Cities, towns don’t get fair share
Alberta’s industrial taxes go to counties, not urban dwellers
Alberta is a rich province yet its villages, towns and cities have crumbling infrastructure. Why is that? After years of research, Don Good, a Peace River businessman and town councillor from 1998-2010, has come up with a big part of the explanation.
Essentially, Good says, there’s a massive amount of industrial tax money, roughly $1.5 billion each year, that isn’t shared equally among Albertans.
Hundreds of thousands of people living in towns and cities work in the oil industry. They help create that $1.5 billion, but that money isn’t shared much with the communities where they live and where they use costly public services. Instead, almost all of it, $1.4 billion in 2011 alone, went to a lucky number of rural counties.
“The results are towns and cities with infrastructure deficits that are massive, that are not even being addressed, because they can’t,” Good says.
For the past few years, he has travelled the province to give his PowerPoint presentation on the matter, mainly to municipal politicians, industry bosses and provincial leaders such as Municipal Affairs Minister Doug Griffiths and Liberal Leader Raj Sherman.
Alberta’s industrial tax base — the equipment, machinery and pipelines of the oil industry — is mainly located in rural Alberta, Good has found. That is where most of this property exists and where it’s assessed. It’s also where the $1.4 billion stays, but Good says this unequal distribution isn’t fair.
“You can make a pretty good argument that pretty much everyone in Alberta contributes to that industrial wealth. A teacher at NAIT, for example, who is training people for the oilfield, is contributing to that wealth just as much as I am with my computer store in downtown Peace River, or a farmer out in Sunrise County. We are all contributing to that. And yet 94 per cent of the industrial property tax revenue never gets back to 83 per cent of the population.”
In the Peace River area, for example, the towns got $414,000 in industrial and pipeline taxes in 2011, but the counties got $37.5 million. In Grande Prairie, the city got $3.8 million, nearby counties $34.5 million. In Wainwright, the town got $319,000, the county $24.6 million.
County politicians will say there’s both an economic cost and a nuisance in having all this oilpatch infrastructure and industry on county land. There’s some amount of truth to that.
But Good wonders if we really need almost 350 municipal governments in Alberta, if we can’t cut down on the ratio of politicians to taxpayers, if we can’t end some needless duplication of services, and if the industrial wealth of the province can’t be distributed better.
“The main problem is that over the last 100 years we have divided the province into more than 300 municipalities, and that makes it hard to manage or reach agreements,” Good says.
In Peace River, for example, 18,000 people are governed by eight different councils, a job one council could do.
“You have eight chief administrative officers for 18,000 people. You duplicate a lot just in the administrative structure, then you duplicate a lot in equipment because each municipality has to buy its own equipment rather than the equipment being used across borders.”
The comparative wealth of the counties and towns can also be seen in the salaries of the politicians, Good says. For example, in Grande Prairie, the surrounding rural politicians are paid roughly twice as much as the city councillors. In Peace River, the councillors make at most $18,000 while in a neighbouring county the top salary for a councillor is $60,000. “It’s astounding the differences.”
One solution would be for the province to pull in all of the industrial taxes, then divide it up among the various communities based on per capita grants.
A better solution would be restructuring municipalities across Alberta, Good says.
Cities like Edmonton, Red Deer and Grande Prairie and towns like Peace River and Wainwright could join with the surrounding county land and their related industries. “You’d put all the money together and let the larger community make the decisions,” Good says.
It’s unlikely that county politicians will give up their jobs willingly, so the provincial government will have to lead this effort.
Unfortunately, the Redford government seems unsure of how to handle these regional issues. They appear wedded to the archaic, unfair and inefficient status quo. But maybe Good and the power of his PowerPoint presentations will have an impact. He certainly should.