Smith says the province should collect property tax for municipalities; councilors worry it's just another power grab

The UCP hasn't given municipalities much reason to trust them, and in response, they mostly seem distrustful.

At the Alberta Municipalities Association Annual General Meeting last week, Danielle Smith went “off-script” musing that it might make more sense for the province to collect property taxes on behalf of municipalities.

Some attendees told me there was a stunned silence.

I spoke with six current and former town and city councilors from Calgary, Edmonton, and rural to get a better idea of what something like this would mean for them.

“Imagine,” Smith told told a room full of municipal staff and officials, “if that (property tax) bill came with the province’s name on it instead of yours.”

“If it doesn't make financial sense for us, how does it make sense for you guys to have 320 different tax departments?” Smith asked, referring to the UCP’s billion-dollar idea to collect taxes in-house rather than allow the CRA to continue doing it on their behalf.

Perhaps it would be shocking to discover that most municipalities in the province — certainly not 320 — don’t have “tax departments”. For most of them, tax time doesn’t require a full-time position, let alone a dedicated department, year round.

After Bill 18, Provincial Priorities Act, and 20, Municipal Affairs Statutes Amendments Act, there isn’t a lot of charity with regard to the UCP’s intentions if they were to begin collecting the main source of municipal revenues.

I’d be skeptical if there wasn’t a clear accounting of what they are supposed to remit to municipalities, and if they would have any mechanism to try and redistribute funds to municipalities that they like more.

Alberta City Councilor

Municipalities have already seen a reduction in their provincial grants since former Premier Jason Kenney tied municipal funding to Alberta’s overall economic position. One councilor lamented that infrastructure maintenance can’t be counted on to hold out until the economic outlook is more pleasant.

The Municipal Sustainability Initiative grant was replaced with the Local Government Fiscal Framework for the 2024-25 year. The province has claimed, one councilor said, an increase in funding, but because they’re now distributing the federal portion as well, the actual amount from the province has been reduced. Municipalities have noticed.

More than one person said that they’ve long felt the provincial portion of taxes collected by municipalities should be more transparent to rate payers. Education taxes are collected as a portion of property taxes and remitted to the province, and when those are increased, as they were in 2022, and 2024, it’s seen on the property tax bill, making it difficult for municipalities to cover their own rising costs.

They also noted that assessments are more burdensome, and costly, as well as lacking in consistency across the province.

Both Ontario and B.C., one told me, have third-party assessors in place that provide the service across the province. It both maintains consistency and removes the impression that either level of government is attempting to use the process as a means to increase revenues.

None of them thought their municipality’s fiscal position would benefit from simply hoping the province returned expected revenues. As their perceived autonomy has been consistently stripped away with last session’s legislation, a real consideration from local officials past and present is that the province may withhold funding if they don’t feel the local council is “friendly” to the governing party.

Councilors from smaller centres are paying attention to the province’s behaviour toward the two largest city councils and they’re feeling the expectation to keep their heads down for fear that the UCP might start making decisions for their towns and counties that their budgets cannot handle either.

Municipalities don’t do anything without a plan. They balance budgets and they know where the money is coming from, and going, because they have a plan.

Former Alberta Town Mayor

As an aside, the federal election is currently set for the same day as municipal elections in Alberta next year. If the federal government’s minority is upheld, the province will have to change the date of municipal elections. When they decide to change the date, they may move the municipal elections sooner, rather than later.

Follow the money

I can see them taking over tax collection to preempt a mayor and council from withholding the education tax. The province owes money to both the cities. I don’t think either of these mayors would do it, but I bet (former Calgary mayor Dave) Bronconnier would have.

Former Alberta City Councilor

The most obvious benefit to the province, aside from wielding more power, is getting access to more money.

One person said they’ve been told the Alberta government is strapped for cash, thanks to the expenses they’ve incurred with restructuring Alberta Health Services. Their projection says the government is about $7 billion short, and they still have their sights on other projects that will also cost the province a lot of money — like a provincial police force.

Not that setting up a provincial tax department wouldn’t come with costs. It does seem like a dirty workaround to claim the creation of one was to save municipalities money, though. After it was done, who would claim it wasn’t worth the cost to then take over tax collection for the Canada Revenue Agency?

Because most municipal governments also allow monthly payment plans for property taxes, there would be a steady stream of income that the government of Alberta could benefit from; in the same way smaller centres do, but with a multi-billion dollar pool. Calgary and Edmonton alone bring in more than half of that AHS project shortfall.

Edmonton is missing $80 million in unpaid property tax from the province. The amount the province “pays” the city in grant funding is currently 50 per cent of the tax bill, down from 75 per cent under Jason Kenney.

Pre-UCP, the Alberta government paid their property tax bills in full.

In response to a question about that at a UCP members gathering in Edmonton on Saturday, Smith said that the provincial government stopped paying property tax “to save money”.

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It’s an affordability measure not available to most of us.

If the province was collecting property tax on behalf of municipalities, they would be able to exercise more discretion as that line item of unpaid tax would simply disappear — and not just for themselves.

The other annually delinquent rate payer making headlines is a regular benefactor of the Alberta Advantage — junior oil and gas companies. Their total owed to rural municipalities and counties around the province is more than a quarter billion, despite a multi-year return to higher prices since the 2014 downturn.

It’s a problem the government seems happy to ignore.

In the middle of summer, the province announced that it would “relax” a rule that required a purchaser of assets from insolvent oil and gas companies to first pay out any property tax still owing.

Another line item, and headline, that simply goes away if the province is collecting the tax instead of local governments.

Elected to do what, exactly?

What if she doesn’t like our budget? Can she just say ‘no’? They can already repeal bylaws. I’m left wondering, at what point is my job actually pointless?

Alberta Town Councilor

The most common response I received from my small sample was that council members feel like they’re between a rock and a hard place; elected to respond to local issues but feeling the province looking over their shoulders.

Some were told things would get better after Smith’s leadership review, when she no longer has appease the membership by trying to micromanage everyone and everything.

Yet, the UCP has been overly attentive to municipal politics since its inception.

During the 2021 election, Calgary saw its first “slate” of candidates running for school board trustees.

Then-premier Jason Kenney tried to encourage conservative supporters to the polls by holding the pretend senate election (Canada doesn’t elect senators) and his non-binding referendum on the equalization formula, but residents of Calgary and Edmonton still opted for non-UCP affiliated mayoral candidates.

Smith, for her part, has decided that municipal “parties” will run in the next Calgary and Edmonton elections. One potential mayoral hopeful I spoke with said they want nothing to do with a party at the municipal level and would run as an independent if they decide to join the race.

Personally, I think the only benefit of a “party” is the ability to distract from the character and background of the individuals inside. Party politics is for lazy voters who don’t mind if they elect someone who compares children to “poop” in cookie dough.

Municipal governments don’t need political ideology guiding decisions; they need to balance the wants and needs of their constituents, and make sure the services they need are available, and affordable.

They don’t need “provincial priorities” added to the list.

Garbage collection isn’t partisan. Snow removal isn’t partisan. Your neighbours just want clean water from the tap, their garbage picked up on time, and to be able to get out of their driveways in the winter.

Most of them don’t care if you vote blue or green or orange after you make that happen.

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