Rural municipalities (RMs) are facing a growing mountain of property tax arrears as many oil and gas companies default on their payments.
Delegates to the Saskatchewan Association of Rural Municipalities (SARM) mid-term online convention November 9 called on the province to give municipalities the power to suspend the operating licenses of oil and gas companies which are in arrears.
Delegates also overwhelmingly passed a resolution asking the provincial government to allow municipalities to place liens on resource company licenses.
It is estimated that RMs across the province are currently owed nearly $20 million in unpaid taxes.
“A lot of RMs are affected by oil and gas tax arrears,” said SARM President Ray Orb in an interview following the convention November 9. “The reasons for the default are many; the economy has slowed, the price of oil dropped, and the pandemic hit the industry hard.
“But the result is that ratepayers could be the ones left to pick up the tab.”
Orb said SARM will be conducting a review of the province’s 296 RMs in the coming months to determine the actual amount of tax arrears owed to municipalities by defaulting resource companies.
Currently, the assets of oil and gas companies in default are sold through court orders. However, the court-ordered sales are subject to ‘vesting orders’ that not only protect purchsers from paying both municipal and education tax arrears, but also include direction from the court to have those tax arrears written off.
SARM delegates passed a resolution asking the provincial government to change existing legislation so that municipalities can register a lien against oil and gas licenses, thus providing a way for municipalities to collect taxes owing.