Sturgeon County council has gutted the policy which sets how the county spends taxes from heavy industrial projects such as the Sturgeon Refinery — a move a former mayor says could put proper management of that money at risk.
County council voted unanimously Oct. 11 to replace its Significant Tax Revenue Growth Policy with the Regulated Property Tax Policy.
Council passed the significant tax revenue policy in 2017 to set how Sturgeon County was to spend the tens of millions in tax dollars it was to receive from heavy industrial developments, primarily the Sturgeon Refinery.
Sturgeon County's 2022 budget documents show that the county received about $30 million in taxes from such developments this year — about 26 per cent of its total revenue.
The significant revenue policy said council would allocate these funds to eight priority areas — reserves and debt, infrastructure, community building, possible service level increases, the Heartland Mitigation Strategy (meant to improve quality of life for Heartland residents disproportionately affected by industrialization), tax stabilization, off-site infrastructure, and operating support — with the percentage share each area received changing over time.
In an interview, Tom Flynn (who was Sturgeon County’s mayor when the policy was first established) said the policy was meant to ensure wise use of this money. Administration would propose various projects in each priority area at budget time for council to consider.
The policy had good intentions but was complicated and labour-intensive, county chief financial officer Andrew Hayes told council. The policy’s key principal was to avoid overreliance on heavy industrial revenue, as such revenue would decline over time through depreciation. Spending decisions were highly strategic and contextual, and were hampered by this rigid policy.
Hayes proposed an almost complete rewrite of the policy.
The new regulated property tax policy eliminated the idea of priority areas and percentage shares, allowing council to allocate heavy industrial tax funds as they wish. A briefing document on the changes said this would reduce administrative “red tape.”
The new policy required the county to monitor its reliance on revenue from heavy industrial properties and use that information at budget time. Administration was to report on this revenue at least once a year and determine when in the future budget expenditures would exceed general property tax revenues due to falling heavy industrial taxation.
County commissioner Reegan McCullough said this policy would give council the flexibility needed to manage future financial pressures.
Not “red tape,” says Flynn
While this new policy would give council more flexibility, Flynn disputed administration’s description of the old one as “red tape.” He said the new policy did not require the county to reinvest in the Heartland to counteract the effects of depreciation and draw new growth, and increased the risk that future councils would use heavy industrial revenue for pet projects.
“There is a risk that (this revenue) doesn’t get managed with the long term in mind,” Flynn said.
In an interview, Sturgeon County Mayor Alanna Hnatiw said the old policy created the expectation that heavy industrial tax revenue would always go up, whereas it would actually start to decline after 15 years due to depreciation. Sturgeon County also now has to offer companies incentives to build in the Heartland under the Heartland Incentive Bylaw, so it won't get that revenue as quickly.
“It can be years before Sturgeon County sees full tax value from those investments,” Hnatiw said, so the county needs flexibility when it comes to how to invest this money.
Hnatiw said councillors would have to advocate on behalf of Heartland residents to ensure they received the tax revenue needed to create safe and caring neighbourhoods.
