At a time when B.C. municipalities are preparing their provisional budgets for next year, the District of Clearwater is preparing for its tax base to be cratered.
The Trans Mountain pipeline runs through Clearwater’s borders, and as it ships oil from Edmonton to Burnaby, it also funnels tax revenue into Clearwater’s municipal coffers.
But the amount of tax revenue that Clearwater and other pipeline communities receive is set to drop dramatically.
Last month, BC Assessment representatives told the Thompson-Nicola Regional District (TNRD) board of directors it plans to change how it assesses pipeline values, which would amount to a multi-million-dollar tax cut for the companies that own the pipelines. BC Assessment plans to implement its pipeline cost model revision next year.
At the meeting, the TNRD was told the updated cost model in its boundaries would result in a reduction of class two pipeline values to the tune of about $300 million, or a 27 per cent drop.
The District of Clearwater has crunched the numbers. Mayor Merlin Blackwell said in a social media post that the reduction in pipeline value would lead to an eight per cent loss of taxation, totalling about $250,000, “or $100 for every man, woman, and child that lives in the District of Clearwater.”
It’s an untenable dollar figure for local taxpayers to take on the chin, Blackwell said.
“We just can’t. That’d be just such a hard hit to take,” he told The Clearwater Times Tuesday, Nov. 18. “That’s too big of a hammer to take all at once.”
The Ministy of Finance will ultimately need to sign off on the assessment change, and Blackwell has been granted a high-level meeting with the ministry which he said will take place Thursday. Asked what he hopes to discuss with ministry officials, Blackwell said the meeting will amount to “a plea to not accept this rate increase.”
He said he knows Finance Minister Brenda Bailey wants to listen to the effects the assessment change will have on B.C. communities before the change goes ahead, which “opens a little bit of a door for actual discussion that this is not a 100 per cent done deal.”
If the rate increase can’t be quashed entirely, he hopes Bailey can be persuaded to freeze rates and allow them to be phased in over multiple years, so that communities aren’t bearing the full brunt all at once.
“Those are not desireable options, but at this point any of them is better than enacting this right now,” Blackwell said.
No early warning
While homes and businesses are assessed based on their market value, pipelines are assessed based on the cost to build, maintain and replace them. Major pipeline companies have been in talks with BC Assessment about changing the regulation that dictates B.C. railway and pipeline values since 2016. That regulation was established in 1986 and based on the costs of that era. The pipeline companies, which include Trans Mountain, argued that current-day costs need to be factored in to the pipeline valuation model.
Key for Blackwell is the fact that these talks have been ongoing for nearly a decade, and the district only learned about the fast-approaching change in pipeline valuations two months ago. That isn’t typical of BC Assessment, Blackwell said.
“My understanding, talking to my staff generally, when BC Assessment sees a risk to roll, as they put it, something that could dramatically affect a rate or rate class, they will notify you immediately on that,” Blackwell said. “And it could be two, three, four years in advance of that risk coming so that you can basically plan your strategy, how to deal with that.”
He said if the distict had been warned years in advance, they would not have budgeted pipeline tax revenue the way they did.
“We would put them aside as an emergency fund or a bonus that we have because we know it might go away,” he said. “We would have budgeted regular taxation to cover all of our costs and we would have held this money aside for special projects or something along those lines, knowing it was at risk. but we never had that opportunity.”
Blackwell said roughly 95 per cent of the district’s budget is already allocated.
“We have some flexibility on five per cent of the budget and right here we’re talking about eight per cent,” he said. “And then we’re talking about the five to seven per cent on top of that that we were already discussing to cover union wage increases and the fact that fire trucks are now taking three to four years to get delivered and cost two or three times as much as they did a year and a half ago, because of Trump’s tariffs.”
Tough choices ahead
B.C.’s next general local elections take place in 2026. Instead of focusing on providing stability in an election year, many local governments could be fighting to stay above water.
“A lot of communities are going to be looking at making really hard choices in a year when we’re supposed to be not trying to do that,” Blackwell said.
For Clearwater, those hard choices could mean “putting off things that we should be doing.”
Taseko’s proposed Yellowhead open pit copper mine project is coming down the road, which would see Clearwater’s population swell dramatically several years from now. The district is trying to prepare for that development by increasing capacity, building up economic development and expanding infrastructure.
The potential loss of pipeline tax revenue “pushes off choices that we really should be making now for what could be a very prosperous future for this town,” Blackwell said.
Some of the lower priority programs and services that some may view as expendable are in fact covered by grants and user fees, Blackwell said, so cutting them won’t amount to any savings. Instead, it will be a matter of whether the district can delay buying a needed fire truck, or fix pot holes and road sections another year.
“That’s just kicking cans down the road that we’re already way too far behind on,” Blackwell said.
As it happens, there is an opportunity to engage with a major pipeline company in Clearwater Wednesday evening.
Trans Mountain is holding an open house at the Community Centre at 209 Dutch Lake Rd. from 5 to 7:30 p.m. Nov. 19. The event is billed as a chance to learn about the company’s pipeline optimization plans in B.C. and Alberta.
Blackwell said elected officials from the TNRD will be attending the meeting to ask questions, and to point out the significant challenge posed by the tax breaks Trans Mountain and other companies stand to benefit from.