There was a certain amount of trepidation, but Ponoka County council approved a significant plan where non-residential ratepayers can get a discount or a deferral on their taxes.
The decision made their April 14 meeting — conducted via a conference call and broadcast via the county’s YouTube channel due to the COVID-19 provincial restrictions — gives businesses and the energy sector until the end of the year to pay their taxes without penalty. As an added advantage to pay up, these companies will get a five per cent discount if their taxes are paid by July 31.
CAO Charlie Cutforth explained the impact of the plan would see the county lose about $650,000 if everyone paid by the end of July. That said, the worst case scenario could see upwards of $13 million lost if no one paid before Dec. 31.
Coun. Doug Weir feels this plan is just the tip of the iceberg and that any deferred taxes won’t be paid.
“I do not want to sit on a council that is going to run us right into the ground after previous councils did a great job of getting some money in the bank,” he said.
“I would like to see it stay as is (with the June 30 tax deadline) and work with anyone on payment plans. I prefer to know earlier if they can pay, but I agree this is uncharted territory.”
Cutforth answered by stating there are about 4,000 non-residential accounts, so dealing with that sheer volume individually would be a tremendous headache.
“We don’t know what percentage of companies don’t have the financial capacity to pay,” he said.“Doing this earlier is better, so they know and the offer won’t hurt our cash flow. If it was left to the current way, I would be shocked if we see any payments.”
County director of operations Peter Hall added the plan is an incentive for those that can and likely will pay. Although, it is simply a guess who will and for some this may be the only way to get their taxes paid.
Reeve Paul McLauchlin believes between 25 and 33 per cent of businesses won’t survive the year. Despite that, he knows the county has to do something.
“You don’t get money from bankrupt companies, so we need to work on those 66 to 75 per cent that need some time,” McLauchlin said, adding in his worst case scenario the county stands to lose $4.3 million because of businesses going bankrupt.
“Putting the political lens on this and recognizing the distress, we need a gesture to get them to pay. Ponoka County is extremely fortunate to still have cash flow and I don’t want to be the council that destroyed what the prudent ones of the past have done.
Coun. Mark Matejka’s concern is that if there is a large amount outstanding as of Dec. 31, it will be tremendously difficult to budget for next year not knowing how much of those taxes the county can collect.
Coun. Bryce Liddle added that if people can’t afford it in July, then it’s likely they won’t in December.
“I hope, and think, we will see is those that can pay will when they can, but we need to extend that olive branch,” said Liddle.
Coun. Nancy Hartford agreed with Liddle, in that anyone with the means will meet the July deadline, “simply because it makes good business sense to save some money.”
McLauchlin understands the apprehension in going down this road stating, “This situation is equal to or worse than the depression. This is as serious as it gets and we are going to suffer significantly. I think we need to make a compassionate gesture.”
He added whatever the county does won’t stop this financial pain and that, for the foreseeable future, this will change how the county does its business.
As a backstop to that plan, administration received approval to obtain a $10 million line of credit to ensure access to cash flow for operations should it be necessary, especially given the uncertainty of who will pay by July 31 and which business will defer until year-end.
“This would provide a short term fix to possible cash flow issues,” said Cutforth.
“We saw a larger amount of tax receivables last year and we are looking at a potential situation where we may have to access temporary funds until we can collect those taxes.”
Residents and farmers will also see some help after council approved a plan to keep them from falling behind and incurring penalties.
“We now have the software in place to accommodate a monthly tax instalment plan for all taxpayers. It may encourage those that are financially challenged to keep their taxes current,” Cutforth said.
“This is probably more important now because of the level of arrears we experienced last year and what the county may be dealing with this year. We have always tried to work with people.”
The plan will see a bit of cost for the county and will also see the payment date for all taxes move to July 31, while also eliminating any late payment penalties for those that set up a payment plan.