A local oil and gas company's failure to pay the M.D. of Foothills taxes has put the M.D. between a rock and a hard place.

Due to the bankruptcy of Lexin Resources (formerly Compton Petroleum), many landowners have not been paid their leases and with the company's failure to pay taxes the M.D. is now facing a 2 million dollar deficit.

M.D. of Foothills mayor Larry Spilak says detecting the problem early has helped the M.D. take appropriate actions.

"It's a deficit that we have to deal with. Now fortunately our finance people have identified this at an early enough stage that it gives us some time to react to this downturn in the tax revenue. What we've done because of that is we have been proactive, we've gone ahead and froze any new hiring, froze any increase in salaries and we're reviewing any capital expenditures that will come out of the tax dollar."

Grants will still continue from the province and all services provided by the M.D. such as fire, law enforcement and most road maintenance will carry on through the new year.

Spilak says other expenses on the other hand will be spared in 2017 to help pay the deficit.

"What that reflects on is someone that may have thought their road was going to get another layer of pavement or new pavement next year probably won't and that's because we've had to cut those types of capital expenditures."

The M.D. of Foothills mayor says it would have been a different story if they weren't so proactive.

"We should be able to keep property taxes where we've historically been as far as increases go but if we would not have taken the measures you could have seen double digit increases in property taxes but that will not happen."

The province has been contacted by the M.D. for assistance but a meeting has yet to be arranged with the Minister of Municipal Affairs.

The M.D. of Foothills and other municipalities in southern Alberta, who are also facing the same problems, are hopeful the province will find a way to help them out of this setback.