The latest Saskatchewan budget looks better than the 2017 version from the perspective of the City of Yorkton but then again last year’s budget was one of the harshest in terms of municipal funding suggested Yorkton Mayor at a media conference on Wednesday, Apr. 11.
In the 2017-18 Budget, the government made the decision to end some payments that had been made to municipalities by SaskPower and SaskEnergy and undertake a complete review in order to find a solution that is equitable to all urban municipalities. The following changes will come into effect in 2018-19.
• SaskPower and SaskEnergy will pay grants-in-lieu of property taxes on owned real-estate assets in Saskatchewan (i.e. office buildings), but exclude generation, transmission, and distribution facilities, as well as pipelines and land.
• SaskEnergy will now collect a municipal surcharge on behalf of all urban municipalities at a rate of five per cent. This charge will appear on SaskEnergy customer bills. Municipalities can choose to opt-out of this program. Prior to this year, 109 Saskatchewan urban municipalities received the municipal surcharge, while most municipalities were not eligible to receive it. This change ensures fairness for all cities, towns and villages in Saskatchewan.
• SaskPower Municipal Surcharge, there will be no change to this existing surcharge.
The provincial budget made it clear that payments in lieu of revenue agreements with cities across Saskatchewan are a thing of the past, and this means Yorkton will be losing some $1 million in annual revenue.
Yorkton Mayor Bob Maloney suggested there are winners and losers in this budget and said Yorkton again is among the losers, as was the case in 2017.
The losses relate directly to The Province breaking two legal, long standing agreements with Yorkton and most other cities across Saskatchewan. The agreements that had been in place for more than 50 years, compensated for loss of revenue to cities when local power and energy companies were absorbed into SaskPower and SaskEnergy in the 1940’s and 50’s.
Maloney said the agreements were not signed without both sides seeing benefits.
“It must have had value for both sides,” he said, adding if the then Yorkton Mayor Bill Fichtner were alive today “he would be an unhappy man,” seeing the deals broken by the province.
The agreements stipulated that the affected cities were to receive five per cent of utility revenue generated in each community in perpetuity. Swift Current, a city similar in size to Yorkton, opted to maintain their own power generation ability, generating more than $4 Million in revenue annually, to support their tax base. Prior to cancellation of the Payments in Lieu Agreements, Yorkton received $1.7 million through the agreements to fund City operations.
Last year after considerable discussion, the Province agreed to cap cuts to the Payments in Lieu Program for Yorkton at 30 per cent, which resulted in a loss of $1,000,000 rather than $1,700,000.
The cap is gone, said Maloney.
Maloney did note the replacement of the five per cent SaskEnergy revenues on an ongoing basis this year is appreciated (some $500,000), as is the Province’s commitment to ensure that no urban municipality is worse off than in 2016.
However in the case of Yorkton the province has had to backfill an additional $200,000, which Maloney pointed out, may not be there in 2019.
“There’s no guarantee beyond this year,” he said.
The budget provides $412.9 million of direct provincial support to municipalities including Municipal Revenue Sharing (MRS), as well as funding for municipal infrastructure projects and other community services. MRS remains on track at near record highs.The amount is set based on one point of the Provincial Sales Tax (PST) collected by the government in 2016-17.
Since 2007, MRS has increased from $127 million in 2007-08 to $241 million, an 89.5 per cent increase.
It will be distributed as follows:
• $155.0 million to urban municipalities;
• $68.1 million to rural municipalities; and
• $18.0 million to northern municipalities.
“As our province continues to control spending and meet fiscal challenges, our government’s commitment to municipalities remains clear,” said Government Relations Minister Warren Kaeding in a prepared release. “Virtually no other area of government funding has seen the overall levels of funding increases that municipalities have received through revenue sharing over the past 10 years. Our goal with this budget is to continue to provide stable and predictable revenue sharing to municipalities, while remaining committed to our fiscal plan of returning to balanced budgets by 2019-20.”
Maloney said while revenues from the province from the latest budget will stay neutral with last year, he said the way the money is being allocated is far from a simple agreement that used to exist.
“It’s a convoluted process,” he said.
And the situation still leaves Yorkton with a budget shortfall of $1 Million from what was received annually under the former SaskPower and SaskEnergy Agreements, explained Maloney. He suggested it would take decades of growth to be where the city was in 2017 in terms of funding.
“We want to be sure residents know exactly what tearing up those agreements means to Yorkton,” he said. Yorkton was harder hit than most Cities due to the large industrial sector versus residential population, and the substantial revenue those agreements generated.
In a release circulated at the Yorkton event it noted the Payments in Lieu of Revenue Agreements provided 17 per cent of the City of Yorkton budget in the 2015 annual budget for operations, infrastructure replacement and capital projects.
“Tearing up those agreements means some necessary and planned for infrastructure renewal will need to be put on the backburner for years to come,” said the Mayor in the release.
“This downloading is frustrating,” he added at the conference.
But at least for 2018 the money remains the same from the province, which was noted by the Saskatchewan Urban Municipalities Association. In reaction to the budget SUMA suggested the organization was relieved that the provincial budget maintains what Premier Brad Wall has called the “solemn promise” of the municipal revenue sharing program, but remains concerned about the many small ways Saskatchewan’s hometowns are forced to bear the burden through provincial downloading.
“Our cities, towns, villages, and northern communities are no strangers to making tough choices when it comes to their budgets,” said SUMA President Gordon Barnhart in the release. “SUMA members balance providing programs and services that are vital to quality of life in this province, with limited ways to generate revenue and being unable to run operating deficits at all, let alone for several years.”
The Saskatchewan Association of Rural Municipalities (SARM) also appeared relieved the budget will maintain funding that benefits rural municipalities (RM) in several key areas.
The 2018-19 budget allocates $241.1 million for municipal revenue sharing. RMs will receive $68.1 million. SARM will continue to advocate to ensure that the program provides reliable and consistent funding to municipalities.
SARM is satisfied to learn that the Municipal Roads for the Economy Program (MREP) will maintain funding at $14 million and will not face any additional funding cuts. Over $900 million in funding is allocated to the Ministry of Highways and Infrastructure, stated an organization release. The release suggested that is good news for RMs and agriculture producers as maintaining the highway system is critical for transporting goods to market and for maintaining public safety.
“We’ll be as good as we were last year,” said Maloney. That means the operating and capital budgets approved earlier this year by Yorkton Council will not need to be reopened and adjusted, he said.
Maloney did credit Premier Moe for consulting with cities prior to the budget release. The process of consultation will be ongoing as the province has served notice it wants to reopen discussion around transfer payments to municipalities.
A provincial release detailed “as announced at the recent Saskatchewan Urban Municipalities Association and Saskatchewan Association of Rural Municipalities conventions, in light of the recent expansion of the PST base and the fact that the program is almost 10 years old, government officials will conduct a thorough review of the current MRS program in consultation with their key stakeholders. The government remains committed to providing predictable and stable funding to municipalities.”
That leaves municipalities wondering what the revenue sharing program will look like down the road, especially since the existing program has been a good one, Maloney said.
“We feel it has been a very valuable program,” he said, adding reopening negotiation is a concern because it creates more uncertainty around revenues.
Other municipal notes from the budget include:
Infrastructure
The 2018-19 Budget includes $123.4 million in provincial support for municipal infrastructure. This includes:
• $73.8 million for the provincial portion of the New Building Canada Fund (Government Relations);
• $12.5 million for the provincial portion of the Clean Water and Wastewater Fund (Government Relations);
• $15 million to complete the government’s commitment for the Saskatoon North Commuter Parkway Bridge (Government Relations);
• $14 million for the Municipal Roads for the Economy Program (Highways and Infrastructure);
• $6.7 million for the Urban Connector Program (Highways and Infrastructure); and
• $1.4 million for the Strategic Partnership Program (Highways and Infrastructure).
Other Funding
The 2018-19 Budget includes $48.5 million in other funding for municipalities, an increase of $6.3 million or 15 per cent from the 2017-18 Budget. Funding consists of:
• $17.5 million in policing grants (Corrections and Policing), an increase of $1.086 million;
• $11.1 million grant to libraries, an increase of $4.84 million (Education);
• $8.5 million for grants–in-lieu of taxes to municipalities and libraries, an increase of $165,000 (Government Relations);
• $5.0 million grant funding for Urban Parks (Central Services, Parks, Culture and Sport and Advanced Education);
• $3.5 million for the Transit Assistance for People with Disabilities Program (Government Relations);
• $1.9 million for the Discount Bus Pass Program, an increase of $26,000 (Social Services); and
• $700,000 for the Community Airports Partnership Program (Highways).
