Revenue sharing from Saskatchewan coffers to municipalities has at least been tied to an easily defined measure in recent years.
The province now distributes a portion of the revenue generated by the provincial sales tax. The reasoning at the time of the program’s creation was simple enough, municipalities would share in the upswings in the economy reflected by more retail sales and thus more PST, and in times of economic downturn they would see less.
Then along came the budget deliberations leading up to the recent provincial budget, and what is a reasonable program was on the table as the Saskatchewan Party looked at ways to deal with a $700 million shortfall associated with the massive decline in the price of oil.
Yorkton Mayor Bob Maloney said only a day after the budget was released that from a municipal perspective there was a concern they could lose a very good program to cuts.
“When the Premier says they were looking at revenue sharing it would have been silly not to be (worried),” he told Yorkton This Week at the time.
Provincial Minister of Finance Ken Krawetz confirmed last Friday the formula was under consideration for change. He said dropping the percentage from one to 3/4 of one per cent would have saved the province $65 million, and when looking to offset a $700 million shortfall, that would have helped.
But in the end the program remained intact.
Maloney said he had felt in the end it would be because it is a good program for municipalities.
“I was fairly confident revenue sharing would stay in place,” he said. “It took so much work to get in place I was fairly sure the government would leave it alone.”
Maloney said the Saskatchewan Urban Municipalities Association (SUMA) certainly tried to make the message clear to the province they liked the revenue sharing program as it is.
“I think SUMA did a pretty good job of lobbying to get the message across about the importance of revenue sharing,” he said.
The lobbying may be needed again, as Krawetz said while the program stayed intact because it was felt many municipalities had already established budget based on the formula, it is also something the province wishes to sit down and talk about with municipalities in the months ahead.
The issue for the province is easily seen as the amount flowing to municipalities is growing as the dollars raised through PST climb.
For 2016, based on data already available, the revenue share pot will be $281 million, up from $265 million this year, Krawetz told the Yorkton Chamber of Commerce luncheon.
That the pie is getting larger is not unexpected when you listen to Krawetz who pointed out the province is now home to 1,132,640 people, the largest population in Saskatchewan’s history. The Sask Party is proud to point out the growth in population under their reign, and those new people are buying goods and services as retail sales are strong. That means more PST for the province and in turn municipalities.
While the province might think a funding cap for municipal transfers might be a good thing, leaving them with more dollars, the reality is municipalities face greater costs associated with the growing population.
There is a need for more streets for more housing. There is more pressure on pavement and rural roads because of more people, and more business.
That is why the formula works so well. The municipalities gain a few dollars in good times to help them deal with greater infrastructure and programming needs associated with a growing province.
To change the formula now would in essence force municipalities into raising taxes while the province spends money that they claw back if revenue sharing changed. That would be offloading of the worst kind.
