North Battleford city council couldn’t contain their outrage over the provincial budget brought down last Wednesday.
“I feel nothing short of blindsided,” said an angry Mayor Ryan Bater, reacting to the elimination in the budget of $1.1 million in SaskPower and SaskEnergy grants-in-lieu to the City.
“We’re faced with a dramatic shortfall in revenue, not just this year but also next year, and I assume for in perpetuity.”
Now, it looks like North Battleford will be joining the litigation that the City of Saskatoon and other municipalities have said they are considering against the provincial government, in an attempt to stop the cut to grants-in-lieu.
Monday in North Battleford, council unanimously passed a lengthy resolution that asks the government of Saskatchewan to uphold the terms of their payment in lieu contracts, and to consider additional means of recovering payments in lieu, including a possible legal action.
It was an angry and visibly shaken City Manager Jim Puffalt who delivered the bad news to council about the grants-in-lieu cut, and its impact to the City’s budget.
“We’re appalled by that. There was no advance notice this was coming, something of this magnitude,” said Puffalt.
“There’s no way in the world we can manage that at this time.”
Some initial measures have been taken immediately. The City has stopped additional discretionary purchases, and while the tendering process is still going on, there is no hiring and no agreement to contract “until we have an opportunity to take a look at this and brief council, because it’s massive,” said Puffalt.
What had Puffalt particularly upset was that he felt the province had no right to the money.
“That is not the province’s money to take,” said Puffalt, pointing to the agreement with the City dating back to 1956. “This is not their money, it’s municipalities’ money.”
The money is collected from gas and power customers on a regular basis as part of their bill. Bater explained it is the five per cent municipal operating charge listed on the bottom line of everyone’s power and gas bills.
That is collected by SaskPower and SaskEnergy and remitted back to the City in an agreement that goes back to 1956.
That charge will still be on your bills, but Bater says it will now be the Province, not the City, getting the money.
“They’re going to continue to collect that from residents, but instead of remitting it back to us as part of a contract we have since 1956, they’re just going to keep it,” said Bater to reporters.
The grants-in-lieu cut was announced in last Wednesday’s provincial budget, but the full impact was not immediately apparent. The initial thought was that the impact to cities would be much smaller.
“I think everybody thought immediately that it would simply relate to the buildings (of) SaskPower and SaskEnergy here,” Bater said.
“Then it was on Friday that we realized it’s not just the buildings. It’s all of the infrastructure that SaskEnergy and SaskPower have in the city. So power poles, rights of way, all of that stuff is part of the equation here.”
Slowly but surely, City officials learned the gravity of the situation. Puffalt told council he was in meetings last week and followed the emails coming in about it, and “it just became worse and worse and worse” until final numbers were released by SUMA Friday afternoon.
Bater was also in contact with other mayors about the situation and planned further meetings and conference calls.
“We’re all feeling blindsided, we’re all outraged,” the mayor said.
There were other budget impacts felt as well. The amount of money coming from municipal revenue sharing at one per cent of PST had dropped by about $335,000.
The City had anticipated that outcome, however. Puffalt said a couple of big purchases in the amount of $380,000 were put on hold.
The City was also prepared for a tax increase, although Puffalt said it was a surprise to learn the PST was now going to be collected on capital construction projects, including for labour.
Before, when doing UPAR, they would pay PST for the materials but never on the labour, said Puffalt.
Despite this change, Puffalt noted the issue could be managed, either by passing the cost on to consumers purchasing the lots in Killdeer (which is seeing a major capital project), or by doing one less block for UPAR this year.
But the grants-in-lieu cut was a complete surprise. Puffalt called the situation “unprecedented.”
“I’ve been around since the ‘90s and it was not like this in the ‘90s, not near as bad, where they just absolutely slashed, without any notice, without any warning … we’re already a quarter of the way through our budget, we’ve already purchased goods and services that were included in the budget, and we are told this at this point in time that this money is being taken away, which again is not their money to take.”
Overall, the hit North Battleford is taking from the provincial budget is $2 million, according to the City.
As for how to address the shortfall, the indication is the City would not be making any snap decisions this week. Puffalt said they would need to go through the budget and “see what we can do.”
The indication from Puffalt is that if the provincial budget isn’t revisited, the City would have to look at potential cuts. Otherwise, residents were looking at a massive tax increase.
If they tried to cover the loss through property tax alone, it would be a 15 per cent increase.
That prospect was unpalatable to the mayor.
“It’s outrageous,” said Bater to reporters. He was also upset about the prospect of having to make cuts to City services.
“We’re going to be forced to make some very, very difficult decisions.”
City councillors were unanimously negative in their reaction to the provincial budget.
“It’s really, really dismaying to see the complete lack of regard for our city and for our people in this province,” said Councillor Kent Lindgren, who added he didn’t think the budget was well thought out or planned.
“We’re on the hook now for other people’s mismanagement,” said Lindgren.
“It’s apparent decisions were made without a full understanding of the impact,” said Councillor Len Taylor. “And that’s a direct result of no consultation.”
Councillor Greg Lightfoot said he was “absolutely outraged” and agreed litigation was the next option if it couldn’t be resolved through meetings.
“A contract is a contract. They can’t just renege on a statement.”
“Disillusioned” was Councillor Don Buglas’s reaction. He felt there was no sense of partnership from the province.
“Having that rug pulled out from underneath us, no partnership seems to be apparent,” said Buglas.
Bater concurred with Buglas’ sentiments, adding “no matter what path we choose, we’ve become the messenger of the province’s bad news. They’ve put that on us. It puts us in a very difficult position.”
“It makes me a little bit physically ill, thinking about what it means to the average taxpayer,” was Councillor Kelli Hawtin’s reaction.
“What does this mean for the kids in our community? What does it mean for seniors? What does this mean for everyone?”
Councillor Kevin Steinborn was downcast that council’s hard work in preparing the 2017 budget had all gone to waste.
“All of a sudden now, boom,” said Steinborn. He supported backing Saskatoon and others in legal action.
As for what is next for council, the timeline is still uncertain. What City officials are holding out hope for is a reversal of the decision by the provincial government.
A meeting was scheduled for Wednesday involving Minister of Governmental Relations Donna Harpauer with Mayor Charlie Clark of Saskatoon and various SUMA officials. Bater expressed hope to reporters something might come from that.
If not, the City is ready to join Saskatoon and other SUMA members in litigation efforts.
Beyond that, if nothing changes in the meantime, the City will need to reopen its 2017 budget and make revisions before tax notices go out.
Bater expects administration will have to “look at the scope of the projects for the year” and see what could be changed. The City would also have to look at “the potential for property tax increases” and “the potential for cuts to programs and services.”
The mayor also indicated decisions will likely have to be made by May, which is when mill rate bylaws are usually passed by the City and tax notices sent out.