The City of Estevan is suddenly staring at a budget shortfall of more than $1 million, after the provincial government made significant cuts in its budget that was released on March 22. Speaking prior to Monday night’s meeting of Estevan city council, city manager Jeff Ward and Mayor Roy Ludwig said the city is still calculating how much money they will lose, but it’s expected to be a seven-figure amount. The biggest issue appears to be the grants in lieu of property taxes paid by SaskPower and SaskEnergy. The city was set to receive $900,000 through those grants this year, but that program was discontinued. There has been talk in Saskatoon and among the Saskatchewan Urban Municipalities Association about legal action, but Ward said a lot of those talks are in the preliminary stages. “Saskatoon is suggesting that this money the government is taking isn’t theirs to take,” said Ludwig. The City of Estevan is trying to determine if the grants in lieu of property taxes were for buildings or for other amenities, such as street lights. Prior to the budget being released, much of the speculation was on the future of municipal operating grants (MOG). Municipalities receive the equivalent to one point of provincial sales tax revenues through the grants. The pool for urban and rural municipalities was down this year, since the province collected less money through the PST, so the city was expecting a reduction in MOG revenues. But thanks to the formula the province uses to allocate the funds, the city will receive less than they budgeted. Estevan’s population went up in the federal census, from 11,054 to 11,483, which was a 3.9 per cent increase, but it was below the provincial average.
“It’s one pool of money, so proportionally we went up less than other cities, so our MOG grant went down substantially,” said Ward. Ward said the city’s share of the MOGs will be between $200,000 and $250,000 less than what they expected. A couple of other issues will also impact the city. The first is the education portion of property tax. The government announced the schools’ share of property taxes would increase to an average of 40 per cent this year, although Ward said it could be higher than 40 per cent in Estevan. He estimates it could mean a 10 per cent increase in school taxes for the average ratepayer. The other issue is the government’s decision to slash support for the regional library system by 58 per cent. “We have been contacted by the regional library that they’re asking for additional funds to avoid cuts,” said Ward. The library is seeking $5.77 per person, which would translate to an additional $66,256.91 from Estevan. The city already has a levy in place to fund their commitment to the library. Ward said he also wants to see how the elimination of the provincial sales tax exemption on construction services will impact the city. He believes it would be applied to building construction, but not on road maintenance. Ludwig noted this is also a reassessment year,
which could further affect people’s property taxes. The base date for the reevaluation of property values is Jan. 1, 2015, which was only a few months after the economic slowdown started. “Now that the economy has cooled, the assessment will be based on 2015, so that will be another big challenge,” said Ludwig. Council is now tasked will how to handle the shortfall, whether it’s through reduced spending or higher taxes. “I think it will be a combination of both – cutting back wherever we can, but unfortunately some of this will have to be passed on (to the taxpayers), because we can only cut so much out of the budget,” said Ludwig. Ward discouraged the
city from borrowing additional money this year. The city’s debt is slated to drop by just $500,000 this year, since they had to take out a loan to complete work on King Street, and pay for the purchase of the former Murray GM building, which will be the new home for the Estevan Fire Rescue Service. “You’re basically just borrowing more money to pay the province, and I don’t think that’s fair to the taxpayer,” said Ward. Council briefly discussed the issue at Monday night’s council meeting. Ludwig said they have a lot of information to take in, not just on the budget, but also with reassessment. Councillor Greg Hoffort suggested council try to meet with Premier Brad Wall to explain the pending
hardships for the city. “We fully recognize the need for the province to get debt under control, and we absolutely support that, but this is one issue that is going to seriously impact our city,” said Hoffort. Hoffort also predicted meetings will be needed with the city’s manage
ment team to discuss the shortfall. Councillor Travis Frank, meanwhile, was critical of the government. “We worked very hard to come up with a balanced budget this year, and now that’s going to have to be looked at again,” said Frank. Council will further discuss the issue at future meetings. It appears the Rural Municipality (RM) of Estevan won’t feel the sting quite as much. Reeve Terry Keating predicted they would suffer a minimal loss from the demise of the SaskPower and SaskEnergy money. “RMs, basically, are at the bottom of the line in the pecking order, so I don’t see any huge ramifications for RMs, specifically the RM of Estevan, in this budget,” said Keating. The application of the PST on construction services could have an impact, but with the economic slowdown, it won’t be felt in the short-term. The demise of the Sas