REGINA –Saskatchewan Premier Brad Wall says municipal tax hikes aren’t necessary and that cities or towns could dip into their reserves to cover their budget shortfalls.
“I would note that many of them have huge reserves,” Wall said Monday during question period in the legislature.
“There is no need to for them to increase taxes, Mr. Speaker, as we work toward a new relationship with the municipal sector, informed by our record, which is record revenue sharing for the municipal sector in our province.”
Urban municipalities say they’re short about $36 million because the province cut grants-in-lieu –money the government gave to cities instead of paying property tax on its buildings or infrastructure.
Funding for rinks, parks, and libraries was also cut in the provincial budget last month.
Finance Minister Kevin Doherty said the grants-in-lieu cuts are just three per cent of the provincial deficit of $1.3 billion.
“I don’t think that that’s unreasonable,” Doherty told reporters Monday.
Doherty also pointed out that Regina has about $240 million in reserves, while Saskatoon has about $130 million.
“They have access to some funds. There’s not a reason to raise property taxes this fiscal year, as we sit down and talk about future years, so they have those funds available to them,” he said.
Saskatoon has said the cuts leave a $9 million hole in its budget this year. In Regina, it’s about $11 million.
Both cities are looking at tax hikes to cover the shortfall. On Monday, Saskatoon’s governance committee approved a plan to approve a tax increase of 0.93 per cent, added to the already announced 1.62 per cent increase.
The city said for the average house, it amounts to $43.80 per year.
“In the longer term, we’re looking for ways to both find further cost savings and looking for further revenues,” said Mayor Charlie Clark. “We want to really engage in an ongoing negotiation with the provincial government about what the future’s going to look like.”
City manager Murray Totland stressed the provincial cut is not a one-year shortfall but a permanent operating budget adjustment that requires back-filling by ongoing funds.
He said taking funds from a reserve would be a one-time solution that wouldn’t endure in the years to come.
Both cities have also said reserve funds are earmarked for infrastructure projects in the future, not for daily operating costs.
The Saskatchewan Urban Municipalities Association said it wants the government to engage in meaningful consultation with communities left reeling by the cuts.
The association is also taking issue with legislation introduced last week which would cancel all municipal services agreements and take away municipalities’ right to legal action against the government.
It said that adds insult to injury.
SUMA vice-president of towns, Rodger Hayward, said almost 100 towns stand to lose their payments in lieu.
“As of today, a lot of small towns have not even heard from the government of what they are being cut and that is very concerning,” Hayward said Monday.
“A lot of those towns either have their budgets passed or are working on it right now and still may not even know that they’re cut back by $4,000, $5,000, $10,000, and that’s concerning because we need that consultation. We need to know those things.”
Hayward said introducing the bill was a clear sign to towns that the province is not interested in meaningful consultation with communities on the front lines of growth.
The city of Saskatoon has said it’s considering legal action, including a court injunction, to stop the province from pulling the grants.
Government Relations Minister Donna Harpauer has said municipalities are still receiving more than $360 million in grants in lieu, municipal surcharge and revenue sharing.