Grants-in-lieu tax grab is an insult to Regina and Saskatoon

Municipal politicians have good reason to be angry at Premier Brad Wall’s Saskatchewan Party government.

This isn’t the usual pre-civic-budget posturing over the revenue-sharing pool based on a full percentage point of the provincial sales tax. (That revenue-sharing pool is down in the austere 2017-18 Saskatchewan budget, because the 2015 PST revenue on which it is based was down.)

What is rightly irksome to the cities is the arbitrary, nonsensical and quite possibly illegal way the province imposed changes to the grants-in-lieu Crown corporations have paid instead of municipal taxes. (Municipalities are exploring their options regarding mounting a legal challenge to the province’s move).

Simply put, this $35.9-million is a tax grab by the Sask. Party government — one city residents will be paying for on their property tax bills. It unfairly targets cities with pre-existing contractual arrangements with SaskPower, SaskEnergy and TransGas — some going back 60 or 70 years to the time when SaskPower took over local electrical utilities. Only 109 municipalities are hit, meaning the remaining 670 of Saskatchewan’s 779 municipal authorities, including all 296 rural municipalities, get off scot-free.

This is simply an insult to Saskatchewan cities that have contended with the brunt of the province’s 140,000-person population boom during the past decade by absorbing 11,220 more people every year. By contrast, all the towns and villages in the province combined have had an average annual growth rate of 780 people. And the province’s 296 RMs? Combined, they’ve grown by 88 people annually.

According to Wall’s office Monday, the $35.9 million in grants-in-lieu of taxes from SaskPower and SaskEnergy is based on individual consumption of gas and electricity. The two Crowns will now pay that money directly to the general revenue fund as opposed to the municipalities.

The explanation goes on to correctly acknowledge that both Saskatoon and Regina will see a $10.6-million reduction, but Regina will continue to receive $7 million in payments from SaskEnergy and SaskPower so the two major cities pay the same amount.

Based on volume of gas and electricity sales in the municipalities in 2016-17, SaskEnergy paid $6 million to Regina and SaskPower paid $12.3 million for a grand total of $18.3 million.

That the Sask. Party government independently (as in, without warning or consultation with the Saskatchewan Urban Municipalities Association, whose members have relied on these grants-in-lieu long before they relied on the revenue-sharing pool) simply decided that Regina and Saskatoon should fork over an equal $10.7 million from SaskPower and SaskEnergy is as puzzling as it is arbitrary.

What seems obvious is the

Sask. Party simply decided it needed cash wherever it could get it, and arbitrarily determined Regina pay roughly one-third, Saskatoon pay roughly one-third and the rest of the urban municipalities pay the final share.

As it turned out, that final share of the $35.9 million ($14.6 million) would come from another 107 urban municipalities with long-standing SaskPower/ SaskEnergy agreements. Some of those communities were certainly hit harder than others. For example, Yorkton’s combined $1.7-million hit from lost SaskPower/SaskEnergy revenue is more than three times the $523,490 hit for Swift Current — a 54-per-cent reduction from last year. In fact, except for Kindersley, Swift Current and Lloydminster, nearly every Saskatchewan city is taking a 25-per-cent-plus revenue hit from the province.

But what’s more irksome is who wasn’t hit ... and perhaps why.

While the Wall government homed in on SaskPower/SaskEnergy grants-in-lieu, it could have as easily gone after SaskTel’s grants-in-lieu. That would have still hit cities like Yorkton ($71,545 a year), Swift Current ($35,591), North Battleford ($111,747), Moose Jaw ($121,322), Prince Albert ($226,007), Saskatoon ($448,957) and Regina ($2,796.854).

But it would have also hit hamlets, northern villages and especially RMs to the tune of $2,249,021. For many RMs, SaskTel’s grant-in-lieu are a tidy $20,000-plus-a-year bonus — $80,518 for the RM of Wilton.

These seem to be very deliberate decisions — ones that should make both city politicians and taxpayers angry.