11.4 MILLION REASONS TO SING THE BLUES

Taxpayers will pay the real price over the reneging of grant-in-lieu payments

I have 11.4 million reasons to be glad I am no longer a member of Saskatoon city council. However, my elation is significantly dampened when I ponder the final outcome of my property tax bill.

The provincial government dealt an unexpected $11.4 million blow to the City of Saskatoon on budget day last week. Now council is scrambling to find a solution for the unanticipated loss in revenue.

Much of the discussion has been focused on “grants-in-lieu.” For those confused by the terminology, let me elucidate. “Grants-in-lieu” is a fancy way of saying “payment of money.”

For example, the provincial government has several Crown corporations with properties physically located in Saskatoon. However, these Crown corporations do not pay property taxes to the city the same way you and I do. Instead, the city “assesses” (fancy way of saying “calculates”) property taxes and the province pays a “grant-in-lieu” equivalent to the property taxes the city would normally charge.

The province also has agreements with the city, as the city allows the province access to city property so workers with SaskPower and SaskEnergy can install infrastructure (i.e. power and gas lines) to deliver services. In order to use the city’s land, the city charges the province a fee; payment of the fee by the province is called a grant-in-lieu.

The province has now announced it is not paying any more grants-in-lieu, which is an $11.4 million loss for the city. It begs the question whether the city is still obligated to provide any of the standard municipal services to the provincial owned land and office buildings.

Has the question of where to locate the next snow dump now been answered?

In addition to the loss of revenue, Saskatoon has two main issues with the $11.4 million loss. First, the city alleges there was no consultation about the cut. Second, only Saskatchewan urban municipalities (cities) have been affected by the loss in revenue; the rural municipalities remain unaffected.

Basically, the province only eliminated grants-in-lieu paid to cities and left rural municipalities alone.

The cities cry political foul, claim they have been singled out and the Sask. Party is pandering to its politically strong rural base. The Sask. Party certainly doesn’t need support from the urban municipalities to remain in power. Accordingly, cities feel politically expendable, and politically expended, at the same time.

Of course, the hard-core conspiracists are convinced the $11.4 million cut to Saskatoon is also a political message by a rightwing provincial government to left-leaning Mayor Charlie Clark. If true, it is the ultimate Machiavellian move by the province, one that would earn a tip of the hat from Frank Underwood of the Netflix series House of Cards.

Saskatoon city council is now considering suing the province for reneging on the grant-in-lieu payments. It’s an interesting legal argument that will depend on the strength of the wording of the agreements between the province and the city, as well as the legislation that governs the purpose of the collection of the funds by Crown corporations.

Of course, if the courts decide the province is not in compliance with its own legislation, Justice Minister Gordon Wyant (fancy legal way of saying “the Respondent”) can simply revise the legislation. It’s a difficult fight for the city to win.

Moreover, the legal fight between Saskatoon and the province would likely shape up to be a long and lengthy argument (remember the province went all the way up to the Supreme Court of Canada with its essential services legal battle). While the fight goes on, Saskatoon taxpayers will pay the real price.

The provincial budget has already hit Saskatoon with a seven per cent education property tax increase (fancy way of saying “holy sh… ucks…”) and it’s uncertain how city council is going to manage the loss of revenue. Taxes either get raised or we suffer essential service cuts.

It is an untenable situation a legal battle will not immediately fix. Nor will the legal nuances be understood, or appreciated, by someone staring at brown grass in a park that hasn’t been watered all summer due to budget cuts.