Calling for a new funding deal
Municipalities need larger share of taxes collected, P.E.I. municipalities tell province
For years, the municipal tax rate in Charlottetown has stayed flat, but as the city population grows, strain on services has outpaced the tax base.
Inflation, too, has stretched Charlottetown’s finances.
The mayor and council, though, show little appetite for raising taxes. Instead, Mayor Philip Brown says there is another option to raising rates or cutting services.
The provincial government actually collects taxes for the municipalities and then hands a portion back to them as a grant. Brown, along with the Federation of P.E.I. Municipalities, is calling on the province to change how much it gives back.
Brown hopes to see some kind of Band-aid measures happen in the new budget year, before looking at the bigger picture.
“We’re trying to put something together as an interim ask for this coming year, but we’re working on a more full ask in what we need from this tax equity between the two levels of government,” Brown said in a March 14 Saltwire interview. “The interim request is just to try to balance the scales.”
Charlottetown has been working on a new arrangement with the province since 2022, after its 2017-2022 deal expired, he said.
FEDERATION
Last month, the Federation of P.E.I. Municipalities sent a budget submission to the province outlining how local governments across the province have struggled to keep up with inflation and population growth.
While negotiations are underway for a new municipal financial framework, that work will still take months, the letter said.
“Despite the dynamic changes and growth in our
province, the municipal framework has not been updated since 2017. Immediate action is needed to bridge the financial gap.”
The author lists a few recommendations for interim measures that will increase the tax revenue of towns, villages and cities without making residents pay more.
The letter also notes a longstanding federation concern – that only 65 per cent of P.E.I. is municipal land, so thousands of people are benefiting from nearby municipal services without paying local taxes.
CITY NEEDS
While Brown supports the federation's effort and noted the group represents most of P.E.I.’S municipalities, he said the province’s two cities have different needs.
As “full-service” municipalities, they also provide police, water treatment and other services not found in the towns.
Brown and Summerside’s mayor have been collaborating on the request to the province, Brown said.
“We’re trying to meet, to find a balance just between the two of us, so we don’t make a request that is opposing one or the other.”
On March 20, Hillary Proctor, senior communications officer with the Department of Finance, said the province is aware of the requests and is working with municipal partners.
“We are currently in negotiations and cannot provide further comment at this time.”