City intends to take budget battle with province over grants to court

The City of Saskatoon will pursue an injunction in court over the removal of grants-in-lieu from urban municipalities in Wednesday’s provincial budget.

A fired-up Saskatoon city council voted unanimously to pursue legal action at a special meeting Sunday afternoon designed to seek ways to cope with a shortfall estimated at just under $8 million in 2017.

The removal of the grants-in-lieu paid by provincial Crown corporations SaskPower, SaskEnergy and TransGas were budgeted at $11.4 million and the city would have to find that entire amount in 2018.

A city report estimates the shortfall is equivalent to a 3.93 per cent property tax increase in 2017, on top of the 3.89 per cent hike council approved in December.

“We are not raising taxes as a result of this meeting today,” Saskatoon Mayor Charlie Clark said at the meeting. “We are reviewing all options.”

Clark said that will include looking at reductions in service.

The legal action could pool municipal resources from around the province. The city intends to pursue the injunction in co-operation with the Saskatchewan Urban Municipalities Association and other municipalities.

Several councillors complained the budget’s removal of the grants-in-lieu unfairly targeted urban municipalities while leaving rural municipalities unscathed.

“This is not equitable at all,” Coun. Randy Donauer said. Donauer convinced his colleagues to support a review of the dollar value of services used by the Crown buildings and infrastructure in Saskatoon.

Donauer said the grants are intended to compensate the city for services provided — like fire, police and road repair — since the city cannot levy property tax against a higher level of government.

“It’s for the provision of services and they still want services,” Donauer said.

Coun. Darren Hill pointed out the elimination of the Crown grants affects 109 urban municipalities out of a total of about 750 municipalities.

Rural municipalities receive about $434 per capita in provincial revenue sharing, while cities, towns and villages receive $205 per person, Hill said.

Coun. Bev Dubois got support for a review of the agreement to lease land to the province for $1 a year for four new dual-use schools being built in Saskatoon. Dubois wants to know what the land would rent for at market rates.

“The city was not aware of what the province was doing with the budget,” Dubois said.

Several councillors also blasted a suggestion by Premier Brad Wall on Twitter Saturday the city should dip into its $141 million in reserve funds to cover the loss.

“It’s not a sustainable solution,” the city’s chief financial officer Kerry Tarasoff said of using reserve funds. Clark told reporters after the three-and-a-half-hour meeting the city is spending tens of millions of dollars to rebuild the Traffic Bridge because its repair and maintenance was neglected for so long.

Council was told a decision must be made on any property tax increase by the end of April, although council had the option of changing the bylaw mandating that deadline. A city report warns bumping the deadline and delaying billing could affect the city’s cash flow.

Coun. Zach Jeffries said the province had months to decide on its budget compared to the deadline on any decision council must now make.

“We’re being asked to do that on the back of a napkin 25 per cent of the way through our budget year,” said Jeffries.

Several councillors shared Jeffries’ sense the city was ambushed by the removal of grants-in-lieu.

Clark said he planned to meet with Government Relations Minister Donna Harpauer on Wednesday.

Donauer said he was “optimistic” the Saskatchewan Party government will reverse the decision in the face of growing outrage. Donauer added he does not think local MLAs understand the impact of the cuts.

Council voted for a joint meeting with the Saskatoon MLAs of both the government and opposition NDP.

Council also backed a temporary hiring freeze at the city until a decision is made on how to proceed and another look at internal savings and revenue.

“This was not financial mismanagement by the City of Saskatoon at all,” Donauer said.