Provincial grants-in-lieu and their importance explained

When the provincial Saskatchewan Party government announced the elimination of grants-in-lieu it created a “fiscal crisis” for the City of Saskatoon, according to Mayor Charlie Clark.

WHAT ARE GRANTS-INLIEU?

Grants-in-lieu represent money sent from federal government agencies, provincial Crown corporations and municipal utilities to Saskatoon instead of paying property tax on infrastructure. In this instance, the provincial budget eliminated grants-in-lieu from the provincial Crown corporations SaskPower, SaskEnergy and TransGas to municipalities throughout the province. In the city’s 2017 budget, a total of about $62.1 million was expected from grants-inlieu. About half of that, $32 million, comes from payments on municipal utilities infrastructure.

HOW LONG HAS THIS RELATIONSHIP EXISTED?

A spokeswoman for the provincial Crown Investments Corporation said the provincial program dates back to the 1930s. The city had budgeted for $5.72 million from SaskEnergy and $5.58 million from SaskPower in 2017.

WHY DID THE PROVINCE CUT THE GRANTS?

The provincial government hopes to save $36 million a year as it attempts to balance the budget in three years. The cut affects municipalities across the province.

WHAT DOES THIS MEAN FOR THE CITY OF SASKATOON?

A report by city hall administration says the cut is expected to eliminate $11.4 million in funding a year. Since the elimination does not take effect until April 1, the city still expects to receive a quarter of the grant for this calendar year. That still leaves a hole of $8.3 million in the 2017 budget, which was approved in December.

HOW WILL THE CITY MAKE UP FOR THE LOST MONEY?

A City of Saskatoon report says the only options the city has is to raise property taxes or cut services. A property tax increase of 3.93 per cent — on top of the 3.89 per cent hike approved in December — would be needed to make up the shortfall. Cutting services to make up for the shortfall would take a long time, the report says.

HOW ARE OTHER CITIES AFFECTED?

Here are some of the shortfalls other cities in the province are facing, according to a City of Saskatoon report: Moose Jaw ($2.67 million), Prince Albert ($2.48 million), Yorkton ($1.54 million), North Battleford ($1.15 million), Estevan ($936.931), Weyburn ($837,912), Swift Current ($530,054), Humboldt ($483, 181), Melfort ($458,156), Melville ($358,065) and Lloydminster ($199,831).

HOW DID SASKATOON FARE IN THE BUDGET OTHERWISE?

The City of Saskatoon received $46.43 million in revenue sharing from the provincial budget, which is about $330,000 more than budgeted, but $2.1 million less than in 2016. But the increase in provincial sales tax to six per cent is expected to cost the city $1.5 million to $2 million and cuts to the Meewasin Valley Authority ($409,000) and Saskatoon Public Library ($651,000) could put pressure on city hall to help bail them out. The province plans to eliminate the requirement that the University of Saskatchewan supply 30 per cent of statutory funding for Meewasin.

The cut is expected to eliminate $11.4 million in funding a year.