Province may freeze transfer payments: minister
If the economy bounces back, sales tax revenue will once again pour into provincial coffers.
But it might not reach Saskatchewan’s cities, after a cabinet minister proposed a freeze in transfer payments to municipalities.
Newly installed Government Relations Minister Warren Kaeding spoke at the Saskatchewan Urban Municipalities Association’s annual meeting on Tuesday, a day after Premier Scott Moe told delegates he wants to restore “collaboration.” The premier promised to work with cities and towns to design a new municipal revenue sharing formula.
The program transfers one percentage point of PST revenue to municipalities, and rises, mathematically, with the value of sales in the economy.
Kaeding echoed Moe in promising to put the formula “under a microscope” during the next year. But he gave the delegates more specifics on how much money they ’ll get in the meantime. He said he wants to freeze the payments at their 2018 level until 2020, essentially suspending the operation of the formula.
“It is my intention to recommend that the revenue sharing funding levels for 2019 and 2020 remain the same as in 2018 and 2019, which would be $241.1 million,” he said.
That’s $16.7 million less than what municipalities saw in the 2017-18 fiscal year. Any changes to the program will take effect in 2020-2021 and beyond, he said.
The minister said the move will grant municipalities “stable and predictable funding levels” while they work out a new formula for the program.
Regina Mayor Michael Fougere said that’s likely to cost that city, which is forecasting an economic recovery — and hence higher PST revenues — going forward.
“We’ve missed an opportunity for growth of revenue under the current model,” he said. “So what we gain is predictability, but we potentially lose revenue, and that’s a concern.”
Regina Coun. Barbara Young said she has heard “nothing good” over the course of the convention. She said Tuesday ’s announcement calls into question Moe’s promise to consult.
Fougere tried to dial back the tone, saying he’s pleased with the premier’s commitment, but he seemed equally disappointed with Kaeding ’s announcement.
“They’ve said they’re going to consult, but they’ve made some initial decisions that will have impact on all municipalities, rural and urban, right across the province,” the mayor said.
Regina Coun. Jason Mancinelli said it seems like Kaeding wants to “lock in” the payments when the province is at the bottom of an economic trough.
“You can only contract so far,” he said. “It’s going to be lost revenue in my eyes.”
Immediately after Kaeding’s speech, SUMA president Gordon Barnhart pressed the minister on another detail. In the last budget, the province expanded PST to cover a wider range of goods and services. But Barnhart said municipalities aren’t seeing any part of that.
Fougere and the Regina councillors agreed that’s a major concern. Coun. Bob Hawkins said it suggests cities aren’t getting the one percentage point they’re entitled to. The province, he suggested, has altered the formula “unilaterally.”
That’s sure to come up in negotiations as the province reworks the program. The premier has said he wants the program to be “fair” and “equitable.” According to Hawkins, it has a long way to go.
Urban municipalities, he claimed, get less than half of what rural municipalities receive on a per-capita basis — about $440 vs. $220 for each resident.
He called it “an inequality that needs to be addressed.” When asked if he thinks the government, with its largely rural base, will be open to making a change, Hawkins was typically blunt:
“It depends on whether the negotiation is a real negotiation or a sham negotiation,” he said.