City budgets could take a hit from potential revenue sharing freeze

“So, we’re going to have to find it somewhere else and we’ll do that. That’s our job. We’re not going to whine and kick up our heels. If we have to find it, we’ll go out and find it. But we will not increase taxes to find it.”

The City is looking at its own budget and what it may have to change if the revenue sharing structure with the province is altered. If the province does proceed down that road, and less transfer money than expected is given to Prince Albert, the City could put its own projects on hold for a year.

“Is that a big deal? No. Let’s look and make things work. At the end of the day, we’re all part of the province.”

As of Monday, the volatile price of crude hit its lowest ebb since 2009. The price of a barrel West Texas Intermediate – crude oil – closed at $45.37 US a barrel.

It’s been a stunning fall from grace for crude oil, which heading into July 2014 was just more than $100 a barrel.

This has all meant lower resource revenues coming in for energy-rich provinces such as Saskatchewan.

And this slide has come at a time when the Saskatchewan government is in the middle of putting its 2015-2016 budget together.

“We’re going to be facing a tough budget this year. Everybody’s aware of what happened with the price of oil and what that does to provincial revenues. But there’s been no decisions made in regards to revenue sharing,” said Jim Reiter, minister of government relations on Monday.

But since the government is in the process of putting the upcoming budget together, Reiter said, “everything’s on the table, everything will be looked at.” This will include a look at where the province can trim its “expenditures.”

The province is aware of the kind of impact any changes or freezes to the municipal revenue sharing grant could have on cities, according to Reiter.

He pointed to the 142 per cent increase in municipal revenue sharing funds transferred to Prince Albert since 2007.

“So certainly, we’re well aware of where our municipal partners, how much they value that. And we certainly wouldn’t take a decision like this lightly,” Reiter said.

And the impact to Prince Albert could be significant.

The revenue transfer is used by the City towards funding all aspects of the services the City delivers, said financial services director Joe Day. These are the same services the City would normally tax residents for.

The revenue sharing transfer represents 15 per cent of the City’s revenues, Day said. He added that it’s a “significant” amount and the City budgets between $7-$7.5 million coming in from the grant.

“I think that it’s fair to say that the City has been able to deliver the daily services that the citizens have seen because of the assistance of this grant from the province. Certainly the stability and the predictability that we had grown accustomed to is something that we could start to [use to] really ensure that we could control our user fees and our tax increases because of this grant that the province was providing to the City.”

If the province were to provide the grant to the City at the same level as it had received in the past year, it could cause a “concern” of about $200,000, Day said. This is the projected increase projected in the 2015 budget, he said.

And it’s a concern that is being shared by other cities around the province.

Debra Button, the president of the Saskatchewan Urban Municipalities Association (SUMA), and mayor of the City of Weyburn, said the importance of the revenue sharing funds is “immeasurable,” since they’re unrestricted funds. This means cities, towns, villages and rural municipalities can use the funds in any way they see fit, she said.

For Weyburn, the funds represented a $2.2 million injection into the budget in 2014. “So yes, we rely heavily on those funds now.”

Button said that back in 2007, when the revenue sharing model was being shaped, municipalities let the government know they were in this during the good and bad times — they’d roll up and down with the PST revenues.

When there was word that everything was on the table, including the municipal revenue sharing funds, SUMA didn’t “rest on its laurels,” Button said. SUMA sought a meeting with Wall to get clarification, but he was unavailable. They then met with Reiter, and the mayors of Saskatchewan cities took part in a conference call.

“We are all sending letters of support for revenue sharing to the premier, to the cabinet ministers…,” she said.

“You know, when you take a look at the growth that’s happening in the province, the population growth and you know where it’s happening, we know where it’s happening. It’s happening in our urban centres, in our cities, towns and villages are feeling those pinches and we know that we have grown about 15 cities the size of Melville.

“I mean, the growth that’s happening is huge and we’ve absorbed it and we’ve continued to manage it, but we haven’t done it alone this far. We’ve done it with the support of our provincial partners.”

Where the efforts to stop the province from making changes to the revenue sharing model are concerned, Prince Albert’s mayor has taken a different stance.

“We should be working with our province to solve what I’m going to call the financial crunch,” Dionne said. “If they are not receiving the royalties they’re expecting from oil, and we all know that even though we’re loving it at the pumps, but at the end of the day we’re going to pay.”

He said if the City has to give up its three per cent of PST this year, “so be it” if it makes the province a “better place to operate.”

However, Dionne would rather see the province look at putting some of the big projects it plans to fund this year on hold.

“We just got to think outside the box. We just can’t say to the government, ‘well, don’t cut us.’ Well, if the government [doesn’t] cut us, I am more worried … for our taxpayers.” He said this could mean the province could raise the education tax, which would affect all taxpayers in the province.

“So let’s work through this short-term pain for long-term gain.”

tjames@panow.com

On Twitter: @thiajames

by Thia James

City budgets could take a hit from potential revenue sharing freeze

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