Saskatchewan towns losing $33M to province: SUMA

The Saskatchewan Urban Municipalities Associationis not backing down when it comes to its objection to the province's changes to Bill 64, which will get rid of grants-in-lieu for 109 Saskatchewan communities.

In its latest budget, the provincial government announced it would put an end to grants-in-lieu of property taxes normally paid to municipalities by SaskPower and SaskEnergy.

The budget means a loss of $33 million in funding to towns this year alone.

Saskatchewan towns dreading the cuts

The towns ofGravelbourgand Gull Lake have had to work through significant funding shortfalls, causedby cuts to grants-in-lieu.

"InGravelbourg, we're paying for all kinds of infrastructure from sewer systems to sidewalks,"GravelbourgMayor DanLamarresaid.

"Losing nearly $33,000 each and every year is a significant hit to our community and it means delaying projects, hiking taxesor eliminating services."

• Sask. government walks back cuts to grants-in-lieu for some municipalities

Gull Lake Mayor Blake Campbell said his town has already spent $107,000 this year on clean-up after a local hotel burned down.

Cambellsaidthe municipalitywillto have to pay an estimated $130,000 by the end of the year to convert thetown landfill to a transfer station on top of theinitialcosts.

"Those costs alone could eat up all of our unallocated reserves. When the provincial government destroys our contract withSaskEnergyfor payments-in-lieu, we'll be losing $26,000 every year," Campbell said.

"That loss is big, especially when you consider that we have to spread it across just 1,000 people."

Hayward said the cut points to a bleak future of government slashing.

"Instead of taking the time to do meaningful consultation with hometowns before they drafted a budget, they are trying to revise history and change the rules with Bill 64," he said.

A long history

Dating back to SaskPower'sinception in the 1940s, an agreement had been in place for the Crown corporation to pay communities grants-in-lieu of taxes after it bought out municipal utilities.

SUMAvice-presidentof villages, resort villagesand northern municipalities, MikeStrachan, criticized the cuts as unfair in a press release, accusing the province of taking municipal revenue to cover its deficit.

The province has suggestedcommunitiesdip into their reserve funding to alleviate some of the funding burdens,which Strachancalls a temporary solution to a permanent hole in municipal budgets.

That hole will be as much as $400 million over the next decade, according toSUMACEO LaurentMougeot.

"Bill 64 strips the legal right to defend those agreements before the courts or to be compensated for the loss of revenues," Mougeot said.

"[Minister of Government Relations Donna Harpauer]asks if it's reasonable for two orders of government to spend money to fight it out in court," SUMAvice-presidentsof towns, Rodger Hayward, said in the same release.

"We ask if it's reasonable to pass legislation that denies local governments the ability to defend legal agreements or be compensated for this loss of revenue."

The past agreements included a guarantee that the municipality would forever get royalties on future sales of power,SUMAclaims.

"That clears the path for the province to take these royalties without any plan to replace them," Hayward continued.

SUMAsays residents and businesses will continue to pay for the sequestered royalties and many will be asked to pay a second time through property tax and fee increases.

On Monday, Harpauer said she is working with a number of mayors, including those in Regina and Saskatoon, to discuss possible grants-in-lieu of property taxes for cities with SaskPower and SaskEnergy buildings.

"A number of mayors have contacted me directly and we're working with them on just that:on there being grants-in-lieu, as there is in executive government and all other Crown corporations, where there is a payment that is reflective of the taxes that they have foregone."