We don’t have many services that aren’t essential.
— Yorkton Mayor Bob Maloney
The province has put much of its deficit onto the municipalities to deal with, or at least that is the suggestion of Yorkton Mayor Bob Maloney.
“Who’s paying? It’s urbans. There’s a bill to be paid and they’re looking to urban municipalities to pay it,” he said, in an interview.
“The shake out for this, it’s going to be very difficult … This is unprecedented. I don’t think we’ve ever seen a budget like this.”
As of Thursday Maloney said he and other municipal leaders were simply looking to understand the blindside they had taken.
“There is so much confusion as to what’s going on,” he told Yorkton This Week in an interview from Regina where he was attending post-budget meetings with SUMA. “Nobody seems to have the answers. It’s very frustrating.
By Monday, the numbers were in, and Maloney, along with Melville Mayor Walter Streelasky and Mayor Don Fogg of Langenburg held a press conference in Yorkton to talk about the provincial budget implications for the three municipalities and other urban municipalities in the province.
The losses to Yorkton from the budget changes will be near $2.3 million, with already recognized reductions in transfers from the municipal share of PST factored in.
“We didn’t cause this deficit (a provincial deficit in the last fiscal year of around $1.3 billion), but we are being asked to pay it,” said Maloney.
“The SaskPower and SaskEnergy ‘payments-in-lieu’ to municipalities will now go to provincial general revenue instead of municipalities,” said Maloney.
The ‘payments-in-lieu’ are based on agreements signed with Saskatchewan communities over 60 years ago, when local power and energy companies were absorbed into SaskPower and SaskEnergy. These agreements were to return five per cent of utility revenue generated in each community, to the affected community, in perpetuity. Maloney said that every city and town throughout the province will see a significant loss in revenue. Yorkton will see the highest per capita loss of revenue of any provincial city due to a larger industrial sector relative to population numbers.
Melville will lose $334,267, with some Waving the agreement dating back to the late 1950s, Maloney said the deals were supposed to be “in perpetuity”, adding it will require legislation on the part of the province to break the contract.
The City of Saskatoon has already said it will be looking at legal action regarding its contract being broken, and Maloney said Yorkton Council will have to have a discussion about going down a similar road.
“We will be discussing that with our Council,” he said, adding the decision by Saskatoon to pursue legal recourse has support at the Saskatchewan Urban Municipalities Association (SUMA) table.
Despite the provincial revenue sharing formula with municipalities remaining the same, Yorkton will also experience a reduction in this area of some $342,000 due to reduced PST revenues and a reallocation based on new Stat Canada population figures.
Funding cuts to regional libraries will mean a reduction in funding to Yorkton of $110,000 and will have an impact on the services provided, said Maloney.
In addition, the one per cent increase in PST will cost the city approximately $200,000.
Added all together Maloney said 58 per cent of the dollars received last year from the province “are being clawed back.”
The $2.3 million would require a 10 per cent increase in property taxes to cover the loss, which would be in addition to the 6.8 per cent increase that was part of a preliminary budget unveiled Feb. 27.
While less dollars are involved both Streelasky and Fogg said their communities are facing cuts which make budget deliberations tougher.
Streelasky said he believes Melville has always been a willing partner with the province to grow the economy, but the budget cuts seem to run counter to a collaborative approach.
“There is a little bit of a cloud hanging over us,” he said, noting the losses to Melville would translate to a 13.4 per cent increase in their municipal taxes based on an overall loss of $432,000.
Like Yorkton, Melville has already been working on a budget, which would require a 6.04 per cent tax increase, said Streelasky.
That would mean an overall increase of 18.3 per cent.
“How do you share this with your community members?” questioned Streelasky.
Fogg said the hurt to Langenburg is $57,000, which is still significant given the town’s size.
“It’s not big numbers,” he said, but added it will still require tax increases, or services to balance the 2017 budget.
Maloney noted municipalities are not allowed to put forward a budget with a deficit forecast.
Maloney said with Council already looking at a municipal tax increase of more than six per cent, (preliminary numbers from February), the new cuts will be difficult to deal with. He said the cuts would require a local property tax hike near 15 per cent.
“We simply can’t do that,” he said, Thursday.
The only option to a tax increase is to cut services.
“Things won’t get done,” said Maloney again Thursday, adding he has to take a page from Premier Brad Wall’s playbook and suggest “everything is on the table’ when Council delves into what to so to deal with the funding cuts.
“We don’t have many services that aren’t essential,” said Maloney, adding he believes Yorkton Council will “do the best we can” to provide the services residents want and need.
Maloney said overall the provincial budget is going to impact the economy and not in a positive way.
“I think this will put a chill on the community,” he said.
“They’ve downloaded budgetary problems onto municipalities,” he said.
SUMA president Gordon Barnhart also raised concerns about the budget when interviewed.
“When we went into the budget … we were bracing ourselves the revenue sharing formula was going to be altered,” said Barnhart, adding there was a fear the province “would reduce our share within that formula.”
Barnhart said there was initial relief that the revenue sharing formula remained intact.
But as the details of the budget were unveiled there was a realization the province “downloaded services and costs onto municipalities” in a number of other moves.
The cuts to municipalities came in various ways, noted Barnhart, including, a cut to the Urban Highway Connector program which dropped by $1 million dollars to $6.65M in the budget.
Previously, the Saskatchewan government suspended a grant program meant to help community rinks’ bottom lines.
The Community Rink Affordability Grant was awarded to 633 ice surfaces in 373 communities last year. It allows indoor curling and hockey rinks to receive $2,500 per indoor ice surface annually to assist with operating costs and upgrades.
And most significantly the Wall government put an end to $36 million in grants from SaskPower and SaskEnergy, which were paid to municipalities in lieu of property taxes for infrastructure.
Barnhart said the result is significant to communities, suggesting “half of the revenue sharing is being clawed back,” through other cuts announced in the budget.
The situation has basically offloaded decisions regarding service cuts to municipalities, said Barnhart.
“Municipalities do not have the ability to run a deficit,” he reminded.
As a result of that constraint Barnhart has limited choices to reduce service, increase taxes and fees, or some combination of the two.
“Our sources of revenue are very limited by the law,” he added.
Barnhart said the decisions for municipalities to deal with the budget cuts announced last week creates another issue that needs to be considered.
“The other thing that is really scary in my head … is infrastructure,” he said.
Pointing to his own community of Saltcoats where he sits on Council, much of the sewer and water system was installed in the 1950s, said Barnhart.
“It needs to be replaced,” he said.
Having a sewer lagoon which needs to be expanded, and a water system needing upgrades are serious issues.
“We’re talking about the health of the people,” he said, adding the municipalities “have less now” to address those needs.
There is also the announced the province with shut down its STC bus service.
“That is going to have an effect, certainly the small towns and villages,” said Barnhart.
Barnhart said the STC cut impacts more than passenger services too, noting the bus line also handles a lot of freight, and questioned how it will impact a farmer needing parts delivered in the midst of seeding or harvest.