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Moe manages to keep municipalities happy

Think back about a dozen years ago when we were in the middle of a pre-election fight over education property tax on farmland. Then premier Lorne Calvert vowed to remove it … although his NDP government never quite got around to doing it.
mandryk

Think back about a dozen years ago when we were in the middle of a pre-election fight over education property tax on farmland.

Then premier Lorne Calvert vowed to remove it … although his NDP government never quite got around to doing it. Instead, his NDP government’s focus in its 2007 budget was free prescription drugs for seniors. The NDP were clobbered in rural seats and lost power to Brad Wall and the Saskatchewan Party.

It was an important lesson on why governments need to pay attention to municipal funding issues — even issues in areas where you aren’t likely to win many seats.

Both municipal politicians and property taxpayers are all too aware of the provincial government’s roll in providing adequate funding to keep down local taxes.

This takes us to one of the bigger problems Scott Moe has faced since becoming premier a year ago.

Upon taking over from Wall, Moe has had to contend with a reduction in the municipal revenue sharing pool from $271 million in 2016 to $241 million in 2017. Moreover, after that $30-million cut in the austerity 2017-18 budget, the revenue sharing pool was frozen at $241 million last so that Moe’s government would have a better shot at balancing the budget this year.

On top of having to contend with cut and freeze, there was now uncertainty for municipal politicians. The revenue sharing formula had been based on a simple, clean and predictable formula most quite liked.

Under Wall’s administration, it was decided to give one percentage point of the then-five-per-cent provincial sales tax to fund the municipal revenue sharing pool.

Simple. Easy. Predictable. It was a formula that towns, cities, villages and rural municipalities could easily use to determine what amount of money they could expect in future years. That made budgeting decisions for municipalities — who, unlike the province, cannot run deficits — significantly easier.

But then along came that spring 2017 budget that only raised the PST to six per cent but broadening it significantly to things like junk food, restaurant meals and insurance.

It was more money for the province that it clearly needed to fight its deficit. But it also threw it’s revenue-sharing formula out of whack.

Annual provincial sales tax revenue vaulted to close to $2 million — more than $300 million per single percentage point of the now, broader six-per-cent PST.

Ideally, Moe could have re-instated the old one-percentage-point-of-the-PST as the new revenue sharing pool formula and handed over $300-million-plus to the municipalities. Municipalities surely would have been overjoyed over that.

But it wouldn’t have been as helpful to the provincial government’s own deficit fight. The Sask. Party government clearly needs every penny it can get to balance the budget.

So what Moe did instead at last week’s annual Saskatchewan Urban Municipalities Association (SUMA) is unveil new formula to fund the revenue sharing pool. It is now three-quarters of percentage point of a much broader six-per-cent PST.

In practical terms, that will mean $251 million for the municipal revenue sharing pool in the 2019-20 budget. That’s a modest $10 million or four-per-cent more than last year — still less than the $271 million in 2016 and far cry from the $300-million plus it would have been if was a full percentage point.

The NDP and leader Ryan Meili have cried foul, hinting an NDP government could provide a full percentage point.

And mayors of the big cities — where Moe and the Sask. Party are in for tougher political fights — seem happy with the modest increase and even happier to see a return to stable source of funding.

And Moe seems to have dealt with a big potential big headache.

Keeping municipal politicians reasonably happy is key.

Murray Mandryk has been covering provincial politics for over 22 years.