Budget back-and-forth plays out between Sask. Party, SUMA

The head of the group representing Saskatchewan’s cities, towns and villages is blasting the recent provincial budget.

Gordon Barnhart, president of the Saskatchewan Urban Municipalities Association, spoke with John Gormley Monday.

He called the Wall government’s 2017-18 budget “disastrous” in light of a decision to cancel grants paid by SaskPower and SaskEnergy to reimburse communities for property taxes on their buildings and right-of-ways.

The cuts leave Saskatoon and Regina each facing budget shortfalls in the range of $10-11 million.

Smaller communities are also affected, with Yorkton’s mayor suggesting the cut amounts to more than half the money they get from the province.

Barnhart said urban councils weren’t told the cut was coming, with provincial officials giving them a rosy picture of what lay ahead even as late as the morning of budget day.

“During the lock-up, I was told, ‘No, you’re going to like this, we’re not touching the revenue formula,’” he said.

Barnhart acknowledged while that was true – the province didn’t go after municipalities’ share of PST revenue – he said the elimination of $36-million worth of grants felt like a bait-and-switch.

“We had a promise, ‘A solemn promise’ as the premier said, to not touch our revenue,'” he said.

Barnhart was especially concerned about the cut only impacting urban municipalities. SaskTel, which owns property mainly in rural municipalities, will continue paying out to rural municipalities.

“These changes affect only the urban. The rural municipalities are not affected at all by this clawback. And to me, that just feels like it’s not very fair,” he said.

Barnhart was highly critical of comments from the premier and other cabinet ministers suggesting municipalities could just draw down their reserves.

We are asking municip to share in less than 3% of $1.2B resource rev drop in #skbudget. Can do so without raising taxes b/c of reserve funds https://t.co/Qp82aYPOii

— Brad Wall (@PremierBradWall) March 25, 2017

He noted the cut was expected to be a permanent loss to municipalities’ coffers, not just a one-time expense.

“You could take out a little bit this year to cover it, a little bit next year. I’m told in about five years, the reserves would be gone,” he said.

Cabinet minister defends decision to cut grants

Donna Harpauer, Saskatchewan’s minister of government relations, called into Gormley shortly after Barnhart was on.

She defended the Wall government’s pre-budget messaging, saying cities, towns and villages were told to prepare for cuts.

“We have been very clear that this was going to be a very tough budget and they (were) going to have to look for efficiencies,” she said.

She repeated the province’s position that Saskatoon and Regina should be able to absorb the cuts without raising local taxes.

“Our largest cities also have large surpluses, and they can draw on those reserves right now, and they don’t have to pass it on to the taxpayer,” she said.

When asked about the discrepancy between rural and urban municipalities, Harpauer said the funding formulas are different between the Crowns.

She said SaskTel calculates its grants based on a community’s mill rate, and that this was the procedure for most other Crowns.

However, Harpauer said grants from SaskPower and SaskEnergy are based on billing rates and usage. As such, she said they’ve been increasing year-over-year at a rate far higher than what’s warranted to cover property tax.

“So, it really is not reflective or realistic to the taxes foregone by the (cities),” she said.