The provincial government today announced that it will cap the grants-in-lieu reduction to municipalities at no more than 30 per cent of the amount the municipality receives in revenue sharing.
“As the province moves away from its dependence on resource revenues and addresses a $1.2 billion revenue shortfall, we made the decision to cancel the grants-in-lieu paid to municipalities by SaskPower and SaskEnergy,” Government Relations Minister Donna Harpauer said. “For the vast majority of municipalities, this was equivalent to reducing their revenue sharing by about 15 per cent or less.
“However, for a few, the reduction was more than 30 per cent. After discussions with SUMA, we felt that it was too much of a burden to put on those municipalities, so we are capping the reduction to ensure that no municipality will see a reduction of more than 30 per cent of their revenue sharing amount.”
The 30 per cent cap will result in nine municipalities retaining a portion of their grants-in-lieu payments from SaskPower and SaskEnergy. They are Estevan, Humboldt, Melfort, Melville, Moose Jaw, North Battleford, Prince Albert, Weyburn and Yorkton.
While these payments by SaskPower and SaskEnergy are referred to as grants-in-lieu of taxes, they are actually based on a flat percentage of utility sales within a municipality and are unrelated to the value of property.
The $29 million in grants-in-lieu based on estimated property taxes on provincially-owned assets are still being paid to municipalities by other Crowns and government ministries. SaskPower also collects a municipal surcharge on power bills, which results in another $74 million for municipalities. Municipalities will also receive $257 million in municipal revenue sharing this year, more than double the amount they received in revenue sharing a decade ago.
Harpauer said the grants-in-lieu reduction is a one-year measure as part of the government’s three year plan to return to balance and that the government will be meeting with SUMA and SARM to discuss a complete revamping of the various streams of funding municipalities receive from the province.
The 30 per cent cap will cost about $3 million, which means the SaskPower and SaskEnergy grants-in-lieu reduction with the cap applied will reduce municipal funding by about $32 million.
“Even after this $32 million reduction, municipalities are still receiving more than $360 million in grants-in-lieu, municipal surcharge and revenue sharing,” Harpauer said.
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