The Saskatchewan government is capping the reduction in grants-in-lieu funding to municipalities that was announced in last week’s provincial budget.
The government says it will cap the reduction 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 in a news release Friday.
“For the vast majority of municipalities, this was equivalent to reducing their revenue sharing by about 15 per cent or less.”
The 30 per cent cap will allow nine municipalities – Estevan, Humboldt, Melfort, Melville, Moose Jaw, North Battleford, Prince Albert, Weyburn and Yorkton – to retain a portion of their grants-in-lieu payments from SaskPower and SaskEnergy.
“After discussions with (the Saskatchewan Urban Municipalities Association), 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,” Harpauer said.
Saskatoon Mayor Charlie Clark says this doesn't help the other 100 communities who will see their grants in lieu disappear.
"When we met with the provincial government last Wednesday, we discussed the importance of both short and long-term options that were fair and equitable," Clark said Friday in a news release.
"This still leaves Saskatoon with no relief or clarity about what we need to do with our 2017 budget."
While the payments by SaskPower and SaskEnergy are referred to as grants-in-lieu of taxes, the government says 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 in funding for municipalities.
Municipalities will also receive $257 million in municipal revenue sharing this year, which the government says is more than double the amount they received in revenue sharing a decade ago.
Harpauer says the grants-in-lieu reduction is a one-year measure as part of the government’s three-year plan to return to balance. She said the government will be meeting with SUMA and the Saskatchewan Association of Rural Municipalities 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.
Harpauer says that even after the $32 million reduction, municipalities are still receiving more than $360 million in grants-in-lieu, municipal surcharge and revenue sharing.
With files from The Canadian Press
