Provincial Budget Update

The recent provincial budget – and its possible impacts on Saskatoon – have been in the news a lot lately. If you’re interested in learning more, visit this page or read the following Frequently Asked Questions:

What is a grant-in-lieu?
Instead of traditional property taxes, the Provincial government has paid the City of Saskatoon grants-in-lieu of taxes and rights of way that SaskPower and SaskEnergy utilities operate within Saskatoon, other cities towns and villages.  This has been the arrangement for more than 60 years.

How does the province’s decision to cut out grants-in-lieu affect Saskatoon residents?
This decision will have an annual impact of $11.4 million dollars to the City, equivalent to a 5.63% property tax increase. It forces City Council to choose between raising taxes and/or making cuts to core services such as snow clearing, leisure facilities, police, or fire.  In other words, the provincial government-owned power and gas companies will still charge their customers the same amount, but instead of passing some of the cash they collect on to cities, towns and villages for the municipal services those companies use, the government is keeping that money.

Does this mean my City of Saskatoon, SaskEnergy, and/or SaskPower bill will go up or down?
There will be no change to the City’s utility charges. Although the Province will no longer provide these grants-in-lieu payments to the City, it intends to keep collecting these amounts through their utility bills (SaskPower, SaskEnergy and TransGas) and then transfer the money to the provincial government’s General Revenue Fund account. The City’s bill does not decrease, because we match SaskPower’s rates.

Did the City know about the grants-in-lieu cut?
No, the grants-in-lieu cut was not made known to municipalities before the government announced the provincial budget. The provincial government’s move will have a huge impact on over 100 cities, towns and villages across the province. The City of Yorkton, for example, would lose the equivalent of 58% in revenue sharing.

When will the cuts become effective?
We understand that as of April 1, 2017, these grants-in-lieu will no longer be paid.

I keep hearing about the “municipal surcharge,” what is that?
The municipal surcharge is different than the GIL.  All cities receive a 10% municipal charge that is applied to the SaskPower Bill of all residents and business in the City. This “flow through” charge of 10% is collected from SaskPower’s customers and passed onto the City on a monthly basis. This 10% surcharge was established to compensate all municipalities in Saskatchewan for lost revenues from the sale of former city electrical utilities to SaskPower.  Although the Cities of Saskatoon and Swift Current retained ownership of their electrical utilities, these cities negotiated for the same 10% municipal surcharge for the areas outside of their power company coverage area.

Why can’t the City just fill this gap and take it from one of the reserves?
This reduction is a permanent operating budget adjustment that requires back-filling by ongoing funds. Taking funds from a reserve would be a one-time solution which would have to back-filled in 2018 and future years to come. The reserve funds are our savings account and are there to cover us for unforeseen events, such as excessive snowfall, emergencies, and as an asset replacement fund. It is not to cover our day-to-day operating expenses. We already know our bridge repair reserves are insufficiently funded today to meet our long term needs. We have been trying to build a parks rehabilitation reserve. Pulling money out of our reserves, transfers this problem down the line and leaves us to deal with unexpected situations out of our operating budget.

What’s going to happen to the Meewasin Valley Authority?
The City of Saskatoon recognizes the importance of Meewasin and has already increased our investment to $1.043 million in its civic 2017 operating budget. The implications of this Provincial budget cut are yet to be fully known, but the City will be actively engaged to find a way to keep Meewasin as a lead steward of our river valley.

Is there any way this can be stopped?
Saskatoon’s Mayor and Council are working with cities, towns, villages and the Saskatchewan Urban Municipalities Association in the hopes of addressing the Provincial Government about the long-term impact this will have. Cities are the economic engines of Saskatchewan.

What is revenue sharing and how does it impact the City?
Revenue sharing is when the Government of Saskatchewan distributes the equivalent of one percentage point of the Provincial Sales Tax to municipalities. The City will receive $330,000 more than it budgeted for, as a result of Census population increases being applied to the allocation. The allocation is higher than what the City projected in the 2017 Budget and totals $46.43 million, resulting in a 2017 budget impact equivalent to a tax decrease of 0.16%. In the last 10 years, 56,441 people have moved to Saskatoon which is a 26% increase and has required the construction of new neighbourhoods and necessary infrastructure.

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