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City of Regina struggles to fill the hole the province blew in its budget

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WATCH ABOVE: Regina city council threw out its regular agenda last night to address a multi-million dollar budget shortfall created by provincial cuts. David Baxter has more on what council is considering as they try to fill the financial hole – Mar 28, 2017

Ward Two City Coun. Bob Hawkins had some choice words for describing the provincial budget’s impact on Regina’s finances.

“This is a budget that comes like a thief in the night,” Hawkins said.

Regina city council threw out the regular agenda Monday night to hold a special meeting to pitch ideas on how to make up a $13 million shortfall in provincial funding.

“We’re looking at ways that would not have a direct impact on property taxes,” Mayor Michael Fougere said.

“We’ll look at exemptions as an example, increasing costs to Crowns as was mentioned, so that’s the view.”

City administration will draw up a revised budget that will be presented to council on April 10.

Fougere added that if a property tax increase is necessary then he would like to see an extra line on tax bills called the “provincial levy.” This would be for taxes collected as a result of this mid-year adjustment.

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In February, city council approved a 3.99 per cent mill rate increase. Council debated reducing that figure to 3.79 per cent, but opted not to, over concern about potential cuts in the then-upcoming provincial budget.

The biggest cut comes from the upcoming elimination of grants-in-lieu of taxes for SaskPower and SaskEnergy. That cut takes effect April 1, and is expected to cost Regina $8 million this year and then $11 million annually.

Several councillors said they were caught off guard by this decision. Premier Brad Wall said that he mentioned grants-in-lieu during his address at the SUMA convention and made it no secret that everything was on the table.

“Neither did the phone ring from the sector about what that meant, or was there an engagement on their part,” Wall said.

Wall said he heard strong support for keeping revenue sharing whole from municipalities across the province, and that’s the route they took in the budget.

“In budgets you don’t specifically consult on a number of issues. Imagine if we did that on PST issues, people would make consumer behaviour issues based on that,” Wall said.

Ward 10 Coun. Jerry Flegel estimates that this would mean an additional $137 per household as the money is recouped solely through property taxes.

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“When we did a four-point increase last year I think the average was about $65 to $70 per household. So this is a huge impact for us, and we’re going to have to go back to the drawing board with the 2017 budget,” he added.

No measures were voted on at Monday’s meeting. The goal was to talk about ideas for administration to consider when making their budget revisions.

One thing council agreed on was that they were frustrated with the province. Councillors said they feel the province is downloading their financial situation onto Regina and other municipalities across the province.

“If the province wanted the taxpayers of Saskatchewan to pay more money, to pay more taxes, they should have been the ones to make that decision,” Ward Seven Councillor Sharron Bryce said.

Mayor Fougere said that in his 20 years in civic politics he’s never seen communities so united on a single issues.

READ MORE: Sask. government responds to Saskatoon city council’s court injunction move

Prior to this meeting, Government Relations Minister Donna Harpauer said the province does not want to see municipalities raise property taxes. She added that cities have reserve funds they can potentially dip into to make up the difference.

Regina city council is hesitant to go down that road. Their position is that reserve funds are accumulated through prudent fiscal management, and should be used for future investment or emergency situations, like a flood.

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“This is the equivalent of using our savings account to pay for monthly expenses. What happens when our savings are gone?” Ward Six Councillor Joel Murray said.

The 2015 Annual Report shows that the city had $213 million in reserves. The 2016 Annual Report will have a more accurate picture of Regina’ reserves once that report is complete.

According to this year’s budget, Regina’s total reserves are expected to total $159 million across multiple accounts at the end of 2017.

Mayor Fougere will join his counterparts from Saskatoon and Yorkton on Wednesday to meet with members of cabinet, including Finance Minister Kevin Doherty. Fougere said his goal is to see a reversal of the decision to cut grants-in-lieu.

Wall said he’s looking forward to the discussion and hearing their concerns. The Premier added that the province and municipalities will soon have to discuss a revision of the Municipal Revenue Sharing Program. Currently, one per cent of the PST is given to municipalities.

READ MORE: Saskatchewan Budget 2017: sales tax increasing to deal with $685M deficit

“Because of the fundamental changes to PST and the base expanding as it is, we’re going to need a new a new revenue sharing formula,” Wall said.

“One that doesn’t relate to one percentage point of the PST, because now one point of the PST means a lot more. It means something a lot different than it did.”

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The provincial budget increased the PST from five to six per cent and removed a number of PST exemptions including children’s clothes and insurance policies.

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