SUMA said it is “outrageous” for the Saskatchewan government to suggest municipalities use reserve funds to make up budget shortfalls.
“Many communities do not have large reserves,” Saskatchewan Urban Municipalities Association (SUMA) president Gordon Barnhart said in a statement.
“Besides, reserve funds are usually a contingency plan for snow removal emergencies, major water main breaks, and other unexpected catastrophic infrastructure needs — not for last-minute, permanent cuts by the province.”
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Last week, the province announced in its budget that it would be discontinuing payments-in-lieu of taxes to municipalities for SaskPower and SaskEnergy.
The cuts eliminates $36 million in funding to municipalities, leaving many scrambling to address budget shortfalls.
“This short-sighted decision has left many hometowns facing a dire financial situation,” Barnhart said.
“In some cases, this move will result in funding decreases equivalent to 40 to 50 per cent of this year’s municipal revenue sharing,”
Saskatoon Mayor Charlie Clark has said the decision leaves his city facing an $11.4 million budget shortfall.
Regina is estimating a $13 million shortfall in provincial funding.
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Of concern to SUMA is a “double-whammy” homeowners could be facing – still paying fees to Crown corporations that were used for payments in lieu and increased property taxes.
“Many councils will need to hike property taxes to stay in the black,” Barnhart said, adding the decision was made by the province without consultation and after most municipal budgets had been set.
“This is no longer a respectful partnership between governments.”
“Hometowns are handcuffed by limited revenue sources and the inability to run an operating deficit. And now, they are being forced to do province’s dirty work.”
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Saskatchewan Premier Brad Wall told reporters Tuesday that Saskatchewan needs a new revenue sharing formula and provincial officials worked to ensure the budget is fair for urban and rural residents.
“That’s why we settled on grants in lieu, knowing that it didn’t affect all municipalities, but there were other things in the budget that would, in my view, disproportionally affect rural Saskatchewan,” Wall said.
Municipal leaders are expected to meet with cabinet ministers on Wednesday to discuss the cuts and seek a reversal.
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