The province announced on Friday that they will be capping 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 in a statement.
“For the vast majority of municipalities, this was equivalent to reducing their revenue sharing by about 15 per cent or less.
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“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 government received criticism from cities, led by the Saskatchewan Urban Municipalities Association (SUMA) after it was announced in the budget that there would be cuts to the grants-in-lieu program. Removing the grants would leave North Battlford with a an estimate $1.1 million shortfall. The City of Regina said they would have to open up the budget due to an $11 million loss in revenue.
Grants-in-lieu are payments made by provincial Crown corporations like SaskEnergy and SaskPower in lieu of property tax.
The 30 per cent cap will see nine municipalities retain a portion of their grants-in-lieu payments from SaskEnergy and SaskPower.
The communities are Estevan, Humboldt, Melfort, Melville, Moose Jaw, North Battleford, Prince Albert, Weyburn and Yorkton.
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The $29 million grants-in-lieu are based on estimated property taxes on provincially owned assets that are still being paid to communities by other crowns and government ministries.
SaskPower also collected a municipal surcharge on power bills, which results in another $74 million for communities. Communities will also receive $257 million in municipal revenue sharing this year, more than double the amount received in revenue sharing a decade ago.
The 30 per cent cap will cost about $3 million, which means SaskPower and SaskEnergy grants-in-lieu reduction, with the cap applied, will reduce municipal funding by $32 million.