Provincial Budget a Positive for Moose Jaw

Robert Thomas

Despite what some may believe, the recent Provincial Budget was a positive for the City of Moose Jaw. That’s the findings of an analysis presented on Monday Night to Executive Committee.

In the report, Executive Committee was told “the Provincial Budget will have a positive impact on the City of Moose Jaw for 2018.”

The budget reinstates the five percent Grant in Lieu of Taxes from SaskEnergy. The consumption surcharge is applied to all SaskEnergy bills and fluctuates with the price and use of natural gas. It should not be confused with the federal government’s carbon tax.

Last year, the surcharge still applied but the Province kept it for themselves.

The value of the surcharge fluctuates with the price of natural gas and consumption. The report estimated the value of the surcharge was $900,000 to $1,200,000 annually, however, the expected amount for 2018 is to be prorated.

The amount expected in 2018 is $675,000.

In the past, the natural gas surcharge funds were used in the operating budget. With cuts and tax increases, the funds are no longer required there and Administration recommended the funds be directed to the General Capital Reserve. Other options provided included using the funds in the 2018 operating budget or using the funds to reduce 2018 property taxes, the report stated.

The General Capital Reserve versus waterworks renewal was recommended as a destination for the funds because the Waterworks Utility has a better ability to capture provincial and federal infrastructure funding.

The General Capital Reserve is expected to have a shortfall of $4,924,877. Under provincial regulation, the fund must be balanced each budget year.

Using the funds to reduce 2018 property taxes would equal a 2.5 percent tax reduction.

Communities who do not wish the surcharge or tax to be applied to their residents’ natural gas bill may opt out if they so chose to do so. Executive Committee chose not to take this action.

SaskPower and SaskEnergy will now pay a Grant in lieu of taxes on their real physical property holdings in the city equaling about $35,000 annually.
Speaking to Executive Committee, Finance Director Brian Acker stated “as an Admin, we will say this budget is reasonable; the only thing unexpected is reinstatement of the SaskEnergy money.”
The SaskPower surcharge of $1.8 million was not returned in 2018, Acker said.

“This is good news,” Councillor Chris Warren stated about the return of the SaskEnergy surcharge, adding that with the financial demands the City is experiencing “it still doesn’t paint a very rosy picture.”

The City will receive a reduced amount of Provincial Revenue Sharing due to a reduction in 2016 PST revenues. The City will receive $5,967,312 or a reduction of $419,016. The PST for Revenue Sharing is based upon 2016 figures.

Provincial Revenue Sharing gives one percent of the PST to municipalities based upon a per capita basis. With Moose Jaw’s population not increasing as rapidly as other centres in the province it also impacts on the City’s share.

The Province is set to sit down with municipalities in the next year to work out a new Revenue Sharing Agreement, given the expansion of the PST and additional funds.

One item the impact assessment was silent on was the six percent PST remains on all City construction projects. The PST extension from the 2017-2018

Provincial Budget remains in place.

In their April agenda package, Prairie South School Division states is the negative effect of the six percent PST applied to school division construction projects. The Division, through the Saskatchewan School Board Association is actively lobbying the Province to remove the PST on their construction projects.

The Saskatchewan Urban Municipalities Association (SUMA) has just completed a survey from members about the effects of the PST on construction services from its members. (See PDF Below)

The PST on construction projects applies to the City, which presently spends tens of millions on capital projects including Cast Iron Water Main Replacement, a new transmission line to the Buffalo Pound Water Treatment plant and Reservoir Upgrades. The projects have an estimated value of over $36 million.

As part of its Provincial Budget coverage, MJ Independent provided Mayor Frasier Tolmie with a list of questions about the effects of the budget on the City. Mayor Tolmie failed to respond