One of the best decisions that the Saskatchewan Party government has made in 11 years in power came in 2009, when they completely revamped the revenue sharing system with the province’s municipalities.
Prior to 2009, the provincial government arbitrarily decided how much money the urban and rural municipalities would receive. Then in 2009, the Sask. Party introduced the municipal operating grants. Communities would receive equivalent to one point of the provincial sales tax (PST), or 20 per cent of the money collected through the PST.
We don’t use the word “simple” very often when it comes to government, but it seemed like a pretty simple system. And while there are complexities when it comes to how the funds are actually allocated on a community-by-community basis, it’s a system that works.
Municipalities knew a year in advance how much money they would receive, allowing them to budget accordingly. And they received considerably more money, allowing them to complete more projects.
The provincial government has decided to scale back the revenue sharing from one point of the PST to three-quarters of a point of the PST. Yet they maintain municipalities will receive more money than before.
After all, the provincial government has introduced the PST on all sorts of products and services in recent years, including restaurant meals, children’s clothing, construction materials and used car purchases.
(The government thankfully decided to back away from its decision to impose the PST on many insurance premiums).
So while municipalities will receive a smaller percentage from the revenue sharing pie, they will receive more money, because there are more revenue streams. We’re not sure if this will ultimately prove to be the case, but it sounds good on the surface.
Municipalities rely on revenue sharing. Property taxes are obviously the biggest share of revenues for a municipal government, and they also receive money through fees for services, but grants from the other levels of government are huge.
There has been a lot of speculation in recent years about how the provincial government would tinker with the revenue sharing grants now that the economy isn’t what it was five years ago, and the province finds itself in its new normal.
If we see that communities receive much less in revenue sharing than in the past, then the government will have to restore the municipal share to one point of the PST.
It’s also laughable to see the opposition New Democratic Party criticizing the provincial government over the changes to revenue sharing. This is one of those issues where the NDP should remain silent, because their record on revenue sharing is abysmal. Kind of like their record for surgical wait times and population growth.
When the NDP formed government in 1991, they took over a province that was in terrible shape financially, thanks to the mismanagement by the Grant Devine Progressive Conservatives. The NDP went to the municipalities and asked them to take a hit on revenue sharing; the municipalities obliged.
When the financial picture improved, though, the money for municipalities did not. And rather than come up with a system that worked, the NDP opted for the status quo, leaving municipalities in the dark until the provincial budget was handed down.
Then in 2007, when the economy was surging, the NDP did tinker with the system, it resulted in lower revenues for every municipality other than Regina and Saskatoon.
Granted, the faces of provincial NDP have changed a lot in the last 12 years, but this is still an issue where their criticism rings hollow.
We are wondering why the provincial government is making changes. This system should be a source of pride for them; an example where the Sask. Party needed less than two years to succeed where their predecessors failed.
If the NDP thinks one point of the PST is such a great idea, then why didn’t they do it when they were in power?
But last we checked, a full point of the PST is higher than three-quarters of a point of the PST, and we’d like to see municipalities get that full point, regardless of how many new PST revenue streams are available.
