REGINA – Saskatchewan municipalities have lost both a provincial tax and the revenue it raised.
Municipal government minister Carol Teichrob announced the two-mill health and social assistance levies will be removed from the property tax base as of Jan. 1.
The province will now provide the estimated $17.6 million the levies raised each year for hospitals, public health services and social assistance. Municipalities had been requesting this for some time.
But Teichrob said the province didn’t have the money, so the municipal revenue sharing pool will be reduced by that amount.
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“Yes the economy is doing very well, but at the same time we’ve got a huge hole to fill in the reduction of federal transfers,” Teichrob said. “Even though we’re doing better we’re still running on the spot.”
Funding cut by almost half
The reduction, coupled with the $20 million revenue sharing cut announced earlier this year, means municipalities face a 46 percent loss in funding for 1997, said the president of the Saskatchewan Association of Rural Municipalities.
Sinclair Harrison called the cuts intolerable and said local councils will have to make up the funds the only way they can – by hiking taxes.
Consultation wanted
“We were promised some months ago that (the levies) would be removed from the tax base and at that time there was no mention of it coming out of revenue sharing,” Harrison said. “We would have liked more consultation. We found out at dinner time today that the levy was coming off.”
But Teichrob said municipalities could raise their taxes by two mills next year and taxpayers would still be paying the same amount as they had when the health levy was in place.
“In a sense it’s revenue-neutral to municipalities because they do have that now unused capacity to recover the loss in revenue sharing without their ratepayers noticing,” she told reporters.
SARM and the Saskatchewan Urban Municipalities Association have asked for a meeting with finance minister Janice MacKinnon.
