Kensington wants new provincial-municipal funding formula

Mike Carson
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KENSINGTON – The Town of Kensington is calling on the provincial government on to address its municipal funding formula and to replace the current grant system with a property tax credit plan.

Kensington Mayor Gordon Coffin


Kensington Mayor Gordon Coffin said municipalities across Prince Edward Island need a funding formula from the province that will allow them to be sustainable and provide services to their residents.

A deal with the Liberal government of Catherine Callbeck in 1995, called the Comprehensive Urban Services Agreement (CUSA), provided tax credits to municipalities based on development. Under the agreement, the arrangement could not be changed without being mutually agreed upon.

In 2008, the province opted to replace CUSA with a grant system to municipalities.

Although, at present, the Town of Kensington is unaffected, the potential for lost revenue is real.

“Between the two proposals, we’re pretty close to neutral,” Coffin said. “We’re one of the fortunate, or unfortunate ones, whichever way you want to wear that hat. There are other communities, Stratford is likely the most affected and are really pushing to have it changed. It does impact Summerside and Charlottetown to the tune of millions of dollars. We’re very close to whichever formula we go with.”

The issue facing town council is the prospect of future growth and what benefits Kensington can accrue from new development.

“The thing that Kensington has to be careful of is, as we grow, we’ll share those revenues,” Coffin said. “What Minister Wes Sheridan’s offer right now is one per cent across the board and that doesn’t allow Kensington to be successful.”

In 2010, the town initiated a tax incentive policy for people to make improvements to their properties or building within the town limits.

“We have a strategy in there now if you build or you make major renovations to a home or a family unit in Kensington, we’ll rebate a portion of your town property taxes to encourage people to build in the town,” the mayor said.

Council’s finance and administration committee has recommended to council to evaluate the tax incentive policy. Staff has been directed to evaluate its effectiveness and administrative cost, and how it's worked to meet the objective.

The committee said this is an expensive line item for the town and as such is worthy of evaluation. The evaluation will be brought to the finance and administration committee for review. Following the assessment the committee may wish to make recommendations to council for consideration.

“With the (provincial) funding program that is in place, if the town were to have a growth spurt, we don’t get to participate in that growth,” Coffin said. “That revenue from the increased growth is not coming back to the municipality. We’re going to the minister and saying that is our tax revenue we need it to go back to the municipalities to be sustainable and provide a level of service.”

He said the response from government is that municipalities will “have to bite the bullet” for a few more years until the province balances its budget.

“It’s the municipalities' tax revenue that’s going into the provincial coffers and not flowing back,” Coffin said. “We getting, ‘Here’s a grant and we will increase that by one per cent a year for the next couple of years’ and we’re saying we’ve grown more than one per cent. In the previous census, we were the second fastest growing community on P.E.I. and under that formula we don’t get that revenue back.”

Organizations: Comprehensive Urban Services

Geographic location: Kensington, Prince Edward Island, Summerside Charlottetown

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