Municipalities can raise taxes for additional revenue, says Sheridan
SUMMERSIDE – Talks are continuing on a new provincial/municipal funding formula but Treasurer Wes Sheridan said it will not go back to what it was.
Finance Minister Wes Sheridan.
Municipalities had a deal with the Liberal government of Catherine Callbeck in 1995, called the Comprehensive Urban Services Agreement (CUSA), which 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.
Under the grant system the city has received less provincial funding. Between 2008 and 2013, the city received $1.3 million less under the grant program than it would have received under the tax credit system.
“We’ve worked at this for almost three full years now and the tough part is that there are real fiscal realities that affect both of us,” the minister said. “That prevents an easy solution. When the rubber hits the road, we have to find a fair and equitable way to share that. That’s the point I’ve said from the very beginning. We have to ensure that for the services being provided by the municipal entity and by the provincial entity in each of these jurisdictions, are we sharing the property tax fairly?”
Sheridan said the province is providing services to municipalities that should be cost-shared.
“In every jurisdiction we provide all of the health care,” he said. “We provide all of the hospital care. We provide all of the education both the schools and teachers. How much of that is suppose to come from property tax? That’s what property tax was invented for.
Jurisdictionally, municipalities are not responsible for any of that.”
The minister said the province will not be going back to the old agreement.
“The CUSA agreement will never be resurfaced,” he said. “But there are ways to share the tax credit and that’s what we've been working at. We move away from the grant system and go into the tax credit system again and that’s been openly on the table for the last year and a half. We have to take that tax credit and share it equally, equitably for the services we provide. That’s where the tough part comes. How much of that should go to services they provide and how much should go to the services we provide?”
Sheridan he wants a new deal to be reached as quickly as possible.
“Great ideas have been bandied about and we’re going to review all of those on both sides,” he said. “We put some new ideas forward. They put some new idea forward and we’ll, hopefully, be able to find a mix and come up with a consensus. Some of these fixes - some of these alterations - don’t treat all municipalities fairly or equally. So, some will be winners, some will be losers, and we’re trying to avoid that.
He said there will be one overall blanket coverage but different municipalities under that blanket would be covered differently.
“Some municipalities provide all the work on their own roads, some don’t,” Sheridan said. “Some provide all the policing, some don’t. That’s the type of thing I talk about. If we’re going to share equitably some will be disadvantaged because of one or the other.
My role is I want to be fair and transparent to all, equitable to each and that’s what I try to do every time I go to that table.”
He said when the municipalities come to the table they are only looking after their own jurisdictions.
This year, municipalities have a one per cent increase which is half of the Consumer Price Index.
“This is just a small part or a piece of their revenue streams, Sheridan said. “They have their own side of the docket and that means that they can raise their own property taxes. They have revenues from both their commercial side and from the portion that they tax the people of their constituency directly.”
“Each municipality gets a different amount from us and they have over 50 per cent of their revenue that is completely and utterly under their own control,” he said. “If they feel they need more tax, they can always tax their constituents more. To this point, we’ve been the ones that are taxing. We have been the ones having tax increases and they haven’t had to. If they find themselves in a position where they need a little bit more they have the opportunity to do that.”