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Saskatoon city council is asking their legal team to pursue an injunction against funding cuts from the province.
The decision was made during an emergency meeting Sunday to address the impact of the provincial budget, which calls for the cancellation of a grants-in-lieu program set to provide $11.4 million to the city.
“We don’t feel like we have the luxury of time,” Mayor Charlie Clark said while explaining the rationale behind pursuing an injunction.
“We need to take a fairly significant action to stand up for our residents.”
Clark and several councillors expressed hope they could convince provincial cabinet ministers the elimination of the grants-in-lieu program would have a devastating effect on municipal taxes and services.
The mayor said a meeting was scheduled with the province for Wednesday to discuss the issue.
Ward 5 Councillor Randy Donauer said he hopes the government will reconsider.
“I hope they give it a sober second thought,” he said. “I think this was a mistake.”
Donauer and several other councillors raised issue with the fact grants-in-lieu programs were only being eliminated in villages, towns and cities through ending SaskPower, SaskEnergy and TransGas payments.
SaskTel — which pays grants-in-lieu to many rural municipalities — will continue to pay grants.
Donauer said everyone in the province will “pay once” through changes to the PST, but urban residents are being asked to “pay twice.”
“This had almost zero impact on rural municipalities,” he said. “It was all targeted towards urbans and that’s regrettable.”
Hiring freeze
Council also decided to implement a temporary hiring freeze for the City of Saskatoon, and put a hold on discretionary spending.
But they held off on making any budget cuts or tax increases, saying they wished to pursue dialogue with the province first.
The shortfall from the loss of grants-in-lieu could result in a 3.93 per cent property tax increase for 2017 on top of the 3.89 per cent already approved by council in December.
To avoid tax increases, the city would need to find cost savings equal to the entire snow removal budget.
Reserve spending ‘not responsible’
Premier Brad Wall suggested another option for cities on Saturday, sending out a tweet saying they could use reserve funds to finance the budget shortfall.
We are asking municip to share in less than 3% of $1.2B resource rev drop in #skbudget. Can do so without raising taxes b/c of reserve funds https://t.co/Qp82aYPOii
— Brad Wall (@PremierBradWall) March 25, 2017
But City Manager Murray Totland told council using their reserves would be a bad idea.
“It’s like using our RRSP savings account to buy groceries,” he said.
“It’s simply not responsible.”
Totland said administration’s understanding was the grants-in-lieu program would be eliminated permanently, meaning reserves could only fund the lost revenue until they’re depleted.
Councillors also rejected the notion.
“The reserves are there to mitigate risk and fund operations for our municipality, not the province’s,” Ward 1 Councillor Darren Hill said.
While council made no decisions on how to make up for the sudden deficit, they don’t have long to decide.
Council is legislated to set the property taxation rate at their April 24 meeting, and tax notices begin going out at the end of May.
