City of St. John's Mayor Dennis O’Keefe speaks on the capital city’s release of its position paper, entitled, “Towards a Balanced Provincial-Municipal Fiscal Relationship and Municipal Sustainability,” at St. John’s City Hall Friday morning. — Photo by Joe Gibbons/The Telegram
The City of St. John’s has been growing. It is a gift of the province’s economic prosperity in recent years, but also a curse when it comes to long-term infrastructure management.
According to a fiscal policy document released Friday morning at city hall — part of a larger presentation on the municipal-provincial financial relationship — St. John’s has been racking up debt in recent years.
“Infrastructure development is expensive and over the past five years, the city’s debtload has increased by 57 per cent in order to fund the infrastructure required to sustain continuing growth,” the document states.
Revenue from property taxes and business taxes just won’t pay the bills, according to council. For this reason, the city is calling for the province to negotiate new revenue streams.
“We have a very good relationship with the provincial government, but we feel quite strongly that it is time for the province to fully review our fiscal relationship, and not just review the municipal operating grant formula as was promised in the 2011 budget speech,” Mayor Dennis O’Keefe said,
Council has suggested a new relationship in which the province covers what the city considers an “equitable share” of the expenses associated with having large amounts of provincial and regional infrastructure, such as the Health Sciences Centre, Memorial University of Newfoundland or government offices within city limits.
It wants the province to pay a gas tax rebate — two cents per dollar — and start following city development regulations and paying for city permits.
“The federal government is not required to do so, but they do. They do out of respect to the municipality,” O’Keefe said. “The province does not.”
Council also wants an assessment of options for broadening its taxation authority.
Chairman of the city’s planning committee, Coun. Frank Galgay said the city is receiving “significant revenue” from private developments in recent years, yet expansion has also been increasing the demand on infrastructure and operational budgets.
“There is not enough money to solely rely on the property tax,” Galgay said.
The city currently benefits from cost-sharing on capital works and an annual municipal operating grant of $3.4 million, but council says much of those benefits are clawed back in taxes, with St. John’s paying $11.5 million annually to the province.
St. John’s Board of Trade chairman Jo Mark Zurel, who was at the presentation, said while details have to be sorted, he agrees with the city trying to negotiate a unique fiscal arrangement, considering the unique pressures that come with being the provincial capital.
The policy document containing all of the city’s proposed changes was only a first step in what should be extensive negotiations, according to council.