New municipal fiscal framework at least two years away, says minister
A new funding formula between the province and municipalities won’t materialize for at least another two years according to the finance minister.
Mayors and Municipalities Newfoundland and Labrador (MNL) have been clamouring for a new funding model for towns and cities for months.
But in Tuesday’s provincial budget, municipalities only rec-eived a commitment to discuss the issue.
“The province will continue to consult with municipalities on the development of a new formula that is equitable and sustainable,” states one budget document.
However, Finance Minister Tom Marshall told reporters a new formula would not be in the cards until 2014.
“We’re running a deficit. We expect to have (another deficit) next year,” he said. “When we get back to surplus, we’re prepared to sit down and look at the fiscal framework.”
Municipalities did get $130 million, over two years, for municipal infrastructure projects in the budget.
Communities will also see their municipal operating grants stay at the same level as last year — a total of $17.8 million.
Municipal leaders in the province didn’t get the provincial portion of the HST rebate they were asking for, nor did they get a share of the provincial gas tax. But most agreed they were happy overall with the budget.
Craig Pollett, executive director of MNL, said the province has committed to review municipal operating grants by November, and he’s confident that looking at the grants would be part of a larger review of the way towns and cities are financed.
Pollett wasn’t concerned about the timeline Marshall gave, saying it could take a couple of years to negotiate and implement a new financial framework.
“But to preface it by saying that nothing’s going to happen unless there’s surpluses, that’s a little disconcerting,” he said.
“Whether the provincial government has surpluses or not, there are serious needs at the municipal level that need to be met.”
Pollett said that includes drinking water issues, roadwork and other capital works that won’t go away, no matter if the province’s books are in the red or the black.
He also said many smaller municipalities have nowhere left to cut and aren’t legally allowed to run a deficit.
”There are no savings to be had,” Pollett said.
He was disappointed there was no mention of giving municipalities a share of the provincial portion of the HST.
That was also something St. John’s Coun. Danny Breen was hoping to see.
“We also would have liked some decisions on the HST and the grant the lieu of taxes (on provincial buildings in St. John’s) and some of the other issues we put forward. But we also know (the province) had some difficult decisions to make,” he said.
But Breen, the chairman of the capital’s finance committee, agreed it was a good budget overall.
He said the city wants to work with the province on a new fiscal arrangement, but a review has to go beyond operating grants.
“That’s disappointing that the government seems to be focusing in on the municipal operating grants when we are trying to get the focus on a new (fiscal) arrangement that’s needed for municipalities,” he said.
“This is a very serious issue,” added Mount Pearl Coun. Dave Aker.
But he suggested MNL has to take the approach that a long-term strategy may take time to develop.
Conception Bay South Mayor Woodrow French said MNL has to keep the issue in the forefront.
“The infrastructure deficit (across the country) is climbing rapidly and at this particular point in time, municipalities don’t have the wherewithal to generate the funds that are needed to be able to rectify the infrastructure problem,” he said.
Gander Mayor Claude Elliott was pleased discussions on funding changes will at least begin this year.
But he said the longer the province waits to come up with a new formula, the more expensive it will be to replace aging roads, water systems and other municipal needs.
“The cost of our infrastructure ... is rising each year. It’s not going to get any cheaper,” he said.