During the recent provincial election campaign, Liberal candidate Danny Dumaresque made headlines when he stated that the provincial government had “a hell of a lot more priorities outside the overpass that need to be addressed before we start forking more money over to the City of St. John’s.” Dumaresque was referring to a call by the City of St. John’s for the province to change the funding structure for municipalities in the province. This suggestion was recently made formal through a position paper released by the city entitled Towards a Balanced Municipal-Provincial Fiscal Relationship and Municipal Sustainability. This document is a refreshingly readable 17-page document available on the city’s website
Part of the city’s problem is that around half of their revenue comes from property-based taxes. In their position paper, they state that “property tax is not necessarily an equitable, or reliable, foundation upon which to build a city.” Council was listening during the last round of property assessments in 2009, when people saw their property values skyrocket and went berserk, prompting the city to reduce the mill rate (how property taxes are calculated). They are also no doubt worried about the public outcry sure to accompany this coming year’s reassessments.
So what exactly does the city want? Their three demands are: 1) The city should not have to pay provincial taxes. 2) The provincial government should have to pay for municipal services they use and obey development regulations. 3) The province should rebate the city’s portion of the gas tax.
Are these realistic things to ask for? In the Yukon, municipalities can apply to the Territory for grants-in-lieu, which cover taxes the territorial government would normally incur for their buildings. For them that means $4.6 million per year for municipalities. The mess of construction going on at MUN and the Health Sciences Centre has set the city off about development regulations. Any other private developer, or even the federal government, who voluntarily adheres to development regulations, would have to pay to improve services, like roads, in the area of the construction, but the province hasn’t paid a cent. Finally, the gas tax rebate seems to make sense. It’s the same arrangement that the city has with the federal government.
Whether or not the provincial government will be willing to fork more of our money back to us remains to be seen. Don’t hold your breath though, we will have to wait until the new year to get our answer. This means no changes will be made in time for the 2012 budget… or in time for property assessments.