Municipal Revenue Sharing Changes

This arrived in my inbox yesterday. I wish it was good news but at the end of the day the province will be sending less money to municipalities. In brief: less PST was collected and because of a change to accounting rules regarding the Saskatchewan Low Income Tax Credit. The net loss is $7 million for municipalities.

 

SUMA recently learned of new accounting standards in the reporting of the Provincial Sales Tax (PST). This change will result in a reduction in Municipal Revenue Sharing for 2014-2015. The revenue sharing allocation for local governments is based on one point of the PST as reported by Public Accounts. In 2012-2013 the total amount collected in PST was $1,284,893,000 - a decrease of $37 million from 2011-2012.

 

The drop in revenue is mainly due to a requirement from the Public Sector Accounting Board on how the government must report the Saskatchewan Low Income Tax Credit. (This credit must be applied to PST revenue as it provides relief for that type of tax revenue.) Because of this change the revenue sharing allocation will decrease by $7.453 million from the 2013-14 level of $264, 432,200 to $256,978,600 in 2014-15. The government estimates that without this change, the revenue sharing allocation to local governments would have increased by $17 million.

 

Though the amount distributed has changed, the percentage distribution remains the same:

• Cities - $123.0 million (estimated) or 47.945 per cent of total pool
• Towns and villages - $42.0 million (estimated) or 16.345 per cent of total pool
• North - $19.2 million (estimated) or 7.456 per cent of total pool
• Rural Municipalities - $72.6 million (estimated) or 28.254 per cent of total pool

SUMA's Executive Committee met with the Minister of Government Relations to discuss this change in reporting. Unfortunately, this is not great news for local governments and the executive expressed their concern with the reduction and the impact it will have on local governments. When the program was launched as being tied to the PST, SUMA accepted that the funding stream would fluctuate with the economy - sometimes up and sometimes down. Urban municipalities have been fortunate to realize significant increases over the past four years, at times in excess of 10 per cent annual increases. This change is not implemented by government, and therefore nothing can be done to reverse this outcome. Going forward, SUMA will continue to work with government to ensure the vitality of the municipal revenue sharing program.