WEYBURN – As municipalities finalize their municipal budgets and prepare for the 2023 construction season, Saskatchewan’s hometowns are continuing to feel the pinch of PST on municipal construction projects. Cities are paying millions of dollars in PST on infrastructure projects designed to improve the quality of life for their residents and surrounding areas.
“Local governments are responsible for approximately 60 per cent of public infrastructure,” Mayor Gerald Aalbers, Chair of the SUMA City Mayors’ Caucus and Vice-President of Cities for SUMA, said.
“Our hometowns largely build and maintain that infrastructure through government grants like the Municipal Revenue Sharing program. But one-quarter or more of our Municipal Revenue Sharing dollars are being returned to the province in the form of PST on construction projects.”
The impact of PST on infrastructure projects in Saskatchewan’s cities was discussed during the virtual SUMA City Mayors’ Caucus meeting Feb. 9.
Weyburn Mayor Marcel Roy agreed with the concerns, saying, “It’s like taking money from one hand and giving it to the other. It becomes quite a thing.”
He added it makes no sense to provide money through grants for an infrastructure project, only to take a big chunk of it back through the PST.
The situation is exacerbated as the federal government also provides some grant money, and the province is also taking some of that through the sales tax.
Based on data gathered by SUMA, medium-sized cities in Saskatchewan returned 24-39 per cent of their total Municipal Revenue Sharing grant back to the province in the form of PST on construction projects in 2021.
When the exemption of PST on construction projects was removed in 2017, Saskatchewan’s hometowns raised concerns over the additional costs, requesting an exemption.
With inflation, costs have increased drastically, further impacting the already limited budgets of Saskatchewan’s municipalities.
For those cities undertaking major infrastructure projects, the percentage of funding returned to the province through PST on construction projects is anticipated to rise substantially.
“We truly appreciate the funding provided to our communities through programs like Municipal Revenue Sharing,” Mayor Aalbers said. “But we are returning a significant portion of this funding through PST on municipal construction, funding that could instead be used to enhance municipal services and limit property tax increases.”
SUMA’s City Mayors’ Caucus brings together representatives from Saskatchewan's 16 cities to discuss issues of common concern and project a strong, unified voice on the most pressing and important local and provincial issues facing Saskatchewan's cities.
Mayor Roy said other issues discussed by the mayors included the issue of changing municipal election dates, and assessments done by the Saskatchewan Assessment Management Agency (SAMA), which are the basis of property taxes in every municipality.
When the mayors asked about possible improvements to the cycle of timing of SAMA assessments, they were told the assessments are on a 10-year cycle and it would take that long, or longer, to make the kind of changes that municipalities were asking for.
“We were told, ‘you just don’t understand how government works’,” said Mayor Roy. “How is this effective governance when it takes that long to change things? They can change things quickly when they want to. I find it absolutely absurd.”
The mayor also noted the city mayors caucus also discussed the recent stand by Premier Scott Moe in telling the federal government there is no way he will support having digital IDs as a condition for health care funding, as proposed by the prime minister.
“I will stand behind the premier on digital IDs,” he said. “We have to stop these grants having so many strings attached to them. This is not right. How many grants are we getting where we have to sign off on the conditions?”
