Grants-in-Lieu of Taxes

Res #: 15-11M
Number: 15
Year: 2011
Midterm: Yes
Expired: Yes
Responses Received: No
Departments: Crown Investments Corporation

WHEREAS not all crown corporations pay grants-in-lieu of taxes to rural municipalities; and

WHEREAS rural municipalities provide services to all facilities and properties in their jurisdiction;

BE IT RESOLVED that SARM lobby the Provincial Government to make the necessary changes for all crown corporations to pay grants-in-lieu of taxes.

Response from Honourable Tim McMillan, Minister Responsible for Crown Investments Corporation:

The Crown corporations pay grants-in-lieu of taxes based on property tax levies and the assessment values of their properties as if they were private property owners. The exceptions are SaskPower, SaskEnergy and TransGas. SaskPower, SaskEnergy and TransGas make payments based on historical agreements dating back to the 1930’s, which were designed to compensate specific communities for revenue lost as a result of transferring their electrical systems to the Saskatchewan Power Commission.

The municipal surcharge is a flow through payment that SaskPower collects on behalf of a village, town or city. Through legislation this surcharge provides a village, town or city the ability to levy a municipal surcharge on customers within their boundaries.

Under today’s system the Crowns make substantial payments. In 2010, SaskPower paid $19.1 million in grants-in-lieu and collected $47.4 million in municipal surcharges on behalf of municipalities. In the same year SaskEnergy paid $19.1 million and SaskTel paid $5.8 million in grants-in-lieu.

Currently, all Saskatchewan cities receive grants-in-lieu and municipal surcharges. Eighty percent of the towns and villages (416 communities) receive the municipal surcharge and 98 towns also receive grants-in-lieu.

The Government does not intend to change the current system. Increasing grants-in-lieu would result in increasing utility rates to your municipal residents. The Government significantly increased municipal funding when annual revenue sharing was increased to equal a full point of the provincial sales tax (PST). That increase resulted in municipalities receiving record revenue sharing of $216.8 million in 2011-12, an increase of nearly $90 million or 70 per cent since 2007-08.

I sincerely hope this helps to explain the Government’s position and responds to SARM’s resolution.