Stratford probably most negatively impacted by municipal grant system, says Kensington mayor
© file photo
Kensington Mayor Gordon Coffin
KENSINGTON — The provincial government is being called on to address its municipal funding formula and to replace the current grant system with a tax property tax credit plan.
Kensington Mayor Gordon Coffin said municipalities across Prince Edward Island need a funding formula from the province that will allow them to be sustainable and provide services to their residents.
A 1995 deal with the provincial government, called the Comprehensive Urban Services Agreement (CUSA), provided tax credits to municipalities based on development. Under the agreement, the arrangement could not be changed without being mutually agreed upon.
In 2008, the province opted to replace CUSA with a grant system to municipalities.
Although, at present, the Town of Kensington is unaffected, the potential for lost revenue is real.
“Between the two proposals, we’re pretty close to neutral,” Coffin said. “We’re one of the fortunate, or unfortunate ones, whichever way you want to wear that hat. There are other communities, Stratford is likely the most affected and are really pushing to have it changed. It does impact Summerside and Charlottetown to the tune of millions of dollars. We’re very close to whichever formula we go with.”
The issue facing town council is the prospect of future growth and what benefits Kensington can accrue from new development
In 2010, the town initiated a tax incentive policy in place for people make improvements to their properties or building within the town limits.
“We have a strategy in there now if you build or you make major renovations to a home or a family unit in Kensington, we’ll rebate a portion of your town property taxes to encourage people to build in the town,” the mayor said.
“With the (provincial) funding program that is in place, if the town were to have the growth spurt we don’t get to participate in that growth,” Coffin said. “That revenue from the increased growth is not coming back to the municipality. We’re going to the minister and saying that is our tax revenue we need it to go back to the municipalities to be sustainable and provide a level of service.”
He said the response from government is that municipalities will “have to bite the bullet” for a few more years until the province balances its budget.
“It’s the municipalities' tax revenue that’s going into the provincial coffers and not flowing back,” Coffin said.