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Province announces a more stable funding agreement for P.E.I.’s municipalities

Communities Minister Robert Mitchell, right, said the new municipal funding formula announced on Wednesday will be reviewed after five years. Bruce MacDougall, centre, president of the Federation of P.E.I. Municipalities, said he’s been fighting to fix the formula since the year after it was changed back in 2007. Finance Minister Allen Roach said the new model features predictable funding and stronger growth potential.
Communities Minister Robert Mitchell, right, said the new municipal funding formula announced on Wednesday will be reviewed after five years. Bruce MacDougall, centre, president of the Federation of P.E.I. Municipalities, said he’s been fighting to fix the formula since the year after it was changed back in 2007. Finance Minister Allen Roach said the new model features predictable funding and stronger growth potential. - Dave Stewart

The provincial government is giving Island municipalities an additional $2 million in funding this year in a new municipal funding formula announced on Wednesday.

The news was greeted by widespread praise by mayors and chief administrative officers who gathered at a press conference in Charlottetown to hear the news.

Under the agreement, the old grant-based system brought in back in 2007, which saw funding fluctuate up and down in the past, converted to predictable tax credit system. The equalization program will be updated and the planning credit will also be extended to municipalities with an official plan.

Municipalities will also receive a grant of 10 per cent on all of their eligible capital expenditures and, under the top-up provision of the agreement, no municipality will receive less funding than it does now.

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Total funding to municipalities of $23.6 million has been increased by $2 million this year, retroactive to April, and will increase by $1 million in each of the next three years. By 2022-23, the funding will increase to $30 million, along with an increase of $100,000 in funding for equalization for small municipalities.

Charlottetown Mayor Clifford Lee said it means the city will get a cheque this year for $250,000, money it hadn’t budgeted for.

“And, when new development happens, the city will actually be able to collect property tax on it which, in the past, wasn’t happening,’’ Lee said. “We were getting no credit for it at all.’’

Lee said he also likes the 10 per cent grant.

“So, if the city spends $3 million on a new fire hall we’ll probably get $300,000 in additional revenue from the province, which is revenue that we’re not getting now. You can plan forward now. You can predict fairly reasonably what the revenue is going to be.’’

Bob Ashley, chief administrative officer in Summerside, said they’re very supportive of the new formula.

“We may be able to crawl a little bit out of the infrastructure debt maybe a little bit faster,’’ Ashley said. “So, it’s going to help along the ways with something like that and operational spending (and) consumer price index.’’

However, Ashley said the new formula isn’t quite perfect, yet.

“We would have liked to have seen some access to taxation vehicles. For example, liquor or event taxes or even the D transfer tax which is something we don’t have access to,’’ Ashley said. “It’s off the table now, but it’s something we want to talk about in the future.’’

Cornwall Mayor Minerva McCourt said the new formula has been a long time coming.

“I think one of the major components is the predictability with the monies going forward,’’ McCourt said. “As our (population) numbers grow, we will be less dependent on the money coming forward from the province.’’

Kensington Mayor Rowan Caseley calls it a big improvement over the old grant system.

“When we grow our own communities, we will benefit from that growth, whereas before, we were at the mercy of whatever equalization or grants that were given to us,’’ Caseley said. “This way, we have more control of our own destiny.’’

Souris Mayor Stephen O’Brien said it gives municipalities stability.

“We were looking at more long-term stable funding,’’ O’Brien said, adding that the town is both looking to boost its population numbers and improve its infrastructure.

FACTBOX

In summary

The new municipal funding formula features four components:
- Municipal real property tax credit, compensating municipalities for services that the province provides in other areas

- Equalization: Funds are based on the basis that municipalities should be able to provide similar services at a similar level of taxation

- Municipal capital expenditure grant, which effectively returns municipalities to the pre-HST status where they did not pay tax

- Top up: No municipality would receive less funding over the next five years of the agreement

Dave.stewart@theguardian.pe.ca

Twitter.com/DveStewart

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