City Still Pushing for New Municipal-Provincial Fiscal Relationship

Monday, December 10, 2012 - 12:45 AM
Budget 2013: Progressive City, Prudent Choices document cover

The City of St. John’s will continue to promote a new fiscal relationship with the provincial government as outlined in its 2011 position paper: Towards a Balanced Provincial-Municipal Fiscal Relationship and Municipal Sustainability.

The position paper focused on three key areas.

  • Intergovernmental Relations
  • Provincial Government as a User of Municipal Services
  • Long-term Sustainable Support to Municipalities
Intergovernmental Relations
The provincial government provides the City of St. John’s with a somewhat arbitrary municipal operating grant of just over $3 million per year and also cost-shares some infrastructure projects. However, the province also charges the City over $11.5 million per year in provincial HST, payroll tax and road tax on our public transit service, which in effect reclaims much of the financial support the City receives. The City also pays HST on low income housing projects, such as the new development in the Pleasantville area.

One of the key issues for the City is the province’s reluctance to obtain building permits and respect the City’s development regulations, which all other developers must comply with. The federal government on the other hand does obtain building permits and follows the City’s development regulations.

Provincial Government as a User of Municipal Services
The presence of the provincial government in our City, with its agencies and institutions, has significant impact on our City. The federal government provides the City with a payment-in-lieu-of-tax because it does use City services and infrastructure. The City of St. John’s believes the province should do the same. Currently the province does not pay any property tax to the City, which requires St. John’s residents to subsidize the provision of services to provincial buildings.

Long-term Sustainable Support to Municipalities
The economic growth taking place in the City of St. John’s is very positive, however it has placed additional strains on municipal government infrastructure and the majority of the tax benefits from this economic growth are enjoyed by the province and not the City. Approximately 85 per cent of the City’s revenue base comes from property and water tax, which places an inequitable tax burden on our residents and businesses.

To ensure long-term municipal financial stability, the City is advocating that the province, like its federal counterpart, allocate part of the Provincial Gas Tax to municipalities and also consider broadening the taxation authority of municipalities.

The City’s greatest challenge is infrastructure development, which is very expensive. The infrastructure deficit in the City’s Department of Engineering alone currently stands at over $400 million. The City is also under increased infrastructure pressure because of its position as the Capital City. The City is honoured to be the Capital of the province, but this has come with a substantial cost to our taxpayers who are forced to shoulder a disproportionate share of the cost to service non-residents and public institutions. The City is asking both the federal and provincial governments to commit to long-term infrastructure programs for municipalities that will allow for strategic infrastructure planning.

For further information:
Jennifer Mills
Communications Officer
City of St. John’s
Phone: 709-570-2037
Cell: 709-690-7586
E-mail: jmills@stjohns.ca