Provincial Financial Support Declining

Monday, December 09, 2013 - 5:30 PM
Cover of Budget 2014: Steady the Course

One of the significant factors influencing future property and water taxes levels will be whether a new fiscal arrangement with the province can be reached.
“We have spent the past three years trying to build a new equitable fiscal relationship with the province and what we have seen over the past year is an actual decline in provincial support,” says Councillor Danny Breen, Chair of the Finance and Administration Standing Committee. “We are very concerned about the major imbalance that currently exists in our fiscal relationship.”
In 2013, the province eliminated the $3.4 million municipal operating grant to the City. The Newfoundland and Labrador Liquor Corporation also cancelled the $100,000 grant-in-lieu of tax it previously paid. The province has also purchased a number of commercial properties in the City and the loss of tax revenue is estimated at $300,000.
At the same time, the City estimates that over the next two years it will pay over $24 million in payroll and sales taxes to the province.
Discussions on a new municipal-provincial fiscal relationship recently got underway led by Municipalities Newfoundland and Labrador looking at such issues as:

  • Payment of property tax on government-owned buildings;
  • Municipal share of HST and payroll tax;
  • Municipal share of the gas tax.

“I am extremely proud of the fact that we are the capital city of our province, however, for our residents and businesses this comes at a high cost as they must offset the loss of revenue from government-owned buildings,” says Mayor Dennis O’Keefe. “In 2011, the City of St. John’s began the process of advocating for a new fiscal arrangement. We are very hopeful that by the time we begin preparations for Budget 2015 we will have a new relationship in place and this will offset the need for any potential tax increases.”

For further information:
Jennifer Mills
Communications Officer
City of St. John's
Phone: (709) 570-2037
Cell: (709) 690-7586
Dennis O’Keefe
City of St. John’s
Phone: (709) 576-8477
Danny Breen
Ward 1 Councillor
Chair, Finance and Administration Standing Committee
City of St. John’s
Phone: (709) 576-2332