City Responds to Provincial Budget
Mayor Dennis O’Keefe and Finance Chair Danny Breen are responding to cuts to Municipal Operating Grants announced in the Provincial Budget.
“The City’s $3.4 million annual Municipal Operating Grant (MOG) has been eliminated, effective immediately. In its place, the City will receive a one-time commitment of $8.5 million in additional infrastructure funding,” explained Councillor Breen. “So we lose $3.4 million per annum forever, in return for a one-time payment of $8.5 nillion, not exactly a fair trade.”
The City of St. John’s has been advocating for a new fiscal relationship with the Province for some time. The City advanced its position paper “Towards a Balanced Fiscal Relationship & Municipal Sustainability” to the Provincial Government in 2011. Among other things, it proposed a HST rebate for municipalities and payment-in-lieu-of-property tax on public buildings. To date there has been no substantive response or acknowledgement from the Province.
Mayor O’Keefe says, “We do not disagree in principle with giving up our Municipal Operating Grant in favor of rural communities who have a greater need for it but that is not the point. We have repeatedly emphasized that the MOG is just one variable in the fiscal equation and we did not see any movement in this budget on any of those other factors.”
The City tabled its own 3-Year Budget in November, 2012 and assumed at the time that it would continue to receive its $3.4 million Municipal Operating Grant.
“One of our biggest disappointments is the lack of consultation or advance notice that the MOG would be completely eliminated. Had we known this when we were preparing our budget a few months ago, we would have made provisions,” says Councillor Breen. “We are now forced to revisit our budget and make the necessary adjustments to ensure we do not run a deficit due to the unanticipated $3.4 million loss in revenue.”
Mayor O’Keefe concluded by saying, “We will adjust our budget accordingly, but that will not include changing tax rates for 2013.”