Did you know cities do not exist in our Constitution? Regina exists because Provincial legislation called The Cities Act. It outlines what cities are supposed to do, and they pay for things. The problem is Regina has changed a lot since the province decided having cities was a good idea.
Regina is growing at a record pace. We need new tools to support our growth. We also need the revenue tools we used to have, taken by our friends at the province, returned. Good friends return tools when they borrow them!
In the next ten years Regina will require new housing stock equal entirety of housing units in Moose Jaw. We need to ensure our sidewalks, roads, water infrastructure, and public safety and amenities growth alongside our population. So, what can be done?
When we make an investment, we expect a return. Regina provides an exceptional return for the province. We have over $18b in annual economic output. When we invest in cities and infrastructure, we all win. For every $1 invested into urban infrastructure we realize $1.50 in after tax income. For every $100m invested we 1,000 jobs are created.
Over 80% of Saskatchewan’s population growth, and 60% of economic output occurs in our largest urban centers. These cities contribute over 60% of provincial income tax, and 50% of PST revenue. Those dollars are used to support the whole province, which is proper. Our economies and communities are integrated. We support each other, but Regina needs the right tools to do our part.
I drafted a motion with the mayor, unanimously approved by council that calls for a new partnership, including the return of those tools borrowed in 2017. We are asking for:
1. PST to be removed from construction, like it used to be. We should not tax capital. It is bad for business and home affordability. We will pay the province $9m in PST this year. That leaves less money to fix roads. Let’s free up capital to invest in infrastructure.
We are grateful that the province dedicates .75 of PST as a grant for municipalities, but cities are returning between 24-39% of this grant back to the province in the form of PST on construction projects, according to SUMA.
2. Return to 2017 levels for Grants in Lieu. These are payments from the Crown corporations to municipalities arising from the creation of provincial utilities and distribution systems. Basically, in the 1950’s we agreed to not have a power company in return for an annual grant. Until 2017 we received around $10m annually
3. Request that the province collect their own education tax or restore the grant that used to offset our costs, until 2017. Remember, 33% of your property tax is a provincial education tax. Since local school boards no longer can adjust their mill-rate, the province should either collect their own tax or compensate Regina for the costs we incur to collect and remit it.
We also asked to examine new revenue tools to address our needs as a city. Just because we are used to paying property taxes, does not make it good tool. Why would I use a screwdriver if a drill worked better? Property Tax is an old and broken tool. It is regressive not reflecting a homeowner’s ability to pay, and unpredictable which is bad for businesses and residents alike. In most American and European cities, tools exist beyond property tax to run a city. In many cases, property tax represents only a small portion of revenue. We will never address our infrastructure deficit or moral failures like houselessness with property tax as our primary tool.
The province does not change their income tax or PST rate every year. When the economy and consumption grows, provincial revenue increases. Most years provincial tax rates stay the same. Sometimes they are reduced. Not so with city government. Our rate stays the same, even if the economy grows. That means our expenses increase without corresponding revenue, meaning we must do a political dance each year to raise property taxes.
Done correctly, we can slowly move from the property tax system to alternative tools that provide more fairness, predictability, and affordability for residents. This won’t happen overnight. We need to be intentional, careful and strategic, but when the same old approach no longer works, we need to think differently.
The province is an important partner. We just want our tools returned so we can build more together.
Dave