SASKATOON — Spring is just around the corner in Saskatchewan, and with it comes the start of construction season.
As Saskatchewan's urban municipalities finalize their 2023 budgets and prepare to pay for road repairs, bridge construction and new local infrastructure, they say the provincial government is making it harder to get the job done.
These construction projects used to be exempt from the provincial sales tax (PST), but that ended in 2017.
Six years later, the Saskatchewan Urban Municipalities Association (SUMA) says cities are paying the provincial government "millions of dollars in PST" when they build public infrastructure — often using grant money the provincial government awarded in the first place.
"Local governments are responsible for approximately 60 per cent of public infrastructure," said Gerald Aalbers, chair of the SUMA city mayors' caucus.
"Our hometowns largely build and maintain that infrastructure through government grants like the municipal revenue sharing program. But one quarter or more of our municipal revenue sharing dollars are being returned to the province in the form of PST on construction projects."
In 2021, SUMA found that medium-sized Saskatchewan cities had spent between 24 and 39 per cent of their total municipal revenue sharing grant money on PST.
Prince Albert, which received a $7.1 million grant, paid $2.8 million back in PST.
This year, SUMA says mayors expect to pay even more — or cut back on infrastructure projects — as inflation has driven up the cost of materials, parts and tools.
"For those cities undertaking major infrastructure projects, like the City of Prince Albert, the percentage of funding returned to the province through PST on construction projects is anticipated to rise substantially," SUMA said in a statement.
Aalbers said he and other mayors "truly appreciate" the money the province provides to small and mid-sized cities so they can build and maintain their infrastructure, but he would like to see a more efficient process, where money isn't passed from the government to the city and back again with no benefit to citizens.
"We are returning a significant portion of this funding ... that could instead be used to enhance municipal services and limit property tax increases," Aalbers said.
