Last year the Provincial Government agreed to provide 0.9 % of the 5% PST to Saskatoon’s municipalities,  increasing to a full 1.0% in 2010. The agreement provided Saskatoon with approximately $29.2 million in funding last year and the expected increase this year would add an additional $9.2 million to City coffers.

However, with the Provincial Government now staring down a $1.5 billion dollar budgeting shortfall Premier Wall signaled last week that “everything” will be on the table as his Government attempts to get their fiscal house in order, including the previously agreed upon PST percentage increase to municipalities. A number of projects within Saskatoon have already felt the pinch of bad financial forecasting, with both the Children’s Hospital and the new St. Mary’s School being put on hold for at least the next year.

The reactions to this funding freeze signal from the Provincial Government from Saskatoon and Regina appear to be polar opposites, with Regina talking a hard line and Saskatoon taking a more conciliatory/wait-and-see approach.

Yesterday, Regina Mayor Fiacco came out swinging against the proposed freeze with some heavy words (story here):

“We all know that the reason for that is the fact that the (provincial) government’s financial position has been compromised as a result of the poor potash performance,”  [...]

“When you spend as much time as we did building trust and a partnership — and you just take it away just like that — we’ve got a problem,”

Meanwhile Atchison had more measured words (story here) :

“We do know one thing. The amount of funding is now going down,”

“It’s at $167 million dollars and we’re certainly hoping we can get to the next level of $194 million. I think there are ways of talking about it, discussing it, and seeing what we can do together.”

Despite this approach, there doesn’t seem to be an appetite from Saskatoon City Council to (publicly) acknowledge that their Provincial funding levels will not increase as promised in 2010, as evident by the stance from Council during Capital Budget deliberations on Tuesday night. A proposal by Councillors Heidt and Neault to defer approximately $7 to 8 million dollars in projects until the Operational budget (early Spring 2010) to act as a safety net against a mill rate increase was voted down by the majority of Council. Instead the full $326 million dollar Capital Budget was passed without any major project cuts or scale backs.

Should the Province follow through and not transfer a full 1 percent of the PST to the municipalities, on which Saskatoon has based it’s budgeting on for 2010, the residents of Saskatoon could be on the hook for the $9.2 million shortfall. Translated into a mill rate increase, this would represent a 8 to 9% increase in 2010. However, should this come to pass, there is no doubt that Council would have to start wielding it’s budget knife to scale back approved projects and program funding.

(EDIT: fixed wording)