News Release
HRM Wants Better Funding Formula
(Tuesday, February 27/2001)-- Mayor Peter Kelly said today that it is fundamentally wrong for the provincial government to utilize property taxes to create an equalization fund for distribution to municipalities.
Mayor Kelly was commenting on a decision by the Province to establish an Equalization Fund next year that will result in the more resourceful municipalities paying into the fund annually, and the rest of the municipalities taking out of it.
Provincial officials outlined the proposal this morning at a meeting of the table officers of the Union of Nova Scotia Municipalities in Halifax. It was contained in the steering committee Report of the Municipal-Provincial Role and Responsibilities Review Committee.
The Mayor said HRM recognizes the need to address the problem of provincial finance, and its impact on municipalities in general, to find an acceptable way to meet provincial expectations-but to take the property tax into the equation is quite out of character for these types of processes.
"We know that the Province has a major challenge in dealing with Cape Breton's unique economic situation, and its impact on the Cape Breton Regional Municipality. We are prepared to discuss options and opportunities to help resolve these difficulties there, and in other areas of the province, " he said.
Mayor Kelly, Chief Administrative Officer Ken Meech and Deputy CAO George McLellan will meet with Service Nova Scotia and Municipal Relations Minister Angus MacIsaac and his Deputy Minister tomorrow.
Under the plan , to become effective April 1, 2002, the province assumes the municipal contributions to public housing and correctional services and fund the Grant-in-Lieu payments to municipalities for university residences. In return, municipalities will pay the cost of assessment services. In addition, the Province is considering a previous commitment to assume the full cost of social services as part of its share of the equation.
Mayor Kelly said " The Hamm government is attempting to selectively choose past and sometimes unrelated issues to rationalize the establishment of the Equalization Fund, so they can get themselves out of financially contributing to less resourceful municipalities."
"They are trying to inflate the impact of their contributions to municipalities by drawing on things that were agreed to in the past, such as the cost of social services, " he said.
Mayor Kelly said it was ironic that the Province constantly complains about the need for fairness in its dealings with the federal government, yet it takes a different approach in its dealings with its municipalities.
Mayor Kelly said the Province is imposing the Equalization Fund without prior consultation with HRM-- however, provincial officials are insisting that the Fund was discussed at meetings of the joint Municipal-Provincial Roles and Responsibilities Review Committee.
"That committee hasn't met for a year and in its report issued last March, it stated that it should be the Province who should be funding any municipal equalization fund, " he said.
The Equalization Fund plan also proposes elimination of the municipal Business Occupancy Tax, claiming the resultant increase in the Commercial Property Rate would provide municipalities with more revenue.
Mayor Kelly said "Part of the perceived benefit is theoretical at best."
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Mayor Peter Kelly
(902) 490-4010
