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The government’s decision to cut $33 million from municipalities is based on a “misguided” assumption that funds paid out by some Crown corporations are grants in lieu of local property taxes, according to the association representing cities and towns.

While the province says the decision corrects an “unfairness,” grants paid to cities by SaskPower, SaskEnergy and TransGas are based on decades-old distribution deals, said Saskatchewan Urban Municipalities Association (SUMA) CEO Laurent Mougeot.

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“These are legal, binding contracts,” Mougeot said of the agreements, which were made in the 1940s and 1950s when more than 100 communities agreed to be compensated for giving the newly-incorporated SaskPower exclusive electricity distribution rights.

“Those agreements were proper when SaskPower came along and they were proper for 60-some years. Now all of a sudden somebody looks at that, fails to understand what they really are, calls them by another name (and) looks at it as being unfair?”