Michel Soucy is far removed from Saint John's budget crisis, but the mayor of Atholville has been paying attention to solutions being discussed for the city because one in particular could fix some of his own village's problems.

"I'm anxious to see what will be the outcome of this because, you know, we keep our eyes open, ears open," said Soucy.

"We hope that the minister will come up with something good."

Earlier this month, New Brunswick Local Government Minister Jeff Carr energized provincial mayors with an announcement the province is open to handing some of the considerable property tax space it occupies inside municipalities over to municipalities.

Specifics are vague so far, but no province takes more tax out of municipal business properties for itself than New Brunswick does. After years of dusty government reports and business and municipal organizations pleading for that to stop, Saint John's budget crisis appears to have given the idea new life.

"As part of the Sustaining Saint John three part plan, government has committed to comprehensive property tax reform," Carr said in a statement to CBC News

Environment and Local Government Minister Jeff Carr says his govenment 'committed to comprehensive property tax reform.' (Edwin Hunter/CBC)

What that reform will eventually look like or cost is unknown, but civic leaders say the problem to be fixed is well understood.

Many municipalities in New Brunswick struggle to pay their bills because too many local property tax dollars are taken by the province without sufficient grants coming the other way to make up the difference, according to Woodstock Mayor Arthur Slipp.

"There is a squeeze. There's no question about it," said Slipp.

"If Woodstock were able to keep all of the tax revenue raised by the province instead of receiving our equalization grant, the Town of Woodstock would be $1.3 million better off."

N.S., N.L. governments take far less

It's not unusual for provinces to levy some tax on property to fund specific items, like schools or transit, but the size of the tax being charged by New Brunswick is in a league of its own.

In Saint John this year, J.D. Irving Ltd.'s 12-storey head office building on Union Street paid a substantial property tax bill of $1.1 million, but that had to be split two ways.

J.D. Irving Ltd. paid $1.1 million in property tax on its Saint John headquarters this year, but the City of Saint John only got $600,000 of that, with $500,000 taken by the New Brunswick government. Critics blame Saint John's financial problems on the city having to share too much property tax revenue with the province. (Robert Jones/CBC)

Saint John got $600,000 to fund municipal services and the rest, $500,000, went to the province.

It's a division of revenue unique in Canada.

In Halifax this year, the 1801 Hollis Street office tower was also taxed $1.1 million, but it paid $1 million of that to the city. The rest, $100,000, went to the Nova Scotia government, 80 per cent less than New Brunswick takes.

Cabot Place in St. John's, N.L., and 1801 Hollis St. in Halifax both paid property tax bills of $1.1 million this year. The City of Halifax got 90 per cent of the revenue from its building and St. John's got 100 per cent. (Google Earth)

Even more dramatically in St. John's, N.L., the 12-storey Cabot Place building, which also faced a $1.1 million property tax bill, paid the entire amount to the municipality, with no split to the province.

JDI pushes for reform

This summer JDI vice-president Mark Mosher said the amount of tax the company pays on its properties in Saint John but is collected by the province for itself has a lot to do with the city's financial problems.

"The issue is really around the proper distribution of property tax revenues," Mosher wrote in an August opinion piece in the company-owned newspaper, the Telegraph-Journal.

"We believe the real question is "does the city of Saint John receive its fair share of property tax revenue from the province."

JDI pays $4.7 million in property tax on its four mills in Saint John, but $2 million of that is taken by the province.

New Brunswick also takes $2 million from the Irving Oil Ltd. refinery and $2 million from the city's seven main office buildings.

It collects $4 million from the malls and stores and restaurants of Saint John's east side shopping district, another $2 million from the city's two NB Power generating stations, and millions more from hundreds of other commercial, industrial and apartment complexes inside city limits.

New Brunswick returned $17.4 million in grants and equalization funding to Saint John last year, about half the taxes it collected in the city.

Ignored report

In 2008, a New Brunswick commission on local government estimated the province raised $268 million per year in property taxes from inside municipalities for itself, including $42.4 million from Saint John, $36.2 million from Moncton and $32.1 million from Fredericton.

Commissioner Jean-Guy Finn recommended just under 60 per cent of that "tax room" be vacated by the province and given over to municipalities.

"From our perspective, a tax room transfer improves general accountability for the taxes levied and the services provided at the local level," concluded the commission. "It enhances transparency, respects local autonomy and supports the concept of those who spend, tax."

That recommendation was never acted on, but there is hope with Saint John coping with an $11-million budget shortfall as early as next year the idea has new life.

Assessments, tax rates and property developments have changed since 2008, but Slipp, who is on the executive of the Union of the Municipalities of New Brunswick as its past president, said having the province step back from property taxes — even if it means cancelling municipal grants and downloading more services to local governments to pay for the change — is the fix preferred by local governments.

"This has been a constant discussion for years," said Slipp "We (have) wanted the complete transfer of property tax room to the local government sector."

In Atholville, where the village has had to raise tax rates five times in seven years to pay its bills, Michel Soucy said he would happily trade the annual $291,000 grant from the province for the $1 million per year the province taxes local business properties.

"It would be a lot easier to govern," said Soucy.