PC Leader Ches Crosbie and Liberal Leader Dwight Ball found common ground Thursday night, both offering a chilly response to a proposal to revolutionize the relationship between town councils and the provincial government.

Representatives at the Municipalities Newfoundland and Labrador leaders forum pressed the politicians for their thoughts on a proposed major cash transfer from the provincial government to municipal levels.

Leaders of both those parties gave it a thumbs down — for now. But NDP Leader Alison Coffin said yes, and NL Alliance Leader Graydon Pelley suggested he could be open to the idea.

The pitch, made by Torbay Mayor Craig Scott, is for the provincial government to set aside one percentage point from the HST and one percentage point from the income tax, and hand it over to municipalities. According to a 2014 position paper by Municipalities Newfoundland and Labrador, that could amount to more than $200 million each year.

Torbay Mayor Craig Scott asks a question to party leaders at the question-and-answer session in Gander on Thursday. (Garrett Barry/CBC)

"Until we can get into a surplus position, that is very difficult to be able to do this at this particular point in time," said Ball, who said it was apparent to everyone in the room that the provincial government is in a big fiscal hole.

"As much as that is a goal that we'd love to be able to get at, it's a very difficult question to be able to say yes to."

Ball described the plan as a "shell game," with public money simply moving from one level of government to another.

A friendlier atmosphere

Unlike Wednesday night, when Ball and Crosbie clashed on Muskrat Falls and health care, Thursday's event was not set up for a combative back-and-forth.

"I was relieved to see the rules of this conversation forbid personal attacks but they don't forbid paying a compliment," Crosbie said. "I heard Mr. Ball … and I agree with him."

The line drew some applause from the mayors and councillors in the room.

Graydon Pelley says it would have been easy for him to promise everything to everybody as leader of the newly minted N.L. Alliance. Instead, he says, he wants to be realistic. He called a cash transfer an 'awesome, awesome gesture' that needs to be investigated further. (Garrett Barry/CBC)

The PC leader said in an earlier answer that he understood the request from town councils for new revenue streams.

"The reality, though, is that the province is in a very difficult financial situation. And I have to say that I can't see accommodating the legitimate needs and requests of the municipal sector with the allocation of tax revenue of the sort that you have very reasonably have asked for in the foreseeable future."

On the other hand

In Coffin's answer — unlike Ball's — the question was not so difficult.

"The simple answer is yes. I support that. We support that as New Democrats," she said.

She said after the debate that while the move would take money away from the provincial government, there were places in the provincial budget to find savings.

"Perhaps we could use a little of that and put that directly into the hands of municipalities," she said.

PC Leader Ches Crosbie and Pelley share a laugh after Pelley said his new NL Alliance party is rubbing off on the other candidates, and was responsible for their more agreeable tone on Thursday night. (Garrett Barry/CBC)

Coffin said town councils are closest to the residents, so it makes sense to give them more money — and, accordingly, more decision-making power.

"Municipalities are in tune with their residents. They know the services that are needed, and they know what needs to be done in order to make those services best available," she said.

Scott said the role of municipal governments seems to be growing every year. And while he admitted the transfer would be big, he implied the provincial level of government would miss it less.

"That's spread out over 500,000 people," he said. "In order to be able to raise that $3.7 million for my town that would come from that, I'd need to increase my mill rate by 56 per cent."

Scott said he acknowledges the province's financial situation, so he's not demanding the change happen this year.

"What we want to do is start the conversation that this potential revenue source is there," he said.

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