The Saskatchewan Urban Municipalities Association is not backing down when it comes to its objection to the province's changes to Bill 64, which will get rid of grants-in-lieu for 109 Saskatchewan communities.

In its latest budget, the provincial government announced it would put an end to grants-in-lieu of property taxes normally paid to municipalities by SaskPower and SaskEnergy.

The budget means a loss of $33 million in funding to towns this year alone.

Saskatchewan towns dreading the cuts

The towns of Gravelbourg and Gull Lake have had to work through significant funding shortfalls, caused by cuts to grants-in-lieu.

"In Gravelbourg, we're paying for all kinds of infrastructure from sewer systems to sidewalks," Gravelbourg Mayor Dan Lamarre said.

"Losing nearly $33,000 each and every year is a significant hit to our community and it means delaying projects, hiking taxes or eliminating services."

Gull Lake Mayor Blake Campbell said his town has already spent $107,000 this year on clean-up after a local hotel burned down.

Cambell said the municipality will to have to pay an estimated $130,000 by the end of the year to convert the town landfill to a transfer station on top of the initial costs.

"Those costs alone could eat up all of our unallocated reserves. When the provincial government destroys our contract with SaskEnergy for payments-in-lieu, we'll be losing $26,000 every year," Campbell said.

"That loss is big, especially when you consider that we have to spread it across just 1,000 people."

Hayward said the cut points to a bleak future of government slashing.

"Instead of taking the time to do meaningful consultation with hometowns before they drafted a budget, they are trying to revise history and change the rules with Bill 64," he said.

A long history

Dating back to SaskPower's inception in the 1940s, an agreement had been in place for the Crown corporation to pay communities grants-in-lieu of taxes after it bought out municipal utilities.

SUMA vice-president of villages, resort villages and northern municipalities, Mike Strachan, criticized the cuts as unfair in a press release, accusing the province of taking municipal revenue to cover its deficit.

The province has suggested communities dip into their reserve funding to alleviate some of the funding burdens, which Strachan calls a temporary solution to a permanent hole in municipal budgets.

That hole will be as much as $400 million over the next decade, according to SUMA CEO Laurent Mougeot.

"Bill 64 strips the legal right to defend those agreements before the courts or to be compensated for the loss of revenues," Mougeot said.

Government Relations Minister Donna Harpauer says she is now working with Saskatchewan mayors through their concerns regarding grants-in-lieu. (Trent Peppler/CBC)

"[Minister of Government Relations Donna Harpauer] asks if it's reasonable for two orders of government to spend money to fight it out in court," SUMA vice-presidents of towns, Rodger Hayward, said in the same release.

"We ask if it's reasonable to pass legislation that denies local governments the ability to defend legal agreements — or be compensated for this loss of revenue."

The past agreements included a guarantee that the municipality would forever get royalties on future sales of power, SUMA claims.

"That clears the path for the province to take these royalties without any plan to replace them," Hayward continued.

SUMA says residents and businesses will continue to pay for the sequestered royalties and many will be asked to pay a second time through property tax and fee increases.

On Monday, Harpauer said she is working with a number of mayors, including those in Regina and Saskatoon, to discuss possible grants-in-lieu of property taxes for cities with SaskPower and SaskEnergy buildings.

"A number of mayors have contacted me directly and we're working with them on just that: on there being grants-in-lieu, as there is in executive government and all other Crown corporations, where there is a payment that is reflective of the taxes that they have foregone."