SUMA found that mid-sized Sask. cities spent between 24 and 39 per cent of their municipal revenue sharing grant money on PST in 2021.

Prince Albert City Hall. Photo by Matt Smith /Saskatoon StarPhoenix

Spring is just around the corner in Saskatchewan, and with it comes the start of construction season.

As Saskatchewan’s urban municipalities finalize their 2023 budgets and prepare to pay for road repairs, bridge construction and new local infrastructure, they say the provincial government is making it harder to get the job done.

These construction projects used to be exempt from the provincial sales tax (PST), but that ended in 2017.

Six years later, the Saskatchewan Urban Municipalities Association (SUMA) says cities are paying the provincial government “millions of dollars in PST” when they build public infrastructure — often using grant money the provincial government awarded in the first place.

“Local governments are responsible for approximately 60 per cent of public infrastructure,” said Gerald Aalbers, chair of the SUMA city mayors’ caucus.

“Our hometowns largely build and maintain that infrastructure through government grants like the municipal revenue sharing program. But one quarter or more of our municipal revenue sharing dollars are being returned to the province in the form of PST on construction projects.”

Ashley Stradeski, director of finance for the City of Yorkton, said the city has paid millions of dollars in PST on construction projects since 2017.

“We have an endless supply of potential projects that we get to as soon as we have the money,” said Stradeski. “Having paid $4 million in PST — that would’ve paid for a project that didn’t get done.”

Many construction projects benefit more than the municipality where they take place. In Yorkton, Stradeski said the city soon plans to start work on repairs to York Road, which is a high-traffic highway connector.

He estimated 1,300 semi units go through Yorkton’s streets every day.”

“That’s a lot of 18-wheelers pounding the pavement, and they’re not all stopping here.”

In 2021, SUMA found that medium-sized Saskatchewan cities spent between 24 and 39 per cent of their total municipal revenue sharing grant money on PST.

Prince Albert, which received a $7.1 million grant, paid $2.8 million back to the province in PST.

This year, SUMA says mayors expect to pay even more — or cut back on infrastructure projects — as inflation has driven up the cost of materials, parts and tools.

“For those cities undertaking major infrastructure projects, like the City of Prince Albert, the percentage of funding returned to the province through PST on construction projects is anticipated to rise substantially,” SUMA said in a statement.

Aalbers said he and other mayors “truly appreciate” the money the province provides to small and mid-sized cities so they can build and maintain their infrastructure, but he would like to see a more efficient process, where money isn’t passed from the government to the city and back again with no benefit to citizens.

“We are returning a significant portion of this funding … that could instead be used to enhance municipal services and limit property tax increases,” Aalbers said.

— Local Journalism Initiative

Julia Peterson is a Local Journalism Initiative reporter who works out of the StarPhoenix. The Local Journalism Initiative is funded by the Government of Canada.

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