Winnipeg Free Press - PRINT EDITION

Big fuss or a big deal?

Municipalities must decide exactly what they want in war with NDP

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The Association of Manitoba Municipalities, the principal lobby for local government in this province, certainly has a lot to complain about right now.

The AMM is unhappy with the raising of the Provincial Sales Tax to fund infrastructure. The increase will provide an additional $30 million this year for municipal infrastructure, but Manitoba's reeves and mayors think they should get a bigger cut of the total revenue raised. As such, they've been put in the unusual position of not opposing the tax hike per se, but criticizing it because not enough money is flowing to the municipalities proper.

The AMM is also upset about Bill 33, which would force smaller municipalities to amalgamate. Although the potential benefits to taxpayers of amalgamation are fairly clear, and many municipalities have already voluntarily merged, the AMM is nonetheless bristling at the measure.

It would not be an exaggeration to say the AMM has declared all-out war on the NDP government. The real questions here are why, and what do they hope to accomplish?

In one scenario, the AMM is working to defeat the NDP government in the next election with the hope it will get a better deal from a Progressive Conservative government. The Tories are enjoying robust poll results which put them, were an election to be held today, in majority territory. Certainly, Tory Leader Brian Pallister and his caucus are working diligently to convince reeves and mayors they will benefit from a change in government.

However, can Pallister really deliver? Bill 33 mergers would be mostly completed by the next election. It is unlikely a Tory government could put that genie back in the bottle. And the Tories do not formally oppose amalgamation.

On the PST, the politics is even more complex. Pallister has promised to repeal the tax hike but that is not essentially what the AMM and its members want. They want more money, albeit with no provincial strings attached, to eat into the ever-growing infrastructure deficit. That is why you will not hear anyone from AMM or any other municipal leader call for a repeal of the PST hike.

It is possible the AMM strategy has nothing to do with picking the winner of the next provincial election, and everything to do with fear and frustration. Municipalities are overwhelmed, and justifiably so, with the growing inventory of infrastructure needing repair or replacement for which there is no money.

If that is the case, then they should take some time to devise a more logical position than the one being expressed right now by AMM president Doug Dobrowolski.

In a commentary published last week in the Free Press, Dobrowolski complained about a long list of provincial initiatives, including the PST hike. In his words, "municipalities will only see a fraction... of the additional $277 million raised annually" by the PST hike. "The rest... will now be spent on other provincial priorities."

This is an intellectually dishonest assertion. The gross majority of the $1.8-billion infrastructure budget the province will spend this year directly benefits municipalities, and there is good reason to suspect the AMM knows this. Whether it is provincial/regional roads that run through municipalities, grants for municipal roads and sewers, cost-sharing of recreational and cultural amenities, or reconstruction of bridges and highways linking communities, many hundreds of millions of dollars will be spent this year to the benefit of local government.

The argument the province is hurting municipalities by not giving them the money directly is either disingenuous or motivated by partisan political aspirations. Or a bit of both. Either way, this strategy is hurting the AMM on other, more practical ideas.

Deep within the mucky AMM rhetoric is a very smart idea to make municipalities exempt from paying PST on infrastructure.

A sales-tax increase is not a progressive way to raise revenue for a government program. At least, not without targeted tax credits to ensure the increase is not hurting as many people as it is helping. Perhaps because the decision to raise the PST was made at the last minute, the province introduced no new tax credits to soften the blow.

This tax hike was specifically designed to create more money for infrastructure. In that context, charging PST on municipal projects is unproductive. It makes sense to give municipalities full or partial sales tax exemption for all infrastructure projects, to maximize the impact of every dollar spent. Unfortunately, it seems unlikely the province will consider this one good idea while Dobrowolski is scolding them for a range of other decisions.

Municipal leaders represent a key strata of the province's political system. No one can afford to ignore their concerns, or doubt their commitment to building better communities.

However, the AMM cannot have it both ways. As such, municipal leaders need to make a decision: Do they want to make a fuss, or do they want a better deal?

Republished from the Winnipeg Free Press print edition July 2, 2013 A10

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