For anyone looking for the ultimate definition of nonsense, we humbly submit the following.
A dispute panel, created by the federal government, decided the federal government owes the City of Winnipeg more money in lieu of property taxes for a federally owned museum.
If you're confused, don't feel bad. This is not an easy story to understand, in large part because this tangle of intergovernmental relations defies logic and rational thought.
Specifically, this is yet another dispute involving federal funding of the soon-to-be-opened Canadian Museum for Human Rights. This time, the dispute centres on exactly how much money the federal government will contribute to Winnipeg to compensate the city for the provision of services.
Thanks to the Constitution Act, the federal government is not required to pay property taxes on any properties or assets it owns. Instead, it is supposed to "voluntarily" contribute a payment in lieu of taxes (PILT) to municipalities for services provided.
At face value, the issue of PILT seems rather innocuous. But this is no small matter for the federal treasury.
The federal government owns some 22,500 buildings and other physical assets worth more than $7 billion and located in approximately 1,250 municipal jurisdictions. In 2012, Ottawa paid PILT totalling $1.03 billion. Winnipeg received $12 million of that total.
The Dispute Advisory Panel, a body set up to determine just how much PILT Ottawa should pay municipalities for federal buildings, decided this week the federal government owes Winnipeg more money. Much more money.
The CMHR has already paid the city $1.5 million. However, the city says the museum owes another $4.4 million up to the current tax year. The final decision on exactly how much will be paid has been left to federal Public Works Minister Diane Finley.
CMHR communications director Angela Cassie said there will be a great deal more negotiation between the city and Public Works and Government Services Canada, which manages federal properties, before a final valuation of, and a tax bill for, the museum is set.
Until then, the museum is setting aside a portion of its $21-million annual operating budget for PILT. Cassie added she expects the CMHR will ask Ottawa for additional operating money to cover the cost of escalating PILT.
Unfortunately for the CMHR, Ottawa has shown little interest in helping federal museums cover PILT.
The Canadian Museum of History (formerly the Canadian Museum of Civilization) has suffered through several PILT disputes with the City of Gatineau (formerly Hull). Recently, its request for an increase in funding to cover PILT was turned down, and more than a dozen staff were laid off.
Ottawa and the City of Montreal have fought for years over PILT owing for parts of the Port of Montreal and assets of the CBC, with no resolution yet.
In 2012, the Supreme Court of Canada heard a dispute between Halifax and the federal government over PILT owing on Citadel Hill, a national park in that city's downtown. In that decision, the federal government was warned it cannot set PILT at "unreasonably low levels." It seems clear Ottawa hasn't heeded the court's advice.
In the current dispute, Ottawa initially claimed the CMHR was worth $1. Although the value of a yet-to-operate, mostly empty cultural facility is open for debate, surely it's higher than the cost of an hour of street parking in front of the museum.
The specific dispute involving the CMHR does have particular aspects that have complicated matters.
The CMHR was originally envisioned to be a private, not-for-profit entity supported by Ottawa but not owned and operated by government. As such, it would not have been required to pay a grant in lieu of property taxes.
When Ottawa agreed to a $21-million operating budget, it did not account for PILT because, frankly, nobody thought the CMHR would have to pay anything to the municipality. Now that PILT must be paid, Ottawa has responded with all the maturity of a cranky preschooler who has been told it's bedtime.
It seems rather childish to accept the responsibility of owning and operating national cultural assets and then balk at paying a fair grant to the municipalities in which they are located.
It is a further insult to freeze operating grants to these museums and demand increased PILT costs start coming out of operating budgets.
Is there any hope Ottawa will see the absurdity of the situation it has created? Unfortunately, it's very hard to preach sense to the nonsensical.