Political experts doubt province would hand over portion of PST to cash-strapped City of Winnipeg
Plan pitched by mayoral candidate Glen Murray was rejected in his 1st stint as mayor
Mayoral candidate Glen Murray's plan to fix Winnipeg's finances hangs on the provincial government offering the city more money — an old idea that's failed locally and in much of the country.
If elected, Murray will face the reality that governments aren't usually keen to relinquish hundreds of millions of dollars to another level of government, said Jino Distasio, an urban geography professor at the University of Winnipeg.
"Giving up a piece of the tax base back to municipalities, whether it's Winnipeg or any other municipality, is just too hard to swallow for a lot of our provincial governments right now," Distasio said.
"And let's face it, they're not doing fiscally all that well either."
In Manitoba, the Progressive Conservatives were ushered into power in 2016, in part to rein in spending, and municipalities have first-hand experience with that.
Provincial grants to municipalities frozen
The province offered no-strings-attached funding, which municipalities appreciated, but that pool of money has remained stagnant ever since, even as the inflation rate soared. In the capital city, the annual operating grant from the province has remained at $121.2 million, although it's been supplemented with other funding for specific projects.
Rather than campaigning for a larger grant, Murray is asking for the Manitoba government to keep that money and instead carve out one percentage point of its seven per cent provincial sales tax, which amounted to $341 million in the last fiscal year, to fund Winnipeg's coffers. He made the announcement last week.
Murray — one of the leading candidates in the mayoral race, polls suggest — told the recent televised debate his plan would allow the city to freeze property taxes.
His idea is actually an old one. Past mayors, including Sam Katz and Murray himself during his 1998-2004 tenure, tried and failed to get a slice of the PST. Other Canadian mayors have also floated the idea to little success.
Paul Thomas, a professor emeritus of political studies at the University of Manitoba, isn't confident Murray will change minds on Broadway.
"He would have to be hugely successful in attracting financial support from other orders of government to get his wish," Thomas said, adding the city has a sizable infrastructure deficit that was worsened by 14 years of frozen property taxes.
Nearly 20 years ago, Murray, as Winnipeg's mayor, pushed for new revenue-sharing agreements between cities and provinces, which including a share of the PST.
The New Deal, as it was called, was spurned in his own backyard, Thomas said.
"When [former NDP premier] Gary Doer was faced with a detailed plan for diversifying the revenues of the City of Winnipeg, he said, 'Don't ask us for the money. If you need it, raise your own taxes. We have to pay for health care, education and social services, and the city has to compete against those provincial priorities.'"
"I'm not sure Murray's [new] plan will get off the ground very easily."
As for the current premier, Heather Stefanson deferred the issue of carving out provincial tax revenues for Winnipeg's benefit to her new working group on "tax competitiveness."
"I will say whoever wins the mayoral race, I'm confident that we will work together toward growing our economy here," she said.
Stefanson's comments came on Wednesday, the same day she announced a review of the tax system, guided by her working group, in a bid to lower the tax burden on Manitobans.
NDP Leader Wab Kinew, whose party is favoured in recent opinion polls to win the 2023 election, wouldn't weigh in on individual mayoral pledges but stressed the freeze on grants to municipalities needs to end.
Manitoba Liberal Leader Dougald Lamont described the PST as a regressive tax that takes a larger percentage of income from low-income earners than people who earn more.
He said he'd rather the city be funded through a mechanism that leaves low-income earners alone — such as a luxury tax or a surtax on people with multiple properties — or perhaps by shifting some federal transfer funding to the municipal level.
"The federal government has been shoveling money toward the provincial government and it's not ending up in the coffers of the city. Why is that?" Lamont asked.
While asking for a portion of PST revenues to help fund cities may be an old idea, Distasio said it's potentially a good one.
He said there's a need for new revenue sources as cities aren't pulling in enough money through property taxes and charging user fees.
"Unless we can change the model substantively, there's just no way for cities to generate the type of revenue needed to be much more innovative like what some of our candidates are proposing now," Distasio said.
"You can't do billion-dollar projects on ratcheting up property taxes a couple of percentage points. You need hundreds of millions of dollars in revenues per year."
He called the PST a consistent source of revenue that grows when the economy succeeds.
No matter what happens, he suggested the discussion of diversifying municipal revenue sources is worth having.
Decade of asking for municipalities
Manitoba municipalities have been beating the drum for a one percentage point share of the PST for more than a decade.
This new cash would be over and above the operating funding that municipalities already receive, Association of Manitoba Municipalities executive director Denys Volkov said.
"Among voters, there is trust in municipal governments on how they can spend the money," he said.
While AMM continues to ask for a slice of the PST, it has also requested the province take a "step in the right direction" by reimbursing the PST that municipalities are paying. Volkov argues a government shouldn't tax another government.
Winnipeggers will choose their next mayor on Oct. 26.
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With files from Bartley Kives