2000-2001 Budget / Budget Speech |
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VIII. $430 million for the municipalities
Our government's sound economic and financial management has generated other dividends today that will compensate for much of the sacrifice of the past. It will enable us to return $430 million net to our municipal partners over the next three fiscal years.
Problems to be solved
In 1997, we asked the municipalities to help us balance our budget. They agreed to contribute and we signed a fiscal pact with them that was renewable in the year 2000. When the time came to renew the agreement, we had to explain that, if we wanted to keep our books balanced, we would continue to need their $356 million contribution, cutely christened "the bill". They pointed out that this might force them to increase property taxes, particularly since they had had to postpone many infrastructure projects.
At the same time, major obstacles loomed on the horizon for the tax on telecommunications, natural gas and electricity (TGE) businesses which the government collects and remits to the municipalities. The tax has failed to keep up with developments in telecommunications. As a result, we were obliged, in 1997, to exclude cell phone activity from the tax field. Though justified, the adaptations to be made to the tax may well cut into municipal revenue and so become an additional irritant.
A solution
Together with our municipal partners, we will encounter major challenges over the coming years. Consequently, it is important to smooth away any rough edges hampering our relations.
First of all, as I announced earlier, we have earmarked $175 million for the municipalities, to be used for their infrastructures.
Second, the government will keep the proceeds of the TGE tax. In return, we will abolish the famous bill, since the two amounts practically cancel each other out. The municipalities will come out ahead, however, since we will be taking over the programs to support municipalities, which had been funded by the TGE tax, that is, equalization, assistance to RCMs and assistance to central cities, for a total of $50 million a year. In addition, we will make $155 million available to ease the transition to the new system and to implement the action plan to strengthen urban areas and RCMs announced by the Minister of State for Municipal Affairs and Greater Montréal on March 3. The bill will become nothing more than an unpleasant memory of a necessary sacrifice.
The municipalities have been asking for new sources of income for a few years now, to better reflect their contribution to economic development. We are ready to begin discussions on this point, keeping in mind, of course, that we too have financing requirements.
If we add together the $175 million provided for infrastructures, the $155 million in general assistance and, two times, the $50 million for programs taken over by the government, this Budget gives the municipalities $430 million in 2000, 2001 and 2002. With these additional funds, our municipalities will be in a better position to continue offering high-quality services to their residents.