Political experts doubt province would hand over portion of PST to cash-strapped City of Winnipeg

Mayoral candidate Glen Murray's plan to fix Winnipeg's finances hangs on theprovincial government offering the city more money an old idea that'sfailed locally and in muchof the country.

Ifelected, Murray will face the reality that governments aren't usually keen to relinquish hundreds of millions of dollars toanother level of government, said Jino Distasio, an urban geography professor at the University of Winnipeg.

"Giving up a piece of the tax baseback 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 doingfiscallyall that well either."

In Manitoba, the Progressive Conservatives were ushered into power in 2016, in partto 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 moneyhas remained stagnant ever since, even as the inflation ratesoared.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.

Plan pitched by Murray was rejected in his 1st stint as mayor

2 years ago

Duration 2:19

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.

Murray one of the leading candidates in the mayoral race, polls suggest told the recent televised debate his plan would allow the city tofreeze property taxes.

His idea is actually an old one.Past mayors, including Sam Katz and Murray himself during his 1998-2004tenure,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, addingthe city has a sizable infrastructure deficit that was worsened by 14 years of frozenproperty 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 fordiversifying 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 Stefansondeferred the issue of carving outprovincial tax revenues for Winnipeg's benefitto her new working group on "tax competitiveness."

"I will say whoever wins themayoral race, I'm confident that we will work together towardgrowing our economy here," she said.

Stefanson's comments came on Wednesday, the same day she announced a review of the tax system, guided by herworking 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 stressedthe freeze on grants to municipalities needs to end.

Manitoba Liberal Leader Dougald Lamont described the PSTas 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 mechanismthat leaves low-income earners alone such asa luxury tax or a surtax on people with multiple properties or perhaps byshifting some federal transfer fundingto the municipal level.

"The federal government has been shoveling money towardthe 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 ascities aren't pulling in enough money through property taxesand 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 diversifyingmunicipal revenue sources is worth having.

Decade of asking for municipalities

Manitoba municipalities have been beating the drum for a one percentagepoint share of the PST for more than a decade.

This new cash would be over and above the operating funding thatmunicipalities already receive, Association of Manitoba Municipalities executive director DenysVolkov 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 sliceof the PST, it has also requested the province take a "step in the right direction" by reimbursing the PST that municipalities are paying. Volkovargues a governmentshouldn't tax another government.

Winnipeggers will choose their next mayor on Oct. 26.