Martensville City Council is expected to vote in favour of remaining in the SaskEnergy Municipal Surcharge program at its next meeting on Tuesday, August 15.
Opting out of the program could cost the City of Martensville an estimated $181,000 annually in general revenue. That shortfall would have to be made up by local ratepayers; which would translate into a 2.01 per cent increase in property tax revenue next year.
A report from the city administration to Martensville City Council’s committee of the whole meeting on Tuesday, August 8 provided some background on the program and the financial implications to municipal taxpayers if the city chose to opt out.
One advantage to opting out of the program, and eliminating the municipal surcharge, is the possibility of a reduction in the cost of natural gas to the individual SaskEnergy users.
However, any savings in energy bills could be lost to higher property taxes.
According to the report, the current SaskEnergy Municipal Surcharge program was reintroduced in 2018 by the provincial government after it was briefly eliminated. The City of Martensville was among the majority of larger urban centres that opted into the program at that time. The city now has the opportunity to opt out of the program if it chooses to do so.
The SaskEnergy Municipal Surcharge program sees the crown corporation collect 5 per cent of natural gas sales from customers in participating municipalities, and remits that to the municipality on a monthly basis. On average, SaskEnergy remits about $181,000 to the City of Martensville annually. Those funds are included in the city’s annual budget as unrestricted operating revenue.
“If the City chooses to opt out of the program, we will experience a shortfall in our operating revenue that we will need to consider,” stated Martensville Corporate Services Director Leah Bloomquist in her report to the August 8 council meeting. “One way the City can recover the operating revenue is by increasing property taxes – based on the average amount received, the City would need to increase property tax revenue 2.01% in 2024 to cover this revenue loss.”
Bloomquist stated in her report that if the city chose to raise property tax revenue to make up for the shortfall, the impact on an average residential property with a taxable assessment of $300,000 would be $48 per year if the increase is applied through the mill rate, or $50 per year if the increase is applied through the base tax.
Alternatively, the city could choose to cut expenses by $181,000 to compensate for the operating revenue shortfall, she added.
During discussion at the August 8 meeting, the majority of city councillors felt the best option is to remain in the SaskEnergy Municipal Surcharge program.
Councillor Debbie McGuire said she saw no advantage to either the city as a whole or to ratepayers to opt out.
“I’m definitely in favour of leaving things the way they are,” said McGuire.