Changes to a provincial grant are causing the District of Houston some extra budget headaches.
At issue is the Small Communities Grant—an annual grant that Victoria transfers to B.C. municipalities with fewer than 19,000 people to help them pay for basic services such as parks and street lighting.
How much money each municipality gets depends on its population and the strength of its tax base compared to other parts of B.C.
That formula hasn’t changed, said a spokesperson for the Ministry of Sport, Culture, and Community Development.
What has changed is the timing of those grants. As the global economy slipped into recession in 2009, the province decided to “pay forward” some of the grant money so that small municipalities had the means to stimulate their economies.
In the fiscal year of 2009, for example, the District received $845,489 under the program. In 2010, that dropped to $134,247.
Speaking in the B.C. legislature last week, Hon. Minister Ida Chong said paying the grants forward is intended to give local governments more financial certainty.
But in a municipality the size of Houston, Director of Finance Tandra Bamsey said that such funding swings are big enough that the District would have to significantly raise and lower taxes each year.
To put it in perspective, Bamsey said that $71,000 represents roughly two per cent of all the revenue—from taxes, fees, grants and investments—that the District receives.
“We’re not alone,” Bamsey said, noting that she has heard from finance directors in towns across northwest B.C. who are also struggling with the grant.
Rather than raise and lower rates year to year, the District and several other northwest municipalities have decided to save the surplus of the bigger-paying years, effectively averaging out the grant to the steady funding it was before 2009.
But that became difficult in 2011, when the province made no formal agreements with local governments.
And this year, District staff could only get a rough estimate over the phone of what the grant might be until late last month.
A firm number was sent to the District on Feb. 27. It was less than the District had been budgeting for, and came less than a month before municipalities had to sign the agreement or forgo the grant entirely.
Mayor Holmberg said council has been lobbying hard for improvements to the grant, taking up the issue with Nechako-Lakes MLA John Rustad and even speaking directly with Premier Christy Clark last fall.
“It’s gone absolutely nowhere,” he said.
Looking ahead, Bamsey told council there is a concern that the grant may also be declining. Between the first two-year agreement and the second three-year agreement that council signed last week, there is a $76,535 drop in average funding.
“What I’m afraid of is that in 2015 and on, we’re probably going to receive $413,000, which is a huge decrease for us,” she said, noting that other towns are seeing similar declines.
Asked about such reductions in the legislature, Minister Chong said there will be some smaller amounts in the years ahead because of an infrastructure program that is now wrapping up.
Minister Chong also said the province is conducing two reviews that are relevant to this issue.
Starting in 2010, a panel of business, local government and provincial officials have been looking at how municipalities set taxes for large industry—a major revenue source for small communities.
Minister Chong also said the ministry is conducting an internal review to find out exactly how B.C. municipalities get all of their revenue. Part of that review will be to understand what would happen if there were no small community grants, she said.