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March 20, 1997
(Municipal and Provincial Affairs)

Strengthening Local Government- Budget Initiatives

Municipal and Provincial Affairs Minister Art Reid says the Budget Speech contained many positive announcements that will serve to strengthen local government and enable municipalities to effectively respond to future challenges.

The minister said government has taken the position that a portion of the savings realized through reductions in the Municipal Operating Grant (MOG) and water and sewer subsidies will be channelled back to assist those municipalities which, at this time, are not capable of solving their financial problems on their own. Many of these municipalities are rural communities which are experiencing difficult economic times, Mr. Reid noted.

Approximately 150 of the province�s 290 incorporated municipalities have debt servicing costs in excess of 30% of their revenues and will be eligible for financial assistance. In addition to debt reduction, the department will also encourage the refinancing of their long-term debt either through banks or lending institutions.

The minister said the phased reduction of the MOG will allow other municipalities time to make the necessary adjustments.

"The announcements in the Budget are consistent with the view that the department must work more with, rather than for, local government and that municipalities must move to positions of self-reliance," Mr. Reid said.

The minister indicated the debt reduction program, combined with the following initiatives announced in the Budget, will serve to strengthen local government and benefit the entire province.

• - The department will be undertaking a Municipal Capital Works Program totalling $25 million.

  - The province will be participating in an extension of the Canada/Newfoundland Infrastructure Works Program totalling $30.9 million.

  - $4.5 million will be allocated to the clean-up of St. John�s Harbour.

  - The department will provide a one-time payment in the amount of $4 million to St. John�s and Corner Brook in lieu of grants for fire protection services for government buildings.

  - The Department will be assisting municipalities with the implementation of enhanced information technology systems to facilitate a more effective and efficient system of local government.

  - The Department will assume a more pronounced role in the professional development of municipal administration.

  - The new Regionalization initiative is designed to make local government more cost effective and adaptable to future needs and offer a framework for sharing services.

  - Legislation will be introduced this year enabling municipalities to more effectively collect their outstanding tax arrears.

  - The Urban and Rural Planning Act is being revised with a view to enacting new or amended legislation that will provide significantly more autonomy for municipalities in the area of municipal planning.

  - To assist municipalities in their efforts to generate increased revenue, government will be revisiting the issue of municipal taxation of machinery and equipment.

  - Government is committed to bringing forward a new Municipalities Act later this year that will significantly enhance the autonomy of municipalities.

Contact: Gary Callahan, Director of Communications, (709) 729- 3142.