Executive Council
Municipal and Intergovernmental Affairs
April 29, 2015

Supporting Communities Throughout Newfoundland and Labrador

Provincial Government Announces New Community Sustainability Partnership

Building on the strong supports and significant investments the Provincial Government has made in our communities over the last decade, today, the Government of Newfoundland and Labrador announced the outcomes of the fiscal framework review – a new community sustainability partnership. This partnership is more than just fiscal in nature; it will enhance supports to communities and strengthen the social and economic fabric of our regions.

“In Budget 2013, the Provincial Government committed to complete a review of the provincial municipal fiscal framework within two years. Through comprehensive review and consultation, the Government of Newfoundland and Labrador has delivered on that commitment. The new community sustainability partnership will provide an additional investment of over $46 million over the next three years to assist communities in ensuring they can provide quality services to the residents and businesses of Newfoundland and Labrador.”
- The Honourable Paul Davis, Premier of Newfoundland and Labrador

The Provincial Government is investing over $46 million in additional funding over the next three years in communities, annualized at approximately $25 million thereafter. These investments include a partial rebate of the provincial portion of the Harmonized Sales Tax (HST), the sharing of provincial gas tax revenues, a three-year commitment to municipal operating grants at the level of $22 million annually, and funding for a pilot project for regional water and wastewater operators.

In addition, an advisory committee will be established to explore a regional governance structure. As well, provisions will be utilized in the Lands Act regarding the creation of reserves to assist municipalities in acquiring Crown lands at market value in a phased approach for development.

“We continue to invest responsibly in communities throughout the province and will continue to work with community leaders to ensure these investments are put into priority areas for residents such as drinking water systems. Recognizing the fiscal situation of our province this new community sustainability partnership is responsible and sustainable.”
- The Honourable Keith Hutchings, Minister of Municipal and Intergovernmental Affairs

Accountability measures are being implemented and a broader accountability framework will be developed, to ensure this new funding facilitates investments in priority areas that provide enhanced quality services to the residents of Newfoundland and Labrador. Further details on the initiatives under the community sustainability partnership are outlined in the backgrounder below.

"We partnered with the Provincial Government on the fiscal framework consultation, so we are happy to be invited to participate today. This announcement addresses several of the priority recommendations from our position paper.”
- Churence Rogers, President of Municipalities Newfoundland and Labrador

These initiatives will support all regions of the province, especially rural communities, as they develop social and economic activities and initiatives to support, maintain and grow their communities.

QUICK FACTS

• Today, the Government of Newfoundland and Labrador announced a new fiscal arrangement with municipalities.
• In Budget 2013, the Provincial Government committed to complete a review of the provincial municipal fiscal framework within two years. Through comprehensive review and consultations, the Government of Newfoundland and Labrador delivered on that commitment.
• These initiatives will support all regions of the province, especially rural communities, as they develop social and economic activities and initiatives to support, maintain and grow their communities.

- 30 -

Media contacts:

Heather MacLean Director of Communications Office of the Premier 709-729-3581 heathermaclean@gov.nl.ca	Donna Ivey Special Assistant, Communications Office of the Premier 709-729-3551 Donnaivey@gov.nl.ca
Kevin Guest Director of Communications Department of Municipal and Intergovernmental Affairs 709-729-1983, 730-2320 kevinjguest@gov.nl.ca	Gail Woodfine Communications and Public Relations Municipalities Newfoundland and Labrador 709-753-6822 gwoodfine@municipalnl.ca

BACKGROUNDER

Overview of Community Sustainability Partnership

Revenues

• Rebates will be provided to municipalities and local service districts of 25 per cent of the provincial portion of the Harmonized Sales Tax (HST) beginning in January 2016, increasing to 57.14 per cent in January 2017. This will provide approximately $1.9 million in new revenue for the 2015-16 year, $10 million in 2016-17 and over $17 million annually thereafter.
• Government will implement sharing of provincial revenue from gasoline tax with municipalities of 0.50 cents per litre in 2015-16 providing $3.6 million in new revenue, 0.75 cents per litre in 2016-17 providing $5.3 million in new funding and one cent per litre from 2017-18 onwards at $7.1 million annually.
• A commitment is being made to Municipal Operating Grant for three years, at the current annual investment level of $22 million, with a review of the grant amounts in 2016-17 will provide stability in funding and predictability for planning purposes.

Capacity Supports

• Government will invest approximately $1 million over a 3.5 year period beginning October 1, 2015, to March 31, 2019, to provide funding for three regional service boards to engage regional water and wastewater operators. These operators will work with a pilot group of communities to address their water and wastewater infrastructure operations and monitoring challenges.
• To further assist communities in the area of clean and safe drinking water, a consultant will be engaged to focus exclusively on solutions to reduce the number of boil water advisories. While boil water advisories are necessary to reduce the risk of water contamination and protect residents, many can be eliminated through proper operation and maintenance of water disinfection systems already owned by those communities. This initiative will provide needed guidance to help communities identify what steps are required so that their boil water advisory could be lifted.
• Government will utilize the provisions in the Lands Act that allow the creation of reserves to assist municipalities in acquiring Crown lands at market value in a phased approach for development. This will allow the municipality to purchase parcels of Crown lands at market value within the reserve area in phases over a five-year period. This will further enhance a municipality’s ability to avail of economic and social development opportunities to grow their communities.

Additional Initiatives

• Recognizing each order of government has an important role to play in sustaining communities, new accountability measures are being implemented. To access municipal operating grants and the provincial gas tax revenues, each municipality must submit a summary of its taxes receivable balances to the Department of Municipal and Intergovernmental Affairs, along with a plan to adequately collect those taxes receivables; municipalities must also maintain own source revenue levels on a per capita basis and municipalities identified for the water and wastewater initiative must participate.
• Infrastructure planning for our municipal sector is important. Accordingly, the Department of Municipal and Intergovernmental Affairs will begin development of a provincial municipal asset management framework that will provide further details on the current state of municipal infrastructure in the province, which is necessary to further quantify municipal infrastructure gaps and to help inform long term investment requirements. The department will consult with the existing Joint Infrastructure Committee as it works to develop a framework.
• Government will begin exploration of whether a model exists for a new regional governance structure that would further improve sustainability. An advisory committee will be established in the coming months to provide advice on the principles and main components of a potential new regional governance model. Such a model would need to be one that enhances current local governments and supports them, facilitates regional services, builds capacity and assists existing local governments to make them stronger and more sustainable. Informed by the work of the advisory committee, the Provincial Government will conduct consultations with the public, municipal sector, communities and other stakeholders beginning in late 2015/early 2016.
• Municipalities Newfoundland and Labrador has also requested an accommodations tax. This tax will also impact the hospitality sector. Therefore, we invite Municipalities Newfoundland and Labrador and Hospitality Newfoundland and Labrador to come together with the objective of developing a joint proposal to submit to government that has the support of both sectors stakeholders.
• Government will initiate consultations regarding the potential expansion of the authority for municipalities to allow for blending of business and realty taxes.

2015 04 29                              11:15 a.m.