Long-term Debt Limits in Saskatchewan - Nipawin

province (Government of Alberta). The province has been
providing up to 90% grants to municipalities to set-up RSCs
to deliver water on a regional basis because this increases
the quality and reduces the costs of infrastructure for
municipalities, thereby reducing demand on the province
for infrastructure dollars. Although costs for the municipality
have been reduced, municipal residents have seen their
water costs rise because they are now paying the true
cost of water. This has been somewhat problematic in
that some residents are upset with cost increases. In some
cases, water bills may have increased by as much as 500%,
which is incredibly difficult for those customers that were
not prepared for the increase, nor given time to adjust their
water consumption habits. However, in the long-term, the
municipalities and residents will benefit in that infrastructure
will be sustainable and consumption will be curbed.
RSCs are not just used for water services. They are
also utilized for the delivery of sewer, waste management
(recycling and solid waste), community planning, and even
public transportation. Wherever there is a public service
that a number of municipalities within a region perceive as
a benefit, and where these municipalities are interested in
working together, an RSC may be utilized. Water, sewer, and
waste management are the most common forms of RSC.
Why are Regional Service Commissions so Common
in Alberta?
Government grants have incentivized the development
of RSCs. The official with Alberta Municipal Affairs noted that
many of the RSCs would probably not have been created if
it were not for significant provincial grants to assist with setup
costs. For example, the Water For Life Strategy included
up to 90% grants for the set-up of water service delivery
RSCs. Other grants have been made available for sewer, and
waste management infrastructure. Organizing the delivery
of services in this way has made possible for some fairly
significant achievements in terms of service delivery. For
example, one major infrastructure project involves the piping
of water from Edmonton, several hundred kilometres away
to Vermillion, servicing many jurisdictions along the way
through a modernized web of service commissions. However,
it is important to note that these would not likely have taken
place without major provincial support.
Benefits and Challenges of Regional Arrangements
When asked about whether regional bodies such as
RSCs, or other such regional partnerships for the delivery
of utilities services in Saskatchewan would be beneficial,
one official with the Ministry of Municipal Affairs in Alberta
noted that some kind of regional service mechanism is likely
a good idea, but the key is to provide an incentive, such as
covering start-up costs, to develop them regionally and to
make them competitive. This official thought that it was quite
likely that many municipalities would fear the loss of control
over regional entities, as well as the loss of jobs within their
community, or even the idea that water or some other service
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would potentially come from a facility in another community.
These challenges would need to be overcome before a
regional service delivery option could be feasible. This official
suggested that regardless of the challenges and hurdles, the
benefits far outweigh the costs for smaller municipalities
that would be able to access higher quality services for their
residents, and reduce infrastructure costs through some
form of regionalized service delivery mechanism. This official
emphasized that though RSCs are a useful tool, they should
only be one tool in the arsenal of municipalities experiencing
growth, and that there are other options. The key point is that
municipalities need to build capacity.
RSCs provide for greater utility debt flexibility in the longterm
because they have a larger debt threshold. Alberta’s
legislation says that RSCs are entitled to a debt limit of 200%
of revenue. But since RSCs do not have revenue when
they begin operating, they require provincial approval of
a debt-limit extension to give them time to set-up and begin
delivering services to earn revenue. Only those municipalities
that have the capacity to set up an RSC with a solid business
plan, including 5 year projections on operating a capital
budgets, will be granted base-extensions for up to five years
to get them operational. Thus, the ability of municipalities to
take advantage of this type of mechanism largely contingent
upon financial and development capacity. Regardless of what
the debt-limit is in legislation, the government of Alberta
works with municipalities and RSCs to ensure that they have
solid business plans and organizational capacity. The Alberta
Government is examining options to give municipalities
more autonomy, such as greater debt limits, but would likely
increase reporting requirements, such as quarterly reporting.
An important feature of this method of service delivery is
increased operational capacity. Many of the RSCs have their
own dedicated staff including a chief administrative officer
(CAO). It was noted by one official that these RSCs were the
most effective because they had the management capacity
to operate as an effective business.
Another regional mechanism that may become more
common as growth pressures increase is the Municipal
Controlled Corporation. Many municipalities would like to
convert their RSCs into municipal controlled corporations.
RSCs are not permitted to make a profit, whereas Municipal
Controlled Corporations are. Examples of this are Enmax
in Calgary. Municipal Controlled Corporations are over
50% owned by a municipality. Although regulated, these
corporations can raise funds, and sell-stocks, so long as
the municipality maintains control of them. This could be
problematic for the province if a significant number of
municipalities created municipal controlled corporations,
and if those corporations experienced significant financial
hardships, as the province could potentially be liable for any
losses. The province has much better capacity to regulate the
use of RSCs than it does Municipal Controlled Corporations.