Long-term Debt Limits in Saskatchewan - Nipawin

make sense to have debt limits indexed to the municipality’s
revenue, so that as revenue increases the debt limit would
increase automatically rather than the municipality needing
to constantly re-apply for debt limit increases. Municipality
C’s respondent mentioned that the SMB had been difficult to
work with, as it provides an unwanted layer of redundancy
and bureaucracy. This representative mentioned that they
have a professional staff for planning and accounting that
prepare applications, and although the application was
eventually approved, the work the professional staff did
to prepare the business plan was sent back multiple times
with minute detail changes to ultimately arrive at the same
conclusion. This municipality mentioned that the SMB should
take into account the larger municipalities’ ability to handle
their own affairs, particularly when those municipalities have
professional staff capacity. The SMB could then take on more
of a partnership or resource role for those able to prepare
their own debt plans, while providing additional oversight for
municipalities that lack capacity and need more assistance
with application preparation.
Officials from two of the other municipalities (D and E)
were concerned about other levels of government imposing
regulations on municipalities, leading to increased costs. For
example, the federal government has recently changed water
standards, requiring the municipalities to make expensive
upgrades. No additional support for municipalities has been
provided. One municipality’s representative noted that
simpler grants would be greatly appreciated, as the current
applications are complex and require either a professional
grant writer or multiple rejections and revisions – both of
these entail high costs.
A number of municipal officials mentioned the concern
that utilities-related debt is included in LTD calculations. The
general perspective of these municipalities is that utilitiesrelated
debt does not impact general financial capacity
of municipalities because utilities are paid for by user fees,
which rise as costs increase. For example, if a municipality
makes upgrades to its water and sewer system, the costs
associated with servicing debt and paying for the upgrades is
paid for by user fees; the municipality’s ability to service debt
for other purposes is not impacted. For this reason, many
urban governments would prefer to see the policy around
LTD calculation modified to remove utilities-based debt from
the formula.
In summary, the main themes raised by the
municipalities were centred on autonomy, flexibility, and
preserving growth. These municipalities raised concerns
around the current “one size fits all” policy of SMB oversight,
and recommended additional flexibility so that municipalities
that have sufficient capacity can be autonomous and
those that need more assistance with applications and
financial monitoring can receive the support they need.
By introducing more flexibility into the current system, the
municipalities will have access to the resources they need
during times of growth.
6
SMB Response
The legislation does not clearly outline a rationale for the
inclusion of utility debt in the formula for calculating LTD for
municipalities. SMB was able to provide a basic explanation
of the practice. First, utility debt is included in the LTD limit
calculation as are revenues from the utility. Second, SMB is
responsible for approving sewer and water rates, and
it is important for them to be able to see that utility debt is
supported by utility rates. The perspective of the SMB was that
whether utilities are included or excluded from the formula
should not be an issue; under the current system, it will
not make a difference to the SMB when making a decision
about debt extensions. The primary issue for SMB is that the
municipality has a business plan for supporting the debt when
they are asking for a debt extension. If the business plan for
utilities-based debt shows that utilities debt is covered by
utility fees, then the SMB will take this into consideration in
determining whether to approve a debt limit increase.
In response to the issue of lengthy approval times, the
representative from the SMB indicated that it does take some
time for the SMB to assess applications, in part because of
efforts to undertake a comprehensive review that assesses
all relevant factors. The SMB representative also noted that, in
many cases, the received applications are incomplete and this
results in further delays. The SMB works with municipalities to
revise applications and repayment plans to ensure they meet
all of the regulations.
The representative from Municipal Affairs indicated
that debt limit calculation is an area that they have flagged
as potentially requiring review, and they are quite open to
considering potential amendments to the relevant legislation.
The representative mentioned that the department has also
conducted some comparative work and may be open to
sharing some of their research in this area.
Survey Findings
In order to gain an adequate understanding of the
perspective of urban governments on the issues surrounding
LTD policy in Saskatchewan, a survey was conducted. The
survey was sent to all urban governments in Saskatchewan
that had not already been interviewed or surveyed by other
means. The survey highlighted further issues and challenges.
The majority (127 of 135) of respondents represented
towns and villages. Moreover, a majority of respondents
represented communities of less than 1000 residents. A
number of interviews were conducted with larger urban
centers, and thus the number of small urban municipalities
that responded to the survey was helpful in providing the
research team with a better understanding of the issues
facing urban governments of all sizes.
Of the 135 urban governments surveyed, 91 reported
that their population had been increasing. Growth rates were
varied with 31.8% of respondents reporting a growth rate of
less than 10%, 27.4% reporting growth of 10-24%, and 4.4%