Degree of disagreement on financing a big, fat, hot mess

Opinion

Hey there, time traveller!
This article was published 06/02/2019 (2151 days ago), so information in it may no longer be current.

Reporters typically believe that if you do enough research, and ask the right people the right questions, the truth of any complex matter can be revealed.

While generally true, it certainly does not apply to the recent, bitter funding dispute between the province and the City of Winnipeg. The degree of disagreement over the facts between politicians and officials is, quite frankly, unprecedented.

The two sides cannot agree on who said what and when, what numbers were discussed and what irreconcilable disagreements continue to simmer. Even when one side agrees with the other, it’s almost inevitably followed by a “Yes, but…” that shakes the foundation of what was once a point of tenuous consensus.

In other words, it’s a big, fat, hot mess.

The conflict raged on Wednesday, as Mayor Brian Bowman and Manitoba Municipal Affairs Minister Jeff Wharton exchanged radically different versions of current and past events.

In a scrum at city hall, Bowman continued to allege the province was going to short Winnipeg by some $74 million on capital projects and was withholding the exact details of provincial grants, preventing the city from tabling a 2019 budget.

Across downtown, at the Manitoba legislature, Wharton told reporters the city has been invoicing the province for work it shouldn’t be funding (or shouldn’t be funding at 100 per cent). He said civic officials were fibbing about being denied details on capital and operating grants.

Attempts to decode the various allegations to arrive at the truth have been fruitless, to date. What has become clear is both sides are playing loose and fast with some of their facts and assertions.

Such as the city’s core allegation the province is reneging on capital grants.

Backed up by a report from Mike Ruta, Winnipeg chief financial officer, the city claims the province owes it $74.4 million for capital projects undertaken in 2018.

This is fundamentally untrue.

Although there is nearly $40 million in 2018 capital projects in dispute, the city is lumping in a $34.4-million sum not connected to last year’s capital spending. That money is from a reserve account, advanced to the city from the province over a period of years for construction of the North End waste-water treatment plant — a project expected to cost more than $1 billion.

The province did write to the city, asking this money be used right away to fund regular infrastructure projects in 2019. However, according to both civic and provincial sources, it also promised to be a full funding partner on the plant project when it actually breaks ground.

Categorizing the money as an “unpaid bill” by the province is a deliberate misrepresentation of the facts.

However, inappropriate as well are claims by the province the city has enough information on which to base its budgeting decisions.

Although both sides agree discussions on provincial grants have been ongoing, there is some question about the reliability of the numbers used in those discussions.

The city has been told to expect $139.4 million in operating funds in 2019, and another $110 million in capital grants. However, there are only verbal assurances on both of those numbers — and, as the province has demonstrated in the past, the devil is in the details of these funding agreements.

On the operating side, the province two years ago changed the way grants were calculated and left Winnipeg with a multimillion-dollar gap in funding for transit.

Previously, the province paid half of estimated transit costs; Manitoba ended that practice without warning in the 2017 budget and provided the city with a lump sum that ended up being less than 50 per cent of total transit costs.

The same seems to have happened on the capital side of the equation.

In 2018, the city budgeted for $50 million from the province for regional roads in what was the last year of a five-year funding agreement. However, months after the city passed its capital budget, the province realized it had forwarded more than the $250 million available under this special program. It told the city it would have to apply $40 million of the 2018 capital grant to other projects, some that wouldn’t start until 2019.

The province’s decision is not unreasonable; the five-year program was over-subscribed, but the timing is horrendous.

Because Winnipeg budgets are on a calendar year, and Manitoba on a fiscal year (April 1 to March 31), the decisions to change funding agreements are being made unilaterally, four to six months after the city sets its spending plans. Not a fair way of doing business.

There is a better way: create a process that allows the province to announce annually the total amount of money flowing to municipalities, on a date that allows enough time for those municipalities to set their budgets.

The federal government does this with provincial transfer payments, publishing the exact-dollar amounts in December — at least three months before provinces table their budgets. Manitoba also does this for school divisions, announcing exact grant amounts in January, before the divisions set their operating budgets for the following school year.

It would require a commitment to finding a better, fairer system and an amendment to provincial legislation to give municipalities the same advance information as school divisions. With a majority government, Premier Brian Pallister has the means to make this possible. All he needs is the motivation.

Pallister might be motivated by the fact creating a better system for setting municipal grants would be fair and transparent, both for municipalities and taxpayers. If that doesn’t work, maybe he should estimate the number of Bowman news conferences criticizing the province that would never be held.

Either way, it’s a win-win.

dan.lett@freepress.mb.ca