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A losing proposition

Switching to hamlet status not favorable

As a hamlet
  • The municipality would receive $208,859 more annually from MACA through formula funding.
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  • At the same time, it would lose $431,095 in property tax revenue and $419,751 in grants-in-lieu annually from the territorial and federal governments.
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  • With suggested reserves of $300,000 per year to deal with infrastructure costs, the village would be responsible for saving that money. MACA would have to provide the reserves.
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  • Overall, Fort Simpson would have $341,987 less to work with each year.
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  • All comparisons are made with the proposed proportional funding cuts taken into account
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    Derek Neary
    Northern News Services

    Fort Simpson (Jun 01/01) - Returning to hamlet status won't make Fort Simpson's funding woes go away, it will only exacerbate the situation, according to a MACA official.

    Tom Beard, senior financial adviser for the Department of Municipal and Community Affairs (MACA), told village council last week that, as a hamlet, the municipality would have to function with even less funding than as a tax-based municipality.

    "I honestly think it would be a detriment," Beard told the Drum following the meeting. "Going back to hamlet status would be a bad decision, I think, for the community as a whole."

    After examining the information package, Mayor Tom Wilson agreed.

    "I think the telling tale is on the comparison page," he said.

    Village council had been considering reverting to hamlet status as an option to counter MACA's proposed proportional funding scheme, which will see the village lose $500,000 in funding next year and another $500,000 the year after that.

    There are other disadvantages to keep in mind, Beard added. As a tax-based municipality, Fort Simpson can continue to borrow money, but as a hamlet it could not. Returning to hamlet status wouldn't absolve the municipality of its current debts either, he noted. For example, payments on $1.8 million owed to CIBC for the sewage treatment plant would have to be made, he said.

    And the municipality would still be responsible for costs relating to sewage treatment, water delivery and recreation.

    As well, all future capital projects over $100,000 would have to be approved by MACA. Getting approval would likely prove difficult as MACA's infrastructure plan is limited almost exclusively to critical projects, said Beard.

    "The only way you would be getting a new arena from MACA is if it was falling down," he said.

    Property taxes would drop

    One advantage of reverting to hamlet status is the property tax mill rate would drop from an average of 23 per cent to six per cent. That revenue would then be collected by the GNWT rather than the municipality, however.

    But Beard noted that there are only 120 property tax-payers in the entire community, including commercial property, so only a fraction of the 1,300 people in the community would realize the savings.

    As well, if and when oil and gas or other developments occur and an influx of people move into the community, Fort Simpson would no longer be in a position to benefit from the increasing tax revenues, Beard said.

    Instead, he recommended that the village work with MACA to carefully analyse its budget.

    "Whether it's recreation or public works, there may be ways we can get more bang for your buck," he said, adding that user fees, such as those for recreation, may have to be instituted or raised.