Please distribute to all council members.

In the wake of the 2017-18 provincial budget, SUMA explored legal options to help 109 of our members defend their rights to payments in lieu. With the April 5 introduction of Bill 64 and expert legal advice, we have concluded that we will not proceed with any action at this time. 

To explain how we came to this conclusion, we must understand what these 109 urban municipalities are losing. Obviously, revenue. But why were they getting these dollars in the first place? Explanations from the provincial government have been slow in coming, and often confusing. Here's what the contracts are showing and our legal experts are telling us.

In the early 20th century, many municipalities started producing and distributing electrical power, which also gave them a new revenue source. While electrification often began in the business district, municipal power expanded to residential areas and out to nearby farms. 

SaskPower was created in the 1940s to expand electrication to all areas of Saskatchewan, and they bought out these existing municipal power utilities to create a provincial grid. These purchase agreements covered capital investments, and included a guarantee that SaskPower and any subsidiaries would pay royalties in perpetuity on future sales of power. 

Basically, because municipalities were giving up their own power company, the new company promised to pay them a little bit of the product they were going to sell. And these royalties were to be paid forever.

Not all municipalities had their own power utility to sell, so that's why only some received these payments. It's not unfair that they received them; it's unfair that the provincial government used the budget to take these revenues away from SUMA members to cover the provincial deficit.

The opposition from SUMA and our members to the claw back of payments in lieu was quick and fierce. The Province responded with Bill 64, which cancels the contracts between SaskPower and municipalities, and lets the Province put the money into the provincial general revenue fund instead. 

Bill 64 will allow the provincial government to a ppropriate these revenues without compensating the 109 municipalities that created and sold their own power utility.

But even worse, when Bill 64 is passed by the government it will, retroactive to April 1, 2017, deny those SUMA members their legal right  to defend these agreements in court or be compensated for their loss . This denial of legal rights strikes at the heart of our concern with a budget that hurts hometowns because it lacked any meaningful consultation from the Province. 

The extreme measures of this bill deny local governments the ability to defend the interests of their residents. The Province is changing the rules instead of playing by them.