Charlottetown Mayor Clifford Lee said the city is losing $1 million in operational dollars this year, which will force the municipality to either eliminate services or raise taxes in its March budget.

Lee was the keynote speaker at the Charlottetown Rotary Club’s weekly luncheon Monday and he painted a grim picture of relations between the city government and the province.

Lee said the city has been trying to forge a strong relationship with the Robert Ghiz government since the Liberals took office almost two years ago.

“To date we have not been as successful as we should have been,” Lee said.

“We have not built a solid close working relationship. We have not communicated well with each other.

“In my opinion, it is a matter of respect and I don’t believe, and my colleagues in the capital area region don’t believe, that local government is being shown the respect it deserves.’’

Lee said last year’s provincial budget changes revenue coming to municipalities from property taxes, from a tax credit system to a grant system.

With that in mind, the communities of Cornwall, Stratford and Charlottetown hired an accounting firm to analyze the change and its implications.

Those findings will be released at a news conference today in Charlottetown.

Lee and his counterparts, Stratford Mayor Kevin Jenkins and Cornwall Mayor Patrick MacFadyen, requested a meeting with Ghiz, Treasurer Wes Sheridan and Communities and Cultural Affairs Minister Carolyn Bertram to discuss those implications.

“The premier responded by refusing us the meeting and telling us to talk to a commissioner on municipal governance,’’ Lee said, adding that the commissioner is not expected to submit his report to the province until late this year or well into 2010.

“I can tell you that it is very frustrating when you are passed over by the premier or when cabinet ministers refuse to engage in dialogue on such an important issue.’’

For years, municipal politicians have been arguing that the province shouldn’t be collecting residential property tax in Charlottetown, keeping 34 cents of every dollar (a cost to the city of up to $6 million annually) but not providing any of the essential services.

In addition, Lee said the province has eliminated the Charlottetown Area Urban Services Supplementary Agreement, which provided $1 million to the city annually for operational expenses.

The city was getting that money because the province agreed that, after amalgamation in 1995, the capital area was underfunded to the tune of $1 million.

Lee added that the city was not receiving $140,000 in property taxes for the Queen Elizabeth Hospital, was short $400,000 because of the high cost of street maintenance and was not getting $460,000 for streets that were not included in the original formula.

The Charlottetown mayor said the province has since agreed to provide the $140,000 in lieu of taxes for the QEH but that still leaves the city government short $860,000 annually.

Lee also took issue with government’s decision last year to eliminate two provincial government departments located in the city.

“I am not opposed to decentralization, however, I am strongly opposed to robbing one community to give another for no other reason than political opportunism.’’

Lee said attention now turns to the municipal budget in March and how the city will access infrastructure dollars announced by the federal government last week.

Those programs require that the municipal and provincial governments share the cost. Lee said that might mean putting the city’s capital debt reduction strategy — not to spend more capital dollars than what the city is retiring in that fiscal year — on hold for the next two years.

Dave Stewart The Guardian