Ponoka’s capital projects shut down prompts council to get legal opinion

Administration declares all capital projects unfunded and stops work on them, Mayor surprised

The decision to withhold tax payments from the province has resulted in all of the town’s capital projects being placed on hold.

At town council’s meeting Feb. 26, CAO Albert Flootman brought a late item on the 2019 capital budget and the picture he painted was stark, as all current capital spending has been cut.

“Administration is avoiding, at this time, any capital program spending that is tied to provincial grant funding, specifically Municipal Sustainability Initiative (MSI) funding,” Flootman told council.

RELATED: Province denying Ponoka funding, further action being touted

Flootman noted the January letter from Municipal Affairs which stated all grants would be held back until the motion passed by council last November — to withhold the 2019 education portion of property taxes — is rescinded.

He also explained the province stated that includes any previously approved grants and that their decision stands despite no payments having been held back yet.

“I asked that question by email of the deputy minister of Municipal Affairs and he responded, ‘That I can confirm the following Municipal Affairs grants, including MSI payments for projects already approved, are suspended at this time,’” Flootman said.

This also includes grants in lieu of taxes, all MSI funding, the federal gas tax and other grants.

Given there is no funding, Flootman felt this left the town non-compliant with certain sections of the Municipal Government Act (MGA) that govern capital budget and spending requirements.

“Based particularly on Section 248, at this time, the 2019 capital budget is considered unfunded to the extent that the budget relied on MSI funding and therefore does not meet the requirements of the act. Therefore, administration has suspended expenditures that would require MSI funding until funding can be re-confirmed,” he said.

That the projects have been halted came as a surprise to Mayor Rick Bonnett and the rest of council — minus Coun. Sandra Lyon who was absent.

“I didn’t think that they would be withholding 2018 funds. We are having our legal representation exploring that,” Bonnett said in an interview Feb. 27.

“We realize that in 2019 we have told them that we are withholding it as of our first payment, which is due March 31. For them to talk about withholding 2018 funds when are paid up, we are definitely having legal look at it.”

While it’s clear the province believes Ponoka’s motion contravenes the requirement to remit education property taxes, it’s equally clear council feels its argument has legs.

“A motion is only as good if it’s acted upon. Until we don’t make a payment, they don’t have anything to complain about,” said Bonnett.

READ MORE: Ponoka mayor not backing down on withholding taxes from province

He also isn’t pleased the government has refused to listen to the town’s ideas on grant funding.

“With their reluctance to even discuss with us and send administration correspondence like that, it’s a slap in the face,” Bonnett stated.

So, that leaves Ponoka to look at what it can do, though he said council will need to do make a decision before the end of March.

“Whether this pushes us to stand strong or to change, I’ll let time see how this plays out,” he said.

“Once legal gets back to us, council will have a strategic meeting and we do want to have some sort of statement going forward.”

The town is expecting those legal answers to come within the next few days.

RELATED: Ponoka maintains capital projects not in jeopardy despite draw on reserves

Projects missing out

During the council meeting, town staff noted a number of significant capital projects are among those now on hold — including the downtown revitalization, rehabilitation of the west side industrial park and the transportation master plan to name a few. The amount that was to be spent on the lengthy list was around $3.5 million.

Bonnett explained council was well aware of those numbers through its work on the interim 2019 budget. What was a surprise, to him and council, was shutting down work on those projects.

He added that, following the receipt of the province’s letter, council wanted administration to come up with some sort of short term fix that would at least keep some projects moving forward until council decided which direction it was going to take with the province.

However, the complete halt in projects was never on council’s radar, which was a big reason council defeating a motion to accept the report as information.

Bonnett also brought forward a notice of motion for the March 12 meeting, but didn’t elaborate further on what that would entail.

Meanwhile, administration is working on figuring out how much is needed to keep some key projects moving ahead in hopes that time won’t be lost when construction season hits. This includes assessing the cost of design and tendering preparations, which will then mean adjustments to the budget that will be before council in April.


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