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Regina — When we think of a “boom town,” we often imagine a formerly sleepy rural town suddenly awash in wealth and economic expansion. It might surprise some to learn that for many municipalities in oil-producing regions in Saskatchewan, the costs of servicing the oil boom can outweigh the benefits.
A Prairie Patchwork: Reliance on Oil Industry Philanthropy in Saskatchewan Boom Towns by Simon Enoch and Emily Eaton highlights the uneven costs and benefits of Saskatchewan’s oil boom and bust within oil-producing communities themselves. We found that urban municipalities in particular were often incapable of capturing sufficient oil revenues to cover the costs associated with a booming oil patch. Instead, many Saskatchewan municipalities have had to rely on oil industry philanthropy for the provision of essential infrastructure and public services that most would consider to be the sole purview of government. This reliance is a direct result of the provincial government’s underfunding of public infrastructure and services and the inability of some local municipalities to capture sufficient revenue from the oil development in their backyards.
Highlights include:
- Respondents identified a substantial inequality between urban municipalities and rural municipalities in oil-producing regions, as the costs of servicing the boom — particularly in regards to services — are disproportionately shouldered by urban municipalities while RMs collect a significant share of the revenues resulting from oil development.
- RMs with intensive oil infrastructure are able to reduce their overall tax burden relative to other municipalities. One RM cancelled its taxes on agriculture outright and only taxed oil infrastructure at half of what the neighbouring municipality was levying.
- Communities rely heavily on the oil industry for the provision of a host of services and infrastructure in the areas of health, human services, emergency response and education.
- A resource-revenue sharing plan akin to BC’s Fair Share Agreement could help communities absorb the shocks of the commodity cycle and ensure local services have the requisite funds they require to coordinate, purchase and invest in the programs, equipment and personnel that best address their needs rather than relying on the precarious nature of private philanthropy.
View the full report here: policyalternatives.ca/prairie-patchwork
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