This Perspective & Insights entry is brought to you by Dan Matthews, a Saskatoon-based writer interested in Saskatchewan’s economic and industry trends and developments. He is also a contributing writer for Industry West Magazine.
Balancing Act: the blurry urban-rural funding divide in Saskatchewan
Saskatchewan’s Municipal Revenue Sharing model is an excellent way to distribute municipal funding equitably, but more could be done to incentivize investment readiness in towns and villages.
Barbara Kingsolver’s title character in her 2022 novel, Demon Copperhead, makes the distinction between money people and land people, which is a clever way to distinguish urban and rural economies.
In Saskatchewan, the divide between rural and urban is much less pronounced than in most other places in North America. From population density and economic diversity, we are – without question – all land people, relying primarily on agriculture, natural resources, and smaller-scale enterprises – classic indicators of a rural-based economy. So, the province doesn’t have much of a rural-urban divide, and funding rural in many ways also supports urban and vice versa.
Classically, urban centres are industrial, commerce, and services hubs. They are for ‘money people,’ using Copperhead’s categorization. That means they tend to have more wage employment opportunities, often generating higher incomes. The economic activities of urban centres are diverse, including technology, finance, and creative industries, so the experience of living in urban centres is also diverse and attractive to young professionals and newcomers, key drivers of innovation, new businesses, and a vibrant nightlife.
Together, these create higher tax revenues linked to more businesses and higher-income individuals, contributing to further urban development and growth. From this perspective, it’s a positive feedback loop and historically has come at the expense of rural populations.
Saskatchewan, in some ways, is playing out a rural-urban divide in values between the province and the current federal government, whose policies are more urban-focused and not well aligned with a rural economy.
That means Saskatchewan people continue to rely on a rural economy.
Likewise, the above description of an urban economy is more true of Toronto or even Calgary than Saskatoon or Regina. While the province has gone from a predominantly rural population about a century ago – above 80% – to an urban one – stabilizing just above 30% in the 1980s – no Saskatchewan city has cracked a population of 300,000 (unless you include metro), meaning the province’s sixteen cities have a distinctly rural flavour, and the rest of what Saskatchewan defines as “urban” populations are towns and villages – some with less than 100 people.
That means Saskatchewan people continue to rely on a rural economy. To support the rural economy, Saskatchewan has a complex network of roads, bridges, and rail that move vast amounts of manufacturing, agriculture, mining, and oil and gas products from mostly rural and remote areas of the province to regional and international markets.
To support the rural economy, Saskatchewan has a complex network of roads, bridges, and rail that move vast amounts of manufacturing, agriculture, mining, and oil and gas products from mostly rural and remote areas of the province to regional and international markets.
With population numbers in the province returning to growth, the trend toward urbanization will increase. But, for today at least, we are land people and rural infrastructure continues to be the backbone of the Saskatchewan economy.
Rural municipalities (RMs) are responsible for much of the infrastructure – 162,000 km of roads and 1318 bridges, for example – keeping the economy running. This is partly why the Saskatchewan government adopted the municipal operating grant nearly two decades ago and later transitioned it into the current municipal revenue sharing model.
Municipal revenue sharing provides “predictable, no-strings-attached funding to Saskatchewan cities, towns, villages and rural municipalities” and is based on three-quarters of one point of Provincial Sales Tax revenue from two years prior.
The provincial government recently announced a record investment through municipal revenue sharing.
“Municipal revenue sharing is up $42.4 million this year, an increase of 14.2 per cent over last year’s record investment, and continues to be a significant commitment on behalf of our government to all residents of the province,” Government Relations Minister Don McMorris said in a prepared statement announcing the funding. “Revenue sharing provides predictable funding based on the strength of our economy so that local leaders can make those investments in services and infrastructure that meet the needs of Saskatchewan communities.”
Alberta’s recent announcement of a Local Government Fiscal Framework in some ways is designed to make up for underfunded rural infrastructure. By comparison, Saskatchewan has a good (although perhaps imperfect) model for funding rural infrastructure and maintaining services. The funding grows with the economy and inflation and the monies are unrestricted – two factors rarely included alongside government funds.
So, is there a rural-urban funding divide in Saskatchewan? Not really. But some areas could use extra support.
Plus, as many a Saskatchewan government media release is quick to point out, it’s “equitable” in some sense. Just under 50% of MRS goes to urban municipalities, about 28% to RMs, 16% to towns and villages, and 7% to northern communities – pretty much a 50/50 city-to-rural revenue divide.
So, is there a rural-urban funding divide in Saskatchewan? Not really. But some areas could use extra support.
The province has a staggering 767 incorporated municipalities. 446 are classified as urban, including towns and villages, 25 are northern, and the remaining nearly 300 are RMs.
The province has a staggering 767 incorporated municipalities. 446 are classified as urban, including towns and villages, 25 are northern, and the remaining nearly 300 are RMs.
No one can deny the importance of cities, northern municipalities, and especially RMs to the well-being of the Saskatchewan economy. Each is vital in its way. But, the smaller Saskatchewan communities patchworked within all this economic activity – while getting their fair share of the municipal sharing pie – have little capacity for the investment-readiness and business retention efforts typically associated with economic development.
Towns and villages being investment-ready and attractive to newcomers is arguably the missing piece of the province’s investment and people attraction puzzle.
The province funds trade missions, trade offices, and vital infrastructure, but is less generous in funding communities to be investment-ready themselves. This policy stance is understandable considering the lackluster return on investment former regional economic agencies delivered, which the province stopped funding in 2012, but attracting people to small towns to provide services, such as EMS, healthcare, and other essential amenities for those working in the mines, farms and supporting SMEs driving the provincial economy is critical.
Towns and villages being investment-ready and attractive to newcomers is arguably the missing piece of the province’s investment and people attraction puzzle.
Manitoba and Alberta have each put significant money into regional and rural economic development and investment readiness, making rural Saskatchewan less competitive.
Last year, the Saskatchewan government broke a longstanding position of not funding economic development by providing Regina and Saskatoon’s ec dev agencies with $450,000. Hope was in the air they would expand that to rural communities too.
“Taking this initiative is about being proactive with the opportunities for our city and province,” Economic Development Regina CEO Chris Lane said. “For the first time, we have economic development agencies and the province working in lockstep to identify, qualify, and bring investment and growth for everyone.”
Maybe not for the first time for those old enough to remember Regional Economic Development Agencies (REDAs) and Enterprise Regions, but certainly a step in the right direction. Minister Harrison made it clear this was centralized investments the whole province would benefit from.
“Saskatchewan is committed to fostering a competitive business environment and this investment allows us to leverage the expertise of the two largest regional economic development agencies,” Trade and Export Development Minister Jeremy Harrison said. “EDR and SREDA’s strong history and innate connection to the business community will allow Saskatchewan to better support economic development initiatives and support capacity building province-wide, which is growth that works for everyone.”
A trickle-down effect can be expected from attracting investment to Regina and Saskatoon, providing “growth that works for everyone.” But considering most of our economy is powered by rural industries, making available funding or incentives that support investment-readiness and business retention in communities outside of Regina and Saskatoon also seems wise.
Manitoba and Alberta have each put significant money into regional and rural economic development and investment readiness, making rural Saskatchewan less competitive.
While some towns are doing an excellent job of this work on their own, such as Shaunavon, the province might consider offering strategic incentives for innovative thinking and friendly competition. The province might also consider incentivizing co-opetition, similar to the Targeted Sector Support, which uses $1.5M of the MRS to increase regional cooperation so that these communities work together as larger regions and leverage the assets of their neighbours alongside their own to create efficiencies and even more attractive investment opportunities.
Whitecap Dakota First Nation’s alliance-building approach is an excellent example of strategic regional partnership increasing economic performance and a community’s autonomy. Why not follow their lead?
While there is probably not a strong argument for bringing back REDAs, strategic funding incentives for smaller communities could go a long way to increasing the number of Saskatchewan towns and villages that become investment-ready, improve business retention, and attract more newcomers.
Dan is a Saskatoon-based writer interested in Saskatchewan’s economic and industry trends and developments. He is also a contributing writer for Industry West Magazine. Learn more about Dan at The Copy Write and Industry West Magazine.
