23 P.E.I. municipalities on the hook for millions in overpayments from the province

Almost two dozen Island municipalities are on the hook for millions of dollars because the province miscalculated their provincial grants this year.

The Department of Finance has confirmed 23 of the province's 66 municipalities have been receiving too much money in their monthly advances from the province, which is responsible for collecting both the municipal and provincial portions of property taxes.

The province didn't provide CBC News with an amount, but Bruce MacDougall — who chairs the finance committee for the City of Summerside and is also president of the Federation of P.E.I. Municipalities — said the value of the overpayments for Summerside alone was $1.3 million, and other municipalities would add up to millions more.

"The disappointing thing is, you know, I know that my municipality and other municipalities contacted the province right away," MacDougall said, figuring right from the first payment in April that the math was wrong.

"And we were told on repeated occasions that it was right."

The $1.3 million in overpayments to Summerside represents about 13 per cent of the amount they had budgeted for their grant from the province this year.

In a statement, the Department of Finance told CBC News that as part of its property tax estimates last year, "department staff were working on a potential new estimate model that attempted to project growth over the course of a calendar year. 

"Unfortunately, some projected data from the new estimate model was used for the 2022 advance payment calculations. This was discovered and corrected as part of the annual reconciliation."

The department said it has offered municipalities the option of repaying the money over 24 months starting next year. 

MacDougall said it will be difficult for some municipalities — especially smaller ones — to lose that revenue.

"Municipalities are always struggling in this province," he said, noting that budgets are drawn up based on the previous year's revenues. 

"And so something has to give," he said. "If they have to pay this back… playground equipment or something is going to have to lose out here, right? Because they can't do all the things that they plan to do because they don't have the revenue."

The province said that it's "open to proposals" from any municipalities who might find the 24-month repayment schedule too challenging. 

MacDougall suggested the province should simply eat the loss.