2013 Ontario Budget Analysis

2008 Upload Agreement
The 2013 Ontario Budget would honour the 2008 Provincial Municipal Fiscal and Service Delivery Review (PMFSDR) agreement to upload provincial social service and court security costs from the municipal property tax base.

The 2013 Ontario Budget’s commitment to infrastructure investment will make Ontario communities safer, more competitive and more prosperous.

Ontario’s joint 2008 PMFSDR showed that Ontario would need $6 billion in new infrastructure investment every year for 10 years to address our province’s infrastructure deficit.

As part of its response to this demand, the Ontario Government agreed to upload provincial social service and court security costs from the municipal property tax base over a 10-year period. The Ontario Government has consistently honoured this agreement and the commitment has allowed municipalities to focus on core municipal programs and services, and to better address their infrastructure demands.

Ontario municipalities own more infrastructure than any other order of government – federal, provincial or municipal – yet the municipal tax base is limited. Ontario municipalities receive about 9 cents of every tax dollar. This is not sufficient to meet their infrastructure needs. All three orders of government must to work together to meet Ontario’s infrastructure demands.

The 2013 Budget would:

  • Invest $100 million in 2013-14 for roads and bridges in northern and rural areas.
  • Make the existing provincial two per cent per litre gas tax transfer permanent.
  • Turn select high-occupancy vehicle (HOV) lanes in the Greater Toronto and Hamilton Area into high-occupancy toll (HOT) lanes. HOT lanes are open to carpoolers and to single drivers that can use the lane for a fee.
  • Expand support for transportation and transit infrastructure in the Greater Toronto and Hamilton Area – details to follow.

Social Service Costs
The Budget makes a number of social service related commitments. These changes have the potential to increase costs for municipal governments although we do not have an estimate of the municipal impact yet. Currently, the Ontario Government is taking on increased responsibility for funding its own social service programs, without having to rely on Ontario’s property tax base. This is the primary objective of the 2008 PMFSDR and recent history has shown that Ontario municipalities were wise to ensure that income redistribution programs are funded through the more dynamic income tax base. Property taxes should not be used to fund provincial social service costs. AMO expects to be fully consulted by the Ontario Government as these social service changes are developed.

Rising Emergency Service Costs
Ontario municipalities are deeply concerned about the unchecked rise in emergency service costs. Wages and benefit increases in this area are greater than increases for other municipal employees, the rate of inflation, increases for Ontario’s general population, and the capacity of many municipal governments. For example, the OPP’s collective agreement will amount to a minimum wage increase of at least 8.5 per cent for 2014, and recent decisions by interest arbitrators have awarded fire fighters increases of up to 24 per cent over three years. Ontario municipalities will continue to battered by these increasing costs without legislative changes to Ontario’s interest arbitration system. AMO has made clear and balanced recommendations to address these costs. However, four legislative attempts to address the problem have failed in the past 12 months.

Ontario Municipal Partnership Fund
The Budget reaffirms a decrease to the Ontario Municipal Partnership Fund (OMPF) by $25 million in 2014. AMO remains extremely concerned with this decrease. It is occurring at the same time as the Government is consulting separately on the OPP costing formula and key property assessment issues during an OMPF transitional year. The potential for unintended consequences is great. The Budget also contains changes to the social assistance system that will have municipal cost implications starting in 2014.  In 2014, municipalities will remain responsible for funding 14.2 per cent of Ontario Works benefit costs. At the same time, the Government will terminate OMPF reconciliation payments for 2011 and beyond.  Municipalities will have to shoulder additional social assistance costs with no corresponding offset through OMPF. Historically, this has not been the case.

AMO again urges the Government to reconsider the order of these reviews, and in the meantime, restore $25 million to the OMPF envelope in 2014. These changes are occurring while the 2013 OMPF is in transition. Allocations have not been calculated using up-to-date figures, such as property assessment rates, policing and social assistance costs, which adds to the challenges that municipalities will face in 2014.

Source Water Protection
The Budget includes $13.5 million over three years for drinking water source protection.  This will assist small and rural communities. Additional details are pending.