03/14/2016

Backgrounder

 Imagining a Prosperous Future for our Communities


In 2015, AMO launched a consultation with its members on how municipal governments can achieve long-term fiscal sustainability.

The goal is to develop a shared vision and plan so that municipal governments have the firm financial foundation needed to meet their responsibilities today and over the long-term, in order to create a strong and prosperous Ontario.

The Challenges
  • Municipalities face changing demands for services and new challenges, such as meeting the needs of a growing population, serving an aging population, and responding to the costs of climate change.
  • The $60-billion infrastructure deficit remains a substantial, persistent challenge across all communities.
  • The main source of municipal revenue is property taxes, which is not keeping pace with new pressures. User fees have only limited use to address growing costs.
  • The provincial government is focused on its own fiscal challenges. It has already re-absorbed about $1.8 billion of its social service and court costs, which had previously been downloaded to municipalities.

The Fiscal Gap

AMO conducted a detailed financial analysis of municipal revenues and expenditures, projected out to 2025. This analysis found that if municipal governments were to rely mainly on property taxes, with all else being equal, they would require an estimated:

  • 4.51% annual property tax increases for 10 years to fund existing programs and service levels, PLUS:
  • 3.84% annual property tax increases for 10 years to fund $60 billion infrastructure deficit.

                    Property tax increase chart

Ontario already has the highest property taxes in Canada. In an environment of fiscal restraint across all orders of government, municipal governments are working together to find innovative solutions to manage current and long-term needs.  AMO is currently analyzing feedback from the consultation to develop options for municipal officials to consider in 2016, with the aim of determining the What’s Next Ontario Plan by mid-2016.