AMO welcomed the McGuinty Government’s first Provincial Budget as a principled, good start and a step in the right direction toward renewing our communities.
“This budget turns a page in Ontario’s recent history by working with municipalities, showing greater respect to property tax payers, and making essential municipal services and infrastructure a priority,” said AMO President Ann Mulvale.

The budget commits to a number of key advances that will benefit property tax payers, including changes to public health cost sharing, providing a share of the provincial gas tax for public transit, new provincial funding for municipal infrastructure, and improvements to property tax policy rules that will empower municipal governments. 

“The budget begins to address fundamental problems with Ontario’s cost sharing rules,” said Mulvale.  “For years AMO has been working to ensure that public health was properly funded through provincial revenue sources, rather than Ontario’s overburdened property tax base.”

Responding to long-standing municipal concerns as well as the Walker and Campbell reports, the budget commits the Province to taking back 75 per cent of other public health costs by 2007, a substantial improvement from the current 50 per cent share established during the previous government’s downloading exercise. According to the budget speech, the move will “upload $127 million from municipal budgets by 2007.”  

The budget commits the government to providing an initial 1-cent a litre share of the provincial gas tax for municipal transit beginning in October 2004, and growing to 2 cents a litre in 2006.  This initiative was an election platform commitment.  The budget also allocates funding for municipal rural infrastructure.  Earlier this month, Canada, Ontario and AMO signed Letters of Intent to develop a $900 million Canada-Ontario Municipal Rural Infrastructure Program. The budget confirms the provincial share of funding for the new program.  

The budget also announces the planned creation of an Ontario Strategic Infrastructure Financing Authority (OSIFA) to deliver a loan program for infrastructure financing in Ontario.   Beginning with an Infrastructure Renewal Loan program focused on municipalities in 2004/05, for water and sewer systems, waste management, roads and bridges, OSIFA will replace the current Ontario Municipal Economic Infrastructure Financing Authority (OMEIFA). 

The Province is offering municipalities greater autonomy and flexibility in areas such as property tax policy.  The Province will replace the 5% cap on Current Value Assessment (CVA) increases for commercial and industrial properties with flexible measures that provide more discretion to municipal governments.  These measures will be fairer to businesses that are currently experiencing a clawback of their CVA tax reductions (to finance the cap), while speeding up the full implementation of CVA.  These changes will help put property tax reform in Ontario back on track. 

“This government recognizes that municipalities are in the best position to make important decisions about property tax matters in their communities,“ said Mulvale.   

At least one part of the budget will result in added costs for property tax payers – a 3 percent cost of living increase for social assistance recipients.  As a result of downloading by the previous government, municipalities are required to pay 20 per cent of financial, employment and drug benefits provided through the Province’s Ontario Works program and Ontario Disability Support Program.  Respecting that municipal budgets have already been established for 2004, the budget notes that municipalities will not be required to cost share the increase until 2005.  The 3 per cent cost of living increase for social assistance recipients will add approximately $20 million to 2005 property tax bills.  

“While AMO commends the Province’s long-overdue cost of living increase for the most vulnerable, it is not viable to fund income redistribution programs like social assistance though Ontario’s property tax base,” said Mulvale.  “We need to begin working together on a plan that will allow the Province to fulfill its responsibilities to the most vulnerable in our society through adequate provincial funding.”    

The budget speech also commits the government to enshrining the principle of ongoing consultation between the Province and municipalities, and to working with the federal government to ensure that municipalities “have a place at the table of national change.”  The budget also commits to government to working with AMO to undertake a review of the Municipal Act to “ensure that municipal leaders have the power and flexibility needed to effectively serve their communities.”  AMO congratulates the McGuinty Government on these important commitments.  “The guarantee of meaningful and productive intergovernmental relationships will be an important legacy for this government,” said Mulvale. “By working together, we can ensure that the interests of property tax payers are always considered.”  

The Association of Municipalities of Ontario (AMO) is a non-profit organization with member municipalities representing 95 per cent of Ontario’s population.  AMO supports and enhances strong and effective municipal government in Ontario and promotes the value of municipal government as a vital and essential component of Ontario and Canada’s political system.

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