The 2009 Ontario Budget confirmed the province will match federal infrastructure investments and offset additional total costs to the municipal sector related to the creation of a harmonized sales tax.
Below are budget highlights affecting municipalities:

The Government is moving to harmonize the federal GST and the provincial PST into a combined new rate of 13%. The Budget confirms that this change will be “fiscally neutral” relative to the amount of PST currently paid by municipalities.  This means that the municipal sector as a whole will not be paying any more sales tax as a result of the harmonization of these taxes. The provision of the current federal GST rebate for municipalities will remain in effect.

The Budget confirms infrastructure investments will be made by the province to match the infrastructure stimulus commitments announced in the Federal Budget. Some details have been announced previously including more than $600 million in matching social housing investments as announced on March 20, 2009. It includes a figure of $6.8 billion over the next two years for “new short term stimulus investments”, the majority of which will be for municipal infrastructure.  

The Budget reconfirms Property Tax Grants for seniors as announced previously in the 2008 Budget.

The Assessment Act will be amended to exclude the additional value of specific energy-efficiency enhancements when calculating current value. Details are expected in regulation.

The Municipal Act will be amended to make it consistent with the new accounting standards of the Public Sector Accounting Board related to tangible capital assets. Municipalities are currently adopting these new standards.

The Budget introduces a mandatory procurement program for the broader public sector called OntarioBuys. AMO has been informed by officials from the Ministry of Finance that municipal participation will be voluntary.

ODSP and Ontario Works rates will increase by 2% starting in late 2009. Municipalities will be shielded from the impacts of rate increases until January 2010. Beginning in 2010, cost sharing for ODSP benefits will shift to 90:10 provincial:municipal and the phased upload of Ontario Works benefits will begin. AMO will advocate for continued OMPF mitigating funding and for the continuation of full OMPF reconciliation in 2009 to ensure that increasing social assistance caseloads are recognized.

Northern municipalities will benefit from increased northern highway investments of $648 million which includes the widening of Highways 69 and 11.

Northern municipalities will also benefit from support for increased investment of key industries including the mining sector ($40 million over three years) and an extension of electricity price rebates to qualifying pulp and paper mills ($58 million).

Rural municipalities will benefit from increased support for farmers to promote Ontario produced goods to the broader public sector ($8 million).

Eastern Ontario municipalities will benefit from the Eastern Ontario Development Fund investments of $20 million this year.

Community agencies will receive $80 million to undertake repairs to social service facilities used by low-income and vulnerable Ontarians.


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