11/07/2013

Today the Minister of Finance, the Honourable Charles Sousa, delivered the Fall Economic Statement.

Prior to its tabling, AMO was provided with a pre-briefing of key municipal issues. The Statement reconfirmed elements of the spring budget and set out several new reviews.

The provincial government is forecasting a deficit of $11.7 billion for the 2013-14 fiscal year.  This is a slight improvement over the previous forecast of a $13.3 billion deficit.  Other highlights are below:

The Province will conduct three new reviews:

1.    Education Property Tax

Since 1998, the growth in education property revenues has remained stable.  The government will explore options to protect this revenue base.  Depending on how the government “avoid[s] further erosion of the support that property taxes provide to Ontario’s elementary and secondary schools”; municipal “property tax room” could be affected.  For the last 15 years, the Province has offset reassessment impacts by resetting education tax rates.  This has, according to Don Drummond’s report, “been positive for municipalities, as it has offset the impact of municipal tax increases on taxpayers and reduce[d] pressure on municipalities to limit tax increases”.

In addition, the government will also review options towards establishing a uniform Business Education Tax rate across the province.  While variances have narrowed considerably, the Province will explore Drummond recommendations related to increasing some low Business Education Tax rates while continuing to reduce high rates.

2.    Provincial Land Tax Review

For many years, northern municipalities have been concerned with issues of tax equity, specifically related to the levying of Provincial Land Tax (PLT).  PLT is the property tax levied in the unincorporated areas of the north.  The Province sets the tax rate which has not been adjusted in decades.  The government will undertake a review in consultation with a broad range of stakeholders including municipalities.  Rates for 2014 will be kept at 2013 rates while this review is underway.  Tax rates in unincorporated areas outside of municipal boundaries have been much lower for several decades.  In fact, 90% of residential properties pay less than $325.  This has encouraged development in unincorporated areas while increasing demands for municipal service without offsetting tax revenue.

3.    Municipal Licensing of Towing

The government’s intention to develop a province-wide system to oversee the towing industry to combat insurance fraud was also included.  Municipalities currently have the authority to license tow trucks.

The following initiatives were re-confirmed:

1.    Permanent Municipal Infrastructure Fund

The Statement confirms that details regarding the promised permanent fund will be released in the 2014 Budget.  AMO continues to meet with the Ministry of Infrastructure on infrastructure matters.

2.    Ontario Municipal Partnership Fund

The Fund’s phase-down to $500 million by 2016 is reconfirmed.  It is expected 2014 municipal allocations will be announced very shortly, reflecting a $25 million reduction notwithstanding our advice.

3.    Services to Seniors

Recommendations from Dr. Samir Sinha’s report, “Living Longer, Living Well,” will continue to be implemented and will include, “increasing investment in home and community care services to better meet patients’ needs and moving care out of the much more costly hospital setting”.  While AMO is supportive in principle of programs such as community paramedicine, the delivery or expansion of such programs must be accompanied by appropriate provincial funding and not be funded from property taxes.

4.    Provincial Infrastructure Plan

The government will legislate that the Province develop rolling 10 year infrastructure investment plans to promote the development of long-term strategic investments.  A new Trillium Trust will be established to fund future long-term infrastructure investments.  Initially, it will be funded from the proceeds of government asset sales which will allow funds from those sales to be transparent and available for further infrastructure projects.