07/14/2014

Today the Honourable Charles Sousa, Minister of Finance, reintroduced the Provincial Budget for 2014.

The Budget was first introduced on May 1, 2014 prior to the dissolution of the Legislature for the 41st Ontario general election. This second introduction makes the same spending commitments as the first.  It contains initiatives that are both good and bad for municipal governments. Highlights include the following:

Good ideas:

  • Significant Infrastructure Investments – The budget includes a 10-year $130 billion commitment to infrastructure investment.  The Province’s matching funds to the federal Building Canada Fund are included along with the following new municipal components:

    • Public Transit and Transportation Infrastructure – Of the above total, $28.9 billion over the next 10 years will be dedicated to public transit and transportation.  This includes $15 billion for the GTHA and $13.9 billion for investments in the rest of the province.  In 2014-15 this represents $3.3 billion ($1.7 billion in the GTHA and $1.6 billion outside the GTHA).  Further discussions on the how and when of these allocations will occur in the future.  Municipalities appreciate the focus on infrastructure.  Communities outside of the GTHA need clarity on the criteria for putting projects forward.   AMO looks forward to working with the government on these programs and those listed below.
    • Permanent Infrastructure Fund for Roads and Bridges – The budget delivers a $100 million annual fund for "critical projects in communities with challenging fiscal circumstances".  It will include application and formula-based funding for municipalities.  It will move towards a fully formula-based funding model over time.  No other details regarding eligibility are provided in the budget.  This honours a longstanding provincial commitment to the municipal sector.
    • Cycling Infrastructure – In a previous statement in the Legislature, the Minister of Transportation provided details on this funding including $10 million over three years through a new cost-shared program that will help municipalities expand their local cycling networks, and in addition, $15 million over three years will be dedicated to investments in cycling infrastructure.

  • The Upload Remains Intact – The Province continues to maintain the 2008 upload agreement.  Its 2015 value to the municipal sector is $1.63 billion.  The importance of this commitment to the sector as a whole is indisputable.  Sector wide, municipalities have been able to redirect these dollars to increased infrastructure investments.  But on a local level, the value of this upload varies considerably from one municipality to the next.  That’s why the Ontario Municipal Partnership Fund is so important to municipalities with challenging fiscal circumstances.

  • Social Services – The Community Homelessness Prevention Initiative will benefit from the permanent addition of $42 million starting in 2014-15.  Previously this allocation was temporary.  In addition, municipalities will not be required to cost-share the Ontario Works rate increase until January 2015.    
Bad ideas:
  • Accelerated OMPF Cuts for 2015 – The budget cuts operating funding to municipalities with challenging fiscal circumstances by $35 million in 2015.  This represents an unexpected funding cut of $10 million to the communities that can least afford it and which benefitted the least from the upload.  AMO had advocated for a deferral of the expected $25 million cut.  While ongoing discussions between the municipal sector and the Ministry of Finance on the OMPF continue, they will not blunt the impact of this envelope decrease.  The Association remains extremely surprised and disappointed with this move.  It raises ongoing questions regarding the government’s approach to OPP billing.  Specifically, what does this added decrease mean when OPP billing reform policy for 2015 has not been determined?

  • Cuts to the Power Dam Special Payment Program – The 110 municipalities which host power dams will see $4.4 million in cuts to these transfers over four years.  Such dollars offset lost property tax revenues for these communities when the right to tax the dams was rescinded in 2001.  To illustrate the impact of this change, to the Municipality of Wawa, payments under this program represent the uncollectable tax revenue coming from 47% of its property assessment base.  Residents of Wawa face a 12.6% property tax increase to make up for these losses.  Any OMPF losses will be in addition to this change.  Municipalities affected by these reductions will be meeting shortly to review the situation and are encouraged to attend.

  • Municipal Hazardous or Special Waste (MHSW) Phase 2 Program Funding Cancelled – The Ontario government has cancelled the MHSW Phase 2 program.  Effective October 1, 2014, municipalities will no longer be reimbursed for the management of MHSW Phase 2 materials.  Announced in the 2012 provincial budget, MHSW Phase 2 was to be a three-year $10.5 million program.  
AMO is surprised and disappointed in the cancellation of this small and important waste diversion program, especially with no consultation or warning mid-year for municipal operations and budgets.   We are very concerned about this additional fragmentation of the MHSW program and the great potential for resident confusion about where these toxic materials go while knowing that the public expects that hazardous and toxic materials will be safely diverted from our landfills and water sources.  

This approach also compromises diversion goals and appears to retreat from the principle of extended producer responsibility – which holds manufacturers and retailers accountable for the costs related to safe disposal of their products.  Phase 2 materials include six wastes:  fire extinguishers, rechargeable batteries, fluorescent light bulbs and tubes, mercury-containing devices such as thermostats and thermometers, and pharmaceuticals and sharps (for those pharmaceuticals and sharps not captured through the Health Products Stewardship Association’s regulated program).

We understand that the Ministry of Environment will be working with producers, municipalities, and other stakeholders to determine a path forward on options for best management of these Phase 2 MHSW wastes given this upcoming program cancellation.  However, no details have been provided at this point.   AMO has been a strong advocate of expanding producer responsibility for their products and packaging and will continue to do so.  We will provide members with further information on this and other waste diversion matters once available.
 
AMO’s budget analysis will continue.  Further updates will be provided as required.