AMO's Post Budget Submission re Bill 55 to the Standing Committee on Finance and Economic Affairs.
Gary McNamara, AMO President and Mayor, Town of Tecumseh

June 12, 2012 at 9:15 a.m.
Room 228, Queens Park

AMO’s Post Budget Submission re Bill 55 to the Standing Committee on Finance and Economic Affairs

(Check Against Delivery)

My name is Gary McNamara and I am the President of the Association of Municipalities of Ontario and the Mayor of Tecumseh and am pleased to attend this Committee. Thank you for this opportunity to represent municipal government interests with respect to Bill 55.

As I scan the fiscal horizon and digest the related policy initiatives, I find myself returning to a consistent municipal position.  The position is simple - no new responsibilities unless they come with a dedicated and full funding source.  In the language of provincial-municipal relations - no new downloads, no new costs.  Our hands are more than full. 

Let us all remember that for every tax dollar collected in this province, municipal governments receive just 9 cents while the federal and provincial governments collect the remaining 91 cents. 

Much is expected of those 9 municipal cents – those pennies are the municipal share that builds roads, bridges, and transit.  They also provide police, fire and ambulance services.  They offer childcare, housing, and immigrant settlement services and much more. 

Municipal property tax dollars deliver infrastructure and service investments that are critical to the success of Ontario’s economy.  In fact, these investments derive more tax return to the province and federal government through corporate taxes, income tax and sales tax then municipal governments see through new business or residential growth. 

With just those 9 precious pennies, sustaining our existing responsibilities is our number one priority.  It is also our number one challenge within the current provincial-municipal fiscal framework.

The uploading of the social assistance costs have been incredibly important for us. Provincial taxes are now funding most of the income redistribution social programs.  This is how it should be.  We applaud the government for taking this big step forward several years ago. 

At the same time, municipal governments hold the fiscal responsibility for all social housing – there is a significant exposure given the condition of stock as well as the end of federal operating and funding agreements beginning in 2014.  On top of this is the ever increasing housing wait lists and the pressure to develop new affordable housing.   This is the time for the three orders of government to come together to build a long term approach.  Those 9 cents that we receive will not solve this particular problem.

So now is not the time for what some are saying is backdoor downloads.  The Budget Bill does not amend any legislation to directly transfer services to us.  However, some of the expense management measures in the Budget’s Addendum are creating program changes that will likely put pressure on municipal governments.  

Delivering a package of program changes to us does not serve our common taxpayer. Not when we collect just 9 cents of every dollar and not when Ontarians still pay the highest property taxes in the country.  Let me give a couple of examples.

The program changes to social assistance include a capping of health and non-health related discretionary benefit; eliminating the Community Start up and Maintenance (CSUM) Benefit within a new consolidated housing program, and cancelling the home repairs program. 

These changes may negatively affect the people living in our communities - our neighbours who for a variety of reasons find themselves in need of simple things; like a transit ticket to look for work or emergency food or dental care. 

We are told that flexibility within a revamped, hard capped health and non-health discretionary benefit is workable.  We are told the same when it comes to the housing/ CSUM program.

Assuming amounts and caseloads stay the same one year to the next, let me give you an idea of the change in funding  -  The City of Hamilton, $1.8 million; the Region of Waterloo,    $ 3.8 million. 
From where we sit, it is difficult to accept that the program changes will not result in less support for individuals and families in the human service support system.  But the province says it is doable. 

Our message has and will continue to be – province, do not expect municipal governments to make up any difference should that not be the result, because our hands are full. 

A similar concern can be expressed about the elimination of the Bear Wise program.  MNR’s bear relocation program trapped and removed nuisance bears away from urban areas across Ontario.  The program is to be eliminated.  Ontarians are to call 911 for police assistance.  Instead of provincially paid wildlife officers, highly paid police officers will be deployed to do that job – municipal forces and contract OPP. 

Ironically, this change occurs at the very same time that the Ministry of Community Safety and Correctional Services is holding consultations about police services and costs; about core and non-core police duties.  Wildlife control is not a core police function.  Creating a gap and relying on others to fill it doesn’t address the problem.  

On the issue of labour relations, AMO is encouraged by some of the steps the government has taken in the Bill related to interest arbitration.   However, it has stopped short of achieving a balanced system – one that is truly transparent and accountable – for all parties including arbitrators, and particularly for taxpayers.

One of the major challenges with the current legislation is the ‘ability to pay’ criteria.   The Bill must be amended to reflect that an arbitrator is required to take into account criteria reflective of the current economic state in a municipality.  The criteria needs to include factors such as: the total compensation costing of the entire settlement including present and future liabilities and the employer’s ability to pay in light of its fiscal situation with considerations of a council’s service priorities, among other matters. 

The Drummond Commission also advised the government to put a stronger fiscal lens in the criteria.  I ask that you study the Appendix to this submission, which highlights all the requested amendments related to interest arbitration.  I urge you to bring them forward as part of your deliberations.

Earlier I mentioned the positive upload of $1.5 billion of social service costs to the province by 2018.  We are pleased to see it unaltered.  It means for some municipalities that they have some revenue room to help with growing operational costs, such as salary and benefits, and also with capital improvements.   For some, it means reducing Ontario Municipal Partnership Funds.   Some understand that the social program grants component would go down as the upload progresses – that makes sense. 

What is of grave concern is the possible change to the Funds of its other three grant components. For many municipalities, their property tax base does not provide the financial capacity to raise property taxes or introduce services fees to make up for any significant loss. 

The government is reviewing the OMPF formula as part of the $75 million proposed reduction over the next three years – reaching about $500 million in 2016.  How this will be undertaken and the impact to the over 350 affected municipalities is not yet known.  We are anxious about this and we are providing our best input to this provincial decision.

This brings me to infrastructure.  We asked for a permanent road and bridge program, particularly for smaller municipalities without the tax base to finance these assets.   We understand the one year delay given the province’s fiscal circumstances.  Yet people who work and live in rural and northern Ontario are in as great a need for adequate transportation as people who live in urban areas. 

So we will be patient for a bit longer.  But at the same time, we know that the economy is stimulated when we make infrastructure investments.   We know no order of government has the fiscal capacity, even in good times, to help municipal governments with their $6 billion annual need.  But we also know what happens when we do nothing – things just get more expensive to fix.

In summary, we understand the provincial fiscal challenges. Municipal governments have their own.  We are facing stalled or declining growth.  Closed factories and shuttered sawmills limit property tax revenues. 

No new responsibilities, no new costs.  This is our ask.  With just those 9 precious pennies, sustaining our existing responsibilities is our number one priority.  Our hands are full doing what it is that we do now.

However let me close with one more important thought.  Municipalities are open to having discussions on coordinating activities that deliver a clear benefit to the Ontario taxpayer and the municipal taxpayer.  This includes the fiscal revenue framework.  To solve our common challenges requires new thinking, new ideas, and a commitment to open and candid consultation with municipalities.  I look forward to that ongoing discussion.  Thank you.