AMO Remarks – delivered by Dave Canfield, AMO Board Member on behalf of President Lynn Dollin
2017 Northern Ontario Municipal Association Conference
Victoria Inn, Thunder Bay, Ontario
Thursday, April 27, 2017
8:30 a.m.

(Check Against Delivery)

Good morning!

I bring greetings from AMO and President Lynn Dollin.  She appreciates the storm that has wrecked havoc here – she has experienced several ice storms and snowstorms that not long ago shut her municipality down. She is disappointed not to be here and asked that I deliver her remarks.

Lynn has been AMO president for about eight months now.  During that time she has spent a lot of it at Queen’s Park – in meetings and at Standing Committees– trying to move the yardstick on legislation that matters to us.  

Today was to be the first of three regional municipal conferences for her. AMO really appreciates the fact that conferences like NOMA are important opportunities to hear and talk about shared challenges – working across Ontario to advance the priority and common interests of over 425 members.

That may sound like a tall order.  However, the truth is that there is quite a bit we can agree on. And much more that unites us.

I can assure you that Phil Vinet, Mayor of Red Lake and I are not shy AMO Board members.

AMO is governed by a 43-member board with membership from across the province and from municipal governments of all shapes and sizes – small and large, urban and rural. In fact, seven board members identify themselves as northerners.

AMO involves northern representatives – both elected and staff officials on all of our subject matter task forces. AMO invested in a video meeting system that allows it to gather input from across the province without putting more pressure on travel budgets.

Kristen Oliver, our Executive Director, is also a familiar face at AMO meetings and events. I think this staff connection serves both associations well.  

For the past two years, the AMO Board and staff have been focused on more than just immediate policy issues – of which there are many. Monika Turner, AMO’s Policy Director will elaborate on several of them in just a few minutes.

I am going to focus on a more long-term strategy - AMO’s efforts to secure the financial future of all Ontario’s municipal governments.

AMO’s policy staff did a deep dive into municipal government numbers. They are alarming in terms of growing costs and limited revenues. Infrastructure across the province is in dire need of repair. You know all too well the continued struggle to get infrastructure funding in to northwestern Ontario.

The only truly predictable infrastructure funding for you comes from three sources. First, the 50% formula portion of the Ontario Community Infrastructure Fund.  Second is the permanent federal gas tax fund.  Finally, for a few of you with a qualifying transit system, the provincial transit fund.  

Let me be clear – these are important because they are real money and are predictable.  But I think we can agree they do not go far enough.

So two years ago, AMO, including its northern caucus, started on a journey with membership – to understand the fiscal problem going forward and to find possible solutions.  It was here at this conference, that AMO launched that journey and called it “What’s Next Ontario.”  

It was AMO’s most ambitious member engagement in recent times. AMO consulted far and wide with local leaders across Ontario, including sessions in the north. Staff went on the road and met with elected officials and staff at more than 40 meetings across the entire province and through webinars. I know many of you took the time discuss the issues and options. Thank you for taking part.

A great deal of agreement on the challenges that we all face was confirmed through this phase of the work. Those challenges might look different in different communities – whether you are growing quickly, or have stable or negative growth.

Each is fiscally challenged. In one way or another, every community faces some version of the same test – providing for the future.

AMO’s analysis found that as a whole, Ontario municipal governments face a $4.9 billion shortfall every year for the next 10 years – and that is simply to maintain current services and address the gap in infrastructure spending.

To reiterate – this is to maintain current levels of service with no new mandates from the provincial or federal governments.

The $4.9 billion shortfall assumes that property taxes and user fees will increase by the rate of inflation, and that the province and federal government will maintain all of their current commitments into the future.

There are really only a few ways to deal with the problem. We can either:
  • cut costs,
  • cut services,
  • find new revenues, or
  • deliver some combination of these things.
We have limited room to cut costs, because many costs are simply beyond our control. For example, hydro rates are hitting municipal governments just as hard as they have been hitting our residents.

Across Ontario, municipal costs are going up about a billion dollars every year – to put that in some context – that is more than $2 million every day.

So we’ve been advising the Ontario Government on ways to help us reduce costs – and we’re looking to the Budget tomorrow to show some interest in addressing these issues.

So far, the Province has failed to intervene on matters that could save us millions, and would not cost them a dime:
  • I’m talking about reform to joint and several liability;
  • And interest arbitration – let me remind you that the current system cost municipal governments about $485 million over five years;
  • And efforts to modernize policing to make it more effective and efficient - to try to lower the ever increasing trajectory of costs while providing for public safety;
  • Or on the Blue Box. Industry stewards always under-pay their share – and provincial policy lets them get away with it, year after year.
In fact, rather than helping us cut costs, provincial actions often drive them up – like a mandatory integrity commissioner as proposed in Bill 68, or WSIB presumptive and post-traumatic benefits.

We told the Province that changing the Building Code to require septic system pumping every five years would be problematic as a municipal enforcement responsibility. We said the same about its decision to have municipal governments enforce residential rental maintenance standards. Unfunded mandates continue to grow and grow.

The aim of these policies may be worthy, but the costs that we must bear need to be acknowledged. New responsibilities must come with new funding sources. Yet they don’t.

So then, do we cut services?

There is not much public appetite for that.

In fact, a comfortable majority – about two-thirds of people, according to recent Nanos polling for AMO, were opposed to cutting municipal services to freeze property taxes.

The reality is that we face factors such as an aging society, dare I say more extreme weather events and changing economic base. These will require more, not less, services in the future. More seniors services, more emergency services, more public works, better broadband, more access to natural gas, and so on.

Then there is the infrastructure gap.

Municipal governments own two-thirds of all public infrastructures – that’s everything from roads and bridges, stormwater to water and waste systems, fire halls and community centres.

These things are the very foundations of our lives – getting us to and from work, shipping products, keeping us healthy and safe, gathering us together for a sense of community.

We have made progress. The upload of some social services meant those dollars were diverted back to infrastructure investments. There have been infrastructure programs from the other governments. Yet there is so much more work to do.

Across Ontario, infrastructure is under pressure – rather I should say, remains under pressure!

Asset management plans are proving it across the province.

For northern Ontario, it is about meeting basic community needs and investing in infrastructure to support economic retention and growth.

I know you are likely tired of hearing me lament about bridges in Kenora. The Province downloaded many of those bridges in the 1990s, leaving some 15,000 people to support that cost of about $140 million

Yet, funding applications for them have not been successful.  

Raise your hand if you’ve had a successful funding application in the past two years. ... Raise your hand if you’ve applied and been denied. …

Not only in northern Ontario but also across the province, basic projects are not approved for funding repeatedly.

Red Rock has applied twice to the Ontario Community Infrastructure Fund for water and sewer line repairs.

Alberton’s number one priority has been replacing the Kehl bridge. It consulted with OCIF and went with a less costly design. It was still rejected.

From a provincial perspective, these projects – all worth $500,000 or less, are not large. But in communities where a 1% tax increase raises less than $50,000, it would have a huge impact on the local taxpayer.

People recognize there is a need. About three-quarters of Ontarians polled said infrastructure and transportation are the biggest problems facing their communities.

Yet, for all we do and all we provide, municipal governments collect only 9-cents of every tax dollar, while the federal and provincial governments collect about four and five times as much. And yes, they do re-distribute some of this through infrastructure programs, but it is mostly done through grant application programs. AMO knows the frustration.  The discouragement. I can assure you that it is shared across the province.  

Your important local asset priorities need support and the current methods just are not doing it.

Lynn is in the Budget lock up at Queen’s Park this afternoon. Any new, major funding is unlikely. Everyone knows that the provincial government is trying to balance its own books.

So why is she going? Well, surprises happen. Budget bills often contain policy changes and they can have impacts too. Remember the dam assessment issue several years ago – it was part of a Budget Bill.

In fact, the recent federal budget held two ‘surprises’. First, it is setting up an Emergency Services Heroes Fund, which is to involve municipal governments, notwithstanding that you pay life insurance for staff.  

The other surprise was on page 210. It said that the one-third tax-free exemption for municipal elected officials would end in 2019. So AMO is gathering information on the impacts to municipal budgets, should the policy change proceed. Stay tuned for more from AMO on this in the coming week.

No matter what is going on federally or provincially, our residents are depending on municipal councils and staff. We provide services that they rely on every single day.

AMO’s polling showed that people feel most connected to us – nearly four in ten pick municipal government as being most responsive to their needs, compared to the federal or provincial governments.

So, how do we address our revenue problem in light of the fiscal need?

Property taxes would have to nearly double in the next decade to make up the fiscal gap.

That is sobering. You and I likely agree that property taxes cannot do the job alone.  

Ontarians agreed. About 76% said they are concerned that current local property taxes will not cover the cost for future infrastructure needs.

The limits of the property tax are clear in Northwestern Ontario. The City of Thunder Bay is dealing with the fallout of commercial assessment appeals from big box retailers. They will cost the city millions of dollars. Fort Frances faces the same commercial appeals.

Other businesses have gone to the Assessment Review Board – with similar outcomes. With a small industrial and commercial tax base already, it forces more of the burden on to residential taxpayers.

Everyone who uses municipal services should help pay for them – including visitors. Not to mention the impact on seniors and people with fixed incomes. Property taxes do not reflect what a person can afford.

Practically speaking, if we cannot reduce the cost of municipal government significantly ... and we can’t reduce services substantively ...  then we are going to have to increase revenue for municipal government.  

Through AMO’s cross province consultations, we discussed more than 40 different revenue tools to find a way that could fit communities with so many varied needs.

We polled Ontarians on seven different new funding tools for municipal governments – from a municipal land transfer tax, gas tax increase, income taxes and the sales tax.

We found some hope – and maybe even an appetite for change. Of all the new revenue tools, there was greater support for a new 1% on the HST dedicated to municipal infrastructure - it was high – about 60% across Ontario. Regionally, support was 62% in northern Ontario.

Ten years ago, after a concerted municipal campaign, the Province agreed to slowly take back the social service and court costs it had downloaded on to us in the 1990s.

In 2018, the 10-year phase-in of the upload will have been achieved. It makes sense to look towards what’s next.

Almost one year ago, Premier Wynne said that modern municipal governments need 21st century revenue tools. At the AMO Conference, she called on AMO to find municipal consensus on a solution.

We are rising to that challenge. AMO has been working with what we’ve learned across Ontario. I can tell you that there is strong consensus that the status quo is not the path forward. Being at the bottom of the government fiscal food chain, being so reliant on other orders of government is not the path for our collective success.  

Municipal governments are at a crossroads. In the coming weeks, AMO will be framing out and sharing what a path forward could look like. Please pay attention.

While I cannot share the details today, I can tell you how important it is going to be to show solidarity and present a strong, united front to all the political parties. They need to care as much as we do – and in a meaningful way.

Our communities are quite different.

Dare I say that even within this group, political stripes are likely different.

It’s easy to exploit our differences. But, and it is an important but - we are very hard to ignore when we work together towards a common goal.  

So in the days ahead, the AMO Board is looking to work with all of you, as we seek that path to building successful, healthy and safe communities.

Ontario’s municipal governments, as the front line order of government, deserve the means to provide for your communities and deliver a brighter future.