By Chad Ingram
Published Jan. 10, 2019
The
Ford government is conducting a review of the Ontario Municipal
Partnership Fund, which provides annual funds to municipal governments,
as it seeks to decrease the provincial debt.
In
a letter to heads of municipal councils dated Dec. 21, finance minister
Vic Fedeli explains the process the province is undertaking.
“Ernst
and Young, who conducted a line-by-line review of Ontario’s spending,
confirmed in its report Managing Transformation – A Modernization Action
Plan for Ontario that the growth in transfer payments and other
provincial supports are key contributors to the province’s mounting
debt,” the letter reads. “Getting this spending under control is why we
are undertaking a detailed review of all transfer payments, including
those to municipalities. We must continue to support municipalities in a
way that is sustainable and responsible. To achieve this, we are
reviewing the OMPF – which is why details of OMPF allocations will be
released later than in past years.
“We
will be looking to you, our municipal partners, to help us with the
challenge that lies ahead – as we look to drive efficiencies and
value-for-money in all of our transfer payments, including the OMPF,”
Fedeli’s letter continues. “While we all will be operating within a
smaller funding envelope, we want to work with you to return the program
to what it was initially intended to do – support the northern and
rural municipalities that need it the most.”
Algonquin
Highlands Mayor Carol Moffatt told the Times that while seeking to
reduce the provincial debt can surely be viewed as a positive step,
people need to realize that the process may have ramifications for
municipalities, ramifications that could manifest themselves in property
tax increases.
“One would read that
letter and say, thank goodness the province is doing their line-by-line
review and getting their financial house in order,” Moffatt said. “You
have to look at it from both sides.”
Property
taxes are the central revenue vehicle for municipalities. If municipal
governments are to absorb a funding cut, Moffatt said, councils
essentially have two ways of dealing with it: a reduction in services,
or an increase in property taxes.
In
2018, total OMPF payments to municipal governments in Haliburton County –
including its four lower tiers, and the upper tier of the county itself
– totalled more than $7 million.
Minden
Hills’ OMPF allotment was $1.73 million; Highlands East’s $1.9 million;
Dysart et al’s $1.8 million; Algonquin Highlands’ $1.26 million; and
the upper tier of the county received $334,00 in its OMPF allotment.
Throughout the province, municipalities received a total of $510 million in OMPF allotments in 2018.
OMPF
payments are for general assistance and not tied to any particular
purpose, and are used to offset operating and capital expenses.
Making
reference to the so-called “common sense revolution” of the Mike Harris
government, which saw responsibilities such as social services and
housing downloaded to municipalities as the province sought to lighten
its books, Moffatt said, “We’ve seen that movie before, and we know the
ending. And it’s not a happy ending.”
In
the case of Algonquin Highlands, for example, an increase of $52,000 in
the municipality’s budget translates to a tax rate increase of one per
cent.
“They do make a good point about
bringing the funding program back to what it was supposed to be,”
Moffatt said, in reference to the letter’s indication that program was
initially meant to assist northern and rural municipalities –
essentially equalization payments for poorer local governments.
If
the county’s townships are considered “rural” by the province, then
it’s possible there may not be much of a change in the level of
funding.
“At this point, the ministry
indicates that they will undertake a review and reallocation of the
funds with a focus on support for rural and northern municipalities, so
it is hard to say what changes we will actually realize in terms of
reduced OMPF dollars,” Dysart et al CAO Tamara Wilbee wrote in an email
to the Times. “Hopefully that will become apparent very soon.”
Councils
in the county work to expand its seasonal economy, attract new
residents and grow the community. So, in that way, as Haliburton County
transitions out of a largely seasonal economy, it may cause
complications when it comes to receiving funding assistance.
“The less rural we become, the less eligible we become for rural funding streams,” Moffatt said.
On
the same day Fedeli’s letter was issued, the Association of
Municipalities of Ontario responded with a statement on “financial
risks for property taxpayers and municipal budgets.”
“AMO’s
advice to the new government has been to take a comprehensive approach
rather than a ministry funding line review and to consider the
cumulative financial impact of how any decisions affect the cost and
delivery of frontline services,” the statement reads. “A comprehensive
approach is the only way to understand how provincial decisions affect
municipal governments. It is unclear if this advice is being taken or
not. We also advised the Ministry of Finance to offer a status update on
the Ontario Municipal Partnership Fund (OMPF). That advice was taken.
Today the Ministry of Finance sent a letter to heads of council and
treasurers advising that the OMPF will be reduced by an unspecified
amount and allocation notices for 2019 will be delayed.”
This
delay, the AMO indicates, will make it difficult for municipal
councils, who normally find out what their OMPF allotment is going to be
prior to the budget year, to do their 2019 budgeting.
“In
recent years, the provincial government has announced OMPF allocations
in the year prior,” the statement reads. “This practice facilitated
local budget development and council approval for the year ahead.
Councils cannot make accurate 2019 spending decisions without this
information. As a result, council budget planning will be delayed. If
allocations to municipalities are reduced, councils will need to
compensate with property tax increases or local service reductions in
2019.”
Fedeli’s letter to heads of council acknowledged the AMO.
“As
part of the OMPF review, we will seek your feedback on how to best
renew the program,” it reads. “We will work through AMO and the recently
signed joint Memorandum of Understanding (MOU). This agreement is a
foundation of our relationship. The AMO MOU table has been an important
forum for discussing and receiving your input on financial matters. I
also understand that there has been a staff working group that has
provided valuable feedback on the OMPF in the past. Ministry officials
have been asked to engage with the group early in the New Year.
“Again,
we want to provide you with the 2019 OMPF allocations as soon as
possible. We are working to complete the review early in 2019.”
