By Chad Ingram 

Published Jan. 10, 2019 

Just
before Christmas, heads of municipal councils throughout Ontario
received a letter from finance minister Vic Fedeli, informing them the
province is undertaking a review of the funding it provides to
municipalities. 

Actually,
it is undertaking a review of all transfer payments the province
provides, including those to municipal governments. In particular, it is
reviewing the Ontario Municipal Partnership Fund, which gives annual
financial allotments to municipalities with no strings attached; money
they use to offset operating and capital costs, thus helping to mitigate
property tax increases. 

Municipalities
are constrained in the revenue-generating tools available to them,
property taxation being the central one. There are other, much lesser
means such as various fees and charges by which municipalities generate
their own funds, but property taxes are the main vehicle. When municipal
governments encounter funding cuts from above, councils are faced,
really, with only two choices – increase property taxes, or reduce
services in some way. 

It
makes sense the Ford government wants to reduce provincial spending.
Few would try to argue that, at more than $300 billion, Ontario’s debt
is not out of control. And any government wants to be able to proclaim
that it has eliminated the deficit or reduced the debt. However, this is
often accomplished by passing the cheque to a level of government on
the next rung down the ladder. Former Premier Mike Harris did this in
the 1990s, balancing the province’s books by downloading billions of
dollars’ worth of responsibility – social services, housing, transit,
etc. – to the province’s municipal governments. 

And
make no mistake; municipalities are the bottom rung of the ladder.
While the province may use fuzzy phrases such as “municipal partners” as
Fedeli did in his letter, the reality is municipalities are wholly and
completely creatures of the province. They have zero constitutional
authority, deriving all of their power directly from the province, to
which they are subservient. Ultimately, the provincial government will
do what it wants. Look no further than Ford’s halving of Toronto council
before last year’s municipal election, which was simply a shrewd
display of power. 

A
reduction of the OMPF will impact municipal budgets, possibly quite
substantially, depending upon the size of the decrease. In Haliburton
County, the four lower tiers and the upper tier of county itself
received a combined total of more than $7 million from the OMPF in 2018.
Minden Hills, for example, received about $1.7 million, Algonquin
Highlands $1.2 million. For small municipalities with small budgets,
these are large sums of money. If a substantial drop in OMPF allotments
creates a shortfall, to whom do you think that shortfall will fall? 

You
guessed it, folks, you and me – the property owner, the taxpayer. As
the old adage goes, there is only one taxpayer. It’s the proverbial
robbing of Peter to pay Paul. While the provincial government may
decrease its expenditures and improve its books, that is likely to
ultimately manifest itself in property tax increases throughout
Ontario.