TORONTO—The Association of Municipalities of Ontario (AMO) is calling on the provincial government to commit to reviewing the provincial-municipal fiscal framework as part of the upcoming provincial budget.
In its pre-budget submission on January 25, AMO explained, “Ontario’s municipalities invest almost $65 billion each year into critical infrastructure and services, including clean drinking water, public health, parks, public transit, policing and much more. They own and operate nearly half a trillion dollars of infrastructure, more than both the provincial and federal governments.”
The financial arrangement that municipalities rely on to serve Ontarians is broken, failing residents, small businesses and major industries, AMO said in the release. Unlike the province, municipal revenues, derived mostly from property taxes, do not grow with the economy or inflation. New realities, including the pressures of growth, economic factors like inflation and interest rates, social challenges and provincial policy decisions are pushing municipalities to the brink.
“Ontarians expect governments to work together and respect tax dollars,” said Colin Best, AMO president. “Municipal governments across the province want to address affordability, invest in infrastructure and the economy and tackle social challenges like decreasing homelessness. Tackling today’s challenges requires a modern provincial-municipal partnership.”
The AMO release explains that municipalities outspend the provincial government by almost $4 billion each year on provincial responsibilities such as social housing, long-term care, public health, and childcare. Homelessness is growing across the province. There are now nearly 1,400 encampments in municipalities across Ontario. Municipalities are stepping up to address homelessness, but they simply do not have the financial tools needed to solve systemic social problems. In the last five years, property taxpayers have seen a 200 percent increase in costs to support homelessness services in their communities.
Property taxpayers can’t afford to keep paying for growing provincial costs. Ontario’s property taxes are already the second highest in Canada. At the same time, provincial per capita spending is the lowest in Canada and Ontario needs to spend almost $2,000 more per person to approach the national average.
The AMO report says that “as Ontario grows, major investment in municipal infrastructure is required to achieve the province’s ambitious target of building 1.5 million new homes by 2031. However, Bill 23 created a $1 billion annual hole in municipalities’ ability to pay for the foundational infrastructure that supports new housing. Municipalities are planning for $250-290 billion in capital expenditures over the next decade, with around $100 billion of that investment connected to growth. The province continues to benefit from housing market growth, collecting $4.48 billion in land transfer taxes in 2022 alone. The provincial share of the purchase price of a new home has climbed steeply over the last decade, increasing by 55 percent compared to local governments’ 13 percent. The province can and should invest more in our communities.”
“Ontario’s provincial and municipal governments have a strong history of collaboration. AMO believes the time is right for municipalities and the province to work together on a social and economic prosperity review so that we can find a better path forward for all of Ontario,” AMO adds.
