Ontario’s municipalities say they may be forced to raise taxes or cut services due to provincial government cuts that will likely equal well over half a billion dollars in lost annual funding and foregone revenue.
Since the Progressive Conservative government released its first budget last month that set out a plan to eliminate an $11.7-billion deficit over five years, word of various cuts has been reaching municipalities in drips and drabs.
They are working to tally up the numbers and extract more information from the province — complaining that it hasn’t been especially forthcoming — but preliminary figures show municipalities will be out at least several hundreds of millions of dollars a year once the changes are fully phased in.
Large municipality mayors have called it “downloading by stealth,” saying the province is attempting to balance its budget on the backs of local taxpayers. The cuts are coming long after municipalities, which operate on calendar and not fiscal years, have passed their budgets. They are weighing tax hikes, service cuts and/or delaying capital projects to make up for the losses.
“There only is one taxpayer,” Toronto Mayor John Tory said recently.
“I’ve pointed out the irony of the minister of finance almost in the first three paragraphs of his budget speech saying ‘We’re very proud of the fact that we didn’t raise any taxes this year.’ And yet they knew, I assume, they were going to be sending us letters and emails within hours or days, causing us to have to raise taxes.”
The City of Toronto alone estimates that the cuts will cost it $178 million this year.
In a letter to the Premier Monday, Tory said while other cities are also affected by the cuts, “for some reason not yet explained, Toronto received harsher treatment.”
The letter formally puts forth City Council’s request made last week that the province reverse the retroactive cuts to the City of Toronto’s 2019 Budget.
It reiterates the City manager’s report that the funding gap cannot be compensated for “with efficiencies alone this far into the fiscal year – if your government proceeds
with these cuts, the City will be forced to cut core services or raise taxes.”
The Mayor also restates the City’s willingness to sit down with the Province to discuss this further and to working together to find efficiencies in both governments — especially where costs are shared between both, such as public health.
Read the full text of Mayor Tory’s letter to Premier Ford below:
Pat Vanini, the executive director of the Association of Municipalities of Ontario, said local governments are struggling to determine firm numbers on what the cuts will cost them.
“The challenge we’ve got is every day it seems like something new is coming,” she said.
“It’s not the first time this has happened, but it’s really difficult to work with, particularly when you don’t have really good, precise information. In the absence of that you do the best you can. You have to make certain assumptions.”
Ontario announced in its budget that it is cancelling an increase to municipalities’ share of gas tax funding. When the previous Liberal government announced it was doubling municipalities’ share from two cents to four cents, it was estimated that would mean $642 million in 2021-22. Last year they received $364 million.
While the figures are calculated annually and it is difficult to pinpoint an exact amount of foregone revenue, municipalities had been planning for their share to double and were counting on the funds for transit projects, since the Tories promised during the election to honour the doubled share.
The province notified municipal public health units in phone calls that it will reduce its cost-sharing levels from 100 per cent or 75 per cent in some cases, to 60 to 70 per cent for some municipalities, and 50 per cent for Toronto. The move will save the province $200 million a year by 2021-22.
Child care funding that goes to municipalities has been more difficult to pin down. Ontario has allocated $80 million less this year than last year, but municipalities and the child-care sector say that number will be much larger, perhaps even double, once cost-sharing changes take shape for programs such as to create more licensed, not-for-profit child-care spaces.
The province has budgeted $93 million less this year on child-care capital spending. A ministry spokeswoman said funding for all previously approved projects remains in place, but since the previous government didn’t have an implementation plan beyond last year, they are not proceeding with that spending this year.
The government’s expenditure estimates show $22 million less for library sector support, which is due to not proceeding with promises from the previous government, such as creating a digital public library. Base operating grants are being maintained. But $2.3 million in funding has been cut to Ontario’s two public library services, which provide support to libraries, including inter-library loans, book delivery, staff training, and pooling costs to achieve operational efficiencies.
Funding of about $17.5 million has been cut to regional tourism organizations across the province, including eliminating money for Tourism Toronto and Ottawa Tourism.
Spending figures show municipalities will get $7.7 million less for ambulance and emergency services. When asked about the cut, the health minister’s spokeswoman mentioned the government’s plan to consolidate emergency health services. No front-line paramedic will lose their job, she said.
The Ontario Municipal Partnership Fund, the province’s main transfer payment to municipalities, has been reduced by $5 million, which is about one per cent.
Conservation authorities are getting $3.7 million less this year for flood management programs — a 50 per cent cut.
Funding under the Ontario Community Infrastructure Fund has been cut by $100 million, but the government said municipalities will be better off because of two new infrastructure funding streams are being opened.
NDP Leader Andrea Horwath said the cuts will trickle down to residents in the form of municipal property tax increases.
“The budget was vague on purpose, but the cuts are very, very clear and they’re very, very painful,” she said.
With files from News Staff