WELLINGTON COUNTY – Municipal councils have dodged a major cost-cutting bullet that could have done serious damage to their 2019 budgets.
In a Feb. 13 letter to council heads, finance minister Vic Fedeli said the current structure of the Ontario Municipal Partnership Fund (OMPF), which provides significant revenue for local budgets, will be maintained for 2019.
“The program and funding will remain virtually the same as in 2018, while allowing for annual data updates and related adjustments,” said Fedeli.
“We heard the concerns of municipalities and that is why we are now providing the certainty they need to begin finalizing their budgets.”
Fedeli said the final 2019 grants will be announced mid-March and he noted the “transitional assistance” process, which has gradually reduced funding over several years, will continue.
In a December letter to councils, Fedeli had said the province was undertaking a detailed review of all transfer payments, including unconditional grants to municipalities, in order to trim a $15-billion deficit. He warned that “we all will be operating within a smaller funding envelope” in 2019.
The review will still take place, but now changes will not take effect until the 2020 budget, and Fedeli is promising plenty of advance notice.
“We will continue to consult with municipalities to ensure the OMPF program is sustainable and focused on the northern and rural municipalities that need this funding the most,” he stated.
At an Erin council meeting on Feb. 19, acting mayor John Brennan said the reprieve will be “a relief to municipalities that are preparing their budgets, and a greater relief to those who have completed the budget process.”
The Town of Erin set its 2019 budget in December with a 1.5 per cent tax increase. Like other municipalities, they warned Fedeli of dire consequences if OMPF funding was to be lost.
Erin included its 2018 OMPF grant revenue of $593,400 in its 2019 budget. Compensating for an entire loss of the grant would have required the closure of both the town’s community centres, or an extra 8% increase in taxes, according to Mayor Allan Alls.
In Guelph-Eramosa, the 2018 OMPF grant of $490,200 was down $6,800 from the year before. The grant represents about 4% of total revenue. To make up that amount entirely through taxation would have required a property tax increase of 7.4%.
From 2017 to 2018, OMPF grant changes varied considerably within Wellington County.
The county’s grant dropped by $313,000 to $1,774,200, while Minto dropped by $172,000 to $1,630,700, Centre Wellington dropped $66,300 to $375,900 and Wellington North dropped $62,700 to $1,317,000.
By contrast, Puslinch was up $43,400 to $413,600 and Erin was up $3,300 to $593,400.
The OMPF was introduced in 2005 to replace the Community Reinvestment Fund (CRF) as the province’s main funding model for municipalities.
Some grants are tied to specific costs such as police and social services, but the current issue is with unconditional grants, which go into general revenue and can be used for any municipal purpose.
A scale-down of the program, starting in 2014, was strongly criticized by the Association of Municipalities of Ontario. Cuts were to be limited to 10% in the north, and 15% in other areas, a commitment that was maintained through 2018.
Unconditional grants totaled $650 million in 2010, $598 million in 2012, $550 million in 2014, and $500 million in 2016. By 2018 the total was up slightly to $510 million, mainly to assist northern municipalities.
Funding is based on a formula that considers the municipality’s financial circumstances, with the intent to provide more aid where it is needed most. Adjustments to the grants have been partially affected by the province uploading (taking back) some costs that had been paid by municipalities.
