TORONTO – The Association of Municipalities of Ontario (AMO) has released a pre-budget submission calling on the province to commit to reviewing the provincial-municipal fiscal framework as part of the upcoming provincial budget.
A Jan. 26 press release from AMO states that 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. Municipalities also 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 officials state.
Unlike the province, municipal revenues – mostly from property taxes – do not grow with the economy or inflation, the association points out.
‘New realities’
“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,” officials state.
“Ontarians expect governments to work together and respect tax dollars,” said AMO president Colin Best.
“Municipal governments across the province want to address affordability, invest in infrastructure and the economy, and tackle social challenges like increasing homelessness. Tackling today’s challenges requires a modern provincial-municipal partnership.”
AMO says 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.
The association also notes 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,” officials state.
In the last five years, property taxpayers have seen a 200% increase in costs to support homelessness services in their communities.
The association asserts 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.
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% compared to local governments’ 13%. 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
