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Home My WebLink AboutTR-14-90 TOWN OF NEWCASTLE REPORT File #3511..2-1- Res. # By-Law # M:ET It{): DATE: REPffiT #: Sl.JR.ECT: GENERAL PURPOSE & ADMINISTRATION COMMITTEE March 19, 1990 TR-14-c9o.' FILE #: CONDITIONAL GRANTS REVIEW BY A.M.O. RECOMMENDATIONS: It is respectfully recommended that the General Purpose and Administration Committee recommend to Council the following: 1. That report TR-14-90 be received for information; and 2. That the Clerk be authorized to provide a copy of the report to the Association of Municipalities of Ontario in order to provide support to their reform recommendations. BACKGROUND & COMMENTS: 1. Direction bv Council: At February 26,1990 Council meeting, a resolution was passed directing that Staff review correspondence from the Association of Municipalities of Ontario and provide comments with respect to the proposals for grants to Ontario Municipalities. . . .2 701 TR-14-90 Page 2 2. Report to be Examined: The correspondence comprises a 200 page document which outlines a new general municipal support grant to replace the current Unconditional Grant Program. It also proposes the elimination of some conditional grant programs to be replaced by unconditional status. It is a discussion document and it is presenting the views of A.M.O, the contents of which are to be presented to the Province later in 1990. 3. Purpose of the Document: A.M.O. has undertaken this study to review all of the conditional grant programs and assess whether these programs are applicable to current and future circumstances of the Municipalities in view of the considerable challenges they face as the 1990's approach. There is growing recognition by Municipalities of the reduced flexibility offered to them as the major source of municipal revenue, the property tax, is coming under increasing pressure to fund new programs which have been down-loaded from the Province, and to finance the cost of new legislation. Some new programs such as pay equity, education improvements, higher welfare rates, and community-based social services, compounded by demands of expanding infrastructure in high growth areas, such as Newcastle, are burdening Municipal governments with more than their financial capacity will tolerate. Municipal governments have had to increasingly shift to a greater dependence on user fees and borrowing to offset the declining provincial payments and inadequate tax revenue generated. 4. A.M.O.'s Position: It is A.M.O.'s position that the conditional grants should be "deconditionalized" in order that the municipalities could regain some of it's diminished autonomy while allowing it to provide more . . .3 702 TR-14-90 Paqe 3 efficient services based on local needs. The placing of conditions on the granting of revenue by the Province is thought to undermine municipal decision making. 4.1 Historically, there has been a shifting of provincial responsibilities onto municipal government which has not been accompanied by the financial resources to carry out these new tasks in spite of the strong performance of the provincial government. Newcastle itself has felt a reduction in the unconditional grants created by the freeze placed on the grants in 1989, followed by the complete elimination of the Density per Household Grant, in the 1990 budget year. The effect of this alone is a calculated loss to the municipality of approximately $199,000. 4.2 AMO is advocating the reinstitution of a II revenue-sharing commitment" which was originated in 1973 and adhered to for only two years. It commits the provincial transfer payments to keeping pace with the rate of growth in provincial revenues. The rate of growth of provincial revenues has been declining since 1974, however the growth of transfer payments has been declining at an even greater pace. 5. The Province The Province has a much broader range of revenue sources than municipalities, which includes personal, corporation and retail sales taxes, federal transfer payments and other budgetary revenue (ie. OHIP premiums, LCBO profits, fees & licenses, etc.). At the same time the composition of Ontario's expenditures is changing. Expenditures on health and social services has increased dramatically, while education funding has declined. . . .4 703 TR-14-90 Paqe 4 6. Grant Reforms: 1. The grant reforms proposed are based on a number of fundamental principles which will stress: a) the need for adequacy in funding to keep pace with the inflation rate b) the requirement of a cost-sharing approach to federal or provincial regulations imposed on municipalities. c) a simplified grant structure including i) deconditionalization of municipal responsibility grants. ii) provincially related functions should be delivered by the province or 100% funded. iii) cost sharing approach to programs with joint responsi- bility. d) equalization mechanism to reduce the variance in the level of basic services proportionate with size. e) timely early announcement of grant details. 6.1 The documentation details the application of the above reforms in reference to specific existing grants. One recommendation, is to increase the under funding in municipal roads for conditional, capital purposes, in addition to a new unconditional grant program for municipal roads to support basic municipal services. 6.2 The reform of the existing Unconditional Grants Program affects the Town in its perhousehold grants (eliminated as of 1990) general support and revenue guarantee grants. It is proposed that a new 'Municipal Support Grant' would be unconditional, be indexed proportionate to gross provincial revenues and would be based on such factors as assessment, expenditures, services and responsibilities. . . .5 704 TR-14-90 6.3 Once the unconditional program is in place the recommendation is to proceed with the shift to deconditionalizing the specific grants. Paqe 5 6.4 It would appear that the proposed reforms are designed to provide a more equitable distribution of resources and the implementation date of 1991 is an aggressive schedule which would provide immediate results to the municipalities. 7. Summary In conclusion, the discussion paper has covered the following: 1. Review responsibility for programs and assign account- ability to a level of government. The municipalities should no longer be held accountable for programs over which they have little or no control. 2. a) Review of existing grants to assess their ability to address the program efficiently with reference to future requirements. b) Recommend changes to grant structure and criteria including a 'revenue-sharing' partnership agreement. c) The implementation of a new General Municipal Support Grant in lieu of Unconditional Grants. d) The removal of conditions on the existing Conditional Grants Program. 3. Attempted to enhance the local decision making process which might enable both levels of government to facilitate the provision of services to its' citizens. The content of this report , I would respectfully suggest, in addition to lending support to AMO's views, addresses the concerns generated through budget discussions on the issue of reduced grants to municipalities. . . .6 o TR-14-90 Paqe 6 It is respectfully recommended that the Town of Newcastle respond to this discussion paper by lending support to the objectives and criteria presented by the Association of Municipalities of Ontario. Respectfully submitted, for presentation ittee, '&a1ffJ-~-- ( Marie A. Marano, HB.Sc., Treasurer. otseff, Administrative Officer. MAM/pp 706 TO: FROM: DATE: SUBJECT: TOWN OF NEWCASTLE MEMORANDUM Marie Marano, Treasurer Patti L. Barrie, Town Clerk February 27, 1990 New Dimensions: Discussion Paper of the AMO Conditional Grants Review Our File: 35.72.2 At a meeting held on February 26, 1990, Council passed the following resolution: "THAT the correspondence dated February 8, 1990, from Grant Hopcroft, President, Association of Municipalities of Ontario, requesting the Town of Newcastle's comments with respect to the proposals for the clarification of roles and responsibilites and a new transfer payment system for Ontario's Municipalities be received and referred to the Treasurer for the preparation of a report to be considered by the General Purpose and Administration Committee at their meeting scheduled-to be held on Enclosed, for your reference, is a copy of the subject correspondence. JZ3 Patti L. Barrie, A.M.C.T. Town Clerk PLB*lp Enc 1 . I, ~ \O~'<uJ' o e~!;)- ~ ((}---~ \)' ~~nO'10 ~(]v ~ ('Lr'r p ,\6[,' (it- _' ~C cO +. f-J ry{\ ()J J-Y uf' ~ pc? [>00'1-- fILE COpy