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HomeMy WebLinkAboutTR-77-97 REPORT #3 THE CORPORATION OF THE MUNICIPALITY OF CLARINGTON REPORT Meeting: SPECIAL COUNCIL File# Date: August 18, 1997 Res. #L _--�Z, By-Law# Report#:__ _Tp 7_7_W File#: Subject: COMMENTS ON THE AMO PAPER Recommendations: It is respectfully recommended to Council the following: 1. THAT the Minister of Municipal Affairs be advised that the Municipality of Clarington is concerned that the delay in vital financial information from the Province will not allow the 1998 budget to be prepared in a proper and timely fashion; 2. THAT the Minister of Municipal Affairs be advised that the Municipality of Clarington has serious concerns with the announcements in the Fair Municipal Finance Act - Part 2 which removes current Municipal funding sources such as the Gross Receipts Tax and the payments-in-lieu before details of the education reform tax bill reductions have been announced; and 3. THAT Terry Mundel, AMO President be advised of Council's resolution. Background: 1.0 In July 1997, the Office of the Mayor received a release from AMO titled "Who Does What Initiative For The Record" (Attachment #1). This paper requests Municipalities to support AMO's request for further improvements to Provincial/Municipal reforms in Ontario. 1.1 The paper has suggested that the Municipality issue a news release with specific financial information relating to reductions in transfer payments to date. It is recommended that the Municipality await the total impact of the Provincial reforms before making official press releases. It is anticipated that the total impact will be severe and staff are concerned that releasing the limited information now available may minimize the final impact or leave the impression that this is the final impact. I i i PAPER RECYCLt ilI4S IS PRitftEO CtJ RECYCLED PAPEq TR-77-97 Page - 2 - 2.0 The recent announcements of reductions to the payments-in-lieu and gross receipts tax, by way of regulatory power, may have an extremely detrimental financial impact on Clarington, as the Ontario Hydro payment-in-lieu is approximately $2.1 million and the gross receipts tax (municipal portion) is approximately $175,000. However, until the education reform is announced, the Municipality is unable to determine whether the removal of some education costs will negatively impact the final tax bill. 2.1 The most difficult problem facing Municipalities is the lack of information on all the recent legislative changes. If some of the details of the impacts to education, assessment, development charges, grants, etc., were finalized through regulations or official notices, the Municipality could attempt to quantify the impact and adjust services, budgets, etc. With the lack of knowledge and information, even informally, budgeting for the 1998 taxation year is anticipated to be extremely difficult. 3.0 The reductions imposed on Provincial transfer payments (excluding the reduction to Libraries and Museums) and have been incorporated into the past budget years and are identified below along with some of the anticipated changes the Province is considering for 1998: Actual Provincial Cuts for 1996/97 Provincial Grant Reduction 1996 1,083,158 Provincial Grant Reduction 1997 601,634 1,684,792 Proposed Cuts in 1998 Provincial Grant Reduction 1998 1,199,478 Farm Tax Rebate elimination (approx) 500,000 Hydro Grant in lieu 2,092,079 Telephone gross receipts 175,069 2,767,148 Total Potential Reduction 1996-1998 5,651,418 As stated the above grant-in-lieu and telephone gross receipts are to be traded off with reduction in education costs charged to the tax bill, however the details are unknown and therefore this is not verifiable at this time. The recent press release circulated to Council (release August 6, 1997) identifies two options for eduction reform. However, these numbers may not be applicable to Clarington under the Northumberland Education jurisdiction. As yet, these are no quantifiable numbers to work with. It should also be noted that there is also an impact from the required contribution from the existing tax base to Development Charges and also the impact from the Actual Value Assessment is unknown until the roll is delivered in 1998. TR-77-97 Page - 3 - 4.0 The final impact of all changes are not likely to be identifiable until some time in 1998. Staff will keep Council informed of changes as they are announced by the Province. Respectfully submitted, Reviewed by, Marie A. Marano, H.BSc.,A.M.C.T., W.H. Stockwell, Treasurer. Chief Administrative Officer. MM/hjl Attachment Attachment #1 I IV4o 2)oei TULt 9nitiative / � r r o / ✓ A � f�o �u�i�, 1997 � y's on This package of information contains three documents that are intended to provide Councils with additional information on issues surrounding the Government's decisions regarding Who Does What, and to help Councils focus their efforts to affect further changes to the Government's planned reforms. r 1. The first document is a letter to Councils from AMO President, Terry Mundell, setting the record straight on AMO's involvement in Who Does What decisions and the association's efforts to bring about changes to those decisions. 2. The second document is a draft action item for Council agendas outlining steps _ member Councils can take to advocate for a better Who Does What arrangement for Ontario's municipalities. 3. The third document is a sample news release that member municipalities can use as a template for a local news release to promote effective news coverage of provincial and local issues regarding ongoing provincial/municipal reform. In particular, it is intended to provide additional pressure on the Government to release information on the local financial impacts of its decisions. For the record,AMO is continuing with its efforts to affect changes in the provincial/ municipal forum that protect the interests of property tax payers by fostering stronger and more autonomous municipal governments in Ontario. As a sector, we have had some breakthroughs and some setbacks, and there is still a great deal of work to be done as municipal governments' role is redefined in Ontario for the 215' century. By working together, Ontario's municipalities can present a strong and unified voice. r I s Association of r Municipalities of Ontario 30 393 University Ave.,Suite 1701 Toronto,ON MSG 1E6 tel:(416)971-9856 fax:(416)971-6191 email:amo @amo.municom.com July 9, 1997 To the Heads and Members of Council: The Government's announcement on May 1, 1997 that it was reversing its decision to download 50 percent of welfare and long-term care costs to municipalities was a major breakthrough for Ontario's municipalities and for.property tax payers in Ontario. It was the result of a concentrated effort on the part of AMO, municipal members of the Transition Team and many member municipalities who told the Government, and showed the Government,that its January Who Does What plans simply would not work. For AMO,the welfare and long-term care download was a primary focus because the AMO Board and,overwhelmingly,AMO members told us that municipalities would rather share in the predictable costs of education in our communities than share half of the costs of open- ended provincial health and welfare programs. There has been a lot of misunderstanding about the role of the Province's Transition Team in this process, There has also been considerable misunderstanding about AMO's role. As the Co-chair of the Transition Team, along with MPPs Ernie Hardeman and Jack Carroll, I have been particularly careful to differentiate between the roles of AMO and the Transition Team. In fact, my decision to participate on the Transition Team was made after careful consultation with the AMO Board of Directors and with the Board's endorsement. We knew that the interests of AMO and its members must be heard loud and clear at the Transition Team table. It was also important because AMO did not select the members of the Transition Team. Those decisions were made by the Provincial Government and, to their credit, they did a good job of selecting able and articulate representatives of Ontario's diverse municipal sector. What's more,my decision to participate came only after the Province agreed that this was a transition process rather than an implementation process. After all, until the Province agreed to reconsider some of the fundamental aspects of its mega-week plans,there was, from AMO's perspective, nothing to implement. So we set the stage for discussion on the premise that the Government was looking for advice on how to proceed and that it was open to change. I AMID &Who Does What Initiative - For The Record Page 1 i The role of the Transition Team was and is to provide advice to the Government of Ontario. Neither the Government nor the Transition Team members ever supported the widely believed and mistaken assumption that this was to be a process of negotiation. And, f although we may not have liked the rules of the game, I think it would have been irresponsible,and certainly unproductive,to decline participating just because we couldn't set the rules ourselves. It is not surprising that the Province cherry picked from the Team's recommendations. They had done the same thing with the Crombie Advisory Panel- accepting only the advice that suited their needs and discounting the rest. in the final analysis,however,the process has led to important improvements to the original package of January's reforms. Here's what the Transition Team proposed: r;,f{ As you know, our initial focus had to be the items that carried the most risk and the highest Y�t T1 costs for the sector: welfare, long-term care-and social housing. The Team's initial proposal, }h recommended that discussions on many other important issues (with annual costs of 1 approximately $2.0 billion) should wait until the health and social services download had been resolved. - The Team's proposal also stated explicitly that careful consideration and additional analysis s of local impacts must be undertaken on the whole range of issues including the elimination of the Northern Support Grant, planned roads transfers and so on. The Transition Team proposed that municipalities could take over the management and funding of capital, custodial and pupil transportation services for our schools. With 44 municipalities meeting a portion of education costs,the Province would have no need to FRI increase our share of welfare or to put us into the business of long-term care or social housing. y On the face of it, the Province said that.the Team's first proposal made sense but that constitutional rights of separate and Francophone school 'boards meant it wouldn't work. It wouldn't work because Francophone and separate school boards would never agree to aid have their schools managed by municipalities and that was that. In fact, it was at that point that the Province indicated that there wasn't really any point in discussing the issue further. Why not just accept what the Province had proposed in January and move on? Why not accept defeat? We couldn't accept defeat because the Transition Team and �X" AMO understood that the implications of what the Province was proposing would be disastrous for Ontario municipalities and for property tax payers. Instead,we sat down with the school boards and came up with a compromise position that } became the foundation of the Team's second proposal. Rather than municipalities managing and funding school physical plant services, the Province could flow a reduced and capped portion of property taxes into our schools and, in doing so, eliminate the need for the download of health,social services costs and social housing. The Team's proposal also considered the overall financial impacts of Who Does What and { offered an alternative solution that was revenue neutral for both parties. i Page 2 AMO &Who Does What Initiative - For The Record It was on this proposal that the Province developed its May l s' response. It did not, however, A} accept the proposal in its entirety. Rather, the Government took what it liked from the package and,without any discussion with the Transition Team or AMO, came up with a new plan for Who Does What. ♦ This is what the Province decided: They accepted the idea of a capped portion of property taxes for education purposes and, in exchange,they decided that there would be no downloading of long-term care and that municipalities would pay 20% rather than 50% of welfare costs. Over the long term, this decision substantially reduces financial risks for municipalities and avoids new costs projected to be in the billions of dollars. However, the Province also decided that municipalities should still be on the hook for provincial social housing programs. And, just as the Transition Team was preparing for discussions on the whole range of other Who Does What proposals,the Province closed the door on any further changes to the Who Does What package of reforms. In fact, the Province's May Vt announcement implied incorrectly that AMO was content with mega week proposals on issues ranging from the elimination of the farm tax rebate and ferry services to public health and ambulance services. In the end,the Province's May l St package represents a net cost to municipalities of about $667 million instead of the $1.2 billion that mega-week would have cost us. It's still far from ideal but it is certainly a step in the right direction. ♦ What was AMO's role in all of this? AMO played a very important role. AMO's role in the Transition Team process was, and continues to be, to provide the municipal representatives on the team with critical, independent advice based on the needs of the entire municipal sector, and to provide important secretariat support. Like the Transition Team,AMO did not negotiate the current arrangement of reforms. At the same time, AMO played a key role in moving the Province away from its original plan to download half of welfare and long-term care costs. + What's stiil unknown? The Province is continuing to work with the Transition Team to effect a smooth transition to a j new system of provincial and municipal service and funding responsibilities. But it is not prepared to discuss changes to the overall package of reforms announced on May 1St Furthermore, the Province still has not released information on the financial impacts of Who Does What on individual municipalities. We do not yet know what municipalities can expect in terms of real revenues or expenditures within a new system borne out of Who Does What. Without this important information and without a detailed analysis of local impacts, it is impossible for municipalities,for the Transition Team or for AMO to provide advice to the Government on the design and distribution of $570 million in contingency funds. We cannot even estimate whether or not this amount will be sufficient. I AMO &Who Does What Initiative - For The Record Page 3 There are also many unanswered questions about the impacts of a variety of Who Does What initiatives against the backdrop of municipal restructuring. There are unresolved policy issues relating to the allocation of service costs for things like police and social assistance, how new tax policy will shape the sector and how new structures like Area Service Boards in Northern Ontario will affect service provision. Questions about social housing continue to concern municipalities. The issue of social housing is currently being addressed through a separate advisory committee process and AMO has been able to have senior municipal staff attend the proceedings in order to ensure that member interests are brought forward in these discussions. ♦ How can you assist? We believe that there is still much to discuss before 1998. Those discussions must be informed by a full disclosure of the financial impacts of the Government's decisions. That's why we are providing you with additional tools to assist you in advocating locally for further improvements to Provincial/municipal reforms in Ontario. 1998 will see an entirely new framework of statutory and financial arrangements for municipal governments in Ontario. Those arrangements will define our role in governing our communities and as partners in government in Ontario. For municipalities and for property tax payers,the stakes are very high. There is much good in what is being proposed. A new Municipal Act and property tax reform are important steps forward for the municipal sector. The same is true of many reforms that will streamline and rationalize the roles of the Province and municipalities. But there are many important improvements to the Government's proposed reforms that must be made now to ensure that municipalities are in a position to lead Ontario into the 21sf century. In order to make it happen,we need to work together on the provincial front and we need to fo--,.us local efforts on key issues. AMO has several meetings scheduled with Provincial Cabinet Ministers over the coming weeks to raise these issues and will keep members inforr--)ed of the progress of our discussions. AMO will continue to press the Government for important changes to Provincial/municipal reforms and for the information you need in order to pion for 1998 and for the future. Hearing the views of the membership is vital. Please feel free to call (416) 971-9856 to contact myself,Douglas Raven, Executive Director at extension 306 or Deborah Dubenofsky, Director of Policy and Government Relations at extension 309 to share your thoughts. Sincerely, Terry Mundell AMC! President Page 4 AMO &Who Does What Initiative - For The Record 4 -4etion 5or 64a, e WE oe� l�llha Municipalities have been very active in pressing the Government for changes that improve the outlook for property tax payers and meet the needs of their communities. The work of municipalities locally has contributed very substantially to AMO's success over the years and in particular since June 1995. The current Provincial Government has demonstrated that it cannot ignore concerted pressure from the municipal sector. ♦ What can you do locally to help bring additional pressure to bear? Work with your MPP - Whether your MPP is a member of the Government Caucus or one of the opposition parties, he or she can be very influential in working behind the scenes or by focusing discussion in the Legislature. Ask your MPP to meet with Council. Ask what he or she is doing to help you get the information you need from the Provincial Government. Ask what they are doing to protect the interests of property tax payers in your community. Ask members of the Government Caucus to account for decisions that adversely affect municipalities, and to provide financial impacts of the Government's plans for provincial/municipai reform. 4 Work with your local news media - Estimate the financial impact on your municipality of Who Does What reforms. In the absence of real numbers from the Province,talk to the local news media about what might be. Let them know that you cannot provide any assurances that property taxes will remain stable. Make sure they know what your i municipality has done already to manage in the face of reduced Provincial funding. Work with your stakeholders -The Government is proceeding with its plans to transfer responsibility for social housing to Ontario's municipal sector. What will the impact be in your community? What is the impact on people in your community who rely on social housing and the agencies that provide services? What opportunity will you have for input? Work with front-line ministries- As part of the Government's May Is' announcement, it confirmed a permanent $500 million community investment fund and an additional $70 million for communities with special needs. But the lack of information on the local financial impacts of Who Does What means that municipalities and front line government ministries cannot plan for contingency funding. What does that mean for your community? Make front line ministries account for the Government's decision on specific issues that concern your municipality. 4 Work with your municipal associations- Councillors and municipal staff represent your I� municipality in many professional and other associations. Are the goals of the associations you support consistent with the goals of your municipality or are they at cross purposes? Is there a clear distinction between political and professional issues? Municipal associations can be a powerful voice for your interests. Make sure crll of your associations are working for you. I I AMO &Who Does What Initiative - For The Record Page 5 I i//. oe6 What SAMPLE NEWS RELEASE For Immediate Release July 9, 1997 Municipality Wants Answers from Queen's Park Municipalities are tired of waiting for information on the local financial impacts of decisions made by the Provincial Government. 1997 is year 2 of a two year reduction in Provincial transfer payments to(insert municipality)totaling $(insert local reduction). For 1998,the Province will eliminate the remaining $(insert reduction) in Provincial funding with the cancellation of the Municipal Support Program. That means that provincial financial support for roads and other municipal responsibilities is a thing of the past. The real problem however,goes much farther than lost Provincial transfers. As a result of the Province's Who Does What plans announced during "mega-week" in January, municipalities across Ontario are facing growing uncertainty about the costs and revenues that they will be managing come January 1, 1998. In May,the Province announced that it would not go ahead with its plans to download long- term care and half of the costs of welfare onto municipalities, but just about everything else municipalities deal with is changing. One of the key concerns is assessment and property tax reform. The change is twofold. The assessment system is being overhauled with a whole new method of property assessment. The Provincial policy that municipalities use to set local tax rates is changing as well. The first stage of the new assessment legislation was passed in May and the second stage, Bill 149, is still before the Legislature. But even once the new legislation is in place, municipalities will not be in any position to project next year's revenues. The revised assessment information won't be ready until some time in the Spring of 1998, But the biggest concern is not on the revenue side of the equation. Municipalities still have not been given any information on what their new Who Does What responsibilities will cost. For certain,there will be new costs. The list of new municipal costs is a long one. Among the most serious concerns for(insert municipality) are(insert key local issues). Although the Province has refused to provide actual figures,the estimated additional costs for property tax payers of these issues is estimated to be (insert figure). (insert Name of Head of Councib said that without additional information from the Province on the financial impacts of the Government's decisions, and without further discussion on how some of these changes will take place, there is no way that Council can provide any assurances that property taxes won't go up in 1998. "We are definitely going to have to do more with less, but until we can start planning based on real numbers,there is little we can do to mitigate against higher costs and lower revenues.' -30- For additional information, contact (insert contact name and phone number) Page 6 AMO &Who Does What Initiative - For The Record