HomeMy WebLinkAboutTR-27-84 (dj
CORPORATION OF THE TOWN OF NEWCASTLE
TREASURY DEPARTMENT K. CAMPBELL, C.A., TREASURER
40 TEMPERANCE STREET TEL.(416) 623-3379
BOWMANVILLE, ONTARIO
L1C 3A6
REPORT TO THE GENERAL PURPOSE AND ADMINISTRATION COMMITTEE
MEETING OF APRIL 16, 1984
REPORT NO. : TR-27-84
SUBJECT: PROVINCIAL UNCONDITIONAL GRANTS AND MINISTRY OF
TRANSPORTATION AND COMMUNICATION GRANTS
RECOMMENDATION:
It is respectfully recommended that the General Purpose and
Administration Committee recommend to Council that this report
be received for information.
BACKGROUND AND COMMENTS:
Subsequent to Council Resolutions #C-145-84 and #C-196-84,
staff have prepared the accompanying report for the information
of Committee regarding the Unconditional Grants and Ministry of
Transportation and Communication Grants for 1984.
Unconditional Grants
The general comments included within this
report have been extracted for the major part from a report by
the Commissioner of Finance of the Durham Region to the
Regional Finance Committee. The matter of Unconditional Grants
has been the subject of a number of past Area Treasurers'
meetings and will continue to be a topic of discussion in
1984. �f
TR-27-84
Page No. 2
April 16, 1984
BACKGROUND AND COMMENTS: cont' d
On February 21 , 1984, the Province announced its unconditional
grant program for 1984. The highlights of this program are
summarized as follows :
1. - The program for 1984 generally maintains the basic
structure of the present grant system.
- In 1984, no municipality loses grant money ( in total )
due to changes in the calculation of the individual
grants.
- Households replace population in the calculaton of the
Police, General , Resource Equalization, and Density
Grants.
- The differential in the police grant between Regions
and other municipalities outside Regions with police
forces has been eliminated, i .e. the grants paid to the
other municipalities have been raised at the level of
the grants paid to Regions.
- The 1983 rate for the General Support and the Nor**rn
Support Grants have been maintained at the same level .
- The "protection" previously provided for the Resource
Equalization Grant (R.E.G.) has been eliminated.
- To compensate somewhat for the elimination of the
R.E.G. protection, a bottom line guarantee for all
unconditional grants ( protection level ) of a 2.5%
increase in 1984 over the actual grants paid in 1983
has been established.
(d
TR-27-84
Page No. 3
April 16, 1984
BACKGROUND AND COMMENTS: cont' d
2. Important Features of the 1984 Program
1 . Households and Population
The new calculation of the unconditional grants
entitlement uses households wherever population was
previoulsy used. Hence, the General , Police, Density
and Resource Equalization Grant (R.E.G.) , are affected
by this change. Equal weight is given to all
households, including vacation properties. These
figures are available annually from the Ministry of
Revenue, while population enumeration is carried out
only every three years which is the major reason for
the change. Furthermore, a household based
calculation is deemed by the Province to reflect
service requirements.
2. The Police Grant
The Province has implemented the proposal put forward
by A.M.O. regarding this grant. The rate differential
of $5 per capita which had hitherto existed between
regions and other municipalities providing or paying
for police services has been eliminated. A grant for
police purposes, however, has been retained.
3. Grant Rates
The General Support Grant rate was reduced in 1983
from 6.0% to 5.75%. The rate has been maintained
recognizing the increase in tax requirements faced by
many municipalities in 1984.
TR-27-84
Page No. 3
April 16, 1984
BACKGROUND AND COMMENTS: cont' d
2. Important Features of the 1984 Program - cont' d
4. The "Bottomline Guarantee" of 2.5%
A guarantee has been provided to the total
unconditional grants received by a municipality. It
is suggested by the Province that the inequity of
protecting one grant at the expense of others will be
avoided. It is also deemed that such a protection
level positively addresses changes in R.E.G.
protection and grant changes in general . Hence, a
municipality is ensured of at least 2.5% more in 1984
grants than in 1983 . The actual calculation may
result in a greater increase depending on the
circumstances of a particular municipality.
5. Changes to the Calculation of the R.E.G.
The calculation of the R.E.G. is to be simplified by
the elimination of a specific pro'ection level .
Previously, the prior year' s grant amount was the
minimum received by the benefiting municipality. A
limit of $2.50 as the permissible gain per household
will apply to the calculation of entitlement to this
grant. The Province feels that this will shift the
R.E.G. to its "intended purpose of assisting
municipalities with weak tax bases" .
In response to this campaign, the Province appears to have
adopted a compromise position in terms of its long-term efforts
towards the simplification of the grants system. The basic
structure of the system was retained .
TR-27-84
Page No. 4
April 16, 1984
BACKGROUND AND COMMENTS: cont' d
The household basis for the calculation of the former "per
capitas" was introduced replacing the population estimates done
only every three years . While the protection for the R.E.G.
has been eliminated, the introduction of the 2.5% increase
guarantee based on 1983 ' s total grant entitlement has mitigated
the possible negative impact of the changes being implemented
at this time. Without the high level of protection provided
the Region and its Area Municipalities, the grant entiltlement
for local municipalities would have been significantly lower
than last year' s grants. The Town of Newcastle received in
1983 $98,719 protection for its R.E.G. grants. Under the
new grant structure this protection has been lost. With the
2 1/2% overall increase in Unconditional Grants guaranteed for
1984, the total dollars received through this program in 1984
are $731 ,972 as opposed to $714,119 received in 1983 .
Of the Area Municipalities in the Region, this year' s program
benefit has been limited to 2 .5% over 1983 ' s funding level for
Oshawa, Ajax, Newcastle and Whitby. Of the larger
municipalites, on Pickering had its grants entitlement increase
by more than 2.5%, i .e. 3.1%, in addition to higher grants
entitlements for the smaller municipalities in the Region -
Brock - 9.1%, Scugog - 10.46%, and Uxbridge - 5.6%.
TR-27-84
Page No. 5
April 16, 1984
BACKGROUND AND COMMENTS: cont' d
General Concerns
There are several points of the transfer payment announcement
that require clarification.
1. There is no indication whether a revenue guarantee will
continue in future years and, 4 so, at what level . If
there is to be a revenue guarantee, will it be based on a
percentage of the overall transfer payments ( i .e. 2.5% of
5%) , or will it fluctuate depending on the available
dollars.
2. The $2 .50/household maximum increase of the Resource
Equalization Grant may not be sufficient and does not
provide for an increase to those municipalities that are
legitimate earners of the R.E.G. The maximum increase of
$2.50/household requires further study to determine its
sufficiency. The future role of the R.E.G. should also
be examined. In its response to the Provincial
Discussion Paper, A.M.O. had recommended that the R.E.G.
be maintained for resource-deficient municipalities.
3. There is also concern that the General Support Grant and
the Northern Support Grant were not returned to their
previous levies of 6% and 18% of the previous year' s tax
levy respectively.
TR-27-84
Page No. 6
April 16, 1984
BACKGROUND AND COMMENTS: cont' d
We understand that the Fiscal Policy Committee of A.M.O. will
be meeting in the near future with representatives of the
Municipal Finance Branch of the Ministry of Municipal Affairs
and Housing to seek clarification of these issues.
Specific Concerns
While the Town has been well-served by the protection levies
built into the 1984 unconditional grants program, it is
apparent that the Province is moving towards a system of
administered grant and grant rate increases which may bear a
less direct relationship to the actual costs and needs of
servicing communities.
The revenue protection has been given to the Town in order to
reach the guaranteed level . Further changes in the program,
however, may result in adverse effects on the current financial
position of the Town. Hence, staff will continue to monitor
this situation carefully and report to the Committee any new
significiant information accordingly.
i
Ministry of Transportation and Communications Subsidy
The Director of Public Works, like most municipal road
officials, is concerned at the restrictions and reductions with
respect to subsidy being provided by the Province for road
maintenance and reconstruction. Because the M.T.C. formula for
subsidy has always maintained a backlog of road needs,
deterioration of the municipal road systems has been allowed to
increase. Furthermore, costs have risen but subsidy has not
kept pace.
i
TR-27-84
Page No. 7
April 16, 1984
BACKGROUND AND COMMENTS: cont' d
Ministry of Transportation and Communications Subsidy
In view of these facts, it is extremely alarming to find that
the Minister of Transportation and Communications anticipates a
further reduction in funding for roads.
Committee may wish to draft resolutions to the appropriate
Provincial Ministries to express their concerns regarding these
grants as a result of information presented here.
Respectfully submitted ,
K A. CampkbLell',"'C.AW. LP
, B.Canm. ,
Treasurer.
*gf
Attachment: 1
' APPENDIX 1
F1-.C7' Sl::
1 9 E 3 F,ND 19b4 UNCONDIT701:1,L GRAFTS PCLICIEs
GkANT
1963 1984
GENERAL $11/CAPITA $30/HOUSEHOLD
POLICE $12 , $17/CAPITA $47/HOUSEHOLD '
DENSITY $0-5/CAPITA $0-14/HOUSEHOLD
GENERAL SUPPORT 5. 75% 5. 75%
NORTHERN SUPPORT 17 . 25% 17 . 25%
RESOURCE $20 , 000/CAPITA $54 , 000/HOUSEHOLD
EQUALIZATION (REG) STANDARD STANDARD
MAXIMUM INCREASE MAXIKUM INCREASE
OF $4/CAPITA OF $2. 50/HOUSEHOLD
GUARANTEE REG ONLY; NO TOTAL GRANTS TO ANY
MUNICIPALITY TO MUNICIPALITY NOT
HAVE A DECREASE LESS THAN 2. 58
IN REG FROM PRIOR ABOVE 1983 TOTAL
YEAR