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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