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Home My WebLink AboutFND-016-03 . Cl~-!lJglon REPORT FINANCE DEPARTMENT Date: GENERAL PURPOSE AND ADMINISTRATION COMMITTEE MONDAY, JUNE 16, 2003 Resolution #:C;PA-r3Lrj-03 Meeting: Report #: FN D-O 16-03 File#: r ;J-:J- By-law #: Subject: PROPOSAL FOR MUNICIPAL REFERENDUM REQUIREMENT FOR PROPERTY TAX RATE INCREASE Recommendations: It is respectfully recommended that the General Purpose and Administration Committee recommend to Council the following: 1. THAT Report FND-016-03 be received; 2. THAT the Progressive Conservative Party of Ontario be requested to NOT extend the provisions of the Taxpayer Protection Act to the municipal sector; and 3. THAT a copy of this resolution be forwarded to Ontario Premier Ernie Eves, the Minister of Municipal Affairs and Housing, and the local MPP. Submitted by: . Reviewed by{) ~ ~ Franklin Wu, Chief Administrative Officer. NT/hjl 1316 REPORT NO.: FND-016-03 PAGE 2 BACKGROUND AND COMMENT: 1.0 The PC Party of Ontario's re-election platform proposes that municipalities would be required to hold a referendum on any increase to local taxes. Many of the municipal associations have expressed serious concern over this proposal. The Association of Municipalities of Ontario has issued a member alert (Attachment "A"). Also attached is a bulletin from the Municipal Finance Officers Association of Ontario (Attachment "B") that outlines specific key concerns relating to this proposed policy. 2.0 As outlined in the attachments, there are some serious potential ramifications of such a policy. The policy would substantially undermine the sound budgeting practices and tax policy decisions that are an integral part of municipal financing infrastructure. 3.0 The Provincial government has downloaded significant responsibilities to municipal government over the last several years, the cost of which are not under the control of the municipal government. Also, the promise of the new Municipal Act was to increase the autonomy of local government. This proposal would be in direct opposition with that philosophy. CONCLUSION: 4.0 It is recommended that the Progressive Conservative Party of Ontario be requested to withdraw this proposal and not extend the Taxpayer Protection Act to the municipal sector. Attachments: Attachment A - Member Alert from Association of Municipalities of Ontario Attachment B - Bulletin from Municipal Finance Officers' Association of Ontario 1317 REPORT NO.: FND-016-03 PAGE 3 Copies to: Honourable Ernie Eves Room 281, Main Legislative Building Toronto, Ontario M7A 1A1 Minister of Municipal Affairs & Housing 777 Bay Street, 17th Floor Toronto, Ontario M5G 2E5 John O'Toole, MPP 75 King Street East Bowmanville, Ontario L 1 C 1 N4 CORPORATION OF THE MUNICIPALITY OF CLARINGTON 40 TEMPERANCE STREET, BOW MANVILLE, ONTARIO L 1 C 3A6 T (905)623-3379 F (905)623-4169 1318 '-'REG OF DUR FINANCE Fax:9055717460 May 272003 11:54 Attachment "A" Menlber COllllllllni<-ation ~[mJO Association of ,!. MUricipalltles .. of Ontario Alert 393~""rnIS,&i1ll11tl1 T........ QoI M!l3 IS! Ta: (416) 971-_'11>:: (416)971-6191 _:....~..." To the immediate attention of the Clerk and Council , . May 23, 2003 - Alert 03/030 . AMO URGES MUNICIPAL ACTION ON REFERENDUM PROPOSAL Issue: Tory Party proposal would require municipalities to hold a referendum on any increase to local taxes. Background: As outlined in Alert 03/029, the Progressive Conservative Party has released its campaign platform for the next provincial election. Of principal concern is the proposal to require voter approval through a referendum before increasing local taxes - whether across the municipality or parts thereof. It will pose significant challenges to municipal operations and budgets and undermine the autonomy recently established with the government under the new Municipal Act. THIS PROPOSAL MUST BE WITHDRAWN. The policy is unworkable for many reasons and will result in multiple and costly referenda in each jurisdiction in Ontario. Councils are certainly not In favour of tax increases. Most of the municipal cost pressures come from: . provincially mandated programs and service requirements, which represent the majority of municipal budgets; . limitations of the property tax laws themselves; and . lack of other sources of revenue. As promised in Alert 03/029, an analysis of key municipal issues contained in platforms of the three parties is available on our websites. Action: AMO urges all members to contact their PC MPPs, Cabinet Ministers, and other PC Party contacts to raise awareness of the serious ramifications of a referendum approach to tax policy. For more Informalion. please contact: Pal Vanin;. Executive Director at 416 971-9856 eX!, 316 ()( email: pvanini@amo.munlcom.com 1319 ( ^' fT1 G) ANALYSIS OF KEY CAMPAIGN PROMISES 2003 (limited to key Issoes arising from campaign materials thai will dlrecliy Impacl municipal operaltons) ~tl~ ~ TOPIC PROGRESSIVE CONSERVATIVES LIBERALS NEW DEMOCRATS AMO COMMENTS (The Road AtIead) (various platform documents) ("Public Power"} ReI8Ttlndum will ba tellul,.,d en Ino,.,B_ II WIll add,... proplrty IIlx unfalrn.... MlO doee "'" IlJflPOlI PC pooltlon end munlt~11 property__ (""""I prnperty 11IM and wu nol OCIlSUIted. 111I1e fleW "",""ue oomesfrom only pari 01 oom"",rd8lIlOOuslr!al plllplrty texl AMO hN ulRJdffN ,.ytewol_ ProperlV T_ Iha JlGIIulilflon. then lhe reterendum-pmpooal No Iu~hlr Downloads wIlIt<lul ProYlnclal pIOperly 1811 _ end ml/IgrJIfon IuoIa, _ I\8lld ll1lpllllllllfrom a me)oolly 0I11lG8 -- 1IInd11llJ. .urh u ..ppIng. directly IIffecl8d belonl the mEllSIIfll klelalln. AMO ,... aid /10 do_d wilhoof 1'81IWIU8 SCutr:N.. Nww R8vlonue .... mun!l:lplll tax on po, _I.nd WlI Ihare 2 C8ll1e 01 flIlllllx (S3t2 Will .h.... 3 ..nil of llH tax Ill, public AMO HI/Rd llira 3-<:8111 iIIIlI 0111'" .... Sou..... pllrIIlng __ allowlld only If IpjlfO'Ielf mlltoftlyew) ler publle tranott. lnnatt, "",do or hlglwvayL lor I18nIpoII8lIon Ivnd; hor.t tax WOIJII1 (On, Hotel, th"'''llh e municipal """""",um 100 W W~ a~o'll munlclpellUe. (0 ",loa hcll8l tax lood.1lClIlOmIc r1ewlopmefIlIIourMm Parldngj d_d to a lpecl11c pooJecl ,'''''''gIN. I Munlo!l'8lll18o over 50.000 popur.llon will be W~I un Pmvlncl8l Audlto' enhllflcBd . -- MunJcIpMillN _1l1IIth ...... GpBfl & .....iewlld annU811y by an Onlarlo ,",unlclpal powlM'8 (0 I~ 'value-fcr-money" .COOUIlI8b!8IftraN:1M and budpltnrl ~ SeNIeM Quality Auditor, wtth 18_ powen from lnns"" pertn.... I~ AIPUP RsfJf'* -.IIIUXI!I8; ~ .. ProvInelll Auditor. Sma~lr munlofpalll!oe new MunlcJpaJ Ad acv:ounlNlllty audl18d "upon ""I....... mllUW&l; CRF m ""'. ~ C MIInldpel mvIoe aw, grant ptfIg18fIf8 bdng lhelr FJnance AudIl8 OWfl eccounI8bIIIIy ~ ~ will be 0IJ1I """" m 1/1 8II/.o11ng -. of Iccauntablllly.....1l/IN. PC poItcy appHA III 11IM IIIIltIIdpe/III ..,.0IJll/8bIe mote III PIollillcl IhellIhe commIIIIIIy. Community Will _1'11 Ru!8lJtlorthem 1'1IClIIlv8 'fal, Notthflm oommunlll'M ""..-.ilp1NMJ Relnwelment - w",- of provlnclal fundtng lI1ro"llh CRF. - C(IIJC8fII wIItt Ih8 A>lmulll Fund (CRF) t:J C ^' ., H Z Ii Z n fT1 ., Oi X ~ (J1 "" ..... "" ~ o Ao....lalIon of MunlclpallUu 01 Onterlo www.mun~om.com 1013 3: I Oi <.<: tV "" tV 8 ~ eN ..... I ..... (:;: '" Sl. 4>- ;-,; ..... ..... ANALYSIS OF KEY CAMPAIGN PROMISES 2DD3 (limited to key issues arising from campaign malerials Ihal will directry impact municipal operalions) .~tt~ c ;0 m Gl o "T\ '=' C ;0 "T\ H Z ~ n m .- TOPIC PROGRESSIVE CONSERVATIVES LIBERALS NEW DEMOCRATS AMO COMMENTS .(The Road Ahead) {various platfoim daculTUlnls {"Public Power'1 WII PUrt"".. and laka responslbl1llv for Willi... nck flnancIBI support II" JlJraI Will tnNIl8 lund!rtll prngnm lor MIO .lIppOIIs /lJ..5fmenl In munIr:lpaI brfdGu IlCI'OSS OntarfD. comRUJnllle.lo Improve thefT roads and If3M!lOllatlon_ ram end b~. Ills UIlCIIm how Ihe Roads .nd Varlcus provInelel hfllhway extenslons" bJldges. velwllons far PC "up/DIld" 01 bt/dgN will Brldges b. UlIrfwtBJm _the oonrlrlersl/ofl 0' ('for delaIIs ... Tal)' Plalrnnn PaJ/cy Paper.tO} WIll fund end d8V9lop atong-12nn Mnr. conJlnR:f/on & _fMen"" ~~hem highway elralagy. when Pro_ /lID 1itIe. We will_tract pfllVlnclll flnenclal Will plOllllle munJdpallll.. wiIlIlundlng to SIgnIITc.m~th1IJcII """'"" support fur Rural ond No~llIlJn pmporly operate ond malnloln .SW1Ir end 0nIad0. IWO he. .dwoclIIIdlbr Funding for oommunlllos to ImpJOVll their _and waler systooms. 1n__tlll_1Ild ..wer- --- .....rlnlr.lslruclunt. wm pfllVlde munlclpolllln wllh lb. 1rIIhI_ In 0nW1D '""" flHImI end , tnfrastructun ptovInclm !ow'" WnI c_ "Dynamic Downlown Fund" raeou",... ""eded 10 bong the North'. lor Bmwnllelds Irwestmanl water ...........nl.nd chlrIbutlon systoom - i-- up 10 standsrd. ~ fN WI. rsqulre Onlerlo Ceblnot to _l'AIh Win _ Northern O_pmenl WI" c:ntIlo . TOfGRIo ClIy. Che""". AMO..."""m alflftfllnglul rslirtIorWrlp ~ Municipal AMOoMeperyur. COlIne" who win ecMse govnml1l8fll WRI broaden munlolpelelllllorlty under wfIh Ihe PRwmoe that c/IIIIIaa ....... - f-.o AulIIoriIy dlroclly on Northern ls8Ues. IHpfH\INJI1It/N IIld "."., 8ffIllg8_ & Munl<lpal Act. In a/imoly_r. Govern"",nt Nor eI86r how IIrea would .ll'ec:t cumIIlt Ralatlon. m..rmg. _Ihe MamotBndum 0' l/ndIIrsIendlhg win cfllllle Independent Smtlrt Growth WUI relonn OMB w1lh oillBr pRl'llnclal W~I relonn lhe OMB MIO luppWlIgnIIIoant 0MlI1IIfcnn Boam WIlIIllUlhorlly to lBSCl>ie Tsslllls baf0r8 rules. more heed 10 local dad.ronl and end tWOgll/IIoIl 01 Ioco/ dacWonl. Planning golltg 10 the Onlarlo MunicIpal Board (OMB). moRl111mI to nMew appllcatlons WI~ Introdutle tile Naw Gmm PlannIng AuthorUy Act,1o fight ..rban Iprawl and prsurve agriculbmll land, wetMnds, and oII1er Importanl nalIlnlI.... "T\ '" X \D o (Jl (Jl -"j ..... -"j l:> "" o As-'a1lon or Mun1clpal111ea Q' Onlarlc www.munJoom.oom 2a13 I 3:: '" u:: tV ~ -"j tV ~ 0 0 w ... ..... 5l, ..... (Jl .. (Jl ;0 ..... tV .- ANALYSIS OF KEY CAMPAIGN PROMISES 2003 {limited to key issues arising 'rom campaign materials Ihal will direc~y impact municipal operalions} ~.tt~ l ^' m Q o .,., t:l C ^' .,., H Z ]) Z n m -.. _u._ .- "" - TOPIC PROGRESSIVE CONSERVATIVES LIBERALS NEW DEMOCRATS AMO COMMENTS (The Road Ahead) (various platform documents (dPubnc Power") Will nwlaw lite .- of fire sOlllloeo In AMO rxmIlde1s fire Hnift;e$ as local Fire Services -- rum' OnfaOO lIuuugh ... Independent --..- me/lf1n rnd In prln</ptJJ. tIl8 ProIllnc8 eudll 01 Ill. Are M<orshalr. Office. lI1ou1d not Ill/rude on /iris /IlJrIrorlfy. Commllt8d Illlmplenumling Commllt8d 10 ImplelMnlll1Q 'Mlllmplemenl WalkerlDn IlIq\Iky Mwk:lpaI ",,.11I _ dNm1tm IhouId mcommendalTona of Walkerton Inquky. lllCOIIIt1l8Ildefiona ofWalkerlcn Inquiry. recomrnenda1lona and will eolllbnsb be 'lIJ'I'OINd by Induslty rmdIw Walerohecl ple... will be done by commltl&tt W1:1 dlvert 60% of wasIB rlllm land1llls Wate..""d pleooTng boorda thai wll pItllllnc8. MUftlcl...1 .ppolnted by a CclmlM1tJon 80l11d. ollJ1lnlcwaote wllbln - \I88's. producs _..hod prolectJon plions. A/unlcfpeIIlIft wIilll/flJly be del(gn81ft ElWlronmental Will ben "me1l8 lendlUlo' Ind fndNll'llllcn. Ihehllp_oIwa_d IuIlH WIlloollra""port Toronlo'lll8lhge or protec/lon p_ _should lhll1llllN soulhern Onladu ....rc WBollIIO 1I1e Nor1h ""... . pdm:/pIJ roIllln IhW_1IDn.. lWI reqWw dlltaIIW __110II 0' , .othotlly. 8II"""'menlendllnMclel .!htogy. - WIll malch flldenlsullPort \0 aeale Will give munlclpoli1lH ouIhorlly ID JWO.UfJPOtls IIIOf8 pmwInct.l ftmJi1r!(I ;: 20,000 new housing unll9 pmrent c18momkln of etrordable bOUIlng /'or ItItllWbIB hoIJIlIIf pmgtamL W_ aocl chlk!nln ball1Q dornMllc 'MIl b1Jlrd 32,000 ~ hauslng urib /lice"" tedIrtlIblAIoI1 ptIlQ'IMII_ II I __Me hcumv Is I ProWm:IeI i' Houelng vlolonee altuallona \0 rec:elve p.1odty In and "2,O1lO ,upportlvlllloUllng unlll 1NpOII!lbIIIty. MtJn/cfpB1II1es m_ nol subsrdlzed housing. Wlllrequl'" , 0% new urban Ind 5% new be p1frmHy Ifn,onoor.r oIlrouslr1g. rural _able hOll&lng 10 be buill fully . acc....lble . ~ Wllll~1Ile Onl1lOO Cblkl Oenatit 10 WlII""'b ..... perents "IWllOCCass \0 'MII.lnk OOSP ID cOlI of living. MlIII/ottII .uppotI/'or IIt1CfaI IMII/t:M ! nl1lO'lll cIlIldren ""m Wefi'are. etrocdlbkt, qullllY chlrdca",.. 'Mil prcw1de f\lndlng for fully eocaealble ....1cImHNf brA ~"'"./ costs shcuId Socl8l IllcnoI8 IllUding IorOOSP. Will help "Welfare re.lprants wlIh slllll. lranaft and housing. nof be on pn>pMfy tilt bNe. Slrvlc8ll lnoreese lundfng lor 1IlIIntal heallh Ind ClHII lrelnlng, d1l!dcl1re and afI'ordabl. ~ 'Sh8lld c... T.......lo fIIb people living on housing". ~ lIIe _llnlo ..... . .,., '" X ill o LTl LTl " >-' " '" en o 3: '" u:; '" " '" o o '" >-' >-' LTl LTl _lIan ., MoJnldpdU.. ., OI1l1r1e wwwJlUlnlcom.com 3.,3 :u >-' '" ~ MFOA Attachment "8" MUNICIPAL FINANCE OFFICERS' ASSOCIATION Ot' ONTARIO @MFOA BULLITIII To MFOA Members June 4, 2003 Backe:round Information - Municioal Referendum ReQuirement for Prooertv Tax Rate Increases orooosed bv PC Party of Ontario Many MFOA members will by now be aware that the PC Party of Ontario's re-election platform contains a commitment to require Ontario municipalities to hold local referendums before increasing property tax rates, (The complete platform, entitled "The Road Ahead," can be accessed at www-Dntariopc.com.) While it is further proposed that municipalities be permitted to tax the sale of gasoline, rental of hotel/motel rooms and use of parking spaces if the tax is approved by affected taxpayers, the practical effect of the proposed policy, if implemented, would be to impose a freeze municipal property tax rates in Ontario unless local voters consent to an increase by way of a local referendum. The new requirement would be given effect by extending the provisions of the Taxpayer Protection Act to the municipal sector. MFOA wishes to assist in helping member municipalities position themselves with respect to this proposal by providing relevant background information and facts that could provide support for any action which a municipality may be interested in taking. Backl!round The PC Party of Ontario proposes that "voter approval would be required before a municipal council introduces a new tax or increases the rate of an existing tax." Tax changes that are "revenue neutral" (e.g., rate increases needed to offset negative assessment growth) would not be affected. Referendum requirements and other measures to cap municipal tax revenue have been imposed in many U.S. jurisdictions. An important precedent was set in California with the passage of Proposition 13 in 1978. A citizen-led initiative, Proposition 13 rolled back local property taxes to one per cent of assessed valuation, limited assessment increases to the lower of two per cent or the armual inflation rate, and required 2/3'd voter approval for new local taxes. Proposition 13 subsequently led to the imposition of state-imposed assessment caps, tax caps and/or local referendum requirements in many other U.S. states. While it is not the purpose of this Bulletin to exhaustively detail the subsequent impact ofthese policies, some of the documented ones include: Reductions in municipal service levels; infrastructure deterioration; increased reliance on user charges; debt ratings downgrades (leading to higher borrowing costs); and, over the long run, increased municipal financial dependency on senior levels of government. Bulletin - June 4, 2003 Municipal Finance Officers' Association of Ontario 512 King Street East, Suite 306, Toronto, ON, M5A 1M1 Phone: (416) 362-9001 Fax: (416) 362-9226 On the web:http://fj''tj''a.on.ca Page 1 of4 This would be entirely counter to one of the central premises of municipal government reform in Ontario since 1995, which has been to increase municipal autonomy and accountability (e.g., via the new Municipal Act). A key concern is that the proposed policy does not take into account how markedly circumstances in Ontario differ from those in other jurisdictions. MFOA contends that these differences completely undercut the case for municipal referendum requirements in this Province, as follows: Ontario municipalities have budgeted responsibly o Total municipal property tax revenue in Ontario grew by an average of 3.0 per cent per annum between 1990 and 1997 (pre-Local Services Realignment) and by an average of only 2.4 per cent per armum between 1998 and 2001 (post-Local Services Realignment). This is less than average annual provincial GDP growth (4.4 per cent) and in line with the average armual provincial CPI inflation rate increase (2.5 per cent) over the 1990-2001 period. Prior to Local Services Realignment, amalgamation, property tax reform and other provincially-mandated changes, many municipalities had not raised tax rates for many years. In contrast, caps and referendum requirements in other jurisdictions were usually triggered by local tax increases well above rates of inflation or economic growth (and driven by broad-based, citizen-initiated grassroots tax reform movements not evident in Ontario at this time). Ontario municipal tax base is undiversified o Ontario municipalities have access to only a single tax base (property assessment). In contrast, most U.S. municipalities--and the Ontario government itself-have access to a wealth of diversified tax bases (e.g., personal and business income, sales, commodity, capital, payroll etc.) many of which grow with the economy, making these jurisdictions vastly better situated to make good on tax freeze or referendum commitments. Ontario municipalities prohibited from running deficits o In contrast to many U.S. municipalities (and the Province of Ontario) Ontario municipalities are effectively prohibited from running operating deficits or financing current spending from borrowing. This makes the unfettered ability to set the property tax at a rate high enough to cover all costs budgeted for the year a fundamental requirement. o Moreover, the policy would undermine the current basis of municipal budgeting in Ontario, under which local taxpayer needs and preferences are the drivers of the budget and tax levy requirements (for those services that are under municipal control). Instead, service offerings would become driven by short-term assessment growth considerations, particularly in low- growth municipalities-an entirely inappropriate premise for municipal budgeting. Ontario municipalities must rely on an unpredictable tax base o In contrast to governments that have access to other tax bases, Ontario municipalities must base tax rates on current values of real property which can and do fluctuate substantially between assessment periods. The proposed policy would be especially harmful to economically challenged municipalities that are not growing or are facing assessment declines. Bulletin - Jnne 4, 2003 Municipal Finance Officers' Association of Ontario 512 King Street East, Suite 306, Toronto, ON, M5A IMI Phone: (416) 362-9001 Fax: (416) 362-9226 On the Web: http://www.mfoa.on.ca 1324 Page 2 of 4 Province dictates many municipal costs o Upwards of 50 per cent of a typical Ontario mtmicipality's budget relates to costs beyond municipal control, including services mandated or controlled by the provincial government (e.g., social services); the cost of provincially-mandated changes to service delivery standards (e.g., provincial regulatory changes relating to drinking water standards); and general changes in local demographic/economic conditions. In probably no other North American municipal jurisdiction is so large a share of municipal costs beyond direct cotmcil control. Many municipal costs are sensitive to economic conditions o The huge increase in municipal social service funding responsibility that resulted from Local Services Realignment has made Ontario mtmicipal finances extraordinarily sensitive to changes in general economic conditions and thus the tmavoidability oftax increases during economic downturns-periods during which assessment base contraction may also be occurring. Municipal infrastructure deficit not considered o The mtmicipal infrastructure deficit in Ontario is massive and growing (estimated at upwards of $4B per armum for the next decade). The imposition of a referendum requirement for new taxes, or rate increases to the property tax, will only exacerbate the current infrastructure funding shortfall and the unpredictability of future funding-to which senior governments (in contrast to the U.S.) have offered no comprehensive solution to date. Threat to municipal debt ratings o Referendum requirements risk adverse impacts on municipal debt ratings. Downgrades would increase the cost of borrowing, placing additional stress on local budgets and crowding out other expenditures. The impact would be particularly severe in Ontario where rating agencies have already expressed concern about the narrowness of the current mtmicipal revenue base. The policy would also act as a serious constraint on the flexibility of elected officials to act promptly in the face of a financial emergency, thus increasing the risk of debt default. (Even when overrides are possible, U.S. experience has shown that the added time involved in getting voter approval reduces management's ability to respond to emerging crisis situations.) Threat to cash flow o In Ontario, mtmicipalities already cannot issue property tax bills tmtil a complex annual process-tmique to the province on accotmt of an elaborate framework of tax protection measures-is completed. This process involves the delivery of assessment information by MP AC, the issuance by the Province of various regulations, rates and analysis tools relating to mtmicipal and education property taxation, and analysis and decision-making by municipalities relating to tax ratios, capping/clawback analysis, etc. In the context of these existing measures, imposing a further requirement to conduct a local referendum before tax bills can be prepared and issued is both impractical and would pose a severe threat to municipal cash flows. Further constraints under current tax system o The Ontario Fair Assessment System (OF AS) contains unique constraints on the ability to redistribute the tax burden between classes, owing to tax ratio restrictions and other features that do not exist in other jurisdictions. To require a referendum for any and all tax rate increases Bulletin - June 4, 2003 Municipal Finance Officers' Association of Ontario 512 King Street East, Suite 306, Toronto, ON, M5A 1M1 Phone: (416) 362-9001 Fax: (416) 362-9226 On the Web: hllp://~'"'fOj2j Page 3 of 4 would therefore be insensitive to the fact that such increases may, depending on the circumstances, affect taxpayers in all property classes, some property classes or the residential class only-and/or may relate strictly to the complex mechanics of OF AS and not to municipal budgetary requirements. Province has already constrained other revenue sources o Unlike in other jurisdictions where municipalities have been able to partially offset voter rejection of property tax increases via increased reliance on user fees, the Ontario Government has already imposed severe constraints on existing alternative municipal revenue sources such as municipal electrical distribution utility returns, licensing fees, several types of user fees, as well as threatened future caps on water/sewer rates and building permit fees. As a result, municipalities may have no option but to increase fees that are not presently restricted (e.g., transit fares). Referendums costly o Finally, the cost of running local referendums will be considerable, particularly in Ontario's smaller and more transfer-dependent municipalities, and may have a material impact on the tax rate increase that a municipality may require to cover its costs. For further information, please contact John Bech-Hansen, Executive Director, MFOA at (416) 362- 9001 ext. 233, or bye-mail atiohn(a)mfoa.on.ca. Bulletin - June 4, 2003 Municipal Finance Officers' Association of Ontario 512 King Street East, Suite 306, Toronto, ON, M5A IMI Phone: (416) 362-9001 Fax: (416) 362-9226 On the Web: http://www.mfoa.on.ca . 1326 Page 4 of 4