HomeMy WebLinkAboutTR 12/98 (2)�N OF p�
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REPORT TO COUNCIL
FROM: Gillis A, Pnterson DATE: April G, 1998
Dircctor of Financc
REPORT NUMBER: TR 12/98
SUBJEC'f: Provincial Downlonding
RECOMMENDATION:
(t is rccommended Ihnt this Rcport No. TR 12/98 bc reccived by Council for
infortnation.
ORIGIN: Dircctorof�innncc.
AUTHORITY:
Not npplicablc.
FINANCIAL IMPLICATIONS;
Unccrtain, but potentinlly mnjor nnd negative for Pickcring over thc longer tertn.
EXECUTIVE SUMMARY:
This report is nn updute to Report number TR 26197 submilted to Council in
December, 1997, which dealt with the Provincial duta nvailnble at thnt time. The
Intest informntion shows n chunge from n shorlfnll of $676,000 to a gnin of
$410,000 for n total positive chnngc of $1,086,000, almost thc samc ns thc currcnt
negative impacl on the To�m of changes to Payments in Lieu of Taxes.
In summary, while the msidentinl education tnx burden will dccrease by 50 per
cent, the Region's costs rccavered from Pickering will incrcuse by approximntely
85 per cent, thereby almost ofTsetting each othcr, Pickcring's taxcs will incrcnse
by some 16 per cent, more thon offset by Ihc residential educntion tax rcduction,
Loss of pnyments in licu of tnxes, whilc still to bc determincd, wiil huve the finnl
negativc impuct of approximntcly 12 per cent on Ihc Pickcring portion of thc tnx
bill.
Report to Council TR 12/98
SubJccl: Provincial Downloading
BACKGROUND:
April G, 1998
I'agc 2
On Deccmber 12, 1997 thc Provincial Govcmment rcicased thc first "Downloading"
numbers to municipnlities. Rcport number TR 26/97 wns proviJed to Mcmbcrs of
Council shortiy therenfler.
On Tuesdny, Murch 31, 1998, Ihc Provinciul Govemment released reviscd
"Downlonding" numbers to municipalitics.
The Intest relense of data contains not only rcviscd numbers, which morc closcly
approximntc thosc calculatcd by Town stnff, but a revised format. Thc information
prcscnted in this rcport will first compare to Ihnl presented by the Provincc in Dccembcr,
1997 in the original formut. The formut changes will then be explained.
Town of Pickcrin¢
The latest Provincinl datu as coninined in Auachment I, compnrcJ to that previously
rclenscd is indicated below:•
CateQOry
Property Asscssment
Trnnsit - Operating & Capilnl Grants
Septic ]nspections
Mnnaged PorcsdConscrvulion
Lnnds Rcbatc
Partn Tox Rcbntc
Gross Rcccipt Taxes
Municipal Support Grnnt
Gros� Incrcaae in Funding Requiremenis
Decembed97 AnriU98 Difference
a s s
800,000 - (800,000)
1,389,000 1,3R9,000 -
- J2,000 32,000(I)
33,000 R,000 (25,000)
68,000 53,000 (I5,000)
4G9,000 191,000 (278,000)
940,000 940,000
3,699,000 2,613,000 (1,08G,000)
Residcntial �ducntion
Property Tax Room (2) 3,023,000 3,023,000
Net Increa�c in Funding Requirements 5676,000 $ 410 000 S I 086 000
NOTE S: (I) Most likely recovemble by fces.
(2) Provided by the Province in December, 1997.
According to the latest infotmntion, Pickering will no longer be "rcyuircd" to rcducc ils
budget by $676,000 to produce the "rcvenuc neutral" pasition put forth by the Provincial
dovemment. Furthermorc, thc reviscd downloading total of 52,613,000 will be morc
than offsct by Pickering's share of thc residential educotion propeny tax rcduction of
53,023,000 resulting in a net rcduction of costs to Pickering rcsidential taxpaycrs of
5410,000, a chunge of S 1,086,000 from December,1997.
Reporl to Council TR 12/98 April 6,1998
Subject: Provincinl Downloading I'uge 3
The Provincinl releuse then provides, Pickering's share of Upper Tier Net Cosls, which
we cannot confirm. Pickering's share is stnted os 516,650,OD0, offsel by the Regional
shnre of residenlinl educnlion property lnx room of 519,179,000 leuving a net gain of
52,529,000 on "Regionnl Downlonding". The totnl net gnin for Pickering's residentinl
laxpuyers is, therefore, 52,939,000. However, Pickering's shaze of the "suvings" the
Region must renlise lo produce "revcnue Neutrnl" is 52,040,000 resulling in a nct cost
shifl benefit of 5899,000. This informution was presentcd lo Regiannl Council on
Wednesduy, April 1, 1998. The Regional downloading estimntes of npproximntely 5100
million nnd cost savings requirement of somc 511 million do not appenr to take into
consideration $I 1 million of transporlation capiml funding from the Province nor some
S4.3 million of PIL shuring from the area municipnlities.
As discussed in n scpurate report in this Agcnda the net effect in Pickering of changes in
Pnymcnis (Grants) in [.icu ofTnxes could bc $I.I million in 1998, which could bc offset
by the above mentioned $899,000 resulting in an all in net effcct on Pickcring of a
5200,000 wst incrcase. We nre unnble at this timc to ascerinin the coincidcntnl nuture of
thc foregoing.
Municipul Capital and OperetinR Restructurin� Fund (M.C.O.R.F.)
Included in thc infortnotion from thc Province is transportation cnpilal funding in thc
amounl of S554,000, a chequc for which was rcceivcJ last �veek. This funding,
prcviously unanticipatcd ut this timc, is bascd on n rnthcr complicated formulu to assist in
funding futurc bus purchases, if nnd when underlaken. It reflccts the siu nnd age of our
curtcnt Oect. All possiblc uscs of ihcsc monics will be considcrcd and recommcndations
madc to Council, most likcly ot thc timc thc 1998 hudgcl is prcsentcd.
Ontario Feir Asacaamcnt System (O,F.A.5.)
In a press release from the Provincc, providcJ lo you Inst weck, it wus indicated thut lnx
increases, due to implcmcntation of O.�.A.S. on commercinl nnd industriul properties and
commcrcial•residential propertics with 7 or morc units, would be limited to 2.5%
unnunlly.
In addition to some other nnnounccments, which will nccessitutc a complete rcthinking of
O.F.A.S.implementntion and computer modcling undertnken so fur, the rctum of thc
assessment rall nnd the appeul period have been extendcd by one month to thc enJ of
Mny nnd lhe end of July, respectively.
Euch change or revision nppears dcsigned to lessen lhc property tax impuct whilc
mnintaining the integrity of the O.F.A.S. In other words re-assessmcnt with as littic as
possible chunges in toxntion.
1998 DudRet
Given lhc foregoing, it is appropriate to specuinte thnt Council mny not wish to finish
Budget delibemtions until )une or July. In such a case, the first installment of thc final
tax billing could bc due in Inte August, as opposcd to on or around Junc 25 in prior ycurs.
This wili ncgotively affect the Town's cash ilows, rcducing inicrcst incomc or incrcnsing
temporary borrowing costs. Howcvaq wnsidcmtion is being given to accomplishing thc
foregoing in a more timely manner und a rcporl will be put fonmrcl in due course.
Report to Cauncil TR 12/98 April b, 1998
' SubJect; Provincial Downloading Pngc 4
ATTACHMENfS: (1) Local Scrvicc Renlignment CoSt Summury
(2) Rcgion of Durham Report "Provincial Updatc on Downloading
Cost Estimntes"
(3) Provinee of Ontnrio News Releuse - Smnll �usiness Tax Solution.
Prepazed By: A pr ecUGndarsed
� �
Gillis A. Paterson 'v—
dAP/md
AtWchments;
Copy: (icncrul Managar
L'or.al Services Realignment (LSR) �
Community R�investment Fund (CRF) -1998 Allocation
Total for all Municipalities within the Geographic Area of the
Region,of Durham :
S Thouu� .
SorialAssistance - - � �.3� �
Ch�d Cara 1,480
PubGc HeaIN � 8,720
Ambulancas 9,204
Soaial Housing 36,338
ChOdren's Afd Soaetles (2,472)
GO Tronsit 11,275
Property Assessment 4,780
Transk • Operating and Cep&il 5,377
ar�o�u o
SepUc Inspeciions 186
PoGcinp 0
Provindal OBencei Net Revenw (1,658)
Grosc Re�eipu Tattes 3,483
Managed Forests / ConsemGon Land� Rebate 418
Ferm Tax Rehata 3,138
Municlpat Support Grent 18,467
Less Sevings /3,A36
2 NET COSTS 1o3,t e
3. RESIUENTIAL EDUCATION TA% ROOM � 103, 4E
4. 70TAL CRF FUNDINO I,4B1
(fine 2 minus line 3; zero N negatne)
�Community RelnvortmeM Fund 3,80�—
Speeld Tnn�Rlon Assi�tince I 474
a er es en a uca on ax oom 4,892
and Totai CRF Funding � �
(line 2 minus line 3 minus 6ne 4)
MCORF Tnnsportation CapRal Funding 14,647
Highw�ys Fundinp 6JB
A��M�# 1 ��� TR 12/98
QmrioMsi4tryolFiuna
m
Local Services Realignment (LSR)
Community Reinvestment Fund (CRF) -1998 Allocation
S Thousands
Region of Durham
Child Can 1,480
PubGe He+kh 8,720
AmbuWnoes ' 9.204
Soeial Housing 38,338
ChOdreds Nd Socleties (2�41�)
GO TransR ���z�5
PropertyAssessmeM � , 4,78D
Transit - Operatinp end Capdal �
Airports 0
Septic Inspections 0
Policinp 0
Provincial Offences Net Revenue (1,658)
Gross Receipb Texes 1,578
Menaped Forests / Conserv�Uon Lands Rebele �?
Farm TeY Rebele 1�5�9
fdunicip�ISupport Gront ���
Less SavYigs �4�
2 NET COSTS 89,464
3. RESIDENTIAL EDUCATION TA1( ROOM 89���
4• TOTAL CRF FUNDINO 0
(line 2 minua line 3; zero H ne atNe
Communiry Re nveatment und 0
Speelal TnnaRion As�l�tanu I 0
a er es en a uca on ax oom �
and Total CRF Funding
(line 2 minus line 3 minus line 4)
MCORF Transportation Capkal Fundinp 71,700
Hlghways Fundinp 679 . �".
OM�iu Mn46y olFruna
Local Services Realignment (LSR)
Community Reinvestmenf Fund (CRF) -1998 Allocation
S Thousand�
Town of Pickering
Region of Durham
Socfa�Assistance � 0
Child Cee 0
Pubuc HeaAh 0
Ambulantes 0
Soelal Fiouimg 0
Chtldten's Aid Socielies 0
GO Trensk 0
Property Assessment 0
TransR • Operatlng end Caphal 1,389
a�o�s o
Septic Inspe:tions 32
Politing 0
Provindal Oflenoes Nel Revenue 0
Groas Rece'ryts Taxet 191
Maneged Farests / Consarntion Lands Rebate 8
Fartn Taz Rebate 53
Municipel Support Grant 940
Less Savings 0
Snare ot UDPer Tier Net Casts 18,850
2 � NET COSTS 79,263
3.1 RESIDENTIAL EDUCATION TAIf ROOM 22.Y02
4• j TOTAL CRF FUNUINO 0
� (I�ne 2 minus line 3; zero ll ne ative)
� Cammun!ryRelnve�trtwntFund p
� Speal�l Tnnsitlon As�ictonca p
� a er es en a uca on ax oom p�939
; and Total CRF Funding � �
� (line 2 mmus line 3 minus 4ne 4)
MCORF Trm:portatlon Caprial Funding 654
GuarbMNpry of FYUnu
�
�
' April 1, 1998
T0:
FROM:
RE:
ATTAidN�IEM'N? TOREPORT# TR 12/98
"HANDOUT"
Finance end Administratian Committee
R.J. Clapp, Commissioner of Finance
REPORT N98-F•29
PROVINCIAL UPDATE ON DOWNLOADING COST ESTIMATES
That the Finance nnd Administration Committee recommend that Regional Council reccive lhis
report for infortnation.
BEPS2HT:
1.0 iNTRODUCTION � '
• On March 3l, 1998, thc Provincial Ministry of Financc, rcicased updated finnncial
dala rclatcd to their pownloading of responsibilities, or the Who Does Whut
(WDW) initiative.
� 2.0 HI .H .1 .tITS OF R . . .ASF.
2.1 Chanp,�s in Co�t Estimate�
• The Province has released anothcr series of rcviscd cost estimatcs for the WDW
downloaded responsibililies for cach local and upper ticr municipality.
• The Impact on Uurham Regton increased by approximately 5600,000 to 511.0
million, from the December 11,1997 Provinc(al estimate of 5103 milifon.
The Provincial estimates far Durham Region and the local municipalittes are
delailed In Attschments #1 and N2.
• 7'hc Province is still insisting that the Region can find significant savings to offset
the new downloaded costs. The Provincial cost estimates reFlect the assumption
thnt the Region will find savings of approximately S I I.0 million, or
epproximately I I% of the 1997 Reginnal Levy budget.
• Further, the Province has changed its method of presentation for the new WDW
amounls by alloceting the upper tier costs to lhc local municipalities, In so doing,
the Province assumes that the Region will achieve the estimated snvings
calculated by the Province i.e. approximntely 51 I million. Accordine�y. the
S Provincial ectimates for the imoact on each Iocei m�nlcipJ�y e�r
��nder.tated by Ihese Provinelel�y salc�lated and erbitrarv eavinec ��hich c�p
nat be achleved w(th(n the conOne• of the ReQion'�xi.tin�gntrollable co�tc.
I '
REPORT M9&F-39 IIANDOUT
PROVINCIAL UPDATE ON DOWNLOADING COST ESTIMATES PACE 2.
� 2.2 omm �ni�y Reinvestment end Special Transltton F�nd.
• The Province has increased the funding available from the Community
Reinvestment Fund to municipalities by S30 miliion to 5600 million. The
Cammunity Reinvestment Fund and the Special Transition Fund werc established
by the Province to provide essislance to municipalities with regurd to the WDW
initiative,
• Two municipalities in Durham Region will be receiving a contribution from the
` Community Reinvestment Fund - 53.2 miilion for the City of Oshawn end 50.6
million for the Township of Brock.
� 'fhe P�ovince has also indicated that the City of Oshawa and the Township of
Brock will receive 5404,000 und 570,000, respectivcly, from the Spcciol
Transition Fund.
2J Residential Education Tax Roam
• The education tax room has becn updated to reflcct the latesl Curtent Value
Assessment data, 71�is educatian tax room reflects thc diffcrencc betwecn Ihe
1997 residcntial education luxes and thc lower 1998 residentinl education taxes to
• the taxpaycrs in each local municipality.
• The cducation tnx room will be rcplaced by ihe new downlaadcd costs of both tha
Region nnd thc locul municipalities.
2.4 Provincial Invoices for WDW Rcrvices
• The recent announcement indicatcd that Municipalities will not be required to
make payments to the Province for the new WDW downloaded services unNl
September 1,1998 (rather than June 30,1998) with the notable exceptton of
soclal asslstance and child care. The Province has been adjusting since January
1998 its monthly payments to municipalilies for general welfarc and child r�re to
reflect the new cost-sharing arrangements for family benefits and child care.
• The promised monthly Provincial statements regazding each of the downloaded
services has not been received by the Rcgion.
�
,, • • REPORTN9bF-29 IIANDOUT
PROVINCIAL UPDATE ON DOWNLOADING COST E5TIM1tATES PACE �.
• 3.0 IMPACT ON TAXPAYF.RS
• The revised Provincial estimate indicates that the Region of Durham will be faced
with a shortfall of approximately Sl I.0 million in funding for the downloaded
scrvices in I998, an increase of epproximately E0.6 million over the previous
Provincial estimates. This estimated impact would require an increase of S55 to
S70 per household for Regional purposes.
• ]t should be noted that the recent update to tha WDW downloaded cstimates does
not consider other potential costs which have not been clearly identified by the
Province, such as the edminisUation of social housing by the Ministry of
Municipal AfCairs and Housing.
4.0 SUMMARY
� Regional staff will continue to monitor the Provinciol WDW inilialives and
Provincial cost estimates end will repon to Commiuee and Council as further
details become availnble.
� These estimates will be incorporatcd inlo tha preliminary 1998 Regional Generel
Levy Hudget revicw and outstanding concems will be pursued with Provincial
. staff at the appropriate Ministries,
R.J. Clapp, CA
Commissioner of Finance
RJC:dik
i�11�8Ch. � � � � . . � OLK�REPORT96�FINWDW3
�
� REGIO�DURHAM
IMPACT OF D0IYNLOADING ON DURIIAM TAXpAYF.R
BuMonAl�rch.ifNBProvincl�l0ovemmmtAnnounc�ment, IneludlnpPO011�olSa415nv1aaAcmnOfA
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11tUNICIPALITIFS
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pTOTAi.i i'ROVINCIALDOWNIAA�6UCOS18AI.I.00A78D . I 11,3f1 7Afl. t1,T10 ��,- I7,W � 11,707 6A11 I,NO 11,101 ..
_ _�. . . '� -- . .' - .. -__ .. .__ ... _._ ..._ .... _
E LBS9RB9tD8M1ALEDUCA710NTA%ROOM ��- �,. ..I...j17.ut) . f�l (1��1 (�Aw) 1�7) N.�1 �I�MQ lilen ��
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._..... . .. . _
'_'�._�-.� � ..`_� �_�_�"__."__.... . <__'___- ___._.r�__ _._._
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Lma: SpetlYTnml�on/u�4WU ; 0 (J0) 0 (161) 0 0 0 0
p I(FT IMPACT TO DURII.Uf TA%PAY�d ..
PRUMfltOVINCIALA0WM.0AD1NG1�IT1A77V83 : '-- j-� � tAG .. ` .310.. . .t/! IA1f . j1M1 .. . Mi �� �671 � � 11l7
_ ... _.____ ___._.�_.-- - —._:..__ V I--�_.»._t'- -.___ _...._- -'..._ ._ ___.�:._...--"
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ns
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(t.Y15) r�.
Attachment N2
DURHAM TA7�AYER IMPACT OF THE
� PROVINCIAL FUNDING TRANSFER ANNOUNCED BY
THE MIMSTER OF FINANCE ON MARCH 31, 1998
a�. �+�
t99! FUNUING
A.Y10l1�CE\IE.\T
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(�I TOTAI: HEAL IMPACI' 7
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�
1998 FUhDING
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TOR ' I�. °rr�v, 1b.9. � 13.3 � (2.6)i
F7NANCE DEPAR111tE1V7': A(erch 3l, 1998
, HVES ANNOUNCES SMALL BUSINESS TAX SOLUTION Pagc i oF2
AITACHMENTq? TCiIt9�011TN_T$.12/9e
New� Release �
Communiqu� lJ Onta
Mtnittty of FYunce Nki46iro des Fln�noet
FOR IMMEDIATE RELEASE:
MARCH 27, 1998
EVES ANNOUNCES SMALL BUSINGSS TAX SOLUTION
TORONTO -- Finance Minister Emie Evcs today followed through on his commitment to protect
small business from large property tax increases by announcing furthcr measures that local
govemments can use under ihe new Ontario Fair Assessment System. Today's announcement includes
a provision that would allow municipalities to limit tax increases, to no more than 2.5 per cent for
each of the next thrce yc;v:,, on business properties with historically outdnted assessments.
"Many municipalities have assessment bases that are relativcly up-to-date and may not need to use
this ceiling on tax changes. We arc making it available to municipalilics to ensurc they have every
necessaty means to protect small business and the jobs thcy create," Eves said.
Some properties in arcas where ihc nssessmcnt basc is badly out-of-date, such as Toronto, could have
faced large shiRs in property taxes. Thc province has been working with �ocal govemments and small
business groups to develop a package of additional measures to makc the new property tax system
feirer and more manegeable, including:
• limiting, to no more than 2.5% annually for the next 3 years, municipal and education property
tax increases resulting &om the new tax system for commcrciai and industrial properties, and
commercial•residential properties with 7 or more units.
• making availeble new classes: o(tice buildings, shopping centres, parking lots and vacant land,
and large industriel properties as well as related subclasses for vacancies;
• permitting tiers or graduatcd tax rates to be applied to both commercial end industrial
propenies, egain to help protect small business;
• allowing the 8-year phase in for all property tax changes rclated to the Ontario Fair Assessment
System;
• allo,ving municipalities to provide tau rebates to business, especially smell business, that need
further protection;
• extending the retum of the assessment rolt by one month to the end of May;
• extending the assessment appeal period until the end of July;
Municipalities can choose to use the measures that are fairest to their small business communities to
implement the Ontnrio Fair Assessment System at a pace that suits local needs.
Where a municipelity adopts new assessment classes end/or gradueted rates to assist small business,
the Province will parallel these measures for business education taxes.
"I said three weeks ago thet thera is no way ►his Government would allow the tax horror
, EVES ANNOUNCES SMALL BUSINESS TAX SOLUTION Page 2 of 2
stories that were circulating to happen," Eves said. "The changes 1 am introducing will
mean that no small business in Ontario needs to face e tax increasc of more than 2.5 per
cent as a result of the new system. Wo will always stand in support of smell business, thc
economic heart of communities across Onterio."
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For fuHher
information:
Rob Mitchell J��$
Tomksinon
Minister's O�ice Communications
Branch
(416)325-9566 (416) 325-0545