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HomeMy WebLinkAboutTR 26/97?O'J?p of p/Ch z q &.41M , REPORT TO COUNCIL FROM: Gillis A. Paterson DATE: December 15, 1997 Director of Finance REPORT NUMBER: TR 26/97 SUBJECT: Provincial Downloading PURPOSE: To inform Council RECOMMENDATION: Receive for Information AUTHORITY: Municipal Act, R.S.O. 1990, as amended FINANCIAL IMPLICATIONS: To be determined upon receipt of more information. BACKGROUND: On Friday, December 12, 1997, the Provincial Government released information regarding downloading. The following are our comments, which are the first of possibly many as the events continue to evolve and change. As numbers become firmer and details known, we will continue to update and report to Council. Discussion: Town of of Pickering According to the Provincial data, the Town of Pickering will be faced with the following additional costs or lost grants: December 15, 1997 -2- Report to Council #TR 26/97 Property Assessment Transit - Operating & Capital Grants Managed Forests/Conservation Lands Rebate Farm Tax Rebate Gross Receipts Taxes Municipal Support Grant Gross Increase in Funding Requirements Residential Education Property Tax Room Net Increase in Funding Requirements 1998 Costs(1) $ 800,000 1,389,000 33,000 68,000 469,000 940.000 $3,699,000 3,023,000 $ 676.000 Note: (1) We are unable to verify the numbers, for example, Gross Receipts are shown at $469,000, whereas the 1997 Budget for the Town included only $179,000. It Is possible this includes the upper tier share. The Province calls the $676,000 increase in funding requirements "Savings in 1998 (equal to 1.7 per cent of own-purpose spending)". Using 1997 data, this is the amount of expenditure reduction (1.9 per cent of total 1997 corporate operating expenditures) that will be required to produce the "revenue neutral" position that the province has been promising. Conversely, the $676,000 would also translate into a 1997 tax levy increase of 4.3 per cent (0.9 mills) on the residential ratepayer to maintain current service levels. Using an average residential assessment of $25,000, results in an increase of $22.50 per annum. All of the foregoing excludes any consideration of sharing Payments in Lieu of Taxes, which amounted to $4,800,000 in the 1997 Budget for Ontario Hydro, with the Region and School Board. Region of Durham Data included in the same package also indicates the Region will lose grants or face cost increases of approximately $89.7 million in 1998. This will be mostly offset by some $88.3 million in "residential education property tax room" leaving a $1.4 million shortfall. However, the Region will also lose the Municipal Support Grant (M.S.G.). of almost $9 million. In total, Durham will have to reduce expenditures or find additional revenues of $10.4 million. This is roughly equal to 11.5 per cent of 1997 Regional tax supported departmental expenditures or 10 per cent of the 1997 Regional levy. The Province states the $10.4 million equates to "Savings in 1998 (equal to 3.1 per cent of own purpose spending)". Pickering's share appears to be approximately $16.0 million of the $90 million, assuming the cost apportionment formulas, primarily population based, suggested in the Who Does What Budget Planning Worksheets released in October are workable and are adopted by the Region. Assuming the "Residential Education Property Tax Room" at the Region level of $88.3 million is effectively shared amongst the area municipalities on the basis of the levy apportionment (1997 weighted, equalized assessment), Pickering's share of the increased costs could actually be a negative number however this would be offset by Pickering's "share" of the lost M.S.G., resulting in a possible increase in the 1997 Region levy of $611,000. For Pickering this translates roughly into a 0.9 mill increase or 4.6 per cent for the average residential taxpayer. December 15, 1997 -3- Report to Council #TR 26/97 Should this not be the case and an assessment based apportionment formula is adopted, as is currently used in apportioning the Regional levy, Pickering's share of the increased costs could amount to approximately $17.4 million, partially offset by education tax room and increased by the lost M.S.G., resulting in a possible estimated increase in the 1997 Regional levy of $2.0 million or approximately 12.9 per cent of the Pickering tax levy. This translates into a 2.8 mill increase, or 15.1 per cent, for the average residential taxpayer. In summary, the total effect on Pickering could be in the range of an 8 to 17 per cent increase in property taxes. It must be cautioned that this change could be entirely offset, or worsened, when the new assessment system is implemented region wide and new ratios for sharing region and education costs are calculated. It should be noted that all of the discussion contained in this report is based upon 1997 financial and assessment data. Changes due to 1998 Town, Region and Board of Education Budgets and the implementation of the Ontario Fair Assessment System are not known at this time. As a result, it would be premature to draw firm conclusions from the foregoing. We are unable, at this time, to express any degree of confidence in the numbers presented by the Province or conclusions based thereon. Furthermore, the above numbers do, to the best of our knowledge, appear to take into consideration the pooling of certain social costs 'across the Greater Toronto Area. ATTACHMENTS: To Municipal C.A.O.s from the Ministry of Finance providing financial realignment information pertaining to the Town of Pickering. 2. News Release from the Ministry of Finance on Equalization of GTA Social Costs - GO Transit. To the Head of Council from the Ministry of Finance providing background papers pertaining to local services realignment. 4. To the Director of Finance from the Municipal Finance Officers Association of Ontario (MFOA) providing a summary of the releases. ./ Gillis A. Paterson GAP/jt Copy: General Manager ----7 DEC-12-97 12.3S FROM=OGTA 10:4163146440 PAGE 1/3 Minis" of Finance QU~'s Park Toronto ON WA 1Y7 Ministllre des Finances Que"'s Park Toronto ON WA 1Y7 Q Ontario. Fax Cover Sheet 4fN?, December 12 1997 ? o?yti C ? C/ OAI 9% ,oi 99? To: Municipal CAOs I Clerks o,?'fF r99?o??0 Please find a=ttached your municipality's local services realignment data- The Ministry of Finpnce media package is being sent to all municipalities via Canada NewsWire at 11:00 a.m. today. If you have questions on this data please contact your regione, office of the Ministry of Municipal Affairs and Housing. If you experience any difficulties receiving this fax please call 416-585-7698. * Lower tiers and separated municipalities receive a table for their own municipality and their upper tier Upper tiers receive copies of all lower tier data I r.%A W-,1- DEC-12-97 12=36 F70K: OCTA 10:4163146440 PACE 2/3 UPPER TIER DETAIL COMMUNITY REINVESTMENT FUND 1998 ALLOCATION S Thousands Durham R Local Services Realignment Social Assistance 24,345 Child Care 1,366 Public Health 6 720 . Ambulances Social Housing Children's Aid Societies GO Transit j Property Assessment l Transit - Operating and Capital f Ferries Airports Septic Inspections Policing Provincial Offences Net Revenue Managed Forests / Conservation Lands Rebate Farm Tax Rebate i - Gross Receipts Taxes Residential Education Property Tax Room* COMMUNITY REINVESTMENT FUND (CRF) i Special Transition Assistance Net Change in Municipal Costs 1 Revenues from ! Local Govemment Realignment Loss of Municipal Support Grant Savings in 1998 (equal to 3.1 per cent of own-purpose spending) Net Change --- " allocated for planning purposes on the basis of net costs 10,387 37,294 (2,472) 11,278 0 0 0 186 0 (1,658) 331 1,972 0 88,338) 0 0 8,960 (10,372) C 0i Note: Policing costs reflect portion of new costs e?igible for Community Reinvestment Fund assistance. r DEC-12-97 12:36 FROM:OCTA I0?4163146440 PACE 3/3 LOWER TIER DETAIL COMMUNITY REINVESTMENT FUND 1998 ALLOCATION $ Thousands Pickering T Part Of Durham R Local Services Realignment j Social Assistance 0 Child Care 0 Public Health 0 j Ambulances 0 I Social Housing 0 Children's Aid Societies 0 GO Transit 0 Property Assessment 800 Transit - Operating and Capital 1,389 Ferries 0 -- Airports 0 Septic Inspections 0 Policing 0 Provincial Offences Net Revenue 0 ' R Managed Forests / Conservation Lands Rebate 33 Farm Tax Rebate 68 Gross Receipts Taxes 469 Residential Education Property Tax Room' (3,023) l COMMUNITY REINVESTMENT FUND (CRF) 0 I Special Transition Assistance i 0 Net Change in Municipal Costs / Revenues from Local Services Realignment (264) i Loss of Municipal Support Grant 940 Savings in 1998 (equal to 1.7 per cent of own-purpose spending) (676) Net Change 0, allocated for planning purposes on the basis of net costs Note: Polidng costs reflect potion of new costs eligible for Community Reinvestment Fund assistance. News Release; Communique' Ministry of Finance Ministere des Finances Queen's Park Queen's Park Toronto ON M7A 1Y7 Toronto ON M7A IY7 (5) Ontario FOR IMMEDIATE RELEASE: DECEMBER 12, 1997 PROVINCE MODIFIES FLAN TO EQUALIZE GTA SOCIAL COSTS Toronto -- Finance Minister Ernie Eves today confirmed the government's intention to equalize the cost of social assistance and social housing across the Greater Toronto Area. GO Transit costs will be shared across the GTA and the Region of Hamilton- Wentworth, which is also served by G0. These services benefit all the taxpayers in the GTA; no matter which municipality they live in," Eves said. "We believe it's fair that the municipalities which share those benefits should also share the funding responsibilities." Eves said an earlier proposal to equalize the cost of public health, child care and --? ambulances was reconsidered after discussions with GTA municipalities. The proposed cost-sharing method for GO Transit has also been modified in response to municipal suggestions. GO Transit costs will be allocated based on a formula that gives equal consideration to each municipality's weighted assessment, GO Transit boardings within the municipality, and the level of service within the municipality. "Our goal is to make the realignment of provincial and municipal services as fair and manageable as possible for taxpayers in all parts of the province," Eves said. "Our discussions with the municipalities in the GTA have convinced us that confining equalization to the two main social service costs -- social assistance and social housing -- along with GO Transit, strikes a balance that is fair to taxpayers all across the GTA." Eves is providing GTA municipal officials with detailed data on program costs, to aid them in their 1998 budget planning. For further information: Beverley Hammond Minister's Office (416) 325-9566 -30- Janis Tomkinson Communications Branch (416) 325-0545 Back rounder December 12, 1997 GO Transit As part of the overall Who Does What initiative, the government will transfer financial responsibility for GO Transit to the municipalities in the GTA and Hamilton-Wentworth as of January 1, 1998. This was recommended by the Who Does What Panel, and is consistent with the government's direction to transfer to municipal control, services that primarily meet local needs, As a municipal service, GO Transit will require a municipal governing mechanism, such as the proposed Greater Toronto Services Board. Until a permanent governing mechanism is in place, a temporary funding arrangement with the involved municipalities is required to cover the subsidy costs of GO Transit. This funding arrangement is described in proposed changes to the Toronto Area Transit Operating Authority Act (TATOA) and its regulations, provided by the Services Improvement Act. The proposed municipal cost sharing approach specified in the TATOA regulations is based on consideration of the municipality's ability to pay, level of servic : ^vailable to ?- each municipality, as well as use of the system by eac', municipality. This approach was developed following consultations with the affected municipalities. The 1998 GO Transit subsidy cost allocation is apportioned to the respective municipalities as follows: Durham 10.6% Halton 9.6% Hamilton-Wentworth 3.1% Peel 15.6% York 11.2% City of Toronto 49.9% The estimated subsidy requirement of GO Transit for 1998 is $106.4 million. An adjustment will be made at the end of the year to reflect GO Transit's actual costs. -30- For further information: Dan Schultz Kathy Dermott Communications Advisor Media Liaison to the Minister of Transportation Ministry of Transportation (416) 327-9200 (416) 235-4102 Ministry of Finance Office or the Minister Frost BuiJoing South 7 Queen's Park Cres Toronto ON M7A 1 Y7 Tel (416) 325-0400 Fax (416) 325.0374 December 12, 1997 Dear Head of Council: Ministere des Finances Bureau du ministre Edifice Frost sud 7 Queen's Park Cres Toronto ON M7A 1Y7 Tel (415) 325.0400 Telec (416) 325-0374 :11 r Attached please find financial information regarding the local services realignment for your municipality. These numbers show the realignment is fiscally neutral across the province, as promised. The province is taking on about $3 billion of funding commitments and the municipalities are gaining control and management of about S3 billion worth of new responsibilities. The Ontario Government has listened to the advice and suggestions from municipalities regarding all the changes involved in the realignment of services. Local partner, told us it would be difficult to manage new responsibilities at the same time the Province is eliminating the Municipal Support Grant (MSG). We are responding by making a commitment for unconditional transitional funding of $75 mullion for each of the next two years on top of the permanent $570 million Community Reinvestment Fund. This enrichment supports communities as they find new ways of doing business and recognizes the up front costs associated with restructuring, the unique circumstances of small and northern communities and the elimination of the Municipal Support Grant. The financial data also include a savings target for 1998. This represents the one-time savings municipalities need to ensure they, at the very least, break even after all the changes, including the elimination of the MSG and the realignment of local services. We believe the savings indicated in this package are fair and reasonable targets. In the end, as we in government find more efficient ways to deliver quality services, taxpayers in all parts of the province will be the winners. Municipalities told us it is not fair that some communities pay for policing and some do not. Effective January 1, 1998, municipalities will be responsible for the cost of policing. Some of the new costs of the program transfers will be defrayed for small, rural and northern communities who will be paying for the first time. -.Y We have listened to advice from our Greater Toronto Area partners. We believe that those who share in the economic benefits of the GTA must also share in the costs of the social safety net. Our goal has always been to achieve a balance. Consultations on the original equalization formula have led to the removal of public health, land ambulances and child care. Now only social assistance and social housing costs will be equalized. The numbers attached reflect the adjustment. In addition, the Government is reallocating $77 million of the operating portion of the Municipal Capital and Operating Fund. This fund will help smaller municipalities whose particular circumstances might delay the achievement of full savings, even after they receive assistance which we are prepared to offer in eliminating waste, duplication and inefficiencies. The Honourable Chris Hodgson, Minister of Northern Development and Mines and Chair of Management Board will chair a committee to allocate this balance, based on the special needs of these municipalities. The attached financial information will be finalized in the next month when the final property assessment data are available. However, we anticipate only minimal changes to the numbers. In the meantime, regional staff from MMAH are available to answer questions you may have regarding the package as it affects your region or municipality. Yours sincerely, Ernie Eves, Q.C. Minister of Finance COMMUNITY REINVE$TPAENT FUND 1998 ALLOCATiON = Millions Province-Wide Total Local Services Realignment Social Assistance 853 Child Care 50 Public Health 211 Ambulances 200 Social Housing 877 Children's Aid Societies (79) GO Transit 105 Property Assessment 122 Transit - Operating and Capital 275 Ferries 7 Airports 4 Septic Inspections 5 Policing 187 Provincial Offences Net Revenue (67) Managed Forests I Conservation Lands Rebate 6 I Farm Tax Rebate 71 Gross Receipts Taxes 93 Residential Education Property Tax Room (2,438) .. f I COMMUNITY REINVESTMENT FUND (CRF) (570) Special Transition Assistance (75) NET CHANGE: LOCAL SERVICES REALIGNMENT t (t 60 (net benefit to municipalities) Loss of Municipal Support Grant 665 Savings in 1998 (% of all municipalities' own-purpose spending) 565 Net Change (50 Additional Funding Special Circumstances Fund From MCORF 77 Municipal Restructuring Fund So Municipal Capital and Operating Restructuring Fund - Capital Transportation 200 ? Non-Profit and Cooperative Housing 173 Water and Sewer Systems 200 i Highways Funding (in addition to $225M announced previously) 5o Backgrounder December 12, 1997 Local Services Realignment The Minister of Finance is providing Ontario municipalities with data on revenues that will assist them in taking control and management of new program responsibilities. Community Reinvestment Fund (CRF) -- total $570 million • Municipal savings targets vary according to the size of the municipality. This recognizes the special needs and circumstances of small, rural and northern municipalities. It also recognizes that larger municipalities have more opportunities to achieve economies of scale. Savings targets are; - 1.7 per cent for municipalities of less than 100,000 population - 3.2 per cent for municipalities between 100,000 and 500,000 - 4.2 per cent for municipalities with population greater than 500,000. • The CRF will help municipalities where there is a difference between new program costs and their savings targets. • Recent changes to the Ontario Municipal Employees Retirement System will give municipalities a $75-million head-start in finding savings. Special Transition Fund -- total $150 million Acting on the advice of our municipal partners, the province is re-allocating $150 million from the Municipal-Capital and Operating Restructuring Fund (MCORF) to assist with the transition to the new alignment of services. $75 million will be available to municipalities in each of the first two years, on the same basis as the CRF_ The CRF and the Special Transition Fund, combined with municipal savings targets; will ensure that municipalities at least break even. Funds for municipalities with unique circumstances -- $77 million $77 million is being re-allocated from MCORF operating funds to recognize unique circumstances faced by some municipalities, including small, rural and northern municipalities. A committee to be chaired by the Honourable Chris Hodgson, Chair of Management Board and Minister of Northern Development and Mines, will allocate this fund based on the special needs of these municipalities. Residential Education Tax Room -- $2.5 billion As announced in May, the government is removing $2.5 billion from the residential education property tax. • This amounts to $2.5 billion in residential education tax room for municipalities. • Municipalities are receiving data on the amount of their residential education tax room. Residential Education Tax Rate The Minister of Finance has announced that the uniform rate for residential education tax will be between .45 and .47 per cent of the residential property's current assessed value. The rate will be set when final property assessment data are available, early in 1998. Once set, this rate will be frozen. The uniform rate will mean that all residential taxpayers, regardless of where they live, will pay education property taxes at the same rate for a service that benefits everyone. Municipal Restructuring Fund -- $50 million A number of municipalities across Ontario have already begun to restructure to find savings. To recognize the upfront costs of restructuring, the Government will provide a $50 million fund for specific initiatives. Policing During consultation, municipalities told the government that it is unfair that some municipalities pay for policing and others do not. Beginning in 1998, municipalities will be responsible for the cost of policing. Some of the new costs of the program transfer will be defrayed for small, rural and northern municipalities who will be paying for the first time. For further information: -30- Janis Tomkinson Communications Branch (416) 325-0545 Baekgrounder December 12, 1997 Education Tax Fairness Beginning in 1998, the province is removing $2.5 billion from residential education property tax bills and is setting a uniform rate across the province. Under the present system, education property tax rates are set by school boards and vary widely across the province, The province will eliminate these inequities with a uniform residential rate across the province. The residential education tax rate vAll be between .45 per cent and .47 per cent of current assessed value. The province, for planning purposes, is using an interim rate of .46 per cent. This will raise a total of $2.5 billion in 1998. Fairness for residential education taxpayers • In 1998, residential property owners will pay exactly the same rate of education tax, regardless of where they live, toward the cost of a service that benefits everyone. • For planning purposes the province is using an interim rate of .46 per cent. • A homeowner whose property is valued at $100,000 will pay $460 in education property tax. Under the present system that homeowner would pay as much as $1,500. • The rate will be finalized when final current value assessments are available, early in 1998. Once finalized, this rate will be frozen. Fairness for municipalities • As announced in May, the government is removing $2.5 billion from residential education property tax. • Municipalities can use this tax room to pay for the cost of their new responsibilities. • The province is transferring about $3 billion worth of services and programs to municipal control. By cutting $2.5 billion from the residential education property tax, and providing municipalities with the $570 million Community Reinvestment Fund, the province is ensuring a fair and even trade. • Municipalities are receiving data on the specific amount of their residential education tax room. -30- For further information: Janis Tomkinson Communications Branch (416) 325-0545 Baekgrounder December 12. 1997 $50-Million Municipal Restructuring Fund What is it? $50 million in new one-time funding is being added to the Municipal Capital and Operating Restructuring Fund in 1997-98 to help municipalities that are restructuring to find long-term efficiencies. What municipalities would it go to? Restructuring for long-term savings can involve significant up-front investments. This funding is intended to help restructuring municipalities cover these up-front costs. The fund will go to municipalities restructuring under the provisions of the Savings and Restructuring Act, 1996. To date, 72 restructuring proposals have been approved by the Minister of Municipal Affairs and Housing under the Act, consolidating 305 municipalities into 113 -- a reduction of 192. The Ministry of Municipal Affcirs and Housing is reviewing another 13 restructuring proposals involving 49 municipalities. The Ministry expects another 20 submissions in 1998. What is it for? When municipalities amalgamate, they face a number of one-time adjustment costs. Staffs combine, information technology systems have to be meshed, and business functions consolidated. The new funding is intended to cover a portion of these costs. The Provincial-Municipal Implementation Team has made recommendations to the government on how the operating portion of the Municipal Capital and Operating Restructuring Fund should be allocated, including the recommendation that only actual readjustment costs be covered. The funding could help to cover the start-up costs of area services boards that could be created in the North over the next three years, subject to the approval of the legislature. -7- Who will administer the fund? The fund will be administered by the Ministry of Municipal Affairs and Housing in consultation with the Ministry of Agriculture, Food and Rural Affairs and the Ministry of Northern Development and Mines. When will municipalities find out how to apply? The Ministry of Municipal Affairs and Housing will contact restructuring municipalities very shortly with more information about eligibility requirements and about the business cases that will be required for eligible expenses. For more information, please contact: Diana Jarine, Director Regional Operations Branch Ministry of Municipal Affairs and Housing (416) 585-7251 Backgrounder December 12, 1997 Financing of Police Services Under the Police Services Act, all municipalities are responsible for providing adequate and effective police services in accordance with their needs. Exemptions in the former Police Services Act resulted in 576 municipalities (representing approximately 15 per cent of the province's population) being policed by the OPP without any direct cost to the municipality. Consequently; some municipalities pay for police services through property taxes (representing 85% of the province's population) while others do not, resulting in unfairness in the financing of police services across the province. Under amendments to Police Services Act (Bill 105) passed earlier this year, municipalities will pay the cost of policing as of January 1, 1998. The net effect of this change, after the assistance provided through the Community Reinvestment Fund, is that households in municipalities that begin paying for policing for the first time will start by paying, on average, about 25 cents a day. The 576 municipalities currently not paying will pay for the OPP services that their communities use. The method for determining the actual amounts owed by municipalities for police services provided by the OPP, and the time and manner in which payments are to be made, have been prescribed in regulation. The changes are consistent with the 'Who Does What Panel's" recommendation that the Province should introduce full cost recovery for policing services provided by the OPP to municipalities that currently do not pay. For further information: Kenneth Tufts (416) 325-9687 Sac under December 12, 1.997 Housing T Municipal Capital and Operating Restructuring Fund Non-Profit and Co-operative Replacement Reserves ? Non-profit and co-operative housing providers receive funding annually for their capital reserves. ? These funds are used for the replacement of worn out capital items such as roofs, plumbing and heating equipment in the buildings. ? The funds are also used to replace items in individual units, such as stoves and refrigerators. In 1992, a moratorium was placed on funding capital reserves. ? Social housing providers have received no money for capital replacements for more than five years. The New Allocation The province has allocated a total of $215 million to repair and upgrade social housing in the province. This allocation includes: $172.5 million for non-profits and co-ops. $42 million for Ontario Housing Corporation. Funding is being allocated to individual non-profit groups based upon a formula which takes into account the number of units in the project, the building type, the interest adjustment date, the cost of building components, and regional factors. For more information, please contact: David Clarke Non-Profit & Market Housing Program Ministry of Municipal Affairs and Housing (416) 585-6377 Backgrounder December 12, 1997 Highway Transfers There have been two sets of recent highway transfers to municipalities. In June 1996, the Ministry of Transportation announced the transfer of 1,766 kilometres of highway. The transfer took effect April 1, 1997. Over the years, construction of parallel highways has taken place, land use development, urban growth and traffic patterns have altered, and the role of these highways has changed from provincial to local in nature. The government established a fund of $110 million to compensate municipalities for these transfers. In January 1997, the government identified a further 3,400 kilometres of highways to be transferred on January 1, 1998. These highways serve local needs and municipalities are in the best position to manage them. A process similar to that used in the first round of transfers was applied to distribute a $225-million compensation fund. The formula used to distribute the money was fair and equitable, provided a one-year maintenance allowance, a capital allowance that addressed two-thirds of capital needs for five years and provided additional funding to those municipalities that received a disproportionate share of the transfers. The government is now announcing a further $50 million fund in response to municipal concerns. This additional $50 million will be distributed as follows: First, the maintenance allowance for highways to be transferred on Januai y 1, 1998 will be extended an additional two years for a total of three years. Second, municipalities receiving a disproportionate share of highway transfers will have their earlier bonus enriched by 50 per cent. Finally, approximately $9 million has been provided to enhance the amount of compensation previously announced for bridge construction requirements. As a result of the two rounds the government will have transferred some 5,150 kilometres of highways serving local needs, and will have provided $385 million in total compensation to municipalities enabling them to address the additional responsibilities. Municipalities raised particular concerns about capital needs for bridges. The additional funds made available address most of the five-year bridge capital needs for the highways transferred on April 1, 1997 as well as those to be transferred on January 1, 1998. -30- For further information: Dan Schultz Kathy Dermott Communications Advisor Media Liaison to the Minister of Transportation Ministry of Transportation (416) 327-9200 (416) 235-4102 Please Oeliver ra: TOWN OF PICKERING '- #I ,UKERING CLERK'S DEPART MENT ?Jrlr 1?19?? News Release ? Ontario Communique" Ministry of Finance Ministere des Finances Queen's Park Queen's Park FOR IMMEDIATE RELEASE: Toronto ON M7A 1Y7 Toronto ON M7A 1Y7 DECEMBER 12, 1997 PROVINCE RESPONDS TO MUNICIPAL PARTNERS WITH NEW FUNDING ARRANGEMENT TORONTO -- As part of the government's plan to provide better, more efficient and more accountable services to Ontarians, Finance Minister Ernie Eves today announced enhancements to the Local Services Realignment initiative and the Community Reinvestment Fund. These enhancements are the result of the proposal made by municipalities in May and extensive consultations with municipal partners, the Provincial Municipal Implementation Team and the Social and Community Health Services Implementation Team. "We have listened to our municipal partners and developed a plan that will be revenue neutral, while allowing them to fully manage services best delivered at the local level. The realignment of services is a fair and even trade," Eves said. In addition to the Province's ongoing commitment of $570 million in the Community Reinvestment Fund the Minister announced that in response to municipal requests, the province is setting up three funds: a Special Transition Fund of $75 million in each of the next two years, a $50 million Municipal Restructuring Fund and the reallocation of $77 million from the Municipal Capital and Operating Restructuring Fund. These funds will recognize the up front costs associated with restructuring, the unique circumstances of small and northern communities, and the elimination of the Municipal Support Grant. Where necessary, the Province will also assist municipalities in finding achievable savings. "Our government recognizes that there is only one taxpayer. We must ensure that the services provided to taxpayers are of the highest quality and delivered at the lowest possible cost. At the same time we have listened to local governments and we are responding to their recommendations, As a result, the local services realignment will ensure that municipalities are full partners in a new and prosperous Ontario," said Eves. Other highlights announced by the Minister include, • A balanced equalization formula for the GTA that includes only social assistance and social housing costs • GO Transit costs on a shared basis that takes into account assessment, boarding and service levels • An expected residential education tax rate between .45 and ,47 percent • A plan for fairness in policing costs • An additional $50 million for highway transfers. For further information: Beverley Hammond Minister's Office (416) 325-9566 - 30 - Janis Tomkinson Communications Branch WES) 3??-r15d5 Message delivefed using fodode (fom Message femis paf le focsRode d' AT&T -Canada To/Destinataire +19054202596 Attention/A ]'attention de G. Paterson, Town pf Pickering From/Expediteur Municipal Finance Officers Asn. Phone/N° de telephone 416-979-1414 Pages/Nombre de pages 4 (including this page/cette page comprise). + MFiJA (41G."979-1060 TO MFOA MFOA MEMBERS AND ASSOCIATE OFFIEIR$' ASSO >ATION MEMBERS OFONTARK) 920 P01 DEC 12 197 1'8:119 December 12, 1997 PAGE 1 OF 3 TI F0A BULLETIN MORE MONEY FOR MUNICIPALITIES P f TA /L S Of Nf W f UND /NG A RRA N 6fM f N lS A NN 0 UN Cf0 Finance Minister Ernie Eves today announced enhancements to the Province's Local Services Realignment Initiative and the Community Reinvestment Fund (CRF). Three new funds will be established, in addition to $570 million previously identified under the Community Reinvestment Fund. The new funds: * Special Transition Fund $75 million in each of the next 2 years (total $150M) for the realignment of ti,rovincial-municipal service delivery. This fund will help to offset differences between anticipated new program costs and provincially mandated savings targets, on the same basis as the Community Rf investment Fund (outlined below). The $150 million under this fund is a reallocation of monies previously allocated to the Municipal Capital and Operating Restructuring Fund (MC,C)RF), originally established at $800 million over a 4 year period. * Funds for Municipalities with Unique Circumstances $77 million to address special financial circumstances for small, rural and northern municipalities. The fund will be allocated by a committee chaired by Chris Hodgson, Chair of Management Board Secretariat and Minister, Northern Development and Mines, based on demonstrated need. These funds are also coming from money reallocated from the MCORF. * Municipal Restructuring Fund $50 million in new one-time funding is to be added to the Municipal Capital and Operating Restructuring Fund for municipalities to offset the upfront costs of municipal restrUCturing initiatives. Eligibility criteria for funding and requirements for business cases are to be made available to municipalities in 1998. Monies from this fund may also address start up costs for new Area Services Boards to be established in northern communities. uQ nr ,itur'ai ilx7l li n,ltl:i }+,cfu pit[^.. 1 t l..',hn Toronto, OnLact , \?,l?V H' TO: (416) ;)',9-1414 - Fa. (41 r.) Q '-1060 + HFi w !:416:1979-1060 9=10 FGr_ DEC 12 ":_47 1=; : 10 Paae 2 ?f 3 New Savings Targets Established for the Community Reinvestment Fund (CRF) The Community Reinvestment Fund, originally announced in January of 1997, provides $570 million to municipalities to offset increased costs arising from the transfer of services between the province and municipalities. The province has also mandated savings targets, depending on the size of the municipality, which are supposed to be attained from more efficient service delivery. Any shortfall arising from new program costs, after savings targets have been considered, will be covered by CRF funds, to ensure that municipalities break even. Savings targets are: (expressed as a percentage of annual budget) =} 1.7% for municipalities less than 100,000 population r 3.2% for municipalities with population between 100,000 and 500,000 4.2% for municipalities greater than 500,000 population Important! Specific municipal allocations under the new funds and the Community Reinvestment Fund are being faxed to individual municipalities starting at 11:00 am on December 12, 1997. Education Tax Rates The residential education tax rate will be set between 0.45 and 0.47 percent of current assessed vale For interim purposes, the province is using a rate of 0.46%. This rate applies to all residential property across the province, and includes multi-residential property types. The final rate will be established in January of 1998, once preliminary current value assessments are available. Municipalities will be notified of their individual residential education tax room. Tax rates for the education portion of commercial and industrial properties have not been released. Police Services Under provisions of Bill 105 (Police Services Amendment Act), all municipalities will pay for the costs of policing, starting in January of 1998. Some of the new costs of policing for small, rural and northern municipalities will be covered by the Community Reinvestment Fund. Highway Transfers An additional $50 million is being made available to municipalities to offset costs involved in the takeover of provincial highways. Allocation of this fund includes increased maintenance allowances (up to 3 years) for highways to be transferred January 1, 1998; a 50% increase in bonus to those municipalities receiving a disproportionate share of transferred highways; and an additional $9 million for bridge construction requirements. + I IFi W (416'.1979-10E.0 9210 PO? DE!v 1 1'97 1:3: ICI Municipal Capital and Operating Restructuring Fund The new allocation for the MCORF consists of $215 million to repair and upgrade social housing projects. including $172.5 million for non-profits and co-ops, and $42 million for the Ontario Housing Corporation units. for further details .................. Details on these and other announcements, and backgrounders prepared by the Ministry of Finance can be obtained from the Ministry's website at: http://www.gov.on.ca/FIN/english/neweng.htm 14a OQ MFOA will continue to monitor developments relating to the Province's Who Does What initiatives, and pass this information on to members. visit MFOA's website at http:l/www.mfoa.on.ca For more information on this Bulletin, please contact the Municipal Finance Officers' Association by telephone at 416-979-1414, or by fax at 416-979-1060.