Ontario's rural municipalities clamour for funding changes

Monday, January 18, 2016

by JIM ALGIE

With both federal and provincial treasurers consulting currently on this year’s budgets, some rural Ontario municipalities want to see more oomph in OMPF, the Ontario Municipal Partnership Fund.

Proposed adjustments in the way Ontario currently supplements municipal property taxation with provincial grants, particularly in small, rural, agricultural areas, are expected at the annual meeting Western Ontario Wardens Caucus in Chatham, Feb. 12. As well, a delegation of Perth County representatives hopes to press for change during combined annual meetings of the Rural Ontario Municipal Association and the Ontario Good Roads Association in Toronto, Feb. 21-24, a Jan. 11, Stratford Beacon Herald report says.

A statement posted on the website of the Association of Ontario Municipalities regarding 2016 OMPF allocations warns of problems.

“Many communities continue to face limited or declining fiscal health and face fundamental operating budget challenges,” the AMO statement says. A recent Better Farming inquiry produced a more detailed critique from AMO Executive Director Pat Vanini.

“Provincial policy determines the property tax treatments of farmland/managed forests at a significant discount,” Vanini said in an emailed response. “This negatively affects property tax revenues for many rural communities,” Vanini said.

“AMO believes that rural communities would be better served if the Ontario Municipal Partnership Fund (OMPF) fully offset this lost revenue.”

Chatham-Kent Mayor Randy Hope, who currently heads the Western Wardens Caucus, said in an interview, he expects his group will further address current concerns when it meets next month in Chatham.

“We want to increase the strength of our voice as rural communities,” Hope said, predicting an outline of requests directed at pending budgets of both the federal and provincial governments. As well, the group needs to further lobby higher levels of government more effectively over the continuing issues of rural communities, he said.

“It’s about unifying our voice,” Hope said.

OMPF is the province’s main transfer payment system funding municipal governments in Ontario. A background paper on the website of the provincial Ministry of Finance provides current details of the 2016 system of grants which includes targeted payments for rural and northern communities.

At the same time, the province has gradually uploaded some costs for some public services funded previously by municipal property tax payers. Current grants and uploads followed a detailed review of the system in 2012 and continuing consultations with municipal officials, the backgrounder says.

In an interview, Monday, Perth County Treasurer Renato Pullia said this year’s OMPF grants don’t come close to matching the need in his municipality. OMPF funding for the upper tier Perth County and its four, lower tier municipal members has dropped to $9.2 million from $16.36 million over the past five years, and they expect to lose another $6.5 million, Pullia said.

Much of what is being lost is money paid under the former farm land and managed forest grant designed to compensate municipalities for the lower level of tax revenue generated by agricultural and forest lands. Pullia described uncertainty about the future of existing funding and “the departure of support for rural municipalities that have farmland,” as Perth council’s main area of concern.

Both the Chatham-Kent Mayor and Ontario Federation of Agriculture President Don McCabe said in interviews that the current program contains troublesome inequities. Some municipalities are stumbling over grant program rules, McCabe said.

“Definitions and the population size . . . can knock a rural community out of the opportunity to apply for a program,” McCabe said of feedback he’s getting on this year’s OMPF grants. “It’s the usual game of saying, yes, we’re taking things off your plate but the reality is that things haven’t been fully thought through to make sure it’s seamless,” he said.

An OFA position paper on the federation’s website predicts problems from OMPF changes, particularly for small rural municipalities as the province seeks to reduce municipal grant payments. That’s because small communities tend not to benefit from provincial uploading of social programs to the same extent as larger municipalities.

“Lower tier municipalities in rural areas are typically not responsible for the delivery of the social programs that are being uploaded to the province,” OFA paper says. “These rural municipalities enjoy little to no direct financial gain from these uploads,” it says.

However, there are also concerns about the method for determining eligibility for the current Rural Communities Grant, which replaced the old system, and the adequacy of province-wide funding announced at $5 million, Perth County’s Pullia said, Monday. All four lower-tier Perth municipalities qualify for the highest level of support at 90 per cent farmland under the new Rural Communities Grant but it doesn’t come close to making up what they’ve lost.

Since 1998, regulations have limited municipal tax rates on farmland to 25 percent of residential rates. It represents a 75 per cent loss of assessment that the new $5 million farm area measure misses by a long shot, the Perth County treasurer said.

The former Farmland and Managed Forest Measure distributed a total of $46 million, Pullia said. Perth County’s recent resolution suggests a boost in the farm area measure to $20 million.


“We don’t think we’re going to get the province to go back to the $46 million figure and we don’t think $5 million is enough,” Pullia said. “We think $20 million is a number they could reach at,” he said.

The ministry backgrounder says the 2016 rural grant totalling $143 million is to be available to municipalities “with the highest levels of farmland in recognition of their unique challenges.” However, the calculation is also adjusted on a sliding scale for population.

Chatham’s Mayor Hope expressed support for provincial moves to upload service costs to the provincial income tax base. His municipality participated in ministry consultations last year about 2016 changes to OMPF.

Recent changes affect different municipalities differently depending on their varying circumstances, Hope said. He described the general thrust of continuing changes in the way Ontario funds municipalities as “moving in the right direction.”

“What the western wardens are trying to do is to make sure we’re unifying our voice,” Hope said. “We’re finally seeing the progressiveness of uploading some services off the property tax base but then when you go now to changing that . . . it’s about making things that work and set more predictable outcomes of what funding you’re going to be getting,” he said.

This year’s OMPF measures guide the transfer of $505 million in unconditional financing to 388 municipalities and include $5 million for northern communities, the ministry backgrounder says. It calculates total benefit to municipalities of OMPF payments plus the upload of social assistance, court security and prisoner transport costs from the property tax base since 2012 at more than $2.3 billion in 2016.

Current grants follow redesign two years ago of the program in what the province expects will be its final year. New for 2016 are the enhanced Rural Communities Grant worth $143 million, an enhanced Northern Communities Grant totalling $84 million and a 20 per cent increase to $67 million in funds available to municipalities “facing more challenging circumstances.” BF