Is the province cutting funding to municipalities, or just “transitioning” to a more efficient financial support system?
The answer appears to depend on where one lives and who’s announcing or reacting to the figures.
The Ontario Municipal Partnership Fund (OMPF) was introduced in 2005 to replace the Community Reinvestment Fund (CRF) as the province’s main funding model for municipalities.
Wellington County and all but two of its seven lower tier municipalities will experience a reduction in unconditional OMPF grants this year.
The OMPF program has been redesigned for 2014 following a year of consultation between the province and the Association of Municipalities of Ontario (AMO) and other municipal representatives on “how best to support municipal needs,” reads an explanation of the changes on the provincial finance ministry website.
Aside from occasional increases for some municipalities, the past decade has seen years of steady reductions in unconditional grant funding. The total amount distributed to Ontario municipalities through the OMPF program has been cut from $650 million in 2010 to $550 in 2014. However, the province contends it’s providing more total support to municipalities than has historically been the case.
“In 2014, the province will provide a total of $550 million in unconditional funding through the OMPF to 388 municipalities across the province,” states a letter from finance minister Charles Sousa and municipal affairs minister Linda Jeffrey, which accompanied the announced of the 2014 OMPF allocations.
“This funding, combined with the municipal benefit resulting from the provincial uploads, will total more than $2 billion in 2014. This is over three times the level of funding provided in 2004 (under the CRF).”
By uploads, the province is referring to a transfer of funding responsibility for programs such as social assistance benefit programs, Ontario Drug Benefits, Ontario Disability Support Program and court security costs to the province.
Lower tier municipalities, which didn’t pay directly for social assistance or court security, contend the benefit of the uploads to them is minimal, but the province is presenting the uploads as a benefit to all municipalities.
“The estimated total benefit of the 2014 provincial uploads for the County of Wellington is $4,487,600, which is the equivalent of 4% of all municipal property tax revenue in the county,” states a line included under the heading “Highlights” in the OMPF allocation notices for each local municipality.
However AMO officials view it differently.
“While all recipient municipalities will continue to receive some funding, there will be negative impacts for most communities,” the association indicates in a position statement on its website.
“Individual municipal reductions for the coming year will be primarily determined as a percentage of 2013 allocations and scaled based on the relative fiscal health of each municipality.
“Northern Ontario municipalities will experience either no change or a cut ranging up to 10% of the previous year’s allocation. Municipalities in all other regions will experience either no change or a cut of up to 15% of their previous year’s allocation. Last year’s cuts were up to 5% in the north and up to 10% in other regions.
“These changes are very significant for some communities – at least 10% will experience an impact greater than $50 per household.”
The County of Wellington’s OMPF allocation has been reduced from just under $4.25 million in 2013 to $3.6 million in 2014, a cut of nearly $650,000.
However, on the county’s allocation notice, the province points out uploads of $4.47 in 2014, combined with the remaining OMPF funding “exceed the payments received in 2004 by just over $6.8 million.”
Five lower tier municipalities in the county also took cuts in OMPF funding in 2014.
Mapleton’s allocation fell by $189,000 to just over $1 million.
Centre Wellington’s 2014 allocation of $764,900 represents a cut of $134,900 from the 2013 figure of $899,800.
In Guelph-Eramosa, the 2014 allocation was cut by $78,000, from $521,800 to $443,800
In the Town of Erin, OMPF funding was reduced slightly, from $588,600 in 2013 to $585,300 this year.
Puslinch Township also experienced only a small cut in their allocation, from $404,000 in 2013 to $402,700 this year.
The allocation notices for Puslinch, Erin and Guelph-Eramosa indicate the level by which the province calculates the funding exceeds that received by the municipality in 2004, ranging from a low of $14,700 for Puslinch to high of $263,800 in Erin, while there are no such notations on the notices for Centre Wellington and Mapleton.
Minto and Wellington North were the only two municipalities to come out ahead in 2014 OMPF allocations.
Minto is slated to receive $1,491,400 – up $184,500 from 2013.
Wellington North’s 2014 share is $1,066,100 – an increase of $23,200 over last year.
Provincial officials state the redesigned OMPF program:
– continues to support municipalities with limited property assessment;
– continues to recognize the challenges of northern and rural municipalities, while better targeting funding to those municipalities with more challenging fiscal circumstances; and
– includes support to assist municipalities as they transition to the redesigned program.
The approach mirrors that taken with infrastructure grant programs and doesn’t strike all municipalities as fair.
The Township of Mapleton was recently turned down for a grant to construct a water tower in Drayton under the Small, Rural and Northern Municipality Infrastructure Fund because, as finance director Yufang Du explained, “other applicants have more challenging economic conditions.”
Mapleton officials feel the approach penalizes municipalities that demonstrate sound fiscal management.
“Both staff and council have worked extremely hard not to have debt and now we’re getting turned down for it,” stated Mapleton CAO Patty Sinnamon at the Dec. 10 council meeting.
However Minto treasurer Gordon Duff reports being pleasantly “surprised” to discover the municipality was getting more OMPF funding.
Duff notes the redesigned program recognizes the inequity between high and low-assessment municipalities.
“If you have a higher assessment base you can absorb a tax rate increase better,” Duff said. “Also, they’re recognizing challenging financial circumstances and it happens to benefit our municipality.”
While the reaction of local municipalities to the redesigned program varies, the province remains intent on cutting a further $50 million over the next two years, bringing the total outlay down to $500 million by 2016.
AMO is concerned the scale of OMPF cuts will be magnified in 2014 by OPP wage-related cost increases of approximately $25 million.
“The lost OMPF revenue and the OPP cost increase will have a $50 million impact on property taxpayers,” states the association. “Almost three-quarters of all municipalities use the OPP. The impact of these two events at the same time will put a burden on municipal property taxpayers. Tax increases or service reductions are likely in all corners of the province.”
