Good afternoon. My name is Chris Wray and I am the President of AMCTO. With me today is Rick Johal, our Director of Member and Sector Relations. I would like to start by taking a minute to thank the committee for allowing us to appear today. In addition to being the President of AMCTO, I am also the Chief Administrative Officer and Clerk-Treasurer of the Municipality of Wawa, so I am especially pleased to be able to make this presentation here in the north. AMCTO is Ontario’s largest voluntary association of local government professionals, with over two thousand members working in almost every municipality in Ontario. As one of the province’s largest municipal associations, we view it has our mission to work with AMO and other municipal associations to promote leadership, professionalism and good governance in local communities. Although our name may say Clerks and Treasurers, we have a diverse membership made up of senior municipal professionals working across a range of service areas. Approximately half of our members are CAOs and senior managers. I’d like to talk to you today about some of the challenges facing Ontario’s municipal sector. As you can see in our submission, we are proposing a number of recommendations that we believe will improve the operating environment for municipalities in Ontario. However, before I get into specifics, I’d like to start with three principles that we believe are key to an effective provincial-municipal relationship.
PRINCIPLES FOR AN EFFECTIVE PROVINCIAL-MUNICIPAL RELATIONSHIP
- The first is the importance of respecting the diversity that exists within the municipal sector. We live in a big province, and the opportunities and challenges that face each community are unique, especially in rural vs. urban, small vs. large, and north vs. south. I know this from my own experience of working in the north. What makes sense for Toronto, Ottawa or London, doesn’t always make sense for Wawa. Yet far too often the province designs policies and programs without considering these differences.
- The second key to a healthy relationship is treating municipalities as responsible orders of government. Local governments in Ontario operate within a restrictive legislative and regulatory environment. Yet the province has repeatedly told municipalities that they are responsible orders of government that should be given autonomy to handle local issues. We believe that if the province views municipalities as responsible governments, it should treat them as such. To do so is the best opportunity for promoting effective local governance.
- Third, provincial policy should focus more on outcomes and less on behaviours. The province has a role to play in guiding policy and practice within the sector, but not in imposing overly proscriptive legislation or regulatory requirements. While municipalities benefit from broad guidance and direction, they do not require specific instructions about how to word council resolutions, or detailed requirements for sending documents via official mail. Local governments are in the best position to access local information, understand the local factors that might impact a policy’s implementation, and respond to those local needs.
1. Take the lead on a regulatory approach for the sharing economy. Moving on to our formal recommendations, I’d like to start with the sharing economy. As you are all aware, over the past five years new services like Uber and AirBnB have grown to become dominant forces in our economy. As you can see from the presentation that we circulated, research conducted by a number of organizations, including Forum, PwC and the Ontario Chamber of Commerce, all indicate that a substantial number of Ontarians are using these services. However, the growth of the sharing economy has posed unique problems for many municipalities in this province. While the regulatory reach of municipalities is geographically limited, many sharing economy companies operate across the globe. Uber for instance now exists in 67 countries and over 371 cities. Similarly AirBnB has more than 2 million listings in over 34,000 cities, in 190 countries. The growth of these companies makes it next to impossible for individual municipalities to control them. That’s why we are encouraging the government of Ontario to take the lead on a regulatory approach for the sharing economy. The province has the ability to take a more holistic approach, instead of leaving it to the province’s 444 municipalities to develop 444 separate by-laws to what is a provincial problem. Regulators across the world have been slow to respond to the sharing economy, but now is the time for action. 2. Continue to invest in infrastructure. Moving on to our second recommendation, we would also encourage the province to continue its investments in infrastructure. The infrastructure deficit is perhaps the most significant fiscal pressure facing municipalities in Ontario. Local governments in this province own more infrastructure than any other level of government, including more than 140,000 kilometres of roads, and 15,000 bridges and large culverts. As you all know, much of this infrastructure is nearing the end of its life-cycle. Just this week, the 2016 Canadian Infrastructure Report Card found that 1/3 of municipally-owned infrastructure in Canada is at risk of rapid deterioration.
2016 AMO Pre-Budget Submission
The Association of Municipalities of Ontario (AMO) presents its 2016 pre-budget submission. Municipal governments are mindful of current economic challenges. We live, eat, and breathe this reality every day. We offer a modest list of changes that would have proportionately greater outcomes for communities – some with little or no cost to the Ontario government.
1. The Upload
The ongoing upload that began in 2008 of some previously downloaded provincial programs, must continue to full maturity in 2018. Why? Because the funds that are no longer sent to the Province are being invested in municipal infrastructure and services. From 2003-2008, before the upload, infrastructure spending averaged almost $4 billion annually. From 2008-2012 it averaged above $6 billion annually with $8 billion in 2010, the stimulus year. For 2013, municipal investments exceeded $7 billion annually. Both orders of government have been upholding their sides of the Agreement and there should be no cause for change. It has been suggested that municipal governments have done much better than other sectors, such as health and education. Let me remind all that municipal governments were saddled with over $3 billion in provincial costs to fund, a gift that others did not receive, so our starting point was very much behind others. We urge the continued honouring of this landmark agreement to 2018 and, again, caution against the assumption that the upload offers space for new spending to pay for provincial statutory changes across government. Every dollar to support a new regulation will detract from the needed infrastructure investment and related economic spin offs.
2. The Ontario Municipal Partnership Fund (OMPF)
While the upload Agreement continues to be valued, not all municipal governments have the same economic basis. Many only have a very limited assessment base and no non- residential assessment, plus residents with low disposable household incomes. They have seen the Ontario Municipal Partnership Fund (OMPF) reduced by $91 million from 2012 to 2016, forcing many rural and northern communities to raise property taxes or reduce services. For almost half of Ontario’s municipal governments, a 1% property tax increase raises just $50,000. These governments fully understand the constraints their citizens have to absorb with property tax increases. OMPF is essential – it is their major source of revenue.
3. Interest Arbitration
Emergency service costs broadly have been increasing at three times the rate of inflation annually since 2002. For example, annual policing costs are likely to exceed $5 billion this year – which is two and half times the value of the upload. Fire service is similarly growing. Salaries are a major driver to these cost increases. EMS salary bands already reflect the risk of their work, so the public are struggling to understand why the cost of living adjustments are higher for this group of employees than others. New research has revealed that had police and fire personnel received the same economic adjustment as other municipal employees from 2010 to 2014, the cumulative savings would have been $485 million. This includes $72 million in fire service savings and $111.6 million in police service savings for 2014 alone. These extraordinary sums of money are the true cost of the failure to address interest arbitration reform. Will 2016 be the year we finally get to a better place – where salary adjustments have a better association to capacity to pay and how other employee groups are treated?
4. Infrastructure and Social Housing
Municipal governments own 67% of the infrastructure in this province. As noted previously, we are making some inroads but we have a long way to go. For example, it is estimated that the capital repair backlog for the social housing sector stands at $1.5 billion. The deferred maintenance for roads and bridges, water, wastewater, stormwater, transit, conservation authorities, and solid waste is $5.9 billion in 2006 dollars (PMFSDR Report 2008, page 43). Then there are the new capital needs such as transit, social housing and roads.
5. Toronto Tax Tools
The Toronto Act deliberately gave the City the authority to use or not the authority. AMO and many others requested that the same permissive authority be transferred to all. Toronto and its citizens looked at different approaches and figured out what worked for its circumstances. Why do you think other cities should not have the same ability? Are they any less capable of doing the research and analysis? AMO supported the transfer of authority, acknowledging that for Ontario’s other 443 municipal governments it may not be used or achieve fiscal sustainability, but they should be able to decide. We restate the request that all municipal governments should have the discretionary authority.
6. Joint and Several Liability Reform
Municipal governments are increasingly the targets of litigation when other defendants do not have the means to pay high damage awards. This exposure has contributed to higher risks which, in turn, drive up insurance costs and settlements. The legislature passed a resolution with all-party support to seek solutions. We had arrived at several options that provided some limitation when others cannot pay their court determined share. We need to get back to work on these.
7. Photo Radar
Municipalities should be given permissive regulatory authority to use photo radar. Such an authority would be consistent with existing enforcement responsibilities and could provide an alternate means for police services to uphold speed limits on Ontario roads while redirecting the efforts of police officers to other public safety priorities.
8. Prudent Investor Status
We are asking that municipalities be allowed to invest in a broader range of investments using ‘prudent investor’ principles, via the One Investment Program in our roles as the municipality’s agent. Conservative estimates of this long-held municipal request are that it could yield an addition $10-20 million for the municipal sector. Stretching the municipal tax dollar makes so much sense and at no expense to the Province. We are also asking that the eligible list of investors recognized in the Municipal Act regulation be expanded to include municipal associations such as LAS, AMO, MFOA, AMCTO, and also indigenous groups such as the First Nations.
9. Heads and Beds
Heads and beds is the levy that the Province pays instead of property taxes on such facilities as colleges, universities, hospitals, and correctional facilities. Instead they pay a levy to the local municipalities known as “heads and beds”. This levy ($75 per head/bed) has remained unchanged for 29 years. If it had kept up with inflation it would be $138 today. Municipalities that host such facilities bear the burden of added wear and tear on local infrastructure, increased demand for public transit, policing, and EMS services to name a few. AMO calls on the provincial government to begin to adjust the fee in accordance with inflation after nearly three decades at the same fixed rate.
10. Power Dams
110 municipal governments host power dams and have had provincial revenue to offset the tax exemption on the dams. In its 2014 Budget, the Province proposed cutting these payments by $4.4 million over four years. It has deferred this cut as it looks at options to restore municipal taxation. Given the related challenges, we request the government to fully abandon plans for any future claw backs and to restore inflationary indexing. Municipal governments should not have this held over their heads.
11. Simplify Municipal Reporting Requirements to the Province
In 2012 The Drummond Commission looked at the amount of reporting to the Province and wrote, “… the information reported is often not used at the other end to influence changes in policy or service delivery”. Drummond went on, “we believe there are simply too many layers of watchers at the expense of the people who actually get thing done. The government must find a new middle ground”.
In Ontario, we collect approximately $19 billion in own source property taxes. An additional $7 billion a year is sent to the Province for education via property taxes. Some $4 billion of municipal property taxes are spend funding the mandatory municipal cost sharing of provincial health and social services programs such as public health, land ambulance, long- term care for seniors, and social assistance administrative costs. Property tax dollars in Ontario deliver more services than in any other Canadian province. They are also the highest – a factor when industry and commerce scout locations for future development. Our ask is simple – let’s solve these outstanding issues and prepare for the future.