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Ontario municipalities respond to 2024 provincial budget

by Sean Meyer, Municipal World
in Finance, Governance, Infrastructure
April, 2024

Ontario municipalities got a lot of what they were looking for in the recently released provincial budget. But while there was much to like, organizations representing local governments across the province say there remains work to be done.

The 2024 Ontario budget unveiled key investments in several areas, including:

  • $1 billion in new funding for a Municipal Housing Infrastructure Program, as well as a $625 million increase in funding for the Housing Enabling Water Systems Fund
  • $200 million for a Community Sport and Recreation Infrastructure Fund, which recognized the need to address both the upgrading and new build of this important community infrastructure
  • $396 million in new funding for mental health, homelessness, and addictions programs that will support municipalities with innovative solutions and integrated services for those in need
  • $152 million of funding will be used over the next three years for various supportive housing initiatives, and $124 million has been allocated for addictions recovery specifically
  • $100 million investment in 2024–25 through the Skills Development Fund Training Stream
  • $46 million over three years that will provide equipment to local law enforcement as well as funding to combat crime and support victim services

Big City Budget View

These funding announcements will fund critical services in communities across Ontario, including its largest cities. Ontario’s Big City Mayors (OBCM) is comprised of mayors of cities with populations of 100,000 or more. Collectively, Ontario’s Big City Mayors, and its 29 member municipalities, represent nearly 70 per cent of Ontario’s population.

“We were very pleased to see major investments coming toward municipalities and infrastructure,” Burlington Mayor and OBCM Chair Marianne Meed Ward said. “We’ve been advocating for that for some time. They obviously listened and put significant new funding into the budget. That is a really good sign for us.”

While pleased with aspects of the March 28 budget announcement, Meed Ward said OBCM and its allies will continue to impress upon their provincial and federal partners for a new deal for municipalities. This need has been further highlighted in recent months by announcements the province had reached individual funding agreements with the cities of Toronto and Ottawa.

Meed Ward said she welcomes these deals but is quick to add that the need for a new fiscal model isn’t just a big city issue. Municipalities across the country are challenged to find solutions for homelessness, mental health and addictions, infrastructure needs, and supports for all manner of housing – no matter whether they are a large city or a small town.

OBCM will continue to make the case that cities need a new deal in federation, Meed Ward said. She added that the situation has been priority one for their partners at the Federation of Canadian Municipalities (FCM) and the Association of Municipalities of Ontario (AMO) as well.

“We are being asked as municipalities to fund through the property tax base a range of services that were never contemplated 100 years ago when this was put into place,” Meed Ward said. “Not only are we being asked to do more on a property tax-based system that was never geared for that, but we are also covering the province’s costs and AMO has estimated that’s to the tune of about $4 billion. So the funding and the budget is very welcome. It’s a big step in the direction of recognizing we can’t do this alone.”

AMO’s Fiscal Perspective

The view is much the same from the AMO perspective. Brian Rosborough, AMO’s executive director, said he sees the budget as a recognition of the urgent need for the kind of infrastructure investment needed to support growth. He also said the $1 billion for housing infrastructure was “a very strong signal from the province” and a direct response to the advocacy being undertaken by organizations like AMO and others.

Rosborough said another key, from the AMO perspective, is found in the added funding for mental health, addictions, and long-term care. He also lauded the province’s $50 million investment over three years to improve access to healthcare in rural and northern communities.

“We have really been talking to the province about the systemic problems that we have, as in many cases, results of 30 years of policy decisions,” Rosborough said. “Things like homelessness and mental health, municipalities are at the front lines. We really need a partnership with the province to help us address those in a systemic way.”

One of the things Rosborough said AMO was hoping to see in the provincial budget was a commitment to working with Ontario municipalities to look at how they currently do business, their fiscal framework, and the relationship with the province. Rosborough lauded a “much higher level of collaboration” with the province since Paul Calandra was appointed the Minister of Municipal Affairs and Housing.

Rosborough praised the AMO team for illustrating the problems with the current provincial-municipal fiscal framework. This includes showing that there’s a $4 billion gap in terms of the net contribution of municipalities to what are conventionally provincial programs and the rest of the country. As a result, AMO has put in for a joint social and economic prosperity review with the province.

“We’re going to continue to advocate for that as an opportunity for the two orders of government in Ontario to sit down and take a good look at what’s working, what’s not working, and how we can work together,” Rosborough said. “To make sure that the critical services that our people, and communities, and businesses, rely on are funded, delivered effectively and efficiently, and paid for in a way that’s affordable and sustainable for both municipalities, the province, and for property taxpayers.”

Bill 23 Impacts

Rosborough said municipalities have had to cope with “some real tension in the system coming out of Bill 23.” For example, he said, significant questions remain around the collection of development charges and how municipalities can afford to support local growth. It was a point Meed Ward also reflected upon.

Bill 23 reduces development charge funding and any other funding necessary to pay for needed infrastructure. Meed Ward said that whatever the estimated gap is, there is no question it will create a financial hole that municipalities need to address.

There is nothing in the 2024 budget, Meed Ward said, that specifically addresses how the province is “going to make us whole.” She acknowledges the province did commit to that, but municipalities are still waiting to find out what that looks like.

Meed Ward points to estimates from AMO, as well as individually from some OBCM members: it’s multiple billions of dollars that municipalities are in the hole for. And since the hole didn’t have to be created in the first place, Meed Ward said the province needs to provide a solution.

“In order for to be successful in meeting the housing crisis, the infrastructure has to get built,” Meed Ward said. “And that’s community infrastructure as well. That’s what development charges pay for. The system is not broken. It works to fund those things.”

Look to the Future

Meed Ward said she is an optimist at heart and so is choosing to be hopeful about the future. After all, there were “really good signs” in the budget announcement. To see the major investments in the things that municipalities have been asking most for – infrastructure, water and wastewater, mental health and addictions, and homelessness – is important.

But so to were the policy changes announced through the budget process. Meed Ward said those policy changes recognize that municipalities are best positioned to implement the necessary solutions.

“It’s indicative of a larger issue that municipalities know best. If you give us the tools, we’ll figure out which ones are necessary for us,” Meed Ward said. “We’re always very happy for anything that gives municipalities the ability to be masters of our own destiny because we are the closest level of government to the people. We know what is best.”  MW

✯ Municipal World Executive and Essentials Plus Members: You might also be interested in Sean Meyer’s article: National strategy invests in municipal resiliency.

Sean Meyer is digital content editor for Municipal World.

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