December 03, 2014

Looking for clues in the funding puzzle

As published in The Erin Advocate

Is Erin truly being cheated in the financial shell game operated by the Ontario government with its municipalities, or are we just feeling hard done by when money is dangled before us, and then snatched away?

The complexity of the system makes it difficult to tell, so the best we can do is look for clues.

The latest disappointment at Town Hall is the denial of two grant applications: $1.8 million from the $50 million competitive section of the Ontario Community Infrastructure Fund (OCIF) for the Daniel Street Infrastructure Renewal Project, and $1.6 million from the Small Communities Fund for the Station Street Rehabilitation project.

Senior governments like to take credit for offering millions of dollars in funding, but when more than 350 municipalities in Ontario want a slice of the pie, the odds of getting a large piece are slim. They’ve told us our projects were not deficient, but won’t say how they were ranked, only that “other applicants with highly critical projects had more challenging economic conditions and fiscal situations.”

Seems it doesn’t pay to keep your debt low. The province is saying that with Erin’s assessment and average income, it can well afford to pay (that is, borrow) for the things it wants. Financial Analyst Larry Wheeler called the criteria “absurd”, in a report to council.

“Being a municipality on the fringe of the GTA brings with it two hugely detrimental characteristics when it comes to winning prospective provincial and federal grant funding: i) Erin household income almost 60% higher than the provincial median, ii) Erin weighted assessment per household 94% higher than the provincial median,” he said.

“Infrastructure funding is not a social welfare program, so why therefore is ‘household income’ being used as a key determining factor? It is paradoxical that ‘weighted assessment’ is being used to steer and channel infrastructure funding in the opposite direction to where it is most crucially required.”

This competitive situation is just one piece of the funding puzzle. Here are a few other recent examples.

• Erin will get $179,100 over three years from the non-competitive section of the OCIF, according to a complex formula to divide up $50 million.

• Erin will get unconditional Ontario funding of $585,800 in 2015 through the regular Ontario Municipal Partnership Fund (OMPF). That is up $2,200 over 2014, but way down from the $654,000 we got in 2012. The province is eager to point out that while it is reducing that funding overall, it is busy “uploading” various costs to the provincial level including Ontario Works benefits, Disability Support, Drug Benefits, and Court Security.

The Town of Erin has never paid for these services, but the uploading will provide $4.8 million in savings for Wellington County next year, the equivalent of 4% of all municipal property tax revenue in the County. That will more than offset the reduction of the County’s OMPF grant from $3.6 million to $2.9 million.

For OPP service, Wellington expects to save more than $2 million per year under a new billing system that is based more on actual calls for service.

Erin residents and politicians need to find out just how much of these County savings will trickle down locally. Let’s hope they are not all siphoned off to pay for hospitals that we don’t use.

It is not surprising that Erin councillors have been treating Town taxes and County taxes as a package deal. The County is so well off financially that it should be able to adopt minimal tax increases – allowing the Town room to tax for what it needs while keeping the overall increase reasonable. Or perhaps the County could do some uploading of its own, essentially paying for more of what the Town now covers.

In a report to council, Director of Finance Sharon Marshall highlighted a statement in a recent letter from the Minister of Finance Charles Sousa and Municipal Affairs Minister Ted McMeekin concerning the upload savings for upper tier governments like Wellington County:

“It is important to acknowledge that in two-tier systems, the removal of these costs off the property tax base benefits all local taxpayers including those residing in lower-tier municipalities. We encourage upper and lower tier municipalities to engage in discussions to ensure that the savings resulting from the uploads benefit their shared taxpayers in the most effective way possible.”