Small Signal, Big Change?

Craig Brockwell | June 2019

Within the 2019 Budget is a small change, which could potentially foreshadow the government’s attitude towards how the province plans to define its relationship with municipalities over the next three years. In the Budget, the government signaled a review of the provincial Gas Tax Program, which currently provides dedicated funds to municipalities to increase transit ridership. While the review of the Ontario Municipal Partnership Fund (OMPF) will be a larger undertaking and garner more attention, the review of the Gas Tax Program can provide a preemptive glimpse as to what degree the Province may have an appetite for granting spending autonomy to municipalities.

Take a look at the Budget language and you will see objectives such as ‘reduce administrative burden’, ‘removing restraint’ and ‘removing duplication’. Adding to this as we are in an era of fiscal belt-tightening, one can only assume that municipalities are expected to do the same or, at least, come to realize there is a new fiscal reality in the province. While negotiations over existing funding is never easy and the one who holds the money holds the power, there may also be an opportunity for municipalities to gain a no-cost win. Municipalities have long advocated that they are mature and responsible entities and what better way for the province to recognize it than by easing the prescriptive measures on the money they provide to municipalities.

This doesn’t mean diminished accountability, rather, it’s devolving the decision to Mayors and council to decide where that dollar goes. Rather than having cities reprioritize critical projects, to access available funds, why not allow them to decide locally where those funds are needed most? A less constrained dollar is suddenly more valuable than money where you didn’t necessarily want it.

How does this all apply to the Gas Tax Program? Let’s look at how the federal Gas Tax Fund is dispersed versus Ontario’s program. The federal portion? Municipalities can spend the money on 17 different types of capital expenditures including local roads and bridges, short-line rail, broadband, wastewater, etc. Ontario’s portion? Monies must be spent on increasing transit ridership. Further, the federal government uses the Association of Municipalities of Ontario (AMO) to administer their funding. If the province is looking to reduce administrative burden for everyone, an open single-window exists.

Could there be an opportunity for municipalities and the province to align on a policy trajectory? While the outcome could take many different forms, what is clear is that interested parties have an opportunity to set the course and municipalities are at the table, with a government that does not shy away from breaking with traditional constructs. If municipalities play their cards right, this could be an opportunity to get more autonomy over each dollar.

Comments are closed.