The Financial Priorities Committee recommends the adoption of the following report (July 23, 1997) from the Acting Chief Administrative Officer:
Purpose:
This report provides an overview of the process to date involving the two provincially appointed implementation teams advising on the transfer of service responsibilities and funding to the municipal sector.
Financial Implications:
There are no financial implications for 1997 arising out of this report. The transfer of service responsibilities and funding to municipalities will take effect next year.
Recommendations:
It is recommended that:
(1) the provincial government be requested to expedite the provision of the financial details and other information on the transfer of responsibilities to the municipal sector as have been previously requested by municipal representatives;
(2) the Association of Municipalities of Ontario be requested to make the matter of municipal information needs regarding service responsibility transfers a priority at the Association's annual conference in August; and
(3) the appropriate Metropolitan Officials be authorized and directed to take the necessary action to give effect thereto.
Council Reference/Background/History:
Following a period of reaction to the provincial plan to transfer service responsibilities to municipalities announced in January, the Province stated that it would work through the Association of Municipalities of Ontario (AMO) to ensure that property taxpayers would be protected. Two transition teams were established by the Province to advise the provincial Cabinet on the transfer of responsibilities. The transition teams' membership was drawn from across the Ontario municipal sector. Chairman Alan Tonks was appointed to the Provincial-Municipal Implementation Team (PMIT) which was to look at all aspects of the reforms apart from social and health services. These were assigned to the Social and Community Health Services Implementation Team (SCHIT) to which Councillor Gordon Chong was appointed. Both transition teams were co-chaired by Terry Mundell, current President of AMO, and provincial representatives (Ernie Hardeman, MPP, Provincial-Municipal Team, and Jack Carrol, MPP, Social and Community Services Team). A complete list of teams' members is provided in the appendix of this report.
The Province announced its revised transfer of service responsibilities plan (or "disentanglement plan") on May 1. Following the announcement, the transition teams were to set up staff project groups to oversee the development of the design and implementation of the details to support the key reforms. The transition teams thereafter were referred to as "implementation teams". The implementation teams are to work with the Province to resolve all outstanding implementation issues by January 1, 1998. Shortly after its initial meetings, Councillor Scott Cavalier joined the Provincial-Municipal Implementation Team, as back-up to Chairman Tonks.
Comments and/or Discussion:
This section of the report provides an overview of the workplan of both implementation teams. Legislation has either been adopted or introduced to enable the transfer of the service responsibilities. The necessary changes and actions introduced through the legislation form the basis of the workplans. Any changes to legislation would be made before the end of the year in order to fully transfer the service on January 1, 1998. Municipal representatives have repeatedly requested the Province to provide the financial impact of the service responsibility transfers for each municipality. The Province, to date, has not provided such information.
Provincial-Municipal Implementation Team:
To date, the Provincial-Municipal Implementation Team (PMIT) has met five times. The workplan of PMIT centres on six main areas arising from service responsibilities transferred to municipalities:
(i) Municipal Capital and Operating Restructuring Fund;
(ii) Community Reinvestment Fund;
(iii) assessment services delivery;
(iv) transportation services;
(v) environmental services; and
(vi) Provincial Offences Act.
Municipal Capital and Operating Restructuring Fund (MCORF):
The Fund provides $800 million over four years to assist municipalities with additional infrastructure responsibilities resulting from Who Does What as well as a result of one-time costs associated with implementing restructuring and efficiency measures. PMIT is to provide input into the development of program criteria to determine eligibility and level of assistance regarding water and sewage projects ($200 million over three years) as well as determining an allocation methodology for funding transportation-related needs ($200 million over fiscal 1997-98). MCORF also allocates $227 million in operating assistance for municipalities restructuring their services and assuming new responsibilities. The criteria for distribution of these funds are yet to be developed. In addition, MCORF includes $173 million for non-profit and co-operative housing.
Much of the water and sewer revenues of MCORF will target municipalities facing either infrastructure-related public health or environmental risks; need for financial assistance; and need to reduce future capital investment through efficiency measures. The transportation portion of MCORF applies to municipalities with transportation assets (municipal transit, GO Transit, local ferries and municipal airports). However, specific provincial contractual capital funding obligations are excluded from the program. This includes the TTC five-year capital plan, province-wide Orion bus order and specific municipal airport commitments. Once consultations with PMIT are completed the Ministries of Transportation and Environment and Energy will report back to Cabinet with recommendations on the allocation methodology and the program criteria for distributing these specific MCORF funds.
Community Reinvestment Fund:
The program criteria for the $500 million Community Reinvestment Fund are to be developed after the MCORF program criteria are developed. The Additional Transition Assistance Fund which provides $70 million for the most needy communities is not identified as part of the draft workplan.
Assessment Services Delivery:
The Province is considering three options for transferring assessment services responsibility to municipalities. These include: a new municipal assessment corporation with municipal representation on the board of directors, much like the British Columbia Assessment Authority (most likely favoured by the Province); individual municipalities to provide their own services; and assessment services transferred to a municipal corporation, but allowing municipalities over a period of time to essentially opt out. In addition, the Province is also reviewing options for assessment service cost recovery. These include apportioning costs across all municipalities (on some specified basis such as amount of assessment or number of roll entries, or both), or directly billing individual municipalities. At its meeting on April 23, 1997, Metro Council adopted the following positions from Clause No. 1 of Report No. 8 of The Financial Priorities Committee:
". . . the Province not transfer responsibility for the delivery of assessment services to municipalities until after the second reassessment scheduled in 2001; and
. . . Metro Council advise the Minister of Finance that a new City of Toronto be permitted to deliver and pay only for its own assessment services and that it not be required to pay for services provided elsewhere in Ontario."
The Minister of Finance has circulated draft legislation with respect to the "Ontario Property Assessment Corporation" which is expected to be considered by the Legislature during its fall session.
The issue of the compressed timeframe for reassessment related activities and decisions required early next year has caused much concern among municipal representatives. In early 1998, the Province is to provide the new assessments and other related information such as tax ratios and "allowable bands" of tax ratios. At the same time, municipal councils must make decisions regarding tax policy which are new responsibilities, previously not undertaken by municipalities. An alternative reassessment implementation timeframe is currently being discussed among municipal members.
Transportation Services:
The Province will consult with PMIT on highway transfer implementation issues and advise on the list of highway transfers and classification of the highway system to determine compensation associated with the highway transfers. On January 1, 1998, the Province will transfer responsibility for 3,400 kilometres of provincial highways to municipalities. Up to $225 million will be provided to fund capital requirements over the next five years and maintenance over one year. This transfer of highway responsibility is in addition to the 1,766 kilometres downloaded to municipalities prior to the Who Does What announcements of this year. In April 1997, Metro assumed responsibility for part of the Q.E.W., Highway 27, and Highways 2 and 2A. No new highways were transferred to Metro from the Who Does What decisions. In addition, PMIT is to advise on a number of outstanding issues including winter maintenance coordination, performance measurement and maintenance standards, and areas of continued provincial interest.
Environmental Services:
PMIT is to advise on the eligibility and level of funding criteria for the new water and sewage infrastructure program funded by MCORF (and described above). Currently two options to determine the level of project funding are being reviewed. In addition, PMIT will also consider several initiatives arising out of Bill 107 - Water and Sewer Systems Improvement Act, involving the streamlining of the delivery and management of Part VII of the Environmental Protection Act (i.e., septic tank approvals and permits).
Provincial Offences Act:
PMIT is to advise on the implementation of the transfer of responsibilities announced through Bill 108 - Streamlining of Administration of Provincial Offences Act, which are to be phased in over a two-year period starting in 1997. Municipalities will be transferred responsibility for the administration and provision of courtroom support functions for Parts I, II and III of the Provincial Offences Act, and selected Part I prosecution functions. These sections deal primarily with moving violations and other infractions where out-of-court settlements (i.e., fines) of up to $500.00 are available. The majority of these charges are under the Highways Traffic Act. Municipalities are to receive net revenues for performing these activities.
Social and Community Health Implementation Team:
The Social and Community Health Implementation Team (SCHIT) as a group has met three times. The main facets of the SCHIT workplan primarily consist of how services can best be delivered in the five following areas of service responsibility:
(i) welfare system;
(ii) child care;
(iii) social housing;
(iv) public health; and
(v) ambulance services.
The workplan requires that SCHIT complete its tasks by the fall in order to incorporate its advice to Cabinet into legislation for adoption in the fall session of the Legislature. Provincial-municipal cost-sharing arrangements for social and community health services will change on January 1, 1998, but service delivery changes are expected to occur over the next two to three years.
The Province is considering the consolidation of management and delivery of Ontario Works, child care, and social housing at the municipal level which would reduce the number of delivery organizations to approximately 50 consolidated units. Through SCHIT, municipal input is being sought as to how best to achieve this consolidation. Where service consolidation is not possible at the municipal level, "service delivery organizations", which take into account larger areas, may be appropriate. SCHIT is reviewing criteria to establish service delivery areas as the basis for integrating social and community health services. Service delivery areas in Northern Ontario will likely differ from how they are organized in the rest of the province.
SCHIT is also reviewing specific details of each of the service areas within its mandate to advise how new municipal responsibilities can be made to work. The following is a brief summary of these initiatives.
Welfare System:
Examination of how municipalities can best take on new responsibilities for social assistance, including: the transfer of the Family Benefits Assistance caseload (particularly sole support parents) to Ontario Works; the basis for municipal cost-sharing of the Ontario Disability Support Program; and the definition of eligible administration costs under the new legislation.
Child Care:
Review of how municipalities can assume new responsibilities for child care licensing, wage subsidies, family resource centres and special needs children.
Social Housing:
To assist the review of how municipalities can assume responsibility for social housing, the Social Housing Advisory Council will be preparing options that outline reforms to the existing systems for the financing, administering and regulating of social housing. SCHIT will also be exploring opportunities to integrate rental assistance programs at the municipal level to provide a more efficient and accessible system to clients.
Public Health:
The Province is exploring ways in which to provide greater flexibility in the delivery of human services through restructuring. To support enhanced service flexibility, the Ministry of Health has considered requiring the Chief Medical Officer of Health not to be the head of a municipal health department.
Ambulance Services:
In addition to determining the appropriate scale of consolidation of land ambulance service delivery, including the servicing of remote areas, SCHIT is reviewing business matters including the Ministry of Health's contractual obligations, unfunded liabilities, and changes to workload.
Need for Detailed Financial Information:
Discussions on service transfers have been conducted in the absence of many of the financial details required by municipalities. Despite repeated requests as far back as the week of January 13-17, during which the provincial announcements on Who Does What were made, the Province has not provided the financial impacts on each municipality. Without detailed information on how much the Who Does What responsibilities will cost, municipalities will be in the difficult position of being unable to accurately determine next year's costs as they begin to develop their 1998 budgets. Metro staff have estimated the cost of the Province's "disentanglement plan" announced on May 1, 1997, at $347.5 million. No detailed provincial analysis has been issued which either confirms or refutes this estimate or the estimates prepared by other municipalities. The lack of information compounds the common problem that municipalities face in terms of not having the necessary information on the impacts of the new property assessment system and how individuals will be affected. Updated assessed values will not be provided until early next year.
Metro and the Area Municipalities are engaged in a process to develop a 1998 operating and capital budget for the Transition Team to recommend to the new City of Toronto. The merging of the budgets of all seven governments and trying to meet the guidelines established by the Transition Team of a 15 per cent. reduction in existing net expenditures is a difficult and complex challenge. This is made more difficult without knowing the full effect of the impact of the transferred service responsibilities. Without additional information from the Province on the financial impacts of its decisions, and without further discussion on how these changes will occur, the new Council cannot provide any assurances that property taxes will not increase in 1998. Metro Council must insist that the Province release the details relating to the transfer of service responsibilities so that municipalities can complete the assessment of the full impact of the provincial decisions.
Conclusions:
Two teams have been established by the Province to advise on the design and implementation of the details necessary to support the reforms announced by the provincial government in its disentanglement plan on May 1, 1997. The actions of the two implementation teams are guided by their respective workplans which are to be completed by the fall in order for the legislation that enables the transfer of responsibilities to be adopted.
In spite of the implementation team process, municipalities have not been provided with the details requested by municipal representatives which would assist in comprehending the full magnitude of the Province's disentanglement plan. Metro must continue to request the Province to provide the financial details which are critical to the 1998 budget planning process currently underway. Strategies to encourage the Province to make available these details should be made a priority by the Association of Municipalities of Ontario at its annual meeting in August.
Summary Chart:
This report conforms with the following:
Contact Name and Telephone Number:
Ed Zamparo, Business Assistant - 392-8668.
Appendix
Membership of Implementation Teams
Provincial-Municipal Transition Team:
Terry Mundell, President of the Association of Municipalities of Ontario (Co-Chair)
Ernie Hardeman, Parliamentary Assistant to the Minister of Municipal Affairs and Housing and MPP for Oxford (Co-Chair)
Janice Laking, Barrie Mayor
John Harrison, Haldimand-Norfolk Chair
Joe Mavrinac, Kirkland Lake Mayor
Don Cousens, Markham Mayor
Jack Morris, Tilbury West Mayor
Alan Tonks, Metropolitan Toronto Chair
Glenn Witherspoon, Fort Frances Mayor
Alain Lalonde, Plantaganet Reeve
Social and Community Health Services Transition Team:
Terry Mundell, President of the Association of Municipalities of Ontario (Co-Chair)
Jack Carroll, Parliamentary Assistant to the Minister of Community and Social Services and MPP for Chatham Kent (Co-Chair)
Ed Down, Oxford County Warden
David Hamilton, Thunder Bay Mayor
Wendy Stewart, Ottawa-Carleton Councillor
Gordon Chong, Councillor, Metropolitan Toronto
Delton Becker, Grey County Warden
Joyce Savoline, Chair, Halton Region
(The Metropolitan Council on August 13 and 14, 1997, had before it, during consideration of the foregoing Clause, the following communication (August 12, 1997) from Mr. Terry Mundell, Co-Chair, Transition Teams, Association of Municipalities of Ontario, addressed to the Premier of Ontario:
I am writing to you in my capacity as Co-Chair of the two Who Does What Teams assembled to provide your Government with advice on the realignment of Provincial-Municipal responsibilities. The purpose of this letter is to communicate our strong objection to the Government's announcements and process regarding projected municipal revenues and expenditures related to the Who Does What process.
Mr. Premier, several months ago you assembled the municipal members of the two Teams to congratulate them on proposing an alternative to the "mega week" announcements of January 1997. At that time, you complimented municipalities on their willingness to work with you to find common solutions to common problems. You indicated that of all the broader public sector transfer partners, municipalities had demonstrated their commitment to the shared objective of providing Ontarians with better government at less cost. By doing so, the Government signalled that the municipal members of the Teams enjoyed your trust and confidence.
In light of this sentiment, the Government's recent Who Does What announcements can be described as counter-productive to forging a new partnership between our two levels of government. The Government's release erroneously portrayed the transfer of responsibilities as revenue neutral, failing to account for the loss of $667 million in Municipal Support Grants and an estimated $225 million for the ongoing maintenance of transferred highways.
Of equal concern is your Government's promise that municipal officials can deliver property tax decreases with relative ease. The effect of the delay in implementation of many programs effective January 1, 1998, is clear. Municipalities will be simply unable to extract savings from programs over which they exercise little or no control.
Municipalities continue to assert that the Who Does What transfer is not revenue neutral. The Government has not furnished the municipal sector with conclusive information to substantiate this provincial claim. Until such time as a community-by-community impact analysis is complete, property taxpayers across the Province cannot be assured that the transfer of service responsibilities will not result in property tax increases.
Your Government has said repeatedly that you will honour the Common Sense Revolution promise that actions taken at Queen's Park will not adversely impact property taxpayers. It is time for the Government to take whatever steps are necessary to restore confidence in the Who Does What transfer.
It is difficult to understand yesterday's announcement that you intend to appoint two new Task Farces to participate in this exercise. While we respect the Government's prerogative to assemble groups as you deem appropriate, it seriously undermines the credibility of the process already established and the individuals who have dedicated considerable time and energy to the process thus far.
Your Government went to great lengths to assemble a group of elected officials from across the Province who represent a variety of constituent interests. These individuals have worked diligently to find win-wins for both levels of government. This has not been accomplished without some price. To ensure the broad-based support of the municipal sector, and to accurately assess sector-wide impacts, it is important that representation on any and all groups be from across the Province. We seek immediate clarification of the role of these Task Forces and their relationship to the two Teams already established.
The issues brought forward yesterday by the Large Urban Mayors Caucus of Ontario are not new. The Who Does What Teams have been sounding the same alarm for months, but to no avail. We have furnished your Government with sound political and policy advice, complemented by operational experience. Examples of your Government heeding this advice are too few to mention. All too often Ministry staff from across the government are coming forward with policy options that are directly contrary to the spirit of disentangling provincial-municipal responsibilities.
It is vitally important that the municipal members of the two Teams have an opportunity to meet with you and cabinet Ministers responsible for the transfer. We respect the efforts of Mr. Hardeman and Mr. Carroll to keep you apprised of development but believe the time has come for a face to face discussion with you.
We would propose that our discussion focus on a few key points. First and foremost is the issue of revenue neutrality and what corrective action is necessary to ensure that no property taxpayer is worse off as a result of the transfer. Second is the continued role of the Transition Teams and how to ensure that the advice of municipal leaders is informing the service transfer. Third is the relationship of the two new Task Forces to the Teams already established. Finally, our discussion should focus on what is a reasonable timetable for implementation of the Who Does What transfers since the January 1, 1998, date has been so seriously comprised by Provincial delays.
The municipal members of the two Teams feel that the events of the past week have brought the current process to a crossroads. We are of the view that the Government is not capitalizing on our expertise and experience. Until we have had an opportunity to clarify our role and to discuss the issues of pressing importance, we are unable to provide you with the high quality advice that you have come to expect from the municipal sector. As a result, we will decline commenting on the education finance reform options at this time, and instead, encourage municipalities to contact the government directly with their views.
Mr. Premier our interest is in working collaboratively to achieve a transfer of responsibilities that is fiscally sound and sustainable over the long term. We are frustrated and concerned by the lack of progress and consultation with the very individuals you appointed to advise the Government.
The upcoming AMO Conference is an opportunity for you to signal that the Who Does What transfer is predicated on a new partnership and a new way of doing business. I am sure you remain committed to our mutual goal of prosperous and vibrant municipal governments.
We await your reply to our request for a meeting. It is of the upmost importance that we engage in open, candid dialogue about these important issues.)
(The Metropolitan Council also had before it, during consideration of the foregoing Clause, a copy of the presentation to the Council by the Acting Chief Administrative Officer and the Commissioner of Finance and Treasurer, headed "Transfer of Service Responsibilities".)
