April 2019
2019 Provincial Budget Update

2019-04-15 11:42:49 AM

CATEGORIES: Finance

On Thursday afternoon, Finance Minister Vic Fedeli delivered Ontario’s 2019 budget, Protecting What Matters Most. This year’s budget – the government’s first since taking office in 2018 – is focused on fiscal management and a plan to return the province’s books to balance after Ontario's next provincial election. Some highlights include:
 

  • Development of 30,000 long-term care beds;

  • A new dental program for seniors;

  • Expansion of alcohol sales by allowing more retailers to sell beer and wine and extending the hours of alcohol service to start at 9 a.m.; and

  • Investments in public transit, particularly by uploading the TTC subway service.
     

This budget makes clear that the government’s overriding priority is deficit reduction and debt repayment. With a projected deficit of $10.3 billion for the 2019-2020 fiscal year, the budget projects decreasing deficits until 2023-2024, when the books will be in balance.

With the focus on deficit reduction and pocketbook items, there are few initiatives targeted specifically at local governments. However, a number of the programs proposed by the province will have an impact on local governments and the ways in which they deliver services.

While AMCTO is currently doing a deeper analysis on this year's budget, below is a brief summary of items that may be of interest to local government professionals:

Fiscal Overview 

Ontario’s Ministry of Finance is forecasting 1.7 percent average growth over the 2019-2024 period, which is lower than the average predicted by the private sector. This year’s budget is forecasting deficit budgets in each of the next four fiscal years with a return to balance – and a modest surplus – in the 2023-2024 fiscal year.

Financial Transparency

Consistent with the government’s approach, the provincial budget contains a number of measures designed to increase transparency in government financial reporting. Specifically, the budget measures will require that – except for election years – the government release its proposed budget by March 31st to allow for predictability and planning.

The government must also report if it misses a deficit reduction target and offer a plan for getting back on track. Both the Premier and Minister of Finance will have a financial penalty equivalent to 10% of their ministerial salaries for each missed target.

In addition, the government will undertake increased scrutiny of public sector budgets by requiring that any unused budget be applied to debt reduction instead of new program spending. Ministries will also be prohibited from applying unused budget to unplanned spending at the end of the fiscal year. However, Ministry staff have indicated that this would not prohibit one-time end-of-year spending as part of overall government priorities.

Finally, the government will be introducing measures prohibiting government agencies and ministries from sponsoring or purchasing tickets to events where an elected official – from any federal, provincial, or municipal government – is featured as the keynote speaker. The budget documents do not, however, define “keynote” for the purposes of this new rule.

Partnership with Municipalities

There are a number of ways in which the provincial government is committing to its relationship with the municipal sector. The government does make clear that it is dedicated to finding efficiencies through collaboration across the sector. The budget documents also state specifically that “growth in transfer payments has been unsustainable” and that the government is focused on value for money. The budget warns municipalities to look for efficiencies in their own operations and that the government anticipates reducing transfer payments in the future.

The budget reiterates the government’s commitment to reducing the reporting burden on municipalities. This supports the province’s clear desire to reduce the regulatory burden it places on all sectors and the clear commitment made by the Minister of Municipal Affairs and Housing to move forward on this file.

The budget also indicates that the government will be pursuing real-time monitoring of sewage overflows from municipal wastewater systems.

Northern and Rural Communities

The budget includes a commitment to invest in broadband and cellular infrastructure to underserved areas, committing $315 million over the next five years to shovel-ready projects. It promises a “Broadband and Cellular Strategy” to be released later in 2019.

Transit and Transportation

The most notable of the transit and transportation announcements is the upload of TTC services and the announcement of provincial funding for new subway lines in Toronto.

The budget announced support for other municipal transit priorities, including Stage 2 of the Ottawa LRT project and the LRT project in Hamilton.

The province has also halted capital funding for high-speed rail in order to further consult with southwestern Ontario communities. A southwestern Ontario transportation plan will be brought forward this fall.

Additionally, the province is undertaking improvements to the highway system by four-laning sections of Highway 69 and 11/17; increasing capacity on Highway 401; and making improvements to bridge infrastructure along Highway 7/115.

However, the province is also reviewing the Gas Tax Program and has cancelled the earlier changes to a rise in share of gas tax funding for municiaplities as proposed by the former government. The 2019 budget indicates that the government will consult with municipalities as part of its review.

Alcohol Sale Changes

While there are several changes to the framework governing the sale of alcohol in the province, there are three changes that will impact local governments directly:

  • Creation of a tailgating permit for eligible sporting events, allowing attendees to “tailgate” in the same way as permitted in the United States;

  • Introducing legislation permitting municipalities to designate public areas for the consumption of alcohol; and

  • Extending hours of alcohol service at licensed establishments – including golf courses – to a 9:00am start, seven days a week.
     

Property Tax Changes

The budget commits to a review of the existing property assessment system and changes to MPAC’s board structure.

Ontario Childcare Access and Relief from Expenses (CARE) Tax Credit

The CARE tax credit would offer low to middle income families up to 75% of their eligible child care expenses incurred as of January 1, 2019. Each year, the CARE tax credit would provide up to $6,000 per child under the age of 7, up to $3,750 per child between the ages of 7 and 16, and up to $8,250 per child with a severe disability.

Lower-income families benefiting from this tax credit may also receive tax relief through the Low-income Individuals and Families Tax (LIFT) Credit, which was announced in Ontario’s 2018 Fall Economic Statement.

A related change involving child care is the reduction of the age requirement for children to access authorized after-school recreation programs from six years to four years of age.

Police Services

The budget includes an investment of $16.4 million over two years to create a province-wide strategy for gun- and gang-related violence. This will include support units for local police officers and joint task forces.

Health

While many of the budget’s commitments for health care do not impact local governments directly, there are three proposals that may affect the ways in which local governments deliver services:

  • The province intends to establish 10 regional public health entities and 10 new regional boards of health in order to help streamline services by 2020-2021;

  • Additionally, the province intends to invest $3.8 billion for mental health, addictions, and housing supports over a 10-year time frame;

  • Budget 2019 also indicates that the government is exploring new models for delivering emergency health services. It is unclear what direction these new models might take.
     

Fire

One of the legislative changes proposed in this budget include amendments to the Fire Protection and Prevention Act, 1997 (FPPA) to enable fire departments to recover costs related to closing buildings when approved by the Fire Marshal for the immediate protection of persons and property. The amendments will also increase some maximum fines for offences under the FPPA.

Reforming Ontario’s Auto Insurance System

The government’s proposed reforms focus on increasing affordability and accessibility for the Ontario public, including the following measures:

  • Introduce a Driver Care Card, which will streamline access to care and make the claims process easier;

  • Improve access to treatment for common injuries, including mental health services;

  • Making sure a driver’s insurance policy will pay for necessary treatment while providing drivers the choice to receive cash settlements if they are eligible;

  • Enhance accountability measures to the evaluation of injury claims by reforming the medical assessments process;

  • Enable insurance companies to offer more discounts and options to drivers;

  • Pass the Ending Discrimination in Automobile Insurance Act, 2018 which would end the practice of discriminating against drivers based on where they live.
     

Estate Administration Tax 

The Estate Administration Tax will be eliminated, effective January 1, 2020, for taxable estates with assets of $50,000 or less, and would be reduced by $250 for larger taxable estates.

Attracting Skilled Workers Pilot Initiative

As part of the need to attract skilled workers and through enhancements of the Ontario Immigrants Nominee Program, the government is starting a new pilot initiative with select communities to explore innovative approaches to bring highly skilled immigrants to smaller communities.

Accessibility Initiatives

In partnership with the Rick Hansen Foundation, the government will invest $1.3 million over the next two years into the Rick Hansen Foundation Accessibility Certification program. The program will prepare accessibility assessments of businesses and public buildings and determine ways to remove any barriers for people with visible and invisible disabilities.

Animal Welfare

The government is currently reviewing legislation to ensure measures are in place to provide animals and their owners with appropriate protections by consulting with stakeholders.


 


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