On Thursday, May 15, Minister Bethlenfalvy introduced the 2025 Ontario Budget: A Plan to Protect Ontario. The budget is worth $232.5 billion. As expected, this year's budget focuses on the economy and the impacts of US tariffs. It continues the narrative of protecting Ontario, which has been the theme of the PC party’s election platform and the subject of recent announcements including the latest inter-provincial Memorandum of Understanding with Manitoba. It's also a narrative that has been carried forward from the 2024 Fall Economic Statement (FES).
In our pre-budget submission, we requested that the Province:
- Commit to a social and economic prosperity review.
- Provide municipalities funding to address state of good repair backlogs that address their asset management planning and lifecycle costs.
- Complete the Property Tax and Assessment System Review and ensure that the next assessment cycle starts as soon as possible.
- Modernize the legislative and regulatory environment to improve local service delivery.
While some of these requests are acknowledged, there continues to be gaps in proactive solutions and providing adequate support for municipalities.
Notably, we see in the budget that the province’s growth projects are down considering the impacts of tariffs on the economy (though other scenarios suggest the economy could grow). The budget outlines that because of increased spending, the deficit will grow to $14.6 billion.
A Plan to Protect Ontario is divided into two parts:
1. Helping Workers and Businesses Weather the Storm
2. Protect Ontario
Of note for our members and the municipal sector in the first part:
- The creation of a Trade-Impacted Communities Program (TICP) to help communities and industries with $40 million in grants beginning in 2025-2026. This program will support projects in responding to trade disruptions and changing procurement to local and domestic suppliers where possible. Municipal governments will be eligible.
Of note in the second part, where most of the 74 references to "municipal" are located, this section is divided into several themes:
- Building a More Competitive, Resilient and Self-Reliant Economy
- Building Ontario
- Cleaning Up Our Streets
- Keeping Costs Down
- Delivering Better Services
There are also initiatives of note in the Annex: Details of Tax Measures and Other Legislative Initiatives.
Within these themes, some investments that may be of interest to our members and the municipal sector include:
Building a More Competitive, Resilient and Self-Reliant Economy
- Outlines a desire to see Ontario as a global leader in artificial intelligence. The budget highlights previous investments and recent activity including the Strengthening Cyber Security and Building Trust in the Public Sector Act, 2024.
We continue to monitor regulatory developments on this issue that will impact the municipal sector and previously delegated at standing committee, highlighting concerns within our Strengthening Cyber Security and Building Trust in the Public Sector Act, 2024 regulatory submission.
Building Ontario
- Announces a $400 million increase to the Housing-Enabling Water Systems Fund (HEWSF) between HEWSF and the Municipal Housing Infrastructure Program in 2024-2025 for a total of $2.3 billion over four years.
While this funding is helpful for new projects, our pre-budget submission highlighted the need for funding to maintain and replace existing infrastructure, address state of good repair backlogs, and adapt infrastructure to manage climate change impacts.
- Mentions ongoing consultation with municipalities on the development of a potholes prevention and repair program.
- Announces the Connecting Links funding will increase to $45 million annually to support municipalities that must maintain roads and bridges on municipal roads connecting two ends of a provincial highway or connecting international or provincial borders.
- Highlights the Province's prescription within the Reducing Gridlock and Saving You Time Act that requires municipalities to seek provincial approval before installing new bike lanes.
Currently the Province is 'reconfiguring' Toronto streets and has added more city roads to its planning. This is something that infringes on local decision-making, a point we emphasized within our November 2024 submission on what was Bill 212 in the last Parliament.
Cleaning Up Our Streets
- Mentions investments of additional $75.5 million in the homeless prevention programs along with Bill 10, Protect Ontario Through Safer Streets and Stronger Communities Act, 2025.
Keeping Costs Down
- The budget would permanently cut the gas tax and end tolls on Ontario-owned 407 east toll highway by introducing legislation with an effective date of June 1, 2025, if passed.
Additionally, this legislation would amend the Municipal Act and City of Toronto Act to prevent municipalities from implementing road tolls and would remove Toronto's existing personal vehicle tax financial tool. While this measure is positioned as keeping cost down for drivers, it is an encroachment on local decision-making.
- The Province continues to review the property tax and assessment system. As announced in the FES, a priority was to help municipalities reduce property tax rates on affordable rental housing. As a result, in 2026, there will be an option to reduce the rate (up to 35% based on definitions under the Development Charges Act) on eligible affordable rental housing units.
In our pre-budget submission, we reiterated the need to complete the review of the assessment cycle and reinstate it as soon as possible. We will continue to monitor developments on this.
- Announced the intent to consult with municipal partners to help drivers pay outstanding traffic tickets or fines by streamlining the collection process.
While the positioning of this exercise is meant to “keep costs down for drivers with outstanding fines” its focus is also said to be on improving customer service and reducing possible duplication. We are pleased to see movement on this area as we spoke about making the collection of fines easier in our recent meeting with the Attorney General. As an Association, we are focused on legislation that ensures justice is served while improving public safety on community roads and reducing operational challenges.
Annex: Details of Tax Measures and Other Legislative Initiatives
- Buried under “other legislative initiatives,” the Province announced its intention to make amendments to the Highway Traffic Act to require municipalities to make Automated Speed Enforcement (ASE) and Red-Light Camera (RLC) locations more transparent to focus on road safety objectives.
We are interested in ASE and RLC initiatives as tools that support the provincial offences system and improve public safety. We will be monitoring developments on this closely.
- Related to the property tax and assessment system review, the Province intends to introduce legislation that would enable the Municipal Property Assessment Corporation (MPAC) to deliver assessment notices to property owners electronically rather than only by paper mail starting in 2026; and create regulatory authority to facilitate expanded municipal uses of MPAC’s property assessment information, such as for research or operational needs.
The budget bill, Bill 24, Plan to Protect Ontario Act (Budget Measures), 2025, actions some of the legislative items noted above. We will continue to monitor the budget bill as it goes through the Legislative Assembly for potential impacts to our members.
For more information or questions, please contact our policy and advocacy team and subscribe to our policy blog for regular policy updates.