Amid ongoing US tariffs, a softening Canadian economy, and affordability concerns for Ontarians, the provincial government released the 2026 Ontario Economic Outlook and Fiscal Review: A Plan to Protect Ontario, also known as the Fall Economic Statement (FES), on October 29. The FES outlines the government’s continued efforts to protect workers, businesses, and communities from economic uncertainty while strengthening Ontario's competitiveness. It also sets the fiscal and economic context ahead of the 2027 provincial budget, which is expected to be released in March 2027.
Already in a pre-FES announcement, the government stated its intention to match federal tax breaks for businesses. Ontario will mirror recent federal accelerated write-off measures, including the Productivity Mega Deduction, providing more than $8 billion in additional tax relief over five years. The FES has a few new initiatives for the municipal sector. Most items largely reaffirm previously announced funding commitments and policy directions.
Key Updates for AMCTO Members
- Municipal Funding: The Province reports that provincial support to municipalities increased from $7 billion in 2019 to $11.2 billion in 2025.
- The FES also highlights up to $3.3 billion announced to date through the Development Charge Reduction Program for five municipalities that have reduced Development Charges (DCs), alongside a $1 billion stream for roads, bridges, and water systems in municipalities that do not levy DCs.
- While provincial support has increased in nominal terms, the FES does not establish whether support has kept up with inflation, population, or the scale of the municipal infrastructure deficit.
- Property Assessment Reassessment: The Province confirmed that reassessment remains deferred, with property assessments continuing to be based on January 1, 2016, valuations. No timeline was provided for resuming the cycle, leaving municipalities to manage property tax systems using increasingly outdated assessments as property values change.
- Education Property Tax Remittances: Beginning in 2028, the Province proposes to streamline education property tax remittances between municipalities and school boards, with the goal of reducing transactions and administrative costs.
- Proposed amendments would affect the Education Act, Municipal Act, 2001, City of Toronto Act, 2006, and the Assessment Act.
- Municipal treasurers should monitor implementation details, particularly the revised remittance schedule.
- Centralized Property Assessment Information: The Province is proposing amendments that would allow the Municipal Property Assessment Corporation (MPAC) to establish a centralized online platform providing public access to selected assessment roll information, with availability expected in mid-2027.
- The Province will also work with MPAC and municipalities to expand the assessment information available to municipalities.
- Improved access could reduce administrative demands on municipal offices, depending on the scope of information made available (see next section below for details).
- Buy Ontario: The Province is exploring extending the Building Ontario Businesses Initiative (BOBI) to municipalities as part of the Buy Ontario agenda and is currently consulting on the proposed changes.
- These include requiring municipalities to prioritize Ontario and Canadian goods and services, expanding vehicle procurement requirements, and restricting design specifications that create barriers for domestic suppliers.
- If implemented, municipalities will need to review existing procurement policies and practices to ensure compliance. Regulatory consultations are open for comment for Fleet Vehicles and Buy Ontario Infrastructure.
- OMERS Governance and Pension Reform: The FES also provided an update on implementing the 2025 OMERS governance reforms, including the new OMERS Sponsors Council, and confirmed a framework allowing defined contribution pension assets to be converted into jointly sponsored pension plans by January 1, 2027. As OMERS employers, municipalities have a direct stake in both changes.
Bill 143, Plan to Protect Ontario (Budget Measures) 2026 (No.2)
Accompanying the FES, the government introduced Bill 143, Plan to Protect Ontario (Budget Measures) 2026 (No. 2), an omnibus bill proposing amendments to multiple pieces of legislation to implement various budget measures and other policy commitments. The following proposed legislative changes are of particular interest to AMCTO members:
- Assessment Act (University Student Housing): Amendments to Subsection 3 (1) would provide for the exemption from school taxation of certain land leased or owned by a university. This would continue to provide residential accommodation for students, while still ensuring these properties remain subject to municipal taxation under certain conditions.
- Assessment Act (Public Access to Assessment Roll Information): Amendments would allow MPAC to make assessment roll information available to the public with the ability to impose conditions or restrictions as appropriate. These provisions would apply to assessment rolls returned starting in 2028.
- Education property tax remittances: Amendments to the Assessment Act, City of Toronto Act, 2006, Municipal Act, 2001, and Education Act would provide the remittance of education property taxes to the Minister of Finance rather than directly to school boards.
- Clean Water Act: Amendments would account for the amalgamation of conservation authorities.
- Conservation Authorities Act: Amendments would:
- Provide for agreements between municipalities participating in a conservation authority regarding the number of members appointed to the authority.
- Establish a process allowing two or more municipalities to request, through the Minister, that the Lieutenant Governor in Council establish a conservation authority. A municipal council could also request that an authority’s area or jurisdiction be enlarged, or that a watershed be removed from its jurisdiction.
- Provide the Minister with authority to recommend the amalgamation of two or more authorities.
- Land Transfer Tax Act: Amendments to Subsection 3(5) of the Act would provide that no land transfer is payable where the only transferee acquiring a beneficial interest in land, or whose beneficial interest in land is increased as a result of the disposition, is the Crown or a Crown agency within the meaning of the Crown Agency Act.
Financial Outlook
Ontario’s 2026-2027 deficit is projected to be $16.9 billion, $3.1 billion higher than forecast in the 2026 budget. The government is forecasting deficits of $12.7 billion in 2027-2028 and $6.7 billion in 2028-2029, with a return to a $0.2 billion surplus in 2029-2030 - one year later than projected in the 2026 budget.
Ontario’s real GDP is projected to grow 0.5% in 2026 and 1.5% in 2027, down from the budget of 1.0% and 1.7%, respectively. Net debt-to-GDP is forecast at 37.4% in 2026-2027, while the Province’s capital plan totals more than $210 billion over the next 10 years.
The combination of a weaker fiscal outlook and limited new municipal sector commitments suggests that municipalities may face continued constraints on new provincial funding ahead of the 2027 budget. Members should monitor whether future provincial investments adequately address the scale and growth of municipal infrastructure needs and plan accordingly.