Municipal acts under review: Revenue Options Needed

NRU
Nov. 4, 2015
Leah Wong

Municipalities across the Greater Toronto and Hamilton Area want the province to grant them more authority to generate revenue so they can address the anticipated infrastructure challenges associated with growth.

The Ministry of Municipal Affairs and Housing is currently reviewing legislation—Municipal Act, Municipal Conflict of Interest Act and City of Toronto Act—that governs Ontario municipalities. Through its public consultation process the province sought comments concerning themes of municipal financial sustainability, accountability and transparency, and responsive and flexible municipal government.

A shared response from GTHA municipalities is to request the same revenue generating tools that are available to the City of Toronto. Under the City of Toronto Act Toronto has greater taxing authorities than other municipalities, which has enabled it to implement its municipal land transfer tax.

Concerned with the financial challenges associated with anticipated growth, including both the demand for new infrastructure and the maintenance of aging assets, municipalities across the region are seeking
greater autonomy to address revenue shortfalls.

Halton Region wants the tools to secure long-term sustainable revenue to address funding pressures such as growth-related capital costs, higher service standards and health and social services program funding.

Similarly Mississauga, wants more diverse revenue sources to enable the city to deliver quality services, while keeping property taxes affordable. The city’s submission argues that if all municipalities had the same taxing authority as Toronto they would be able to diversify revenue bases and access tools to fund infrastructure and other budget demands. Council would then have the discretion to determine which tools were best suited given considerations of fairness, impact on businesses, estimated revenue and stability of revenue streams.

York Region’s submission requests the authority to establish its own debt and financial obligation limit, which is currently determined by the province. While the region is seeking more autonomy in this area it suggests municipalities should meet prerequisites such as an AA credit rating and the annual adoption of a long-term debt management plan.

Another area where municipalities want change is in the heads-and-beds levy, which colleges, universities, correctional facilities and hospitals pay in lieu of property taxes. The current $75 per head (colleges/universities) and bed (hospitals/correctional facilities) levy was frozen in 1987. Hamilton’s submission notes that the frozen rate understates the escalating costs associated with providing municipal services.

Hamilton recommends that the prescribed levy be amended to reflect inflationary increases since 1987 and thereafter adjusted annually to reflect inflation. The increase could be phased-in for a more gradual increase.

Municipalities also recommend ways to improve municipal accountability and transparency. These include legislative amendments concerning conflicts of interest, the definition of a publically accessible meeting and the composition of regional council.

Whitby’s submission notes that the language in the Municipal Conflict of Interest Act needs to be updated and modernized to make the definition of pecuniary interest clearer.

Ajax suggests the act needs to consider non-pecuniary conflicts of interest, which, while not financial in nature, can present significant conflicts. The town suggests councillors should declare these conflicts, but under the current legislation councillors may be unsure if and how to declare them.

Oshawa recommends the conflict of interest act be amended so under certain circumstances, if a councillor makes a declaration of interest he or she may still continue to participate in the discussion and vote on the issue.

As a result of a number of closed meeting investigations conducted under the Municipal Act, the Association of Municipalities of Ontario says in its submission that a better definition of what constitutes an open meeting is needed. Municipalities and provincial oversight agencies use different definitions as to when meetings should be open to the public and this has created confusion among municipal councils and staff.

The office of the Ontario Ombudsman, for example, uses a broad definition, making any gathering of councillors a meeting. Under this definition, when a group of councillors meet with a federal or provincial minister it would be an open meeting.

AMO recommends that a meeting be defined as “a quorum of elected officials gathering to deal with subject matters which would ordinarily form the basis of council or a local board or committee’s business and acts in such a way as to move them materially along the way.” The scope of this definition would allow councillors to have gatherings without following formal procedures.

Markham recommends that the open meeting exceptions be reviewed and amended to provide clear guidance on the meaning of each exception. Current exceptions include security of the property, personnel matters about an identifiable individual, labour relations and solicitor-client advice. The city is asking for more flexibility to conduct in-camera meetings to discuss strategic planning, commercial negotiations and intergovernmental discussions.

Some lower-tier municipalities also raise concerns about fair representation on regional governments. Ajax comments that electors are presently unable to petition for a change to regional council structure. Currently under the act the region and the majority of lower-tier municipalities must agree to changes to the composition of regional council. The town suggests that there should be a standardized process, with a full public representation review completed every three terms of council, to improve transparency.

Some municipal submissions focused on the need for provincial legislation to help municipalities respond to emerging challenges such as shared services and climate change.

Markham recommends the emergence of the services sharing economy needs to be considered in the Municipal Act, as municipalities are limited in their abilities to regulate activities, such as Uber, which are not constrained by traditional boundaries. The city suggests the province consider a new regulatory approach for shared services.

On the same topic, Mississauga suggests the province provide a taxicab definition that includes alternative transportation service providers. This would require a company such as Uber to comply with existing by-laws or with separate regulations for alternative providers, such as a limit to the number of licenses or a requirement to meet specific insurance criteria.

In its submission Ajax says the Municipal Act should advance local government’s mandate to act on climate change. To do so it recommends granting municipalities the authority to adopt and implement mandatory green development standards and to advance community energy planning.