Legislative Assembly of Ontario

MINISTRY OF MUNICIPAL AFFAIRS AND HOUSING

CONTENTS

Tuesday 6 October 1998

Ministry of Municipal Affairs and Housing

Hon Al Leach, minister

Mr Dino Chiesa, assistant deputy minister, housing operations division

Ms Nancy Bardecki, acting assistant deputy minister, municipal policy division

STANDING COMMITTEE ON ESTIMATES

Chair / Président

Mr Gerard Kennedy (York South / -Sud L)

Vice-Chair / Vice-Président

Mr Rick Bartolucci (Sudbury L)

Mr Rick Bartolucci (Sudbury L)

Mr Gilles Bisson (Cochrane South / -Sud ND)

Mr John C. Cleary (Cornwall L)

Mr Ed Doyle (Wentworth East / -Est PC)

Mr Gerard Kennedy (York South / -Sud L)

Mr John L. Parker (York East / -Est PC)

Mr Trevor Pettit (Hamilton Mountain PC)

Mr Wayne Wettlaufer (Kitchener PC)

Mr Terence H. Young (Halton Centre / -Centre PC)

Substitutions / Membres remplaçants

Mr John Gerretsen (Kingston and The Islands / Kingston et Les Îles L)

Mr Joseph Spina (Brampton North / -Nord PC)

Clerk / Greffier

Mr Viktor Kaczkowski

Staff / Personnel

Ms Anne Marzalik, research officer, Legislative Research Service

The committee met at 1548 in committee room 2.

MINISTRY OF MUNICIPAL AFFAIRS AND HOUSING

The Vice-Chair (Mr Rick Bartolucci): Ladies and gentlemen, can we call the meeting to order. We have an hour and 34 minutes. We're going to start our rotation with the third party, who have 20 minutes.

Mr Gilles Bisson (Cochrane South): Thank you very much. They're going to get a mike here eventually.

Chair, just a question of process: I've got 20 minutes. Will it come back around to me the second round?

The Vice-Chair: Yes: 20, 40, 60, so yes, it comes back to you.

Mr Bisson: One of the mayors in northern Ontario was just on my cell phone, wanting me to ask the minister a question. I've got to get back to him, but I'll get the ones I've got now.

Minister, I'm not going to go through a lot of preamble. I've got a number of specific questions I'd like to ask you regarding the transfers to municipalities. As you know, a lot of questions are being asked by municipalities. They need a bit of clarification. In light of that, I'd like to get on the record some answers to questions that have been put to me by municipal councils throughout our area of northern Ontario and also from other areas.

Let's start with this: In regard to the CRF fund, a number of municipalities have asked me if you're going to be continuing the special circumstances fund and the transitional assistance to the CRF next year, if you can give us an answer on that.

Hon Al Leach (Minister of Municipal Affairs and Housing): The CRF is going to continue. I think the Treasurer made that announcement at AMO.

Mr Bisson: We know the CRF will continue; that's not the question.

Hon Mr Leach: The special circumstances fund is still under consideration. At this point in time, I couldn't commit that it would be, but I also would not indicate that it wouldn't be. We're still dealing with that.

Mr Bisson: We know the CRF is going to continue; that's a yes, obviously. But the special circumstances fund: You don't know at this point, is what you're telling us?

Hon Mr Leach: We haven't made a decision on that yet, but that decision will be forthcoming shortly. We recognize the need for municipalities to start their 1999 budgeting processes as soon as they possibly can, and we want to ensure that they have all the information they need to start that process.

We also recognize that 1998 was a unique and different type of budget year, with the number of changes that were made to the municipal process through restructuring and through amalgamations in some areas. We want to assure municipalities that we want 1999 to be a period of stability. We're going to do everything we can to accommodate that.

Mr Bisson: Specifically to the special circumstances fund, do we have a sense of timeline? Will it be within the next 30 days, 60 days, 90 days?

Hon Mr Leach: We will advise municipalities as quickly as we possibly can. I'm reluctant to give a specific time frame.

Mr Bisson: What would be the latest that municipalities would get an answer?

Hon Mr Leach: All I can say is as quickly as we possibly can. I recognize the need for municipalities to have that information as soon as they can. As soon as we can deal with that, within our caucus and with our cabinet, we'll get back to the municipalities.

Mr Bisson: You also funded this year some transitional assistance to municipalities to offset some of the costs of moving a number of services over to the municipalities and other reasons. Is any of that transitional assistance going to be continued in the next budget year?

Hon Mr Leach: In some instances, there were multi-year commitments to that transitional funding: on roads, for example. Obviously, those commitments would be honoured and that funding will be there for next year.

Mr Bisson: What about on others? Are you aware of any others that'll continue?

Hon Mr Leach: Again, the decisions for funding on 1999 have not been finalized yet, other than that we had indicated to the municipalities that we would keep the CRF money coming and that we would also examine the final numbers at the end of this year; and we made a commitment to the municipalities that if there was underfunding this year as a result of changes in the number, we would cap their funding up, and that if there was an overfunding as a result of the numbers being lower than we had indicated, we wouldn't claw that money back from municipalities.

Mr Bisson: So again, no sense of when the decision -- there's no out date in terms of when those decisions will be made on any of those transitional or special circumstances funds. You're not prepared at this point to give us a date about when the latest is that we can expect an answer.

Hon Mr Leach: All I can say is the decision hasn't been made yet. We'll make it as quickly as we can and get back to them.

Mr Bisson: I am not going to stay on this, other than to make this one point. I don't want to be combative, but I tell you, there's a lot of frustration with the municipalities I've been dealing with about their not knowing what's going to happen for the next budget year. They've already had enough problems with that this year, and they're feeling extremely frustrated about what all this means for the second year.

But you've heard it directly from the municipalities. I will echo those comments back to you that I got on the phone, some of which I would not repeat here. Some of the things that were told to me by municipalities on the phone about what's happening, I don't think I'd want to repeat in the Legislature.

Hon Mr Leach: It must have been complimentary to the government.

Mr Bisson: They were very far from complimentary, I guarantee you.

The second question: On the whole issue of reassessment, there are two sides to every story and then there's mine, right? But on reassessment, here's a question I've had from a couple of municipalities, and maybe you can give an answer on this. I don't need to explain the issue to you; you understand quite well what has happened. But I would ask you this: There have been a number of errors in regard to the assessment of value on property. People have successfully gone back and had some of those properties reassessed, and subsequently the valuation of those properties has been lowered, rightfully so. The municipalities are asking me, are they going to get some additional funding from the province to offset the money they lose in the lower valuation of property as a result of appeals? I think I know the answer, but I'd like to have it.

Hon Mr Leach: That's a question that probably should be addressed to the Treasurer of the province. From my understanding of the process, appeals of assessment happen not only this year but every year.

Mr Bisson: Oh, yes, it happens all the time; we don't argue with that.

Hon Mr Leach: If there is a decrease in an assessment as a result of the appeal, that's a matter for the municipality to deal with.

Mr Bisson: But, Minister, you would also be somewhat sympathetic, I would hope. Because of the changes to the assessment system and the reassessment of all properties across this province, a number of people have seen their property assessment values go up. They've gone to appeal -- we're getting record numbers of appeals -- and as a result, some of them, unfortunately not enough of them, are winning their appeal and having their assessment lowered. The reason the municipalities ask is because this is impacting the bottom line, the revenue they have, because those appeals are being won, so it means they have less money coming in.

Hon Mr Leach: There are three parts to the equation, as I know you understand. There's the pot of money that the municipality has to collect to pay for the services it delivers; there's the assessed value on all the properties; and there's the tax rate that's set. If one of those variables changes, it affects the other two. All three of those are within the total control of the municipality. If the assessed value of the properties decreases and they still require the same amount of money to provide services, they increase the tax rate. If the assessment increases and they still require the same amount of money, they can decrease the tax rate. But all those decisions to deal with any of those three parameters rest solely with the municipality. That's what a municipality is there for, to determine the amount of money that's required to provide the level of service that their taxpayers want.

Mr Bisson: Again on the issue of assessment, one thing I've been noticing is that, not strictly because of the increases municipalities have passed on to their taxpayers because of the downloading, and not strictly because of the higher valuation of property and the result to the new assessment system, we've seen people's property taxes, especially in the commercial sector, go up by as much as 130% over last year. I've seen it in businesses in our community of Timmins, I've seen it up in Mattice, I've seen it in Kapuskasing and different communities up in our area, where the commercial sector -- that's people like you and me -- who happen to operate a business, often family-run businesses, were seeing their overall tax go up by 130% over last year. The simple question I have of you is, do you think that's fair?

Hon Mr Leach: In the commercial sector, if someone's taxes went up, somebody else's taxes went down. We recognize that there may be shifts within the commercial area, and that's why we gave municipalities tax tools to deal with that. They had the ability, for example, to tier taxes within the commercial sector, to protect small businesses, to have one tax rate for small business, one for medium business and one for large business, if they so desired, if they felt that would help businesses in their community. They had the ability to cap tax increases at 2.5% to protect against substantial tax shifts from one business to another. All those tools were available to the municipal councillors to implement. If there is a business in your community whose taxes are increasing by a substantial amount, it's because there's another business in your community that's getting a substantial reduction. But the municipality had the tools and the ability to smooth those shifts, those increases and decreases, to phase them in over a period of time.

1600

Mr Bisson: Vis-à-vis the assessment.

Hon Mr Leach: Yes, and the tax rates.

Mr Bisson: But the problem we're starting to find is that it's not strictly a question of assessment. I'll just give you an example: For Bupont Motors on Riverside in downtown Timmins, the assessment increase over last year is somewhere around 30% on the overall valuation of the property, yet his property taxes are going up by over 100%. We know the municipality has only increased the taxes by 2.5% over last year, so it would stand to reason that his property taxes should not have gone up more than about 30% if it was strictly a question of valuation and of the municipal government increasing taxes. People like Bupont Motors, Chenier Motors, the Timmins Garage, the Toyota dealership, all of those people, are seeing their assessment go up by 127%. They're talking to their municipal government, who are saying, "Yes, it's true, we could have capped," as you have said, the taxes due to the assessment shift, but it's far more than just assessment. It would appear a whole bunch of other factors come into play which are seeing these people, quite frankly, having to make some decisions about who they're going to lay off this year.

Hon Mr Leach: You're absolutely right. There were a whole lot of other factors to take into consideration. There were various classes. That's why we increased the number of classes within the commercial sector to seven so that municipalities could actually smooth out the shift in taxes from large to small businesses by setting up as many as seven different classes, and within each one of those classes they could have tiers.

Mr Bisson: I understand that.

Hon Mr Leach: All the tools were there to allow municipalities to level out the tax increases over the entire commercial envelope to make sure that somebody didn't get 100%.

I would suggest to you, your question back to your municipal leaders is, why didn't they take advantage of all the tools that were made available to them?

Mr Bisson: The simple answer is that it's not just the cap.

Hon Mr Leach: It's not only the cap; there are more tools than the cap.

Mr Bisson: Let me ask you this: Vis-à-vis the different classifications within that particular tax rate -- not rate, but anyway -- we see, for example, the Bank of Nova Scotia at Pine and Third in Timmins going from about $120,000 in municipal taxes last year down to somewhere around $30,000. The bank, which last year made a few dollars, I believe -- I don't think they lost money at the Bank of Nova Scotia last year; if they did, I stand corrected -- is seeing their actual taxes paid go down by almost $100,000 from last year. On the other hand, people like Urgel Gravel, people like Rick Chenier, the Masciolis and others in our community, who, as you and I do, work hard for their dollars, are seeing their property taxes go up as a result of the shift that you talk about within the classifications and the assessment system that has been imposed.

The simple question I ask you is, do you think it's fair that the Bank of Nova Scotia sees its assessment come down by $100,000 as compared to a car dealership in downtown Timmins that sees their taxes go up by 127%?

Hon Mr Leach: No, I don't think it's fair, and that's why we gave the municipality the ability and the tools to ensure that that didn't happen. Again I suggest you go back to your municipality and ask: "Why didn't you set different tax classes within the commercial sector? Why didn't you tier those in? Why did you allow the bank to get a $130,000 reduction while somebody else is getting a $130,000 increase?" They had the ability to phase that in, to level that off, so that the new tax assessment system, which I think everybody agreed was necessary --

Mr Bisson: No.

Hon Mr Leach: Well, the tax assessment system in the province of Ontario was recognized by everybody --

Mr Bisson: We had market value up in our area for a long time before ever you got to it.

Hon Mr Leach: -- in this province as being totally out of whack and totally unfair. The municipalities were given the tools and the ability to ensure that tax shifts within a class, within the commercial class in particular, could be smoothed out to avoid any of those major shifts that are affecting some businesses very badly. They have the ability to fix that.

Mr Bisson: But it's your ministry and your cabinet who made the decision that we were going to change the assessment system in the first place, create new classifications, rates within the classifications, change the assessment system overall, download the services on to the municipality. For you, as the Minister of Municipal Affairs, to sit here and say, "Your municipalities had some tools that they could have used to try to protect them" -- hell, what they needed protection from was you. That's what they needed. That's what they didn't get. What's you've actually done is downloaded --

Hon Mr Leach: What you're saying is that --

The Vice-Chair: Minister, just a second. Mr Bisson, can you finish your question?

Mr Bisson: The point I make is they needed protection from you. To bounce the ball back into the municipality and to say it's all their fault I think is grossly unjust. The municipalities, yes, have some decisions that they could've made, such as not to increase municipal taxes by 2.5% this year, but they hardly had a choice given everything that your government has done.

I come back to the point, do you think it's fair for local businesses in our community, as in many others, I'm sure, to see their municipal taxes go up by over 100% over last year?

Hon Mr Leach: Absolutely, I don't like to see that, and there was no need for it. As a matter of fact, we have a meeting coming up with AMO tomorrow morning where we will be discussing the possibility of reopening the issue to allow municipalities to go back and revisit the decisions they made. In defence of the municipalities, some of them made decisions without recognizing the extreme effects that some of the decisions they made were going to have, because it was a new taxation system, a new assessment system. There wasn't any doubt about that.

Mr Bisson: And some of the information wasn't available.

Hon Mr Leach: There were some decisions made that, when they look back at it in retrospect, they say, "Oh, my God, we didn't realize that the shifts were going to be of this magnitude." So we're talking with AMO, we're meeting with municipalities. One of the options that will be available to them would be that we'll --

Mr Bisson: You'll reopen the cap issue?

Hon Mr Leach: -- give them an opportunity to reopen the cap, to reopen the tools that were made available to them originally so that they can correct some of the inequities that were created.

Mr Bisson: Can I ask you this: If you reopen the cap issue, that'll fix part of the problem in the commercial sector, but who's going to offset that increase in taxes that'll be needed at the residential sector?

Hon Mr Leach: That's the point we're making. It's the municipalities that determine the pot of money they need; it's the municipalities that determine the tax rate that they set; it's the municipalities that determine what sector pays for it, whether it's residential, commercial or industrial.

Mr Bisson: All you're doing is you're offloading on to another part of the tax base. If you freeze the commercial taxes under the cap -- and I'm sure the people who own commercial property will be happy if that happens -- what it means is that you've got to get that lost revenue from somewhere else. Municipalities will be forced, because of your actions, to offset --

Hon Mr Leach: Not because of our actions.

Mr Bisson: -- because of your actions, to offset that loss against residential property, which means now Urgel Gravel and Jim Mascioli and others at home will end up having to pay for that tax in another way. It seems to me somewhat counterproductive. Why not try to find some other longer-term solution?

The Vice-Chair: We'll move over to the government side for their 20 minutes.

Mr Ed Doyle (Wentworth East): I'd like to continue with some of these questions that Mr Bisson started. I wonder if you could explain if you feel municipalities fully understood some of the things that they were doing. There were plenty of courses available to the municipalities and seminars, were there not, for them to attend? Can you tell us how many answers may have been available to them at fairly early dates?

Hon Mr Leach: There was a lot of information provided to the municipalities over the course of the last year. There were also a number of municipal seminars that were put on by the Ministry of Municipal Affairs staff right around the province as a matter of fact. Close to 1,000 municipal politicians attended those seminars to make sure that they appreciated the changes that were being made.

Having said that, there were some decisions that were made by some municipalities that, if they had an opportunity to revisit, they would probably make a different decision. I don't think they fully appreciated the magnitude in shifts that would take place as a result of the change in the assessment system.

It's a delicate issue; there isn't any doubt about that. If the municipality cuts taxes in one area, it's going to have to raise taxes in another area, and to try and find that balance between residential, commercial and industrial is not an easy job. I have a lot of sympathy for the municipal politicians who have to deal with that issue, but let's be realistic: That's why municipal councillors are there. They determine the level of service to be provided to their citizens. They determine the amount of money they have to raise to pay for those services and they determine which class pays for what services. all of the decisions that are required to look after that rest with the local politician.

1610

We've tried to provide as many tools and systems to allow them to make those decisions, to ensure that the shifts in assessments from large to small can be phased in over a period of time, or capped in some instances. We're still prepared to sit down and talk to the municipalities, talk to the municipal sector, to say, "If you don't want to revisit this, if you feel there's a need to go back to the 1998 tax systems or to address it and correct it in 1999, we're prepared to sit back, review the tool box that was available, re-open that tool box and make them available to you again," or even add new ones if there are suggestions from the municipality that new ones might be necessary.

Mr Doyle: I ask the question because I sometimes get the impression that perhaps they didn't fully understand all the tools that were available to them. I had two constituents call me and say to me that they had been informed by a municipal councillor that the tax rate at the municipal level was set by the province. If they understand things that way, I question if they fully can grasp what's been happening here.

Hon Mr Leach: That's a partially correct answer, because the education tax rate is set by the province. The municipal tax rate is set by the municipalities.

Now, one thing that your constituents can be sure of, and we've made the commitment and we'll live up to the commitment, is that the education tax rate was frozen this year, the education tax rate will be frozen next year and the education tax rate will frozen for the year after that. So your constituents can rest assured that the education tax rate or the taxes collected for education by the province of Ontario will be frozen for the next three years. They have that assurance that there's some stability there. With respect to the tax rate set for municipal purposes, that's an issue that their local councillors should deal with.

Mr Terence H. Young (Halton Centre): In my region of Halton, which I'm sure you're familiar with, I've analyzed it every way I can and there is a lot of duplication in municipal government, I guess as elsewhere. For instance, the town of Oakville has a planning department, as do the other towns, as does the level of regional government. When you call 911 to your house, you get an ambulance from the province, you get a police vehicle from the region and you get a fire truck from the town.

There are other duplicated departments. They have two big buildings full of municipal civil servants. They don't do any joint banking, as they do in Renfrew, where they save I think $50,000 a year doing joint banking. But I wanted to ask you, what roadblocks do they have, if any, to reinventing government at the municipal level in my region?

Hon Mr Leach: We have indicated that regions were excluded from Bill 26, which allowed restructuring to take place in the county system throughout Ontario. We have indicated to the regions, though, and certainly specifically to Ottawa and to Hamilton-Wentworth that if they come up with a triple majority, which is the majority of the lower-tier municipalities, representing the majority of the population, and if that decision is concurred in by the upper tier, the province would implement any changes in governance that they felt was appropriate. That situation and that commitment would be made to Halton as well.

Mr Young: You see, our regional chair is on record saying that most of what they do, or 85% of what they do or what they spend is just writing out cheques; that is, the services are demanded by provincial legislation anyway. They have a level of government which is there basically just to make decisions with regard to 15% of what they do. It seems like an awfully expensive way to do things. I think it's something that we have to constantly review, so that's what I will be encouraging.

Hon Mr Leach: There isn't any doubt that in many parts of Ontario we are over-governed. Each of the regions is different. Each has its own unique situation. Halton did some restructuring, I think, with the creation of Halton Hills a few years ago.

Mr Young: The towns also do some joint purchasing, which is wise. They get together with the school boards, actually, and do joint purchasing, which is very admirable. But a lot of my constituents have said to me that they're really fed up with the finger pointing. I don't mean that municipal politicians in Halton haven't worked hard, because they have, but at every public meeting you go to they're talking about downloading, downloading. The taxpayers are saying they're fed up hearing about it, that they expect us, meaning provincial-level politicians and municipal politicians, to work it out and to make it work better. That's what I'll be encouraging. Do you have any comments on my role as a local MPP?

Hon Mr Leach: Obviously you are working very closely with the local politicians, and that takes place not only at the lower-tier but at the upper-tier as well. It was a difficult year for municipalities; there isn't any doubt about that. This government had an agenda to get rid of waste and duplication and to bring fairness and equity back into the tax system. All of those things we've done and we've implemented, but it wasn't without a great deal of hard work and a great deal of concern for some municipal officials as to how they were going to cope with different changes.

As far as the changes being revenue-neutral, the trade that we made in the delivery of services vis-à-vis the tax room that we created by taking 50% of education was revenue-neutral. We did, though, eliminate the municipal support grant, and when we took the municipal support grant away -- which we advised them in 1995 would happen, by the way, and it would be phased out over three years -- we said that to make the whole package revenue-neutral, you were going to have to find tax savings of somewhere between 1.4% and 4.2% depending on the municipality. So they were fully aware that some belt-tightening was going to have to be done, as is being done with all levels of government.

Certainly with our government, when you were faced with an $11-billion deficit that you had to get rid of, and knowing that 70% of your costs were in transfer payments, it doesn't take a rocket scientist to figure out that the municipalities were going to have to be part of the solution to get rid of that deficit.

Mr Young: The town of Oakville has done a good job. Their tax increase is 0.14% --

Mr John Gerretsen (Kingston and The Islands): Gary Carr did a good job at that.

Mr Young: -- which is basically zero per cent, but the region did bring in a tax increase. As I say, the taxpayers are fed up hearing about the finger pointing. It's like they feel they have arrived, that this is it: "This is the absolute best we can do and we're going to take another look at it next year." What I've said to them is that you could never stop trying to look for better ways to provide services cheaper, that government is a process and that there's no time when you say: "OK, that's it. We've done our best. Here's your tax increase," and then say, "Let's see what's happening next year." We have to keep working to find ways to provide services better. That's my message to them. Is that --

Hon Mr Leach: Absolutely. We all have to look for ways of getting rid of inappropriate spending. That's not saying that anyone goes out to intentionally spend money inappropriately, but there are lots of ways to save money. Some of the municipalities that have amalgamated in restructuring, for example, are good examples of where there are savings to be made. Prince Edward county, for example, realized $300,000 in savings just on their insurance rates for municipalities. Chatham-Kent is a very similar situation, where by collectively looking at the provision of services they were able to cut costs.

With dollars being as scarce as they are at all levels of government, municipalities have to start looking at, "How we can get a better price for the services that we provide to our taxpayers?" There are all kinds of issues that the old way of doing business just is no longer appropriate. They have to go back to square one, to the bottom line and start building it up from scratch, looking at every line item, saying, "Is this the best way to provide this service at this cost?"

Mr Young: Right.

1620

Mr Wayne Wettlaufer (Kitchener): I'd like to follow up that line of questioning, Minister. In my own area, you're fully aware of the duplication of services that we have. We've got eight municipalities, including the regional government, serving a population of less than 440,000 people. In discussions that I had with the regional government and with the city government, I proposed to them that one of their options was to look for savings in their spending as opposed to sending on tax increases, and they said that was not an option. That was their approach.

What we have had is an increase in taxes to some residential areas, definitely to tenant housing, to multi-residential owned housing and some rather significant increases to small business, especially small industrial.

Mr Bisson: What about banks?

Mr Wettlaufer: One of the things that we have seen is that the city --

Mr Bisson: What about banks?

Mr Doyle: Will you let him have his turn? You had your say.

Mr Wettlaufer: -- of Kitchener has not utilized the various tools that were made available to them by your ministry. What more we can say to them to encourage them to utilize the tools?

Hon Mr Leach: I think they're beginning to realize now that the tools that were available to them would have made their life a whole lot easier in retrospect. I think they didn't appreciate some of the major shifts that were being made.

As I mentioned earlier, we are meeting with AMO and working with AMO, the association that represents the municipalities, to look at the options that may be available for municipalities to go back and revisit the decisions that they made earlier this year. In some instances they may want to go back and revisit the cap on commercial, for example, or they may want to revisit the phase-in period that was available to them for residential, for example. The city of Toronto, for example, decided to phase in the increases in residential over five years. They also applied the cap.

If those tools were used in many of the municipalities, and it's difficult for me to say in all of them, because I don't have the specific circumstances for all of them here in front of me, but if the municipalities had used the tools that were available to them in most instances, the major shifts and the major problems that are facing individual businesses or individual homeowners wouldn't be there right now.

The Vice-Chair: Any other questions from the government side?

Mr Young: How are we doing for time, Chair?

The Vice-Chair: Another five minutes.

Mr Young: I have a question, or do you want to --

Mr Wettlaufer: I was going to ask another one. What I was going to suggest is that you're aware of some of my interest in amalgamation of services in the various municipalities. In some cases I would even go further, and I know that you're not willing to -- I shouldn't say you're not willing, but you're certainly not desirous of encouraging or forcing municipalities to merge necessarily, although I personally would be quite forceful with the municipalities in my region. But what could we do to encourage the municipalities to look at amalgamation of services as a means to cut costs?

Hon Mr Leach: We committed to work with municipalities to identify best practices -- best practices that are used by other municipalities around the province, for example, that we are aware of. We committed to set up a process that would allow those best practices to be shared across the province. That, in many instances, goes to the amalgamation of services, sometimes to the amalgamation of departments.

In a two-tier situation, as you have in your community, there is lots of consideration being given to shifting the delivery of services from the lower-tier to the upper-tier and some areas from the lower-tier down. I mentioned insurance before, but insurance is being provided at the upper-tier for the entire region in some cases, which has produced substantial savings.

So we would continue to work with the municipalities. If any municipality wants to explore the best-practices procedures that we've identified, we'd be glad to work with them directly or through the municipal association.

Mr Wettlaufer: In some cases, however, we have parochial views, and that is not possible, because they aren't willing to work with us. But I'll leave that for another day.

The Vice-Chair: Two minutes, Mr Young.

Mr Young: Minister, I sat on the committee last year when we listened to the public on the City of Toronto Act. The difference between the reality now, what has happened in the city of Toronto and what people are saying, versus what was being said is absolutely dramatic. At that time, the sky was falling and this was going to happen and the core was going to be eaten out and it was going to be like the worst American -- all that stuff, none of which has happened. In fact, there isn't even a hint of any of it happening. We have probably the best salesman in Canada as mayor, who's out selling Toronto to bring the Olympics to Toronto and talking about major capital projects, like covering over the Gardiner Expressway. Can you comment on the transformation or how the result has been compared to how you thought it would be?

Hon Mr Leach: I think the proof is in the pudding. The budget chief for the city of Toronto has acknowledged that the $300 million in savings to the municipality, as a result of eliminating the waste and duplication of having seven governments provide services within the Metropolitan Toronto area, is there and is real. It's being recognized and it's being found. All of the fearmongering that was done with respect to a loss of community identity has been proven to be just that; there is no loss of identity in communities.

I live in the city of Toronto. I've always lived in the city of Toronto. I think I'm probably as qualified to speak about the sense of community in various parts of Toronto as anyone in this House. I can tell you from first-hand knowledge that the concerns that were addressed by some have just not materialized and will not materialize.

The Vice-Chair: We'll turn it over to the Liberal party.

Mr John C. Cleary (Cornwall): I had a gentleman call my office last week, and he was very angry. I had talked to him on the phone on the weekend. The one instalment on his tax bill is $1,351. He says here that he is being charged an education levy of $515. He went on to tell me about all the glossy brochures and everything he'd received saying the Ministry of Education was picking up the education levy. He said that he was surprised to see the education expense on his municipal tax bill. He was under the impression that the province, led by the Ministry of Education and your ministry, had taken the full cost of education. He is charged $515, and he wants an explanation.

Hon Mr Leach: Let me give it to him. The province of Ontario offered to assume 100% of the cost of education off the municipal tax bill. That was a proposal we made to the municipalities. After we made that proposal, AMO, the association representing the municipalities, at committee came back and said: "No, we have another proposal. We recommend that you only take 50% off the tax bill and share costs on other services, like social services." We now share social services 80-20 and we pay for 50% of education.

We had originally proposed that 100% come off. I personally think 100% should come off. Education shouldn't be on the property tax. We are working, and the Treasurer, the Premier and I have stated that income redistribution issues should come off the property tax. When the provincial budget is in a position that we have some stability to it, we have committed to move in that direction. But it was the municipalities that asked that only 50% come off. That's what his $515 is.

1630

Mr Cleary: I have another one here too. It's on conservation land. This lady writes me: "During my attempt to get my questions answered, I have contacted every person I know. Everyone is very unco-operative. No one can explain the increase in my taxes. Nevertheless, they told me to pay the complete amount."

She goes on to say that she had purchased the land six years ago, a parcel, and it was classified as conservation land. However, she says that the conservation title was recently removed without her being notified. As a result, her property taxes went up $638. Obviously, she is very concerned and wants to know how this increase could be justified. She said that she has planted 7,000 trees on her property, and she wants to get information from you and about the deadline for help.

Hon Mr Leach: It's difficult to deal with a specific situation. I'm not sure whether she's talking about the assessed value of her property increasing, which has resulted in an increased tax bill, or whether it was the tax rate that went up that caused her taxes to increase. The only thing I could suggest that you advise her is that --

Mr Cleary: I can give you the letter.

Hon Mr Leach: That would help, but the decision on municipal taxes obviously rests with the municipality. She should first ascertain whether the increase was a result of an assessment increase or whether it was a tax rate increase. That could be provided by the municipality.

If you want to send that letter over to me, sir, I'd be glad to have my officials look at it and provide the individual with some advice on how to follow up on it.

Mr Cleary: She refers to downloading in it. I'll send it to you.

The special circumstance fund: How long is that going to be in place?

Hon Mr Leach: It's certainly in place for all of this year. There hasn't been any decision made on how special circumstance funding will be applied in 1999. We hope to make a decision on that in the very near future, and we will advise municipalities accordingly.

Mr Cleary: The transition fund?

Hon Mr Leach: It's the same situation. We've advised municipalities that their municipal support grant would stay in place for 1999 and that the amount of funding that was provided to municipalities would remain stable. Whatever they got in 1998, they would get again in 1999. That's the bulk of their support spending.

On the special circumstances fund, each municipality would be revisited on its unique circumstances, and a decision would be made on an individual basis, as it was this year.

Mr Gerretsen: I have a comment before my questions. It's far too early to know whether or not community identity has been affected at all by amalgamation. We should maybe give it another three or four years. To sit there and say that there will never be a change here in Toronto about communities etc, I just find that a little bit too much. Let's just wait and see what happens.

Hon Mr Leach: Let me just make one very quick comment on that. As I said, I grew up in the city of Toronto. I grew up in a community by the name of Mount Dennis. Mount Dennis was amalgamated into the city of York in 1954. I remember my mother bouncing me on her knee and telling me about that amalgamation. I just wanted to point out that Mount Dennis was a community in 1954, and Mount Dennis is still a community in 1998. My mother puts Mount Dennis on her mail, and it gets there.

Mr Gerretsen: That may be so, but I still think possibly the worst thing your government has done, sir, is to get rid of an awful lot of the local representation out there. No matter how you cut the cake, one of the reasons municipal government and local government has worked well in this province over the last 150 years is that in most municipalities a councillor was no farther than down the next concession line or somewhere in the neighbourhood. That, I'm afraid to say, we're going to lose. Eventually, there will be less citizen input into the municipal processes.

Let me ask you something about the Ontario Housing Corp. You stated here the other day that you don't believe the province should be involved in public housing and social housing, although you kept calling it co-op housing. May I remind you, Minister, co-op housing is a small part of the total social housing portfolio. You said you really believed in the rent supplement program, and yet there are absolutely no new dollars in your rent supplement program; as a matter of fact, there are fewer dollars this year than last year for the number of units you support. How long is the waiting list now within the OHC public housing system? Can somebody give me a number quickly, without taking too much time, as to how many people we have on the waiting list currently within the entire system, or within MTHA? Just give me any number at all.

Hon Mr Leach: It's probably pretty close to what it was 10 years ago when you were in power.

Mr Gerretsen: I've never been in power, sir.

Hon Mr Leach: And probably never will be.

Mr Gerretsen: I'm eagerly awaiting that day. It may never come.

Hon Mr Leach: I'd suggest you don't hold your breath.

Mr Gerretsen: I never hold my breath, because I want to keep breathing.

Hon Mr Leach: The waiting list for social housing, certainly in the major urban areas -- and that goes beyond Toronto; it's Toronto and Ottawa and London and Windsor --

Mr Gerretsen: Do you have a number, sir, as to how many people are currently on the OHC waiting lists in the housing authority system in Ontario?

Mr Dino Chiesa: I don't have it off the top of my head.

Mr Gerretsen: You don't have it off the top of your head. Five years ago these people had those figures just like that. It's amazing how they seem to have lost that information. Anyway, no matter what the number is -- and you said 45,000 -- what do you as a province intend to do about those 45,000 families and individuals who are waiting for some sort of subsidized housing? Do you feel you have any responsibility at all there?

Hon Mr Leach: Did you say 45,000?

Mr Gerretsen: Well, isn't that what you said, that that's the number on the waiting list?

Hon Mr Leach: I said 25,000.

Mr Gerretsen: There are 25,000. Well, then, it was double five or six years ago, because then it was 50,000. If that's incorrect, I'd like your officials to correct me.

Mr Chiesa: The reason we don't have a number is because in many areas we've got coordinated access and common waiting lists now, so it's hard to have a number without duplicating the social housing number.

Mr Gerretsen: So how many people are there on the waiting list for social housing in general, then? Do you have any idea at all, in the province of Ontario?

Mr Chiesa: I can't tell you that, because many groups keep their own waiting lists; it's not a coordinated, all-across-the-province, common waiting list. If you want to know how many people specifically are on the waiting lists for public housing only, we can separate that data, and I can get it for you in a day.

Mr Gerretsen: Would 50,000 be way out of line?

Mr Chiesa: No, 50,000 would not be out of line.

Mr Gerretsen: So the minister was totally wrong with his 25,000 a few minutes ago.

Hon Mr Leach: You are a piece of work.

Mr Gerretsen: And so are you. I've certainly found that out in the last two or three years, that you are a real piece of work.

The Vice-Chair: Mr Gerretsen, please. Let's ask the questions, let's give the answers, let's not banter about names; nothing's accomplished.

Mr Gerretsen: Do you think the province has a responsibility towards these people who are looking for social housing, yes or no?

Hon Mr Leach: Yes, I think that all levels of government have the responsibility to make sure that housing is provided to everybody in our community that needs it, whether it's federal, provincial or municipal. We believe, as the federal government believes, the Liberal government in Ottawa, that housing should be devolved down to the level of government closest to the people. The federal government is devolving it down to the provincial government, and we in turn are devolving it down to the municipal government.

Mr Gerretsen: So you're saying that any new social housing that is to be created in this province is to be done at the municipal level and there is to be no provincial involvement in that. Is that what you're saying?

Hon Mr Leach: No, I didn't say that at all. Perhaps if you would wait for a complete answer, you would find out. We're saying the municipalities should be responsible for administering and funding municipalities, but the policies that ensure that the market will provide additional housing rest with all three levels of government. Much of that goes to policies of CMHC, for example, on mortgage rates for developers to get back into building low-cost housing.

1640

Mr Gerretsen: So the province is only involved in setting the climate, then, the economic climate, as it were. The actual delivery of housing and the subsidization of housing and any future new housing that's to be built is the local responsibility.

Hon Mr Leach: That's correct.

Mr Gerretsen: Okay. That's what I thought you said earlier.

You also made a statement, and you've mentioned this a number of times, that the kind of savings you were looking for from municipalities was somewhere -- and I think I wrote this down correctly -- between 1.4% and 4.2%. Is that right?

Hon Mr Leach: That's correct.

Mr Gerretsen: Just so that we're clear on that, that's not 1.4% or 4.2% of the provincial dollars that go into local municipalities; that is of the total municipal budget. Is that correct?

Hon Mr Leach: Of money they're responsible for.

Mr Gerretsen: Right. How much would you save, on average, in the province? Of the total municipal budgets out there, what percentage does the province put in?

Hon Mr Leach: I'm sorry, I didn't understand that question.

Mr Gerretsen: Well, let's say a budget is $100 in a particular municipality. Do you have any idea how much of that $100 would come from the province as opposed to from the local taxpayers through property taxation?

Hon Mr Leach: No, because it would vary from municipality to municipality. If there were 815 municipalities in the province, then the amount of subsidy that was provided through various subsidy programs would vary from municipality to municipality. That was the whole purpose in undertaking the Who Does What exercise. We were trying to eliminate those cost-shared programs so that the municipalities would deliver and pay for services that are most appropriately handled by municipalities and the province in turn would pay for and provide services that are best provided at the upper tier. That was the whole purpose in undertaking the Who Does What exercise. As a result, we've reduced the number of cost-shared programs between municipalities in the province from 12 down to three.

Mr Gerretsen: But do you have any idea as to what percentage of the average municipal budget out there is our provincial dollars? Are we talking about a third, a half?

Hon Mr Leach: That would vary from municipality to municipality. I'm sure the budget situation in the city of Toronto, for example, would be a whole lot different than the budget situation in Amherst Island.

Mr Gerretsen: Don't pick Amherst Island. These people pay an awful lot in ferry subsidies.

Hon Mr Leach: I don't think you can pick a number out of the air and say that the tax situation in this municipality would be equal to that of every other municipality in the province. It's just not possible.

Mr Gerretsen: You're telling me that within your ministry nobody has a pie chart or a summary sheet which indicates that out of all of the dollars that are spent at the municipal level, nobody has an idea as to roughly how much comes from the province and how much from the local property taxpayers?

Hon Mr Leach: We can give you that number for every municipality in the province. But what I'm saying to you is that every municipality would be different. For me to say it's 50-50 would not be correct. It might be correct for one municipality, but it would be entirely false for another one.

Mr Gerretsen: The point I am trying to make is that you wanted the municipalities to get that entire 1.4% to 4.2% in savings out of the money that you were traditionally giving to them. Isn't that correct?

Hon Mr Leach: No. We felt that the 1.4% savings, for example, should come from the total amount of municipal spending. We felt that was certainly achievable for municipalities, to reduce spending by 1.4%. In some instances, that was as little as two cents on the dollar, so all you had to do was cut two cents on each dollar of spending and you more than equalled what the province was hoping you would achieve.

Mr Gerretsen: How do you explain the fact that Mr Eves said in the House one day, just last week, that a third of the municipalities didn't have a tax increase or may have even gone down a little bit, a third of the municipalities had a tax increase of no more than 5% and a third had a tax increase of higher than 5%? Are you saying that for all of those municipal councils that had an increase of more than, let's say, 1.4%, in effect this is the result of their own doing in the sense that they wanted additional programs etc? Are you saying that every municipality out there, or two thirds of them, in effect wasn't affected by downloading at all? You seem to claim that it's revenue-neutral. You've mentioned this numerous times.

Hon Mr Leach: Some municipalities, of course, have had tax increases. I'll give you an example. The region of York increased property taxes by, I believe, 7.2%. When they were asked why they were increasing taxes by that amount, they said it was because they were in a growth community, they had additional services that had to be provided and they had to increase taxes to provide that additional increased level of service their taxpayers deserve.

There are many municipalities that are changing their service levels and require funding to pay for that. If they want to increase the level of service that they provide to their taxpayers, then they increase taxes to pay for it. That's fair ball. That's the job of a municipal council, to determine it. But if it was based on the same levels of service that were delivered last year and the same levels of service to be delivered this year, there was no action taken by the province of Ontario that would increase taxes other than by the 1.4%.

Mr Gerretsen: I totally disagree with that.

Hon Mr Leach: You may be wrong.

Mr Gerretsen: I'd rather take the municipal word on that than your word on that on any given day.

Is it not true, as well, that the education portion -- the percentages that you have set, especially on commercial and industrial properties throughout the province -- is at a higher rate than the municipalities expected? In order to get the $6 billion in education dollars from the property taxpayer, you had to peg that to a --

Hon Mr Leach: I doubt very much whether it would be higher than what they expected, because we took 50% of what was there last year and froze it. There was absolutely no increase in the amount of property taxes collected by the province over what was paid last year. If some municipality is trying to tell you, sir, that they were surprised by the increase in property taxes, find out what they're smoking, because they're wrong.

Mr Gerretsen: Are you familiar with the Canadian Federation of Independent Business?

Hon Mr Leach: Yes.

Mr Gerretsen: What do you think of that organization as far as their research organization is concerned?

Hon Mr Leach: They have good points and bad points.

Mr Gerretsen: If they say that the factor you're using throughout this province to raise education tax dollars on commercial and industrial property is too high or is much higher than what it needed to be in order to get those dollars, you're saying they are wrong in that?

Hon Mr Leach: No, I'm saying that the province is collecting exactly what the municipalities collected last year. The province did not increase education taxes one penny, not one cent, on any municipality in Ontario.

The Vice-Chair: That's the last kick at the cat for the Liberals. We go to the final 20 minutes of the NDP and then 14 minutes for the government side.

Mr Bisson: I can assure you that it's not going to be the last we hear on that particular issue, because from the work I've done within the communities that have contacted me, it would appear that there's a big problem in that area. But I won't comment until I make sure what my numbers are.

I want to come back to the issue of the reclassification that we talked about a little while ago in regard to commercial tax rates, the subclassifications within those. One of the situations we're finding, for example, in our part of the province up along the Highway 11 corridor, is there's a TransCanada pipeline that comes through. There are compression stations in a number of communities -- I'm not going to name them; they're very numerous -- but for a lot of the small municipalities along Highway 11 -- and I'm sure it's the same in other areas -- there's very little in the way of commercial assessment. Most of their assessment is, by and large, residential, and about the only commercial assessment they've got is the TransCanada pipeline.

What we're seeing now in communities like Mattice, Matheson and others is that there's a huge reduction in the amount of taxes that the TransCanada pipeline paid to those municipalities this year as compared to last year, because the classifications have changed, as we talked about earlier. As a result, a municipality is having to shift the burden of what the TransCanada pipeline used to pay on to other classifications of businesses within that classification. We're seeing now, for example, businesses in Mattice where their property taxes are going up from 80% to 120% on the basis of that shift within the classification.

Do you think it's fair that the TransCanada pipeline should get a reduction and, to offset that reduction, individual businesses in small communities like that are having to pay a large increase?

1650

Hon Mr Leach: I'm not familiar with the specifics of the municipality you're talking about, but if I understand correctly, you're saying that the pipeline assessment is --

Mr Bisson: Their classification within the commercial classification -- there's an ability, because of what you've done within the legislation, to change --

Hon Mr Leach: We provided a specific class for linear properties like pipelines.

Mr Bisson: It has meant a reduction in taxes paid on the part of the TransCanada pipeline to municipalities, not the assessment, but the changes that you've made within the actual tax system. Municipalities are having to offset that. We're seeing increases in commercial properties in those small communities, and I'm asking, is that fair? Are you prepared to do something to address that problem?

Hon Mr Leach: Just to make sure that I fully understand the implications of pipeline taxation, I'll get Nancy Bardecki to respond to that.

Mr Bisson: If we can get a good briefing, this would be good.

Ms Nancy Bardecki: The pipelines are in a class of property by themselves. The transition ratios that were established by the Ministry of Finance, which talk about the relationship among tax rates that's allowed for a municipality to choose, were established so that each class of property could, if the municipality chose, bear the same proportion of the tax burden as they did in earlier years, as they did last year, so there could be a change in the amount of tax, the proportion of tax, that the pipeline generates. But that would be because the municipality took the tax policy choice to move from the transition ratio provided by the Minister of Finance to some other tax ratio policy.

The Vice-Chair: Excuse me for interrupting. Nancy, could you please identify yourself for the purpose of Hansard.

Ms Bardecki: I'm sorry. I'm Nancy Bardecki. I'm with the Ministry of Municipal Affairs and Housing.

Mr Bisson: If you could provide me your phone number afterwards, I'd appreciate it.

So you're saying to me that, in the end, the municipality, if it chose, would not be forced to be in a position where the total taxes paid by the TransCanada pipeline in a given community would go down?

Ms Bardecki: That was certainly the tax policy goal. I really can't be 100% certain of the accuracy of the transition ratios defined by the Minister of Finance, but that was certainly the policy.

Mr Bisson: Have you had any calls to your particular office from various communities or businesses about this? I just started to receive them last week.

Ms Bardecki: I can't say that I have received those calls personally, no.

Mr Bisson: I will get some more details, because I just started to receive these particular calls, actually last week sometime, and I've only had two so far.

Ms Bardecki: Perhaps municipalities will start to call. Certainly if they do have any questions, they can feel free to call the municipal finance branch in the ministry or they could call the tax policy branch in the Ministry of Finance. Either should be able to help them.

Mr Bisson: I will get back to you individually, but just so the minister is clear, what appears to be happening is that the overall taxes paid by the pipeline seem to have gone down. When the commercial property owners find out what the hell is going on in their local municipalities, they're saying, "We have no control except by the province." That's what they're being told. That might be correct or incorrect. I'll go back and check with Nancy.

Hon Mr Leach: It's an issue that hasn't been brought to my attention by anyone. But thanks for the information. We'll look into it.

Mr Bisson: I detect that there is a willingness to try to help in this particular case.

Around the whole issue of the classification of various categories of taxes, we're seeming to see that the larger the company, the bigger break they seem to have gotten. We're seeing that, for example, overall taxes paid by the banks in Timmins, Iroquois Falls and other places, as compared to last year, are down substantially. We're seeing larger companies, such as the gas pipeline and others, seem to be getting a break. Was that the policy the government was trying to follow, to decrease the tax pressure on larger corporations and shift it on to smaller businesses?

Hon Mr Leach: No, it was not. As a matter of fact, we were cognizant of some situations where that might occur if the same tax rate was used for all businesses within a commercial class. That's why we gave tools to the municipalities to be able to set ranges within the commercial tax sector to say that, for example, if the assessment is $100,000 you could have one rate, if it's half a million dollars it would be another rate, if it was $1 million it would be triple rate, to make sure, if the municipalities so chose, that it could affect larger businesses differently than smaller businesses.

Mr Bisson: I'll just tell you this much, before I go to the other issues. One of the things I'm seeing is that a lot of the people who used to be your supporters in those communities are really feeling pretty upset with you guys about now, as they look at their tax bills. I would suggest, if you want to hang on to the support you used to have, that you guarantee that you'll try to do something to fix the problem. I'll tell you, I've gone to a number of businesses in my community that are saying, "I'm going to lay people off this year because of the increase in taxes I'm getting from the municipality," based on what they figure are decisions you made. And they are not big lovers of municipal government, believe me.

Hon Mr Leach: Again, no one, regardless of what party you belong to -- but certainly the Conservative government is not one that has ever been in the business of hurting small business. All I can tell you is that the tools that were made available to the municipalities were developed specifically to ensure that that didn't have to happen.

Mr Bisson: I can tell you, a lot of people are starting to wonder about that.

Anyway, I have another question. I want to get back to transitional assistance and the special circumstances fund. I was talking to Blain Morin earlier today. He was here but, as you know, can't sit here today because he's not gazetted yet and can't take his seat in the Legislature until next week. One of the questions he wanted to ask me, specifically, in the town of Chapleau, from what I understand, you might know Earle Freeborn, who is the reeve of Chapleau, is quite concerned that if they lose the special circumstances fund and the transitional assistance next year, they're going to lose 25% of their municipal revenue for next year.

I come back to the question I asked you earlier, do you anticipate any kind of special provisions for communities that are assessment-poor, such as Chapleau, to be able to offset the decision?

Hon Mr Leach: Well, as I said, that decision hasn't been made by government. Special circumstances fund means just that, there would have to be special circumstances for it to apply. We haven't made the decision as to how that's going to be applied next year. We hope to have a decision out on it very soon. Hopefully when your new member takes his seat in the House, we'll be able to provide him with that information.

Mr Bisson: Well, I got it on behalf of Blain and other municipalities in my riding. Matheson, for example, is another one that's in exactly the same position. Talking to Gary Eaton, who is the town administrator, and others on council, Reeve Lamb, whom you probably know quite well, I think he's somewhat of a friend of yours, they really are worried about what's going to happen next year. If something is not done next year to guarantee that they get close to the amount of money that they got last year by way of the special circumstance fund and the transitional assistance fund, they're going to be in an awful position. They're talking like 30% of their overall revenue comes from that. They have low assessment.

Hon Mr Leach: We know that municipalities have to start their 1999 budget process almost immediately, and that's why we're saying we want to get that information out to them as quickly as possible. We will.

Mr Bisson: I urge you to try to do something, because those communities are going to get hit bad if that doesn't happen next year. Even communities like Timmins, which is a different issue, it may not be the same percentages, but they're fairly significant amounts of money.

Moving on to another issue, the issue of last year when municipalities were told, "Here are the services that you're going to be transferred" -- I'll use the polite word -- "Here's what your CRF funds are going to be," and when all of it comes out, it should balance out to what they were told in those documents; I think they were issued last year sometime. We had their copies in the House. What they're starting to find is that the amount of money that was the balance that was supposedly there in those documents ain't showing up. In other words, the amount of money they're getting by way of transfer from the CRF is not balancing the amount of money they're having to pay out. Do you plan on adjusting that? In other words, it's not revenue-neutral.

Hon Mr Leach: Yes. As a matter of fact, when the Treasurer spoke at the AMO conference in August, he announced at that point in time that the numbers that were provided to the municipalities would be revisited at the end of the year.

1700

Mr Bisson: For this budget year?

Hon Mr Leach: For this budget year. And if the numbers that we indicated were lower, then we wouldn't claw that money back; if the numbers that we told them were higher, then we would supply additional money to cover it off.

Mr Bisson: All right. So if they're able to make a case that shows that the figures they were given and the actual transfers don't balance out and it's specifically related to that, you are going to make an adjustment one way or another.

Hon Mr Leach: Yes, we said that we would make that adjustment.

Mr Bisson: I will pass that on.

Hon Mr Leach: As we were developing the process over the year, the numbers were very fluid. The numbers on social assistance, for example, were changing monthly. The number of people on social assistance was declining each and every month, so there were additional monies available to municipalities to provide social services, and we are not going to claw that money back. In some areas, highway maintenance, for example, monies may have been understated. If that's the case, then we revisit it and top that money up.

Mr Bisson: OK. Another question from one of the other reeves of the communities up in northwestern Ontario -- and I've seen this not in a lot of communities but in a number of communities in the northeast as well -- is that a number of them, when they were being sent their bills by, for example, the Porcupine Health Unit or some of those agencies that are now billing -- a health unit is not a good example, but the health council, the ambulance services etc -- are now starting to send their bills into municipalities, in some cases they have not received the offsetting money from the province and they've had to borrow the money to pay the bill. Are there going to be any adjustments for interest charges carried because of that?

Hon Mr Leach: As a principle, I can tell you that it was never the intention of government that municipalities would be financially hurt by accepting the transfers.

Mr Bisson: So, specifically in those cases where they've had to go out and borrow the money to pay the bill, are you going to be in a position to offset?

Hon Mr Leach: We took a couple of steps earlier in the year by delaying the date that the education tax had to be submitted, for example, so that the municipalities wouldn't have to go out and borrow other monies to carry on. We said to delay the remittance of the education tax, for example, to cover that off. Hopefully that would take care of any differences the municipalities may have had.

We also delayed the date of the billing for services that were being transferred for social housing, for example, until October 1 to make sure that municipalities wouldn't have to go out and borrow money to pay the province for social housing. The whole goal was to make sure that municipalities weren't faced with the situation of having to go out and borrow money. I'm not aware of any municipalities which specifically had to do that. If you're aware of some, we could --

Mr Bisson: A whole bunch of them are borrowing. That's where we're finding they're having to carry the interest charges.

Hon Mr Leach: It depends what they're borrowing it for. I've just been provided that we pushed back the deadline for repayment of the school boards' portion of the property tax to October 30, which means the municipalities have use of those funds between now and then so they don't have to borrow money.

Mr Bisson: But, Minister, part of the problem is, as you know, the tax bills have only just now gone out, so they're not going to be collecting a heck of a lot of interest on it. In fact, they need the money to pay the bills that they didn't have the money to pay for in the first place. You realize the problem we're in. I understand that any time the government goes through massive changes, such as what you guys are doing, there are always problems. I don't agree with where you're going, but there are always problems in trying to implement it. What we're finding is that there are a lot of hidden costs because of the hurried process. I don't want to banter this point, but they're having to carry interest charges because of that. What I'm asking you is, will you offset those interest charges that they have to carry, legitimately, because of the unforeseen problems that have been created by the delay in a lot of the decisions that had to be made around these transfers?

Hon Mr Leach: I think we would have to revisit the situation of each municipality, because, as I indicated, we did take action by delaying payments by municipalities to the province to ensure that they wouldn't have to borrow money. If there is a circumstance where a municipality, having the use of the education tax dollars, for example, or not having to pay the social housing bill until later, still had a need to borrow money, then we'd have to look at the circumstances of that specific municipality.

Mr Bisson: I have another question, having to do with cottage lots and cottages. A number of mayors have come to me from across most of where I'm from, northeastern Ontario. The experience has been is that the assessed value on cottages has gone up dramatically, because these cottages were last assessed some time ago -- it's a little bit like the story of the city of Toronto -- and what's now happening is that the value of those cottages is being assessed much, much higher. You see tax bills from the municipalities on cottages, when built within a municipal area, from $600 to $1,200 a year. Is there any intent by the government to find a way of capping that or to slow the transition?

Hon Mr Leach: Yes. We made available to the municipalities the ability to phase that in over eight years if they chose to do so.

Mr Bisson: But you were saying earlier that you might be reopening that, because right now they can't. The problem is that a lot of municipalities --

Hon Mr Leach: If they didn't take that option, the door was closed to doing it now. As I mentioned, we are going to revisit those --

Mr Bisson: Reopening the cap. I want you to understand that a lot of the municipalities did not take that option for no other reason than that they didn't have all the numbers at the time: The tax rolls weren't done and there was a whole bunch of information missing. They had 30 days to make up their minds and councils were not able to move quick enough. Some may or some may not. You're saying that you're prepared to revisit that issue.

Hon Mr Leach: Yes.

Mr Bisson: Do I have any time?

The Vice-Chair: About 30 seconds, so ask a quick one.

Mr Bisson: I'm not going to get a quick answer. On the question of unorganized municipalities, I just want you to know that your colleague the Minister of Northern Development, through his bill, is going to in effect raise the taxes for those people in the unorganized communities in northern Ontario by as much as 1,000%. I'll tell you, you'll be hearing from a lot of those people. They're going to be awful upset when they get their tax bills next year.

Hon Mr Leach: No action being taken by this government is --

Mr Joseph Spina (Brampton North): They're getting services.

Mr Bisson: They're not getting the services. That's the problem.

The Vice-Chair: Joe. Go ahead and finish, Minister.

Hon Mr Leach: I'd be very surprised if that were the case. We do, on our committee, have a representative from northern affairs. He may want to comment on that when he has an opportunity.

The Vice-Chair: We now go to the government side, who have 14 minutes or less.

Mr Spina: Before I ask the question, Minister, I will take the opportunity to clarify that when the area services board legislation is put into place, those in unorganized territories will be receiving services as a result of any increase and they will have the option to buy into that. But that's not what we're here to debate at this point, with due respect to the member for Cochrane South.

I have here something which isn't necessarily a matter of public record. It's the Peel Tax Policy Framework: Regional Policies and Tax Impact Analysis, done in July 1998. If you'll bear with me, there's a little background I want to provide before I ask the question.

They list here within-class interventionist tax policy tools they have available: optional new property classes, graduated commercial and industrial rates, small business rebates, capping tax increases on apartment and business taxes at 2.5% for three years. Then they discuss, on a subsequent page of this report, "A Non-Interventionist Tax Policy: Pros and Cons," and "An Interventionist Tax Policy: Pros and Cons."

They chose, according to this, the within-class fairness minimum-intervention model. In that particular model, they indicated that there are no graduated rates, caps, rebates or new classes. They want to allow the relative CVA values to determine the property taxes owing within the commercial and industrial classes. Their rationale is, "It maintains a strong link between taxes owed and the relative values of properties...provides a defensible rationale for unavoidable shifts in tax burdens," and is "a significant one-time tax burden shift as Peel tax bases are updated or integrated to the 1996 CVA."

1710

That's a policy that they voted on and passed. My concern is that this minimum-intervention policy has resulted, in terms of the actual impact, in these numbers: On the commercial taxable chart, 43% of the commercial taxes went down and 13% remained neutral, so 56% of the commercial tax base was either neutral or the taxes went down. What that means, of course, is that 44% went up. The largest number of companies that went up had a 10% to 20% increase, and it declines thereafter. Then suddenly, there is a whack right at the bottom of the list: 8% of the businesses went up over 100%.

I can understand the assessment: Somebody's assessment goes from $200,000 to $400,000 because that's the category they're in. But knowing this, the municipality -- and it's the first time the upper tier, as you know, has had the taxing responsibility -- has chosen this least interventionist method. Even though the region chose the seven categories, the municipality chose 28 categories of tax rates. Even with this, my concern, like a lot of other people's, and yours as well, I know, is that we still have too many businesses that are being impacted negatively. In other words, they're getting an increase that's not minimal; it's a whack increase.

That's what we did not intend. We have tried to implement what we feel is a fairer system, a more proper taxation system that reflects actual values and is a fairer taxation system on properties. My concern is that I think they deliberately have not used the tools. This has been discussed and rolled over many times, I'm sure; this is the first time I'm at the committee, as I hope you can appreciate. I'm bearing. What can we do to make these municipalities adhere to the cap system? What can we do to make them use a tax rate model or series of models that can make greater than the majority of 56% neutral or zero, but higher, to maybe 80% or 90% or 95%?

Hon Mr Leach: The region of Peel is a very sophisticated municipality and they obviously had all the information they needed to make the decisions they made. As you pointed out, in their tax policy they were aware of the tiering that was available, of the caps that were available, of the phase-ins that were available, and they chose not to use any of those, saying that 50-some-odd per cent were going to be a zero increase or a tax decrease and the majority of the balance was going to be 20% or less. They made a very conscious decision to say that 8% of their businesses were going to be thrown to the wolves.

To me, that's a very unfortunate decision. In retrospect, and from following this issue in the media and from comments that have been made to me by business people in Peel, there's sufficient pressure being brought to bear on the municipal council right now that that issue may well be revisited. As I mentioned earlier, we are meeting with AMO. We're looking at the feasibility of reopening the tax issues for 1998, which would allow municipalities like Peel region to revisit the decision they made.

What they may want to do, and this would be solely their decision, is take that 8% and put them in a separate class and spread the tremendous increase to those 8% over the balance of the commercial rates, which may be one tenth of 1% or something to everyone, rather than 110% or whatever to that 8%.

We're meeting with the Association of Municipalities of Ontario to discuss the options that may be available. Hopefully, we'll be able to assist the municipality solve their problem, because the decision still rests with the municipality. They did it very consciously, knowing that 8% of their businesses were going to get burned, and burned very badly. They knew that and said, "So be it."

Mr Spina: So it was a cop-out.

The Vice-Chair: This concludes the questioning with regard to municipal affairs and housing, so we'll have the vote.

Shall votes 1901 through to and including 1906 carry? All in favour? Carried.

Shall the estimates of the Ministry of Municipal Affairs and Housing carry? All in favour? Carried.

Shall I report the estimates of the Ministry of Municipal Affairs and Housing to the House? Carried.

Before the minister leaves, I'd like to thank the minister and his staff for their attendance and their answering of questions.

Interjection: Do we come back tomorrow, Chair?

The Vice-Chair: The reality is, estimates committee is going to adjourn for today because we cannot have the estimates of a ministry that's debating a motion in the House. We'll meet you here tomorrow.

The committee adjourned at 1718.