2017 Ontario Budget Update

Today Ontario’s Minister of Finance Charles Sousa tabled the province’s 2017 budget. The first balanced budget following deficits that reached $19 billion at the height of the global recession in 2009, the government’s 2017 plan pledges new investments in sectors, such as healthcare and education, that have not seen significant spending since the economic downturn.

For the municipal sector, many of the new initiatives proposed in the budget, such as the Fair Housing Plan, have already been announced. However, the budget does grant municipalities new authority to levy a hotel tax. AMCTO’s pre-budget submission recommended that the government provide municipalities access to new revenue tools, and while this falls far short of the overall fiscal needs of Ontario’s local governments, we are encouraged by the government’s willingness to begin expanding the range of revenue tools available to municipalities.

While AMCTO will continue to review the budget in greater depth over the coming days and weeks, below is a brief summary of some of the highlights of the budget for the municipal sector:

New Municipal Power to Impose a Hotel Tax:

  • The budget proposes amending the Municipal Act and the City of Toronto Act to allow single and lower-tier municipalities to levy a hotel tax. However, there are a few conditions on this new authority, including:
    • If a municipality has an existing Destination Marketing Fee (DMF), it will be required to share hotel tax revenue with the relevant tourism organization.
    • Municipalities that do not have a DMF will be required to share 50% of revenue with their respective regional tourism organization.

Fair Housing Plan:

  • The budget confirms many of the details previously announced in the government’s Fair Housing Plan, including:
    • Expanding rent control to all private rental units, including those built after 1991.
    • A new $125 million development charges rebate program for multi-residential purpose-built rental housing. Municipalities who opt to participate in this program will be able to tailor it to suit their needs.
    • A requirement for municipalities to tax new multi-residential apartments at a similar rate as other residential properties.
    • Allowing the City of Toronto to tax vacant homes. The budget also notes that the government will “work with other interested municipalities that are experiencing issues” to deal with the problem of vacant real estate and speculation.
    • Working with municipalities to ensure that they have the tools they need to help encourage the supply of new housing.
    • Creating a special “Residential Land Development Facilitation Team” to work with municipalities and other stakeholders on improving the development approvals process.
    • Introducing a 15 percent Non-Residential Speculation Tax (NRST) on foreign home buyers.

Other Investments in Housing:

  • More than $45 million over three years to provide up to 1,150 additional supportive housing units for those with serious mental illness, addictions, and those who are homeless, or at risk of becoming homeless.
  • A new program to sell surplus provincial land at below market value as a way of building more affordable housing across the province:
    • The province will commit $70 – $100 million towards pilot projects of this program, creating 2,000 new housing units in the Greater Toronto and Hamilton Area (GTHA).

Additional Infrastructure Spending:

  • An additional $30 billion (in addition to the previously announced $160 billion) will be added to the government’s long-term infrastructure plan. The new investments will primarily be dedicated to hospital projects, school renewal initiatives and child care expansion.

Child Care:

  • As announced yesterday, new funding will support child care for 24,000 more children up to the age of four.

MPAC Governance:

  • The government proposes to broaden the eligibility for members of the MPAC board of directors, by including former municipal officials, and changing the size of the MPAC board from 15 to 13 members.

PLT Reform:

  • Building on changes announced in the 2015 budget and 2016 fiscal outlook, the province will introduce legislative amendments to further support increased equity in provincial land taxation in the north.

Seniors Public Tax Credit:  

  • A new Ontario Seniors’ Public Transit Tax Credit for Ontarians aged 65 or older. The tax credit would provide seniors with a refund of 15% of eligible public transit costs.

Long-term Care:

  • An additional $58 million of spending in 2017 (a 2% increase) for long-term care homes.

Sharing Economy:

  • A promise to release the government’s Sharing Economy Strategy at some point in 2017—though the budget contains no new details about the plan.

Fair Hydro Plan:

  • Confirmation of the government’s Fair Hydro Plan, which will begin to reduce hydro prices for ratepayers by 25 percent this summer.

Investments in Healthcare:

  • Increasing healthcare benefits by 11.5 billion over the next three years, committing to a number of new hospital projects and providing free prescription drug coverage for everyone under 24.

For more:

AMCTO 2017 Pre-budget Submission

AMCTO 2016 Budget Update

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