Backgrounder: ONTARIO MUNICIPAL PARTNERSHIP FUND

March 31, 2005

The Ontario government is introducing a more equitable provincial municipal funding model, the Ontario Municipal Partnership Fund (OMPF), to provide $656 million in support to communities across the province.

The $656 million is an increase of $38 million or 6.1 per cent over 2004. The new model is the province's largest transfer payment to municipalities, serving 87 per cent of Ontario municipalities.

The Ontario Municipal Partnership Fund will assist municipalities with their social program costs, include equalization measures, address the challenges faced by northern and rural communities and respond to policing costs in rural communities.

The OMPF replaced the Community Reinvestment Fund (CRF) that was introduced in 1998. There have been longstanding concerns with the CRF associated with its complexity, inequity, and administrative burden. In an attempt to understand these concerns, the government invited its municipal partners to participate in a review of the CRF.

The discussion of municipal concerns assisted the government in the design of this new grant program that is fairer, more understandable, and transparent.

There are four components to the new $656 million Ontario Municipal Partnership Fund.

1. Social Programs Grant of $179 Million

Funding from the Social Programs Grant will provide support to 128 municipalities that have limited property assessment to support their municipal share of eligible social program costs. This grant will provide funding to municipalities whose costs for social programs exceed the revenue that could be raised by levying a 0.2 per cent property tax rate on their assessment base. This funding will assist them in meeting their portion of the established municipal-provincial cost-sharing arrangements for social programs.

2. Equalization Grant of $170 Million

This grant will provide funding to municipalities that have limited property assessment through two components.

  • Assessment Equalization will provide funding to 217 municipalities with limited property assessment due to lower property values and limited non-residential assessment. Municipalities will receive funding if their total assessment per household is less than $170,000.

  • Farmland and Managed Forest Assessment will provide funding to 66 municipalities with limited property assessment due to a significant amount of farmland and managed forest properties

3. Northern and Rural Communities Grant of $249 Million

This grant will provide funding to small, northern and rural communities in recognition of the unique challenges they face.

In order to support this grant, a rural and small community measure has been calculated for each municipality to determine the proportion of their population living in rural areas or small communities.

This grant has four components:

  1. Rural Communities funding will be provided to 346 municipalities based on the proportion of their population that is living in rural areas or small communities.

    • Municipalities with a rural and small community measure of 75 per cent or more will receive the full per-household amount of $150. Municipalities with a rural and small community measure between 25 per cent and 75 per cent will receive a portion of this funding on a sliding scale.

  2. Northern Communities funding will be provided to 144 municipalities in Northern Ontario based on the number of households.

    • The amount per household is $225.

  3. Northern and Rural Social Programs funding will be provided to 101 municipalities by establishing a limit on the share of municipal tax revenue needed to support the municipal share of eligible social programs in northern and rural communities.

    • Funding will be provided if total eligible social program costs (net of the Social Program Grant) exceed 15 per cent of municipal tax revenue.

    • All northern municipalities are eligible for this funding if their social costs exceed the threshold. Municipalities that are not in the north are eligible to receive the grant if they have a rural and small community measure of over 75 per cent and their social program costs exceed the threshold. Municipalities with a rural and small communities measure between 25 per cent and 75 per cent receive a portion of this funding on a sliding scale.

  4. Stabilization funding will be provided on an ongoing basis to municipalities that would otherwise see decreases of more than $150 per household, relative to funding received in 2004 through the CRF.

4. Police Services Grant of $58 million

The Police Services Grant will provide funding to rural communities to support policing costs.

This grant will provide funding equal to 50 per cent of eligible police costs above $150 per household for 238 municipalities that have a rural and small community measure of 75 per cent or more. Municipalities with a rural and small community measure between 25 per cent and 75 per cent receive a portion of this funding on a sliding scale.

Reducing Municipal Costs for Social Programs

  • Both the Social Programs Grant and the Northern and Rural Social Programs Grant Component assist municipalities in meeting their portion of the established cost-sharing arrangements for social programs. The province will continue to fund its portion of the cost-shared programs, as well as provide additional funding to municipalities for their social program costs through the OMPF. (Only upper and single tier municipalities are responsible for social programs.)

  • 159 municipalities, or 78 per cent, of the 203 municipalities that are responsible for the municipal share of social program costs will receive either one or both of these grants.

  • These grants will provide the equivalent of 30 per cent of the total social program costs of the municipalities that receive these grants.

  • For many municipalities, these grants will completely offset their contribution to one or more social program costs

    • ODB program costs will be offset for 149 municipalities.

    • ODB and ODSP costs will be offset for 89 municipalities

    • ODB, ODSP, and OW costs will be offset for 27 municipalities.

$233 million in One-Time Funding

As part of implementing the OMPF, the province is providing municipalities with $233 million in one-time funding to meet the province's reconciliation obligations for 2003 and 2004 under the old CRF model and to ensure a manageable pace of change for municipalities.

The transition fund of $233 million has two components:

  • $135 million in funding is being provided to municipalities for their 2003 program costs and their estimated 2004 costs. The 2003 and 2004 CRF adjustments represent the final closeout payments of the old CRF grant program.

  • $98 million in one-time transition funding is being provided to municipalities that would otherwise see reduced revenue under the Ontario Municipal Partnership Fund compared to the funding they received in 2004 through the Community Reinvestment Fund.

The Stable Funding Guarantee announced in January 2005 will ensure that municipalities will receive, at a minimum, as much funding in 2005 as they received through the CRF in 2004.

The Ontario Municipal Partnership Fund allocations will be announced annually in the fall and flowed in quarterly payments to municipalities. All OMPF allocations and associated one-time transition payments will be provided to municipalities as unconditional grants.

Replacement of the CRF with a fairer funding model and the allocation of a transition fund to support its implementation are both part of the province's overall commitment to municipalities.

This commitment includes:

  • $680 million in gas tax funding over the next three years;

  • Increasing the province's share of public health funding to 75 per cent by 2007;

  • $298 million towards the $900 million fund for the Canada Ontario Municipal Rural Infrastructure Fund (COMRIF); and

  • $1.2 billion to date in infrastructure loans through the Ontario Strategic Infrastructure Financing Authority (OSIFA).

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