New provincial municipal funding model not kind to Perth South

By Dan Rankin
The Ontario Municipal Partnership Fund (OMPF) is the main transfer payment municipalities receive from the province. According to Perth South treasurer Rebecca Clothier, in 2015, the unconditional OMPF grant allocation Perth South received was just over $1.5 million, or “equal to about $987 per household, and close to 50 percent” of the municipality’s tax levy. But things are changing, as, in 2014, the program was redesigned, and, as Clothier presented to Council on Dec. 1, that’s going to mean less unconditional OMPF funding coming to Perth South in the next few years. Based on current estimates, by 2020, the annual funding received by Perth South will be about half the amount received in 2016.
“The redesign or phase down of the program resulted in an annual reduction in our allocations,” she said. “Grant amounts were generally increasing from 2004 to 2012, remained unchanged in 2013, and then have been reduced annually. Reductions that have been made are significant and are equal to about $612 per household. It’s anticipated that continued reductions will continue into the future.”
Clothier’s presentation to Council revolved around a “Fiscal Indicators Report” she had been sent by the Ministry of Municipal Affairs and Housing that broke down how much funding Perth South was due and the rationale behind it.
The new funding model has the stated objectives to support municipalities with limited property assessment, recognize the challenges in northern and rural municipalities and target those with challenging financial circumstances, and assist municipalities with the transition to the redesigned program. Thus, there are now four components to the grant: the assessment equalization grant, the northern communities grant, the rural communities grant, and the northern and rural fiscal circumstances grant – as well as a temporary transitional assistance payment.
To qualify for the “assessment equalization” component of funding, Perth South would need to have a median per household assessment below the provincial median assessment of $263,000. “The median assessment per household in our municipality is $380,000, so we’re not close to getting any money in that part,” Clothier said.
Northern municipalities receive an extra $228 per household and, beginning in 2016, benefit from an extra $5 million provincial investment into the OMPF fund. “Obviously we’re not in Northern Ontario, so we’re not going to get it.”
However, as Perth South is considered 100 percent rural, they qualify for the rural communities grant, equal to $134 per household or $214,000. Additional per household funding for rural municipalities was added in 2016, accounting for an additional $30 per household, or $48,000. “I’m not sure what we’re going to use that money for,” Clothier said. “It’s not a lot.”
Finally, there is the northern and rural circumstances grant, which Perth South technically qualifies for as a rural municipality. However, they rank very low on the grant’s “municipal fiscal circumstance index (MCFI), which looks at factors such as median household assessment, household income, employment rate and population above the low-income threshold. “Municipalities with relatively challenging circumstances have a MFCI of 10, ones with relatively positive circumstances will have one of 0,” Clothier said. “We have a 0.9. Some municipalities will receive increases of more than 30 percent in per household funding allocated through this grant. That’s not us.”
For their fiscal circumstances, Perth South receives a mere $9 per household, for a grant of $14,400.
Coun. Stewart Arkett ventured that at least that news means the municipality is in pretty good shape, to which Mayor Robert Wilhelm replied, “unless you’re trying to get some grants.”
“It’s like we’re being penalized for being efficient,” Deputy mayor Jim Aitcheson said. “They’re basically going to take us from $1.6 million, where I think we were three or four years ago, to $597,000 by 2020 and we’re still paying for the police and the social services.”
Clothier finished her presentation by noting that funding was reduced by 15 percent for 2016, compared to the 20 percent reduction they saw in 2015. “I should do this presentation first, at the beginning of the meeting, before we have people asking for money,” she mused.
She expressed some frustration that, while the province continually asks municipalities to plan long-term, it rarely seems to do so itself when it comes to municipal funding. “I think they need to be a little more transparent on how they’re going to fund us in the future so that we can make the necessary plans in our budget as we move forward for both operating and capital,” she said.