Waterloo councillor adds her voice to growing call to revise fiscal agreement between province and cities
Demand for social services like access to housing or homelessness puts pressure on municipal tax base
A Waterloo city councillor wants the province to commit to reviewing the financial arrangement between municipalities and the province as cities are forced to take on more complex health and social challenges in their communities.
In her notice of motion, Coun. Diane Freeman says a third of municipal spending is for services in areas of provincial responsibility, like housing, homelessness, mental health and supporting asylum seekers coming to the region.
She will be presenting her notice of motion Monday for council to consider Jan. 29.
"Municipalities need more tools in their toolbox to allow services to continue and to take the burden off the property tax base," Freeman told CBC News.
"There's a requirement for affordable, attainable and sustainable housing and those investments cannot reside entirely on the property tax base. There needs to be more investment made by higher levels of government."
Freeman's motion is part of a growing call from local leaders asking the province to do the same. In May 2023, the Big City Mayors' Caucus outlined the challenges facing their municipalities during a Federation of Canadian Municipalities Conference.
"We've known this for some time, but [what] is becoming increasingly clear is that the existing fiscal framework ... has never been designed to handle the kinds of demands that are being put on Canada's cities, like Kitchener," Kitchener Mayor Berry Vrbanovic said in an interview in May.
Freeman said access to housing and homelessness are some of the main items the City of Waterloo has had to undertake in its annual budget.
"It's the right thing to do. There is no question about it, but historically that would have never been paid for by the property tax base and now it is," she said, adding it means that residents are being taxed twice, since the region also addresses the same issues locally.
Pressures on municipal tax base
The increase demand for social services has impacted local taxes as well. Guelph was facing a 10 per cent tax increase for 2024. In that budget, items Mayor Cam Guthrie dubbed "PILL" — provincial impacts local levy — were services he said the province is under funding or has downloaded to the municipality.
"The first one is housing legislation changes. The second is hospital funding for expansions and renovations and the third ... is around addressing homelessness," he said in November.
The city passed an 8.52 per cent tax increase for 2024.
The Region of Waterloo passed its 2024 budget with a tax increase of 6.9 per cent. Of the $2.1-billion budget, approximately $472 million was allocated to expand affordable housing and support people experiencing homelessness.
In an email statement to CBC News, a spokesperson for Ontario's Ministry of Finance said the province has added an additional $202 million each year for programs like homelessness prevention and Indigenous supportive housing.
The province has invested $500 million annually to provide stability to municipalities through the Ontario Municipal Partnership Fund and up to $1.2 billion through the Building Faster Fund that also includes northern and rural communities, the spokesperson said.
"A lot of the funding this government said they are providing to make municipalities whole after they changed the Development Charges Act are competitive and so you can completely lose out, and one of them is related to housing targets," Freeman said.
"The city has a housing target of 16,000 new builds by 2031, but I have no tools to compel a developer to build."