Gabriel Eidelman is director of the Urban Policy Lab at the University of Toronto’s Munk School of Global Affairs and Public Policy. Tomas Hachard is manager of programs and research at the Institute on Municipal Finance and Governance at the Munk School of Global Affairs and Public Policy. Enid Slack is director of the Institute on Municipal Finance and Governance.
From the moment they wake up to the moment they go to bed, Ontarians interact with municipal services. The water they use to shower, the garbage they roll out to the curb, the roads they drive on to work, the transit on which they ride, and the streetlights that light up their street – all are services delivered to residents by municipal governments.
Add in social-housing and social-assistance programs for those in need, long-term care homes, ambulance services, and public health programs, among others, and all told, local governments across Ontario collectively spend more than $64-billion every year on such services.
But city governments don’t do this alone.
In a new policy brief for Ontario 360 – an independent, non-partisan and fact-based project of the University of Toronto’s Munk School of Global Affairs and Public Policy to determine evidence-based public policy ideas for the Ontario government – we found that the provincial government is involved in every aspect of local service delivery.
The province helps fund municipal services through $9.4-billion in annual transfers. It affects how municipalities deliver services through no fewer than 280 provincial statutes, and countless policies, regulations and service standards.
In short, the province and municipalities are heavily intertwined. Too often, however, the rationale behind particular cost-sharing ratios or other arrangements is hard to understand. Observers would be right to ask why child care – the costs of which are 86-per-cent borne by the province – is not wholly a funding responsibility of the province, similar to full-day kindergarten. One might also wonder why municipalities pay for 60 per cent of ambulance services, even though health care is funded and delivered provincially.
These arrangements can most often be traced back to previous reviews of provincial-municipal responsibilities in the 1990s and 2000s, as well as responses to fiscal pressures and other policy decisions. But they rarely follow any clear, principled criteria, whether based on population, fiscal capacity, or need.
It’s time to review the relationship between the province and municipalities in Ontario again so that we can address these issues and ensure Ontarians are receiving the most effective, efficient and highest-level services from their governments.
This review should follow some core principles.
It should take a collaborative approach, engaging municipalities, Indigenous communities, the business community, and service providers as partners in the process.
It should respect local and regional differences. For example, fast-growing suburban municipalities, such as Milton, spend 19 per cent more than the provincial average building new roads, while Toronto spends more on public transit than all 443 other Ontario municipalities combined. To account for these differences, asymmetrical agreements with municipalities may be required.
The review should follow the pay-for-say principle, meaning that it should ensure that any government’s input into how a service functions is matched with a corresponding responsibility to pay for that service. The more a service needs to be standardized and regulated at the provincial level, the more it should be funded at that level; the more local input and variation is desired, the more it should be funded by municipalities.
It should protect both levels of government from incurring costs that arise from regulations or policies they do not control. Ambulance services, for example, are greatly affected by the wider health-care system, which is provincially controlled. Ambulances cannot discharge a patient at a hospital until there is a bed available, which can take hours because of long waiting times at some hospitals. Municipalities bear the cost of these delays, even though the waiting times are out of their control.
A review should look at municipalities’ ability to pay – whether they can raise sufficient revenues to deliver services effectively – and at whether municipalities have the right sources of revenue to pay for their responsibilities. For example, municipalities pay three-quarters of social housing costs. These costs put great pressure on the property tax, which is not as progressive as an income tax, and therefore not the best way to pay for social services such as social housing.
The review will necessarily look backward to correct for inefficiencies and inequities that reveal themselves over time. However, it should also look ahead to future challenges, such as how Ontario’s aging population might affect local service costs or how climate change will affect municipalities.
Finally, a review shouldn’t tackle all services at once. Rather, it should begin with a focus on public health, ambulance services, long-term care, social housing, social assistance and child care – services for which lines of accountability are most opaque and questions about local input and autonomy most pronounced.
When it comes to service delivery in Ontario, the province and municipalities are highly interdependent. By examining how responsibilities are shared between them, both levels of government could improve service and ensure greater accountability for tax dollars.
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