Analysis reveals rocky road ahead for Eastern Ontario municipalities

Results of a comprehensive financial study of Eastern Ontario municipalities paint a sobering picture of a region struggling with a limited tax base, rising debt levels and a growing need to invest in infrastructure.
An Eastern Ontario Wardens’ Caucus (EOWC) initiative, the Eastern Ontario Financial Sustainability Update Project examined the economic condition of all 114 urban and rural local governments in Eastern Ontario.

“We’ve known for some time that Eastern Ontario communities are facing tough challenges,” said Mel Campbell, Chair of the EOWC. “Now we know exactly what these challenges are and how they will affect the ability of the region’s local governments to provide vital community services and maintain our roads, bridges and other infrastructure.”

The Project Report, Facing our Fiscal Challenges, identifies numerous factors that contribute to the region’s overall financial sustainability. In addition to challenges faced by the region as a whole, the report identifies long-standing difficulties unique to Eastern Ontario’s 103 rural municipalities:
• Limited tax base to pay for services and maintain existing infrastructure. Residents contribute almost 90 per cent of property taxes collected in the region’s rural communities due to low levels of commercial and industrial activity, and large areas of Crown land and managed forest that are partially or completely exempt from municipal property taxes. In addition, these residents are more likely to have lower incomes, be unemployed, and be over age 65 compared with the rest of the Ontario.
• Rising debt levels. Municipal debt levels have increased about 300 per cent over the past decade.
• Growing and critical need to maintain existing infrastructure and meet future needs. Municipalities in Rural Eastern Ontario need to find an additional $500 to $600 million per year to maintain existing capital assets, including roads and bridges.

“The financial study identifies that the challenges faced by Prince Edward County are not unique,” said Mayor Peter Mertens. “Like the other municipalities studied, the County has increasing debt, decreasing reserve funds and a
growing and critical need to maintain existing capital assets, including roads and bridges. The County
also shares the same limited tax base and ability to pay as others in the study area.”

“Municipalities in Rural Eastern Ontario, like Prince Edward County, must fund higher service delivery costs with a limited tax base,” said Mertens. “Roads in the rural region span an area roughly equal to 1.5 times the distance around the world. In the region’s separated cities the cost of rebuilding one lane-km of road is split between 25 households, while in our rural areas, the same cost is shared by only five households. Economies of scale are rare.”

The report notes residents of Eastern Ontario pay their taxes, but they are reaching the limit of their ability to pay for existing services and meet long-term infrastructure needs.

The EOWC is initiating a series of discussions at both federal and provincial levels to find ways to address the region’s unique concerns and issues over the long term, while recognizing that all levels of government face major financial challenges.

To respond to the fiscal challenges, Mertens said the County has begun a process aimed at sustainability.
“The Chief Administrative Officer and Commissioners have submitted a list of 19 potential cost saving opportunities. The list includes ‘suggestions’ rather than ‘recommendations’, and are intended to generate high-level discussion, evoke thought and inspire intense thinking and creativity. The list identifies potential changes to operations and governance, combining or eliminating functions, adjusting service levels, disposing of or repurposing assets and is a starting point for more comprehensive review.”

Council will consider the suggestions on March 14 at 9:30 a.m. and provide direction on which have merit and should be studied further and which are not appropriate. Additional suggestions and advice on other cost saving measures may be put on the table by members of council. The staff report and 2012 budget information can be viewed at www.pecounty.on.ca. Ratepayers and stakeholder groups are welcome to make their viewpoints known by contacting Council@pecounty.on.ca or by contacting their ward councillor.

“Municipal governments across the province are struggling with fiscal pressures,” said Mertens. “I strongly believe that the public wants and expects council to look at all aspects of our operation, including rationalization of our assets, programs and services, to make sure they are sustainable. There has been some strong reaction to some of the suggestions put forward and I see that as positive. Already there are new ideas for collaboration and innovation being generated.”
New approaches will be needed to avoid major taxation increases. The County has taken the first steps toward sustainability with the discussion scheduled for March 14 and by supporting and assisting the EOWC to raise awareness of the issues.

The EOWC is a group of 11 Eastern Ontario Counties and two Single-Tier municipalities, working in
conjunction with the provincial and federal governments to promote the region and focus on EOWC priorities.

To read the entire report, Facing Our Fiscal Challenges, go to www.eowc.org