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Provincial Gasoline Taxes - City of Kingston Resolution (FCS02037)(City Wide)

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Provincial Gasoline Taxes - City of Kingston Resolution (FCS02037)(City Wide) CITY WIDE IMPLICATIONS CITY OF HAMILTON FINANCE AND CORPORATE SERVICES Budgets and Fiscal Policy Services Report to: Mayor and Members Submitted by: Joseph L. Rinaldo, General Committee of the Whole Manager Date: April 15, 2002 Prepared by: K. Weaver 546-4152 SUBJECT: Provincial Gasoline Taxes - City of Kingston Resolution (FCS02037)(City Wide) RECOMMENDATION: a) That the resolution of the Corporation of the City of Kingston respecting allocation of a portion of provincial gasoline taxes to assist municipalities to pay for such items as maintenance and upkeep of roads be endorsed. b) That municipalities be given the flexibility to utilize these funds on transportation related programs (i.e. roads, transit), as local needs dictate. c) That a copy of this report be forwarded to the Association of Municipalities of Ontario (AMO), The Ontario Good Roads Association (OGRA), The City of Kingston, the Minister of Finance of Ontario and the Premier of Ontario. Joseph L. Rinaldo, General Manager Finance & Corporate Services EXECUTIVE SUMMARY: This report recommends that Council support the position put forward by the City of Kingston with respect to providing municipalities with access to a portion of provincial gasoline tax revenues. The report also proposes that municipalities be given the flexibility to apply these funds broadly to transportation related programs. SUBJECT: Provincial Gasoline Taxes - City of Kingston Resolution (FCS02037)(City Wide) - Page 2 of 4 BACKGROUND: The Council of the Corporation of the City of Kingston approved a motion at its February 12, 2002 Council meeting that resolved as follows: ! That Kingston City Council demand that the Province of Ontario provide additional funding to help municipalities pay for items such as the maintenance and upkeep of roads by allocating a portion of gasoline taxes to municipalities ! That Kingston City Council insist that no further downloading of services takes place in the Province of Ontario ! That Kingston City Council request that the Ontario government undertake a full review of other potential sources of revenue, in consultation with municipalities, to determine which of these revenue sources should be given in total or in part to municipalities in recognition of the added financial responsibilities municipalities now have as a result of downloading. ! That copies of this resolution be circulated for comment and endorsement to all municipalities of Ontario with population over 50,000, Premier Mike Harris, Ontario Liberal Leader Dalton McGuinty, Ontario NDP Leader Howard Hampton, John Gerretsen (MPP), Tony Clement (MPP), Chris Stockwell (MPP), Elizabeth Witmer (MPP), Jim Flaherty (MPP), and Mr. Ernie Eves. Staff have received and reviewed the resolution (attached as Appendix A) and this report provides staff comments for Council consideration and also recommends endorsement of the position presented by Kingston City Council. ANALYSIS OF ALTERNATIVES: Council is well aware of the impact provincial downloading of services has had on Hamilton’s fiscal situation. Even beyond the issue of downloading provincial contributions to total municipal revenues has been declining since 1995. The resolution of the City of Kingston notes that, according to the Federation of Canadian Municipalities (FCM), government funding to Canadian municipalities as a percentage of total municipal revenue is lower than funding levels in both the United States and Europe. It is also noteworthy that the provinces of Prince Edward Island, British Columbia and Alberta all allocate a portion of gasoline taxes to their municipalities. It has been estimated that allocating two cents of the exiting provincial gasoline tax could raise $290 million for investment in road infrastructure. The Province now owns only about 10% of the provincial road inventory. However, they retain 100% of user fee related revenue from gasoline, licensing, and fines. The focus of the Kingston resolution is on gaining access to provincial gasoline tax revenue. However, the federal government is not without responsibility on this subject. The Federal government collects $1.8 billion annually in gasoline tax from Ontario. This money is not used to operate federal roads in the Province because there are almost no lane kilometres of federally maintained roads in this province. It is also noteworthy that SUBJECT: Provincial Gasoline Taxes - City of Kingston Resolution (FCS02037)(City Wide) - Page 3 of 4 Canada is the only major industrialized country that does not have a national transportation policy in place. Council has received previous reports highlighting the financial needs of the City, the infrastructure deficiencies, the high social service tax burden, and the lack of provincial financial support to meet the needs of the community (State of the City Reports, FCS01117 – Social Services Pooling, FCS01104 – Federal and Provincial Commitment to Infrastructure). Road infrastructure needs in the City have been well documented. Council and staff have been making similar arguments to those presented in the City of Kingston resolution. As a result staff recommends Council support the resolution. Staff would also suggest that the Kingston resolution be broadened to permit municipal flexibility in allocating these funds to all transportation related programs. Municipalities could then apply resources to transit, road maintenance, or other alternate transportation programs as local needs dictated. The alternative to not receiving a portion of this substantial revenue source is that municipalities will continue to struggle to maintain road infrastructure through deferred maintenance resulting in higher long-term costs. The prior reports cited above have demonstrated that such as situation is not sustainable. FINANCIAL/STAFFING/LEGAL IMPLICATIONS: The downloading of services to municipalities without providing an adequate source of funding for these services has placed significant strain on municipal budgets. If municipalities were successful in gaining adequate funding from the Province the financial strain would be reduced. The resolution put forward does not address the issue of services such as Social Housing and Ontario Works, the funding of which does not belong on the property tax base. POLICIES AFFECTING PROPOSAL: The recommendations in this report are consistent with previously adopted Council positions relating to Provincial funding. CONSULTATION WITH RELEVANT DEPARTMENTS/AGENCIES: Staff from the Roads and Traffic Division and HSR has reviewed this report. Their input has been included in the body of this report. Staff from both of these divisions of the Transportation, Operation and Environment Department have indicated their support for the City of Kingston resolution. They note that their respective municipal associations have been lobbying for such an outcome for some time now. SUBJECT: Provincial Gasoline Taxes - City of Kingston Resolution (FCS02037)(City Wide) - Page 4 of 4 CITY STRATEGIC COMMITMENT: The City is committed to developing partnerships with other levels of government and to investing in infrastructure. Obtaining Provincial commitment to adequate funding will better permit the achievement of these two objectives. APPENDIX A TO REPORT FCS02037 MOTION OF THE COUNCIL OF THE CORPORATION OF THE CITY OF KINGSTON Motion (6) – February 12, 2002, Meeting No. 05A-2002 (6) Moved by Councillor Garrison Seconded by Councillor Rogers WHEREAS Municipal taxpayers have been forced to take on additional financial responsibility for services and programs previously provided by and administered by the provincial government, including what were formerly provincial highways, and; WHEREAS despite the massive download, the provincial government have failed to provide municipalities with enough new sources of substantial revenue in order to handle the download, and; WHEREAS according to the Federation of Canadian Municipalities, government funding provided to municipalities since 1995 as a proportion of total municipal revenues to 18%, lower than funding levels in the U.S.A or Europe, and; WHEREAS Prince Edward Island, Alberta, British Columbia and Quebec currently allocate a portion of provincial gasoline taxes to their municipalities; THEREFORE BE IT RESOLVED THAT Kingston City Council demand that the Province of Ontario provide additional funding to help municipalities pay for items such as maintenance and upkeep of roads by allocating a portion of provincial gasoline taxes to municipalities, and; BE IT FURTHER RESOLVED THAT Kingston City Council insist that no further downloading of services takes place in the Province of Ontario, and; BE IT FURTHER RESOLVED THAT Kingston City Council request that the Ontario government undertake a full review of other provincial revenue sources, in consultation with municipalities, to determine which of these revenue sources should be given in total or in part to municipalities in recognition of the added financial responsibilities municipalities now face as a result of downloading, and; BE IT FURTHER RESOLVED THAT copies of this resolution be circulated for comment and endorsement to all municipalities of Ontario with a population over 50,000, Premier Mike Harris, Ontario Liberal Leader Dalton McGuinty, Ontario NDP Leader Howard Hampton, John Gerretsen (MPP), Tony Clement (MPP), Chris Stockwell (MPP), Elizabeth Witmer (MPP), Jim Flaherty (MPP), and Mr. Ernie Eves. CARRIED.
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