GOVERNMENT POLICIES AND ISSUES – MUNICIPALITIES AND CITIES – CANADA BY: PAUL YOUNG, CPA, CGADATE: OCTOBER 31, 2016

AGENDA

• Issues facing Municipalities and Cities• Capital Spending• Revenue sources• Funding/Infrastructure• Compensation• Pensions• Water Act (Regulation)• Green act • Downloading• Arbitration issues

• Here are key issues facing the cities • Development fees are drying up due to lack of land available for development • Arbitration – OPP settlements have put pressure on municipal budgets due to matching of those

settlements. OPP Costs - http://www.durhamregion.com/news-story/4414447-municipalities-pushing-back-against-opp-costs/ or Arbitration - http://www.thestar.com/opinion/editorialopinion/2012/02/28/ontario_municipalities_struggle_with_cost_of_essential_services.html or http://www.parrysound.com/news-story/5447183-new-opp-billing-model-angers-municipalities/ or https://ca.news.yahoo.com/blogs/dailybrew/are-police-officers-getting-paid-too-much-174554130.html

• OMERS – OMERS is underfunded as such the municipalities will be part of the pension solution http://www.omers.com/corporate/news_article.aspx?newsid=7000

• Transportation – Why are you not pushing Ontario Government for an integrated solution for transit including using GO with TTC as well as other Transit systems to help move people around the city? http://www.metrolinx.com/en/docs/pdf/board_agenda/20140905/20140905_BoardMtg_PPI_Report_EN.pdf

• Size of Government – You increased your staff budget when other parts of the economy have either cut or reduced their costs. You have asked other departments to cut, but you grew your budget, why? http://www.torontosun.com/2015/02/12/crombie-says-22-mississauga-tax-increase-delivers-on-promise or http://www.fcm.ca/Documents/tools/International/Your_Guide_to_Municipal_Institutions_in_Canada_EN.pdf

• Here are key issues facing the cities 

• Build Canada and Gas Tax Funds link Municipalities: http://www.slideshare.net/paulyoungcga/municipalities-canada

• Economic Development - Key Market Indicators KPIs for January 2015 - http://www.slideshare.net/paulyoungcga/key-market-and-industry-indicators-for-canada-january-2015

• Hydro Rates/Rental - http://www.slideshare.net/paulyoungcga/power-generation-canada

• Housing Prices - http://www.cbc.ca/news2/interactives/housing-canada/

• Property Taxes - http://c.ymcdn.com/sites/www.realpac.ca/resource/resmgr/research/2013_realpac_-_altus_propert.pdf

• Greenbelt Legislation - http://www.mah.gov.on.ca/Page195.aspx.

• CPPIB Proposal - http://news.nationalpost.com/2015/01/23/kelly-mcparland-justin-trudeaus-hidden-agenda/

• OPP Costs - http://www.durhamregion.com/news-story/4414447-municipalities-pushing-back-against-opp-costs/

• Arbitration - http://www.thestar.com/opinion/editorialopinion/2012/02/28/ontario_municipalities_struggle_with_cost_of_essential_services.html.

• Private Sector –vs- Public Sector - http://www.cfib-fcei.ca/english/article/6301-a-closer-look-at-private-public-sector-wage-gaps.html.

• P3 Failures http://www.auditor.on.ca/en/reports_en/en14/305en14.pdf

• Corporation taxation http://www.slideshare.net/paulyoungcga/corporation-taxation-canada-44675640.

• Internal trade barriers - http://www.slideshare.net/paulyoungcga/internal-trade-canada. Wynne will not budge on union contracts - http://www.theglobeandmail.com/news/politics/saskatchewan-premier-wall-threatens-retaliation-over-ontario-protectionism/article20216919/

• IPO / Hydro - http://www.bnn.ca/News/2015/10/27/Hydro-One-to-navigate-choppy-IPO-market-with-fat-payout.aspx

CAPITAL SPENDING

GOVERNMENT SPENDING

GAS TAX FUND

BUILD CANADA FUND

FEDERAL GOVERNMENT SPENDING ON INFRASTRUCTURE

FEDERAL GOVERNMENT SPENDING ON INFRASTRUCTURE

FEDERAL GOVERNMENT SPENDING ON INFRASTRUCTURE

COMPENSATION

http://www.cfib-fcei.ca/english/article/7114-public-sector-workers-earn-more-work-less.html

DOWNLOADINGT here are a range of ways this happens, but some of the most common forms of senior government downloading include:• Direct offloading of federal or provincial programs and/or responsibilities without

adequate funding or revenue tools;• Regulatory changes that require spending by municipalities.• Enforcement of federal and provincial regulations;• Cancellation of programs and services that are needed or expected by the

public;• Reduction or cancellation of senior government transfers or program funding;• Programs that are paid for municipally, but where municipalities have little

control over costs;• Grant-based or 'one time only' funding of downloaded or new programs

encouraged by senior governments;• Underinvestment by senior governments in infrastructure maintenance, renewal

and replacement; and Failure to adequately address issues or problems that should fall under provincial or federal jurisdiction

Source: http://thetyee.ca/Opinion/2014/09/24/Downloading-Steamrolls-Cities/ or http://rabble.ca/blogs/bloggers/municipal-matters/2014/09/municipalities-struggle-to-cover-costs-federal-and-provinci

PENSION FUNDINGFunding of pensions is becoming an issue for many cities/municipalities. The latest to come forward has been the city of Houston - http://www.click2houston.com/news/mayor-turner-to-announce-historic-pension-reform-plan.  The issue has been market returns a pension funds have a portion tied money market investments. Money market investments are driven by interest rates. Shortfall in pensions are the responsibility of the municipalities. Municipalities are under pressure as such dealing with shortfalls in pension plan will be put pressure on taxation as well as delivery of program spending. Pensions plans also driven by contributions/matching by various municipalities. The problem is that public sector has not moved enough when it comes to salary/pension reforms - http://www.cfib-fcei.ca/english/article/7114-public-sector-workers-earn-more-work-less.html  Here are key plans in Canada• OMERS -

http://www.theglobeandmail.com/report-on-business/omers-posts-67-return-in-2015-bolstered-by-infrastructure-real-estate-assets/article28925778/. OMERS is underfunded by about 10%. OMERS is investing heavily into infrastructure projects, like transportation systems.

• British Colombia - http://www.fic.gov.bc.ca/pdf/pensionplans/ReportOnPensionPlans2016.pdf - Issues with unfunded liabilities - https://www.moodys.com/research/Moodys-US-government-pension-shortfall-overshadowed-by-Social-Security-Medicare--PR_346878 http://business.financialpost.com/news/fp-street/inside-the-risky-strategy-that-made-canadas-biggest-pension-plans-the-new-masters-of-the-universe

 What needs to happen:• More regulations over pension funding including risk testing as well as ensure there are plans to make the plans including

solvent.• Pension/Salaries reforms to close the gap between private and public sector payroll gaps• Fixing a broken arbitration systems  Other Sources:• http://www.slideshare.net/paulyoungcga/municipalities-canada  

ARBITRATION ISSUES

• OPP Costs - http://www.durhamregion.com/news-story/4414447-municipalities-pushing-back-against-opp-costs/• Arbitration -

http://www.thestar.com/opinion/editorialopinion/2012/02/28/ontario_municipalities_struggle_with_cost_of_essential_services.html

WATER ACT

• http://www.thestar.com/news/queenspark/2014/12/09/publicprivate_financing_cost_ontario_taxpayers_8_billion_auditor_says.html

MUNICIPAL PENSIONS

MUNICIPAL GOVERNMENT SPENDING PER CAPITAL

REVENUE

REVENUE PER CAPITAL

GREEN ACT

• http://www.lfpress.com/2014/12/02/pov-rural-urban-divide-blowing-in-the-wind• http://www.windconcernsontario.ca/ontario-rural-citizens-no-s

ay-in-wind-farm-development/