by JIM ALGIE
With both federal and provincial treasurers consulting currently on this year’s budgets, some rural Ontario municipalities want to see more oomph in OMPF, the Ontario Municipal Partnership Fund.
Proposed adjustments in the way Ontario currently supplements municipal property taxation with provincial grants, particularly in small, rural, agricultural areas, are expected at the annual meeting Western Ontario Wardens Caucus in Chatham, Feb. 12. As well, a delegation of Perth County representatives hopes to press for change during combined annual meetings of the Rural Ontario Municipal Association and the Ontario Good Roads Association in Toronto, Feb. 21-24, a Jan. 11, Stratford Beacon Herald report says.
A statement posted on the website of the Association of Ontario Municipalities regarding 2016 OMPF allocations warns of problems.
“Many communities continue to face limited or declining fiscal health and face fundamental operating budget challenges,” the AMO statement says. A recent Better Farming inquiry produced a more detailed critique from AMO Executive Director Pat Vanini.
“Provincial policy determines the property tax treatments of farmland/managed forests at a significant discount,” Vanini said in an emailed response. “This negatively affects property tax revenues for many rural communities,” Vanini said.
“AMO believes that rural communities would be better served if the Ontario Municipal Partnership Fund (OMPF) fully offset this lost revenue.”
Chatham-Kent Mayor Randy Hope, who currently heads the Western Wardens Caucus, said in an interview, he expects his group will further address current concerns when it meets next month in Chatham.
“We want to increase the strength of our voice as rural communities,” Hope said, predicting an outline of requests directed at pending budgets of both the federal and provincial governments. As well, the group needs to further lobby higher levels of government more effectively over the continuing issues of rural communities, he said.
“It’s about unifying our voice,” Hope said.
OMPF is the province’s main transfer payment system funding municipal governments in Ontario. A background paper on the website of the provincial Ministry of Finance provides current details of the 2016 system of grants which includes targeted payments for rural and northern communities.
At the same time, the province has gradually uploaded some costs for some public services funded previously by municipal property tax payers. Current grants and uploads followed a detailed review of the system in 2012 and continuing consultations with municipal officials, the backgrounder says.
In an interview, Monday, Perth County Treasurer Renato Pullia said this year’s OMPF grants don’t come close to matching the need in his municipality. OMPF funding for the upper tier Perth County and its four, lower tier municipal members has dropped to $9.2 million from $16.36 million over the past five years, and they expect to lose another $6.5 million, Pullia said.
| Special measures for rural and northern Ontario municipalities
by JIM ALGIE
Now in its final year of operation, the Ontario Municipal Partnership Fund (OMPF) for 2016 includes special measures for rural and northern Ontario municipalities that some municipal officials say don’t work for them.
An online technical guide posted to the provincial Finance Ministry’s website describes an “enhanced” Rural Communities Grant for 2016 worth $143 million. Increased funding is to be “targeted to municipalities with the highest levels of farmland in recognition of their unique challenges,” the document says.
Perth County Council, the Western Warden’s Caucus, the Association of Municipalities of Ontario and Ontario Federation of Agriculture have all expressed public reservations about this year’s OMPF programs. Even so, a Finance Ministry statement issued Monday by email in response to Better Farming inquiries indicates the agency is unaware of “any widespread criticism of the 2016 program.”
The statement from ministry spokesman Christian Bode said this year’s programs were “designed to respond directly to municipal feedback and balance the range of views expressed during the consultation process.”
“The phase down of the OMPF is now complete, and the design of the core grants reflects the long-term objectives of the program,” Bode said. “We will continue to work with our municipal partners this year on potential future refinements to the program to ensure the OMPF reflects the priorities of municipalities,” the ministry statement said.
Methods for calculating special measures for rural and small communities as well as a “fiscal circumstances index” for northern and rural municipalities are all outlined online in the OMPF Technical Guide.
Measures for rural and small communities apply to those with population density of less than 400 square kilometres which are not integrated with a population centre greater than 10,000. However, there are further qualifying details.
The farm area measure is calculated by dividing the area of farmland in a municipality by its total land area. Farmland must be assessed and valued as farm land in the farm property tax class as of Dec. 31, 2014; it must be used for farming by its owner or a tenant, generate at least $7,000 annually in gross revenue and must hold an Agricorp registration number or a valid exemption.
A Northern and Rural Municipal Fiscal Circumstances Index may also apply to provincial funding in some cases. It measures the fiscal circumstances of individual municipalities as compared with others by assessing six indicators.
Two primary indicators are weighted assessment per household and median household income. Four secondary indicators are: average rate of change in assessment, employment rate, ratio of working age to dependent population and the percentage of the population above low income. BF |
Much of what is being lost is money paid under the former farm land and managed forest grant designed to compensate municipalities for the lower level of tax revenue generated by agricultural and forest lands. Pullia described uncertainty about the future of existing funding and “the departure of support for rural municipalities that have farmland,” as Perth council’s main area of concern.
Both the Chatham-Kent Mayor and Ontario Federation of Agriculture President Don McCabe said in interviews that the current program contains troublesome inequities. Some municipalities are stumbling over grant program rules, McCabe said.
“Definitions and the population size . . . can knock a rural community out of the opportunity to apply for a program,” McCabe said of feedback he’s getting on this year’s OMPF grants. “It’s the usual game of saying, yes, we’re taking things off your plate but the reality is that things haven’t been fully thought through to make sure it’s seamless,” he said.
An OFA position paper on the federation’s website predicts problems from OMPF changes, particularly for small rural municipalities as the province seeks to reduce municipal grant payments. That’s because small communities tend not to benefit from provincial uploading of social programs to the same extent as larger municipalities.
“Lower tier municipalities in rural areas are typically not responsible for the delivery of the social programs that are being uploaded to the province,” OFA paper says. “These rural municipalities enjoy little to no direct financial gain from these uploads,” it says.
However, there are also concerns about the method for determining eligibility for the current Rural Communities Grant, which replaced the old system, and the adequacy of province-wide funding announced at $5 million, Perth County’s Pullia said, Monday. All four lower-tier Perth municipalities qualify for the highest level of support at 90 per cent farmland under the new Rural Communities Grant but it doesn’t come close to making up what they’ve lost.
Since 1998, regulations have limited municipal tax rates on farmland to 25 percent of residential rates. It represents a 75 per cent loss of assessment that the new $5 million farm area measure misses by a long shot, the Perth County treasurer said.
The former Farmland and Managed Forest Measure distributed a total of $46 million, Pullia said. Perth County’s recent resolution suggests a boost in the farm area measure to $20 million.
“We don’t think we’re going to get the province to go back to the $46 million figure and we don’t think $5 million is enough,” Pullia said. “We think $20 million is a number they could reach at,” he said.
The ministry backgrounder says the 2016 rural grant totalling $143 million is to be available to municipalities “with the highest levels of farmland in recognition of their unique challenges.” However, the calculation is also adjusted on a sliding scale for population.
Chatham’s Mayor Hope expressed support for provincial moves to upload service costs to the provincial income tax base. His municipality participated in ministry consultations last year about 2016 changes to OMPF.
Recent changes affect different municipalities differently depending on their varying circumstances, Hope said. He described the general thrust of continuing changes in the way Ontario funds municipalities as “moving in the right direction.”
“What the western wardens are trying to do is to make sure we’re unifying our voice,” Hope said. “We’re finally seeing the progressiveness of uploading some services off the property tax base but then when you go now to changing that . . . it’s about making things that work and set more predictable outcomes of what funding you’re going to be getting,” he said.
This year’s OMPF measures guide the transfer of $505 million in unconditional financing to 388 municipalities and include $5 million for northern communities, the ministry backgrounder says. It calculates total benefit to municipalities of OMPF payments plus the upload of social assistance, court security and prisoner transport costs from the property tax base since 2012 at more than $2.3 billion in 2016.
Current grants follow redesign two years ago of the program in what the province expects will be its final year. New for 2016 are the enhanced Rural Communities Grant worth $143 million, an enhanced Northern Communities Grant totalling $84 million and a 20 per cent increase to $67 million in funds available to municipalities “facing more challenging circumstances.” BF
Comments
As a farmer and Rural Municiple politician I think we need to revisit Tax Rates on Farm Land. With the rapid increase in Purchase Price and Rental Rates on Farmland there is more than enough Revenue to pay a more reasonable rate of Tax.We have been frozen at 25% as OMPF Funding has decreased every year. I think a reasonable strategy would be to increase Tax rates at some kind of offset rate to this reduction. In our municipalities we suffer a double whammy as most large farm operators buying properties demolish buildings to avoid paying Residential portion of tax.
Terry Phillips - Township of Kerns
Farmers should be paying their fair share of property tax both on buildings and LAND! It is time to terminate FARM TAX REBATES and everyone pay their fair share of taxes, If farmers can pay upwards to $20,000 an acres for land ,then why are they not paying land tax like everyone else! This needs to change ,it might stop these high land prices and would help municipal Governments Budgets do the improvements needed in there Municipalities! Now let's see some guts and Cancel the program! Bill Denby / rate payer of Ontario
First what is a fair share. Farmland doesn't consume a lot of municipal services. A limited amount of fire protection, policing and roads. It doesn't require libraries, rec centers, tourist guides etc. The vast majority of farmland doesn't even need snow removal, barns do but not the land. I believe OFA has done studies that show farm land is often paying more in taxes than required to support the services it uses.
Not all farmland has been purchased at today's prices, so that does not reflect all farmers ability to pay higher taxes, and farmland taxes have been going up anyhow as residential tax rates have been rising.
John Gillespie
Ripley
I think I would be correct to say that not many know how much the farmland tax rate varies across the province . Some areas to the north might be unregulated municipalities and have zero taxes . Other areas that I know of pay as high as $130 dollars per acre . Big difference ! Some may even be higher .
Farmland is farm land . Should not all farmland taxes OFPCTR be the same ?
Then add to the exemption of processing and value adding that is not taxed at the commercial or industrial rate . Farming is about the growing of crops . Storage of those crops is one thing directly tied to the growing of those crops . Processing and value adding is not .
Farmers use roads and bridges to move their machinery from farm to farm, they also use the same roads to ship their crops to markets. It is the cost of repairing and building new roads and bridges that the Farmers land tax does not cover. That is the real issue that everyone does not factor in on land taxes! For example ,I have 6.9 acres zoned industrial and residential my taxes are over $ 7500.00 a year with no services, we plow our own road, take our own garbage to the dump and our income before taxes are between $150,000 & $300,000 ,after taxes a lot less and NO tax rebate on anything. All property taxes have gone through the roof except FARM LAND TAXES and yet they make a living using the roads and bridges every day. That is why their needs to be some fairness put back in Property taxes, The farm land tax rebate needs to go ,and the land pay for the usage of our roads and bridges! That's fair property taxation for everyone! Bill Denby Property owner
Well if you have a farm field on fire I would think you would be glad to have the local fire department out to put the fire out . If you have ever operated a round baler you should know the value .
So what you are saying is that our taxes should reflect the price a farmer paid when he bought his farm . Even when the farm was bought 50 , 60 , 70 or more years ago ? So what happens when farms are willed or gifted , what value do you then use ?
OFA has also been saying that municipalities needs more money to improve roads and bridges so that farmers can get to their fields . This would also be in areas where no one lives .
Livestock buildings need to be taxed much higher .
Now when it comes to taxes the OFA Energy know it all was so far out in left field when it came to what it thought wind turbines were to pay for tax that it made them look foolish . It was thousands of dollars difference . One example I saw was the difference between $600 ( real tax ) and $7600 ( OFA thought to be tax ) . OFA supported the GEA and by doing so it has proven that OFA had not done it's homework even when asked to .
If agriculture is such an economic driver then ag needs to pay more tax . No more exceptions and exemptions .
It is obviously necessary to offer a reminder of the reason behind the current farm tax rebate program. For over 20 years, the OFA lobbied the provincial government to address the inequities of the method that education tax was assessed and paid. The OFA argued that education was a service to people and that services to land should be assessed and paid separately. While the government agreed that farmers were paying a disproportionate share of education costs, they did nothing until the spring of 1970 when many Ontario farmers launched a tax protest by withholding their taxes. By the fall of that year, the Bill Davis government agreed to address this inequity with a "temporary" fix by rebating 25% of farm property taxes. This was to be a temporary band aid until an equitable assessment solution could be found. The percentage rebate was increased to 50% then to 70%, when finally the government agreed that it made no sense to collect farm taxes and then rebate a portion. Hence we end up with our current system.
If we allow the removal of the current tax rebate system without fixing the education levy component, we will be back where we were prior to 1970 only now we will be paying an even more disproportionate share of education costs.
Think clearly and act wisely.
Bev Hill Varna
The problem is that farmers have not thought clearly and have not acted wisely - we seem to have no hesitation paying up to $20,000 per acre to buy the land on which we then claim we need a tax break, and yet we can't seem to see the double-standard.
Business and industry don't get a break from paying education taxes if I understand the situation correctly - therefore, the argument that we should be able to enjoy something denied to others simply because we're farmers is, given our well-demonstrated overspending when buying farm property, becoming increasingly-hollow and not likely to find much, if any, favour with cash-strapped rural municipalities whose elected representatives increasingly tend to not be farmers.
If we lose this exemption, it will have nothing to do with what farmers saw to be double standards on $200 per acre land in 1970, but will have everything to do with the double standards we are seen to be demonstrating now that we have, in part because of low property tax rates, driven the price of land to $20,000 per acre.
Stephen Thompson, Clinton ON
Couple things to Mr. Hill .
We no longer have the Farm tax rebate . It is the Ontario Farm Property Tax Class Rate .
What is a disproportionate share of education costs and our rural municipal taxes ? As farmers have grown and bought more farms from their neighbors the opportunity for our municipalities to increase their tax revenue that they need with rising costs of services has diminished . The main revenue is from assessments on houses & buildings . Farmers have all but torn down many of the rural houses which contributed to that municipal revenue .
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Clearly ALL farmers pay property taxes and only a very small percentage are able to, or want to, pay up to $2000/ac. for land. Farmers have always been willing to pay their fair share for the services that they use and they continue to be willing to pay for their fair share of education costs.
To tar all farmers with such an irresponsible statement brush, is not something
any wisely acting, real economist would do.
Bev Hill Varna
Mr. Hill seems to forget that, for example, seniors who own their own homes pay for education costs when paying their property taxes - why should they be forced to pay more for something they clearly don't use just so that farmers can pay less?
The obligation of every "wisely acting, real economist" is to point out the double-standards in arguments offered by people wanting legislated exemption - the argument by farmers that we shouldn't have to pay for something we don't use is a one-sided and increasingly-lame argument, and not one any pensioner living in his/her own house or renting an apartment in a privately-owned building, is likely to accept.
Furthermore, Mr. Hill seems to forget that these seniors (as well as singles, and childless homeowners of all ages) we are forcing to pay more for something they don't use just so we can pay less, are our customers and the less money we leave them to buy food, the less they'll buy.
Stephen Thompson, Clinton ON
Think Hill and Thompson need to remember just how many acres are rented out any more . Many seniors are renting their land and not for record rents so they can't afford an increase in taxes .
With the advent of MPAC we were promised tax equality but such things as regional government has squid the equality in municipal taxation. Municipalities are only agents of the Province. Toronto's residential tax rate was 0.57% lower than my rural rate (2015). So lets do the math. Toronto had 692,811 residential properties (2013) with an average assessed value of $524,833.00 (2015). That means TO had over $363 BILLION of residential assessment. Since their rate was 0.57% lower, Toronto was subsidized to the tune of $2.072 Billion in 2015! That tax inequality creates urban sprawl and other service problems.
Why are we not asking or expecting Toronto residents to pay their fair share?
Government seems all too willing to through rural and ag under the bus for vote patronage. Seems to examplify the of definition in "casino politics"... the house (ont liberals) are never wrong
We have been hearing for many years now how Agriculture is the # 1 economic driver in the country . Ag then should be paying more as it's fair share . As farms keep expanding and growing they hire more workers . As Ag keeps evolving and becoming more high-tech Ag needs a more well educated work force . That then means Ag is more than ever using the education system to source higher educated workers . Ag is no longer about pulling teats , slugging bales and slopping pens .
Further I have yet to see one farm go broke from the minimum wage increase as was spouted by farmers and their representatives when the wage increase came in .
Lastly the average farm income has grown substantially , farmers have not quit buying even more expensive equipment but seem to want farm property taxes to not move with the times . This is more than a double standard . Property taxes are a percentage of the value . As values go up so do the taxes as they should .
Farmers pay property taxes on land that they own . Farmers do not pay the property tax on land they farm or rent . There are areas of the province where farmers get paid or charge a land owner a fee to farm the land .
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