$800M or more needed for money to funnel to municipalities

An Ontario government plan to earmark a chunk of any annual budget surplus for spending on infrastructure improvements could be a boost to transit projects for cities.



Finance Minister Dwight Duncan announced yesterday the government will introduce legislation so that, if the annual surplus hits $800 million, money will flow to cities and towns to pay for roads, bridges, transit and social housing. Hitting that mark would trigger the release of $200 million of the surplus to municipalities, with the other $600 million going to Ontario’s debt.



Surplus cash above the $800 million mark would also flow to communities for infrastructure.

The surplus last year was $2.3 billion and it is expected to be higher this year, despite the government’s official projection of a $750 million surplus.

"If you’re a homeowner who has some extra money at the end of the year, the smart thing to do is pay down some of your mortgage, but also to dedicate some of the extra money toward the furnace that needs to be replaced this year," Duncan said.

The money is to be divided based on population.

The new legislation would change a rule brought in by the former Conservative government that said any budget surplus must be used to pay down the provincial debt, which is projected to be $162.9 billion by the end of the government’s fiscal year on March 31.

The Legislature resumes sitting on Monday, and there will be more details about the plan in the March 25 budget.

"Municipalities would have the flexibility to use the funding for their own capital priorities, whether it’s to improve roads and bridges, expand transit or upgrade social housing," Duncan said, warning the province "would have the right to recover funds if not used for capital purposes."

The legislation is modelled on one used by former Liberal prime minister Paul Martin — Duncan’s mentor and a fellow Windsor native.

While details will emerge in the budget, cities and towns won’t know for sure if the $800-million threshold will be met until the public accounts are audited and finalized this summer.

Progressive Conservative Leader John Tory scoffed that "it’s the way you can put aside some extra money for a vacation or a flat screen TV, but it’s no way to fund municipalities."

"What we’ve had for the last number of years is an annual begging exercise by municipalities and now we’ve added to that an annual crapshoot," said Tory.

cap on surplus money

  • The maximum amount municipal governments could receive would be capped at $2 billion. That could only happen if the government recorded a surplus of $2.6 billion.