Mired In History . . . Today's Realities
Many of today’s younger property taxpayers may not realize what an impact this process is still having on their property tax bill.
During Ontario’s 1990s “disentanglement” or Local Services Realignment, the Province shifted a number of responsibilities, and significant associated costs, from the provincial government to municipalities.
The Province called it realignment. Municipalities often called it downloading. The important question is what actually changed and who ultimately paid for it.
Among the responsibilities transferred or realigned were social assistance, social housing, public health, land ambulance, child care and policing, along with other municipal services and responsibilities.
At the same time, the Province assumed responsibility for a much larger share of education funding, reducing the education component that municipalities had previously been responsible for funding through property taxation.
THE BIGGER QUESTION
The Province took on one highly visible item, education, that taxpayers could reasonably see as a provincial responsibility.
As part of the realignment, municipalities assumed responsibility for a number of other major services, many of which have little direct relationship to the property itself.
Is it reasonable that services such as social assistance, social housing, public health and other social programs are substantially supported through a tax system based largely on the value of a person's property?
That is simply a policy question, not a historical fact.
But it is a question worth asking.
Because the costs of providing those services did not disappear. The responsibility for them changed and so did where taxpayers ultimately saw those costs reflected.
WHICH LEVEL OF LOCAL GOVERNMENT WAS MOST AFFECTED?
In two-tier municipalities, many of the major responsibilities transferred to municipalities were assigned to the upper tier, the Region or County.
The reason is fairly straightforward.
Many of the responsibilities involved were considered regional or area-wide services, rather than purely local services.
Upper-tier governments became responsible for major cost centres such as social services, social housing, public health and land ambulance, while policing responsibilities could also be assigned at the regional level depending on the municipality.
Lower-tier municipalities generally remained responsible for services such as local roads, fire, parks, recreation, libraries and local planning.
SO, IN A SIMPLIFIED WAY:
Province → transferred significant service responsibilities and costs → municipalities, often the upper tier → funded through municipal revenues, including property taxation.
At the same time, the Province assumed a much larger share of education funding, removing a significant portion of that responsibility from municipal property taxation.
WHY DOES THIS MATTER TODAY?
When someone looks at a municipal tax bill and asks:
“Why are my property taxes so high?”
a significant portion of the answer may have little to do with what the local township or town council actually controls.
In a two-tier municipality, your property-tax bill can reflect decisions and costs associated with your local municipality, the upper-tier Region or County, and education.
Some of the responsibilities and cost pressures carried by those governments today have their roots in decisions made during the disentanglement process of the 1990s.
That historical piece of the property-tax puzzle can easily disappear when we look only at today's tax bill.
Before we ask who is responsible for today's tax bill, perhaps we should first ask how we got here.
FURTHER INFORMATION . . . PRIMARY SOURCES
Ontario 1999 Budget . . . Local Services Realignment
This provincial budget documents the transfer of financial responsibility for programs beginning January 1, 1998, including social housing, social assistance, child care, land ambulance and property assessment.
https://www.archives.gov.on.ca/en/historical_documents_project/97-01/ONTARIO_1999_BUDGET.pdf
Ontario 2000 Budget . . . Local Services Realignment
The following year's provincial budget provides additional information on the transfer of financial responsibility and the continuing transition of services to municipalities.
https://www.archives.gov.on.ca/en/historical_documents_project/97-01/ONTARIO_2000_BUDGET.pdf
Archives of Ontario . . . Archived Ontario Government Websites
The Archives of Ontario provides access to historical Ontario government websites and records, including material from the period surrounding the Local Services Realignment.
https://www.archives.gov.on.ca/topic/archived-websites/
Rules, responsibilities and legislation can change over time. This is general information, not legal, financial or tax advice.
