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May. 18, 2021 | Tuesday
Local News
Letter: Province should let municipalities borrow more to avoid tax hikes

Dear editor:

There is a financial matter that has a major impact on the budgets of municipalities that could be resolved by a provincial order-in-council introduced by the minister of municipal affairs.

Municipalities in Ontario are limited to borrowing no more than 25 per cent of municipal own-source revenues such as taxation and user fees, which was increased some years ago from the historical limit of 20 per cent.

Why not lobby the premier to increase this limit to 35 per cent for a five-year period in order to finance infrastructure projects in light of the extraordinary budgetary demands imposed by COVID-related costs?

The province may even want to roll back the maximum to 20 per cent after that period is over, in order to ensure a restoration of fiscal responsibility in our communities.

This will eliminate the need to increase our municipal taxes but increase borrowing expenses in the long term. This long-term expense will be eliminated as mandated by the province as the local economies improve.

Long-term infrastructure projects should not be delayed by budgetary demands as choices are made that are a result of COVID-related costs. Municipalities are not allowed to acquire debt to fund operating costs, yet studies suggest that infrastructure spending could be higher as there is room for expansion in Ontario

This will ensure that spending in our economy is maintained, which seems to be the priority of our provincial and federal governments – spending our way out of a plausible recession.

Derek Insley