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January 3, 2002
Provincial Auditor confirms Downloading is not revenue neutral
  
Ontario taxpayers now have confirmation that the Province of Ontario's
Downloading program (LSR) was not revenue neutral and cost the City of Toronto
hundreds of millions of dollars, said Toronto Mayor Mel Lastman today.

Independent Provincial Auditor Erik Peters' report confirmed that the
Province's downloading was not revenue neutral.

"We have been telling the province all along their funding formulas were
wrong," said Lastman. "The use of imaginary figures and targets to balance the
numbers is an admission that it has never been revenue neutral, and it's been
used to penalize municipalities like Toronto."

"The auditor admits its cost us $140 million, and he wasn't even asked to
consider the downloading for transit capital," added Mayor Lastman. "When you
include transit, it's cost us hundreds of millions of dollars - $276 million in
2001 alone."

The Downloading cost to the citizens of Toronto in 2001 was significant.

Per Household $290
Per Capita $110

The Province recently addressed some of the unfairness of LSR for the City of
Toronto by finally agreeing to provide funding towards the Toronto Transit
Commission Capital costs and taking over the full operation of GO Transit -
responsibilities the province previously funded.

"We have to start realizing that it's the same taxpayer funding the City, the
province and the federal governments and they deserve leaders that work
together to solve problems," said Lastman. "It is increasingly difficult for
the City of Toronto to provide the quality and variety of services we do, when
municipal property taxes account for 5 per cent of the total taxes an average
family pays to all levels of government."

The City of Toronto's taxpayers currently pay out $4 billion more in taxes than
they receive in government spending. The City will be seeking a solution for
funding losses due to downloading and a new funding formula that achieves
revenue-neutrality.

Backgrounders

Downloading (Local Services Realignment)
The Annual Report released by the Provincial Auditor on November 29, 2001
included a review of the Community Reinvestment Fund (CRF), which was
established with the objective of ensuring that the Local Services Realignment
(LSR) initiative be revenue neutral. The results of this report has reopened
the issue of the financial impact "downloading" has had on the City of Toronto.

The Auditor acknowledged that the services realignment could not be considered
revenue neutral over the 1998 to 2000 period. When considering the impact of
lost subsidy for TTC capital, the cost of downloading is considerably higher,
as illustrated in the City's estimate for 2001. Even after new Provincial
contributions to transit are factored in starting in 2002, the forecast still
reflects downloading on the City.

Downloading Impact on City of Toronto ($'s millions)
Auditor's Report Total
1998 - 2000
City Estimate* 2001City Forecast*
Average Annual Impact
2001 -2010
Cost of Downloading 140276163


(*) Based on difference from historical 75% capital subsidy for transit.
Forecast has been adjusted to include 1/3 TTC capital funding from the Province
and no costs for GO Transit. Assumes no increase in impacts for all other
programs (including social assistance and social housing) and no provision for
transit (GO TTC or other) expansion.

Impact of $276 million in 2001
The 2001 downloading cost to the citizens of Toronto was significant. Had it
been funded from current revenue sources, rather than borrowed, the impact
would have been as follows:

Per Household $290
Per Capita $110
Source Households - MMAH data for enumeration purposes (rec'd April 27, 2001) Source Population - Statistics Canada 'inter-census' estimate (July 1, 2000).

IMPACT TO CITY OF TORONTO PROVINCIAL LOCAL SERVICES REALIGNMENT Net of GTA Pooling (approx. $185M)
2001 Budget Preliminary
 
New Program Responsibilities - Post Local Services Realignment 
Social Housing233.7
GO Transit50.8
Property Assessment25.8
Provincial Offences - Net Revenue(8.5)
Funding Changes - Post Local Services Realignment 
Transit - Operating95.7
- TTC Capital247.0
Social Assistance100.9
Child Care26.3
Public Health(9.0)
Ambulance-
Children's Aid Society(23.9)
Gross Receipts Tax18.3
Municipal Support Grant Eliminated77.7
Sideloading6.9
Total Costs to City841.7
Residential Tax Room To Taxpayers(565.2)
Net Change to Taxpayers276.5


Media Contact
Media contact:
Jim Warren, Mayor's Office
416-395-6482

 

 

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