Chris Savard

Chris Savard
Seaway News

November 17, 2006:

Last week the McGuinty government announced that it will review funding for municipalities with generating stations. According to the government’s media release, Ontario currently compensates 105 municipalities annually for the property tax revenue from 139 hydro-electric generating stations. These payments have remained unchanged since 2001.

In August of this year, during the Association of Municipalities of Ontario annual conference, Premier McGuinty announced that the province was launching a joint review aimed at improving the delivery and funding of municipal services. The Provincial-Municipal Fiscal and Service Delivery Review is being be conducted by the government and a public report is expected to be released in Spring 2008. The level of compensation for Ontario municipalities with hydro-electric generating stations, has now been added to this review.

Cornwall City Council has long been appealing to the Provincial Government for greater compensation for the Saunders Power Generating Station in the city’s west end. Interestingly, very few of the other 104 municipalities with hydro-electric generating stations, have joined with the City of Cornwall in the fight for more compensation.

The power dam is currently assessed (CVA) at approximately $101.3 million and if it were to be taxed as a true private enterprise, then the City would receive an annual tax payment of almost $7.5 million. Instead, the City of Cornwall receives an annual, flat-lined payment in lieu of taxes in the amount of about $230,000. As such, the City is upside down by almost $7.3 million between what it currently annually receives and what it might receive if the dam was taxed at full assessment.

Looking back to 1998, the gross tax revenue that would have been realized had OPG paid on full CVA, would have been almost $75 million. Instead the City has received payments in lieu for a total of almost $2 million, therefore resulting in a shortfall of $73 million since 1998. This shortfall has had a dramatic impact on the continuing infrastructure deficit. The McGuinty government also announced “that for 2006 and 2007, compensation to municipalities with hydro-electric stations will be adjusted to account for inflation.” If the Consumer Price Index is 2.5%, then the City can expect an additional $5,750 in 2006 and $5,895 in 2007. This inflationary increase during the review period, “is to show that the Government is serious about this,” according to our local Member of Provincial Parliament.

It strikes me that if this government was truly serious about addressing this problem, they would not have waited until the final year of their majority mandate to begin work on this issue. Mr. McGuinty has a majority government, which could have fixed this but has chosen not to do so. More discouraging is that there is no help in the foreseeable future, as the review will not be completed until 2008.

This review could have and should have been done a long time ago. Unfortunately, the $5,000 that the Liberal government has offered up to the City, will do very little to provide any much needed financial assistance for the first two budgets that our newly elected Council will deliberate on. The terms of municipal councils all across this province will be half over, before there will be even any hope of support from the McGuinty Liberals.

Councillor Mark MacDonald stated during the discussion that day, that the announcement reminded him of the game show, “Deal or No Deal”, where the contestant must decide whether to take the deal from the bank, or to continue opening cases in hopes of a better deal. Councillor MacDonald indicated that from his perspective the City should tell the Province of Ontario…No Deal!

chris@chrissavard.ca