Ontario surplus funds to be used for more than debt reduction
Last Updated: Wednesday, March 12, 2008 | 2:26 PM ET
The Canadian Press
Ontario will bring in legislation to change a requirement that all surplus funds be applied to the province's debt at the end of each fiscal year, Finance Minister Dwight Duncan announced Wednesday.
The bill, which will be introduced when the legislature resumes sitting next week, would allow the government to spend some of any surplus on municipal projects such as roads, bridges and public transit, Duncan said.
Municipalities would have to wait until summer — when all revenues finally come in, months after the fiscal year-end — to see exactly how much, if any, surplus cash the province will have to share with them each year, Duncan added.
"It's very difficult to predict these things. Last year it was $2.3 billion," Duncan said as he announced the proposed legislation, called the Investing in Ontario Act.
"If you look at that figure relative to total provincial revenues, it's a relatively small percentage, but that small percentage can translate into a lot of dollars that could be used either for debt repayment or investments in municipal infrastructure, and we've chosen to do that."
Duncan said his "prudent, responsible approach" would strike a balance by ensuring that surpluses go to both debt reduction and to government priorities. The first $600 million of any surplus would go to the debt and any anything above that amount would be divided among municipalities based on population, as long as the surplus is at least $800 million.
Mississauga Mayor Hazel McCallion said she'd prefer to have fixed provincial funding so that her suburban Toronto municipality knows how much cash to expect each year, but she added she was very pleased the province had agreed to share its surpluses with local governments.
"We've been saying to the federal government: Share your surpluses. In bad times we know you may not be able share the money with us, but now is the time to do it," McCallion said at a news conference with Duncan.
"The province has done exactly what we've asked them to do."
The province's plan closely mirrors a proposal put forward last month by federal Liberal Leader Stéphane Dion, who said a Liberal government would invest any unanticipated surplus exceeding a $3-billion contingency fund in roads, bridges, sewers and other municipal projects.
The Association of Municipalities of Ontario said Wednesday that it welcomed any extra cash from the province, estimating local governments in the province face a $40-billion "infrastructure deficit" that they cannot pay for without help from both the province and Ottawa.
"The announcement signals to us the importance that the provincial government attaches to the municipal government infrastructure deficit," association president Doug Reycraft said.
"That deficit is significant, and eliminating it has a lot to do with the future prosperity of our municipalities, and with the future prosperity of the province and the country."
Ontario's total debt was $160.8 billion as of last September and was projected in last year's budget to grow to $162.9 billion by March 31, 2008.
Duncan admitted Wednesday the debt would keep growing under his proposed changes to spend some surplus money on infrastructure projects.
