The recession may be just about over, but economic hardship could linger for some time, Ontario municipalities heard Monday.

"While we may officially declare the recession over in the third or the fourth quarter of this year, some of the variables that will hit governments, including at the municipal level, will drag on well into 2010," said Don Drummond, chief economist with TD Bank Financial group during his keynote address to the annual meeting of the Association of Municipalities of Ontario.

Drummond said corporate taxes will be down for years to come, as businesses carry forward their losses. In addition, Canadian unemployment — now at 414,000, with a "disproportionate" amount in Ontario — is expected to hit 507,000, bringing the unemployment rate up to 10 per cent later this year.

"You don't actually get your peak hit on welfare caseloads until well after employment even starts to go up," he told the Ottawa conference.

That is a problem for Ontario municipalities because many social programs such as welfare were downloaded to them from the provincial government in the 1990s.

The Ontario government announced last October that it will take back welfare and court security costs over the next 10 years, starting in 2010.

Ontario Municipal Affairs Minister Jim Watson reminded municipalities of that Monday and acknowledged that the downloading should never have happened in the first place.

Stimulus slow to flow: councillor

Watson added that the provincial government is addressing municipalities' issues by working with the federal government to get their stimulus money out the door.

Ottawa city councillor Georges Bédard, who was attending the conference, said it's important right now for members of municipal council to "know what the economic future is for Canada."

He wasn't surprised by Drummond's comments.

"It is always the case that the impact carries on," he said, adding that is something municipalities have to deal with.

When asked if stimulus funds from the federal and provincial governments are helping, he responded, "When it gets rolled out and is in fact implemented, then obviously the impact is going to be very, very positive. Right now it's slow getting to it."

But he was understanding of the fact that due diligence must be done to ensure the projects funded are the right ones.

When Watson was asked about provincial funding for Ottawa's proposed light rail project, he said he had nothing to report, as it would take the province months to study the project. The City of Ottawa has underestimated costs in the past, he added.

Provincial and Ottawa city officials are expected to meet next month about the project next month. Coun. Peter Hume said the city should have a better idea of the project's costs by then.