Municipalities across Ontario say they can’t keep covering the costs of provincial programs like social services and healthcare, citing an “unsustainable” funding gap that amounts to billions of dollars each year.
The Association of Municipalities of Ontario (AMO), representing all 444 municipalities in the province, initially called for a review in 2024. However, they now assert that the situation has reached a “critical” stage, as highlighted in their pre-budget submission, forcing municipalities to delay vital infrastructure projects.
Recently, the Region of Durham pushed for a reassessment of the existing fiscal framework between the province and municipalities to tackle what they describe as a $4-billion shortfall due to provincial responsibilities being offloaded onto them.
This motion was put forward by Whitby Mayor Elizabeth Roy just one day before the new budget was released by the province. In an interview with after its announcement, Roy mentioned that the budget failed to address these longstanding funding gaps effectively.
“We have gone backwards,” Roy said.
In Whitby’s case, Roy noted that they’ve postponed developing new parks and fixing roads and sidewalks for years in order to meet community needs related to areas she claims fall under the Ford government’s jurisdiction.
While it’s common for municipal governments to co-fund social services and health-related programs, it is primarily up to the province to legislate healthcare in Ontario.
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Whitby Mayor Elizabeth Roy says the town has chosen to delay key infrastructure projects in order to support community needs in social housing and healthcare, which she says are the province’s responsibility. (Town of Whitby)
Roy pointed out that local health networks must cover 10 percent of new hospital construction costs, which often means municipalities have to contribute financially as well.
She wants this requirement reduced because it diverts funds from roadwork and infrastructure projects.
“The taxpayer is paying for the shortfalls of where funding should be coming from,” Roy added. This year alone, Whitby faced a $2.5-million cut across all departments as part of efforts to manage rising costs and is currently conducting a core services review aimed at identifying further efficiencies. The Ministry of Finance responded through a statement sent to saying that over five years, municipal support has been increased by more than 45 percent. “We will continue to provide historic investments to protect and build Ontario,” said Sarah Chapin, ministry spokesperson. The statement also emphasized that red tape has been reduced so communities can develop quicker; citing last week’s $8.8 billion agreement with federal authorities for housing development as well as increasing funds from the Ontario Municipal Partnership Fund by $100 million over two years as examples.
“We just don’t have the financial tools that are necessary,” Carter said. LISTEN | Oshawa Mayor Dan Carter reacts to Ontario provincial budget: Here and Now Toronto7:21Mayor of Oshawa shares his view of the Ontario provincial budgetDan Carter serves as Oshawa’s mayor where a GM plant has recently scaled back operations resulting in layoffs exceeding one thousand workers. He noted one major missing element from Ontario’s Budget was measures addressing affordability-especially concerning support for laid-off workers affected by U. S tariffs. Mayor Carter shared his thoughts on Here and Now regarding this issue. Carter highlighted cities like Toronto and Ottawa as examples worth emulating due mainly their reliance on property assessments alongside upper government financing while having considerably lower property taxes overall. “We continue to go back to homeowners to increase their taxes so we can pay for resources and services,” Carter continued.
“It’s just not sustainable.”
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“The taxpayer is paying for the shortfalls of where funding should be coming from,” Roy added. This year alone, Whitby faced a $2.5-million cut across all departments as part of efforts to manage rising costs and is currently conducting a core services review aimed at identifying further efficiencies. The Ministry of Finance responded through a statement sent to saying that over five years, municipal support has been increased by more than 45 percent. “We will continue to provide historic investments to protect and build Ontario,” said Sarah Chapin, ministry spokesperson. The statement also emphasized that red tape has been reduced so communities can develop quicker; citing last week’s $8.8 billion agreement with federal authorities for housing development as well as increasing funds from the Ontario Municipal Partnership Fund by $100 million over two years as examples.
‘Not sustainable’: Oshawa mayor
Oshawa Mayor Dan Carter expressed that he wants federal participation in discussions alongside provincial officials since Canada increasingly aims at providing municipalities with project funding like housing initiatives. In a recent chat on CBC Radio’s Here and Now program, Carter acknowledged he doesn’t have all solutions but believes it’s evident that current municipal funding models aren’t effective anymore.“We just don’t have the financial tools that are necessary,” Carter said. LISTEN | Oshawa Mayor Dan Carter reacts to Ontario provincial budget: Here and Now Toronto7:21Mayor of Oshawa shares his view of the Ontario provincial budgetDan Carter serves as Oshawa’s mayor where a GM plant has recently scaled back operations resulting in layoffs exceeding one thousand workers. He noted one major missing element from Ontario’s Budget was measures addressing affordability-especially concerning support for laid-off workers affected by U. S tariffs. Mayor Carter shared his thoughts on Here and Now regarding this issue. Carter highlighted cities like Toronto and Ottawa as examples worth emulating due mainly their reliance on property assessments alongside upper government financing while having considerably lower property taxes overall. “We continue to go back to homeowners to increase their taxes so we can pay for resources and services,” Carter continued.
“It’s just not sustainable.”
Younger municipalities struggle more: AMO
While larger urban centers such as Oshawa or Whitby may cope better financially; smaller rural areas carry heavier burdens according AMO executive director Lindsay Jones. Jones described today’s funding shortfall challenge facing municipalities right now particularly affecting smaller ones located throughout rural or northern regions within Ontarionas “one significant” concern. “They’re being askedto do more with less,” Jones mentioned. Accordingto her , manyof these smallercommunities choose notto fund major infrastructuralprojects dueto limitedtaxbasesdespite needing tomake upgradesfor rapidgrowth. Jones indicatedthat AMO finds hopein fresh partnerships betweenprovincialandfederal governments, suchasthe recent announcementaimed at loweringdevelopmentchargesfornewhousingbut pointedoutthese initiatives onlyoffertemporary reliefsofar.Ifmunicipalitiesaren’tresponsibleforthecostsofprovincialservices , theycan redirectfundsintoinfrastructure,” she stated.
Whitby’smayor revealedthat she’llbe meetingwith Ontario’sfinance ministeralongsideothermembersofthebigcitymayors’ caucus shortly afterthis reportwas .
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