City of Burlington
Burlington City Hall
426 Brant Street
Burlington, ON L7R3Z9
RE: Ontario Gas Tax Program
Dear Mayor & Council,
I’m writing to provide clarification regarding transfers to municipalities under the Ontario Gas Tax program for the 2019-20 fiscal year.
As you know, the Ontario government collects 14.7 cents for every litre of gasoline sold in Ontario each fiscal year, (April 1 to March 31). Since 2006, the program has provided municipalities with two cents per litre of provincial gas tax revenues. (see Appendix 1 below)
Municipalities receiving gas tax funding must use these funds towards their public transit capital and/or operating expenditures, at their own discretion, including upgrading transit infrastructure, increasing accessibility, purchasing transit vehicles, adding more routes and extending hours of service. The funding formula is based on 70 per cent ridership and 30 per cent population.
In 2017-18 the total funding envelope was $357.2 million. For 2018-19 the funding envelope for municipalities with transit systems is $367.5 million. A total of 107 municipalities, (up from 105 last year) will share in this funding. Burlington has seen a $70,184 increase in its share of the gas tax over last year. (see Appendix 2 below)
Since the majority of the funding formula is tied to ridership (70 per cent), it’s important for Burlington Transit to make every effort to continue growing its ridership. I am pleased that Burlington Council is continuing to make transit investment a priority, especially considering the decrease in ridership of 13.3 per cent that occurred between 2013 and 2015. (see Appendix 3 below)
In 2013, the Wynne government created the Transit Investment Strategy Advisory Panel to recommend transit funding options. The panel recommended that increased funding for transit be financed with an increase to the gas tax of 10 cents per litre and raising the corporate income tax rate by .5% to 12%. These measures would have generated an additional $80 million in Harmonized Sale Tax revenue.
A second recommendation made by the panel was to cap the gas tax increase to 5 cents by increasing the HST by half a per cent.
In a pre-election promise, the previous government committed to increasing gas tax funding for municipalities to 2.5 cents per litre starting in 2019-20. No decision was made on how the previous government would fund their gas tax promise prior to the June 2018 General Election.
It would have been very unwise for any municipal government to base their budget numbers on unfounded promises. That’s why the City of Burlington’s 2019 operating budget did not include the previous Liberal government’s gas tax increase proposed for 2019.
Earlier this week, the Mayor provided an analysis to local media suggesting that Burlington would be under-funded some $20 million over the next 10 years. Unfortunately, this analysis was based on a highly speculative extrapolation of a pre-election promise by a former provincial government and is misleading.
To understand the local impact of forgoing the increase from 2 cents to 2.5 cents, let’s assume:
- the number of litres of gas sold in Ontario stays the same in 2019-20;
- that Burlington Transit ridership remains constant, and
- the City of Burlington continues to fund the transit system at a similar rate
If all these assumptions held true, the difference in gas tax funding would be .00035 per cent of the city’s 2019 operating budget. This is not even close to the number put forward by the Mayor.
We know the previous government was spending about $40 million a day more than it was collecting and they allowed the debt to double to $347 billion.
Despite these fiscal challenges, the Ontario government is committed to funding transit in Burlington and across the province. I strongly support Council's commitment to encouraging transit ridership after previous double-digit declines.
Please know that as the MPP for Burlington I will continue advocating for ongoing investments in transit and infrastructure for our community. By working together, we can accomplish so much more for the people of Burlington.
LIST OF APPENDICES
Appendix 1 - Ontario Gas Tax funding to Municipalities 2004-17 (note for 2017-18 and 2018-19 the dedicated gas tax amount remained at 2 cents per litre.
Appendix 2 - Burlington's share of the gas tax 2014-19
Appendix 3 - Burlington's 7-year Transit Ridership