LONDON, Ont. - Premier Dalton McGuinty dismissed calls Tuesday to accelerate the uploading of social assistance programs from municipalities, despite warnings that surging welfare costs will mean big tax hikes for struggling homeowners.
"The short answer is no, I don't believe so," McGuinty said in London, Ont.
The province, which pays for 80 per cent of welfare benefits, has moved a "long way" towards easing the burden on municipalities, he said.
"Our burden, so to speak, is four times greater than theirs when it comes to dealing with the challenge of increasing welfare roles," McGuinty said.
"Just as they have financial challenges, so do we, and we're going to have to find a way to manage our way through these."
A recent TD Economics report warned that homeowners in struggling Ontario communities may be hit with big property-tax hikes to cover rising welfare costs during the recession.
The report singled out Toronto, but TD economist and co-author Derek Burleton said other municipalities will face similar financial pressures as the economy sours.
In its budget plan released Tuesday, Toronto signalled that residential property taxes will rise by four per cent in 2009. Mayor David Miller cited higher costs for transit, policing, snow clearance and welfare in defending the hike.
The provincial government promised in October to take back some of the costs of social programs that have been downloaded to municipalities, but the plan is being phased in over the next decade.
McGuinty should speed up the plan because cash-strapped homeowners and municipalities can't wait 10 years for help, said NDP Leader Howard Hampton.
Municipalities can't go into deficits, but the provincial government can.
Finance Minister Dwight Duncan is expected to announce a sizable deficit in the upcoming spring budget, with some economists predicting it could be as high as $10 billion.
"Swelling social assistance costs should be absorbed by the province because it has the fiscal capacity to handle it," Hampton said in a release.
"Cash-strapped municipalities do not and their financial situation will only worsen as the recession deepens."
Municipalities currently pay 20 per cent of welfare benefits, but they also administer the program, and the province has capped increases to its share of those administrative costs, Burleton noted in his report.
Windsor, Ont., has been struggling for years to find a way out of a severe economic downturn that began in 2002, said Mayor Eddie Francis.
As manufacturing jobs disappeared, welfare caseloads started to "skyrocket" in 2005, he said.
With Windsor's jobless rate hitting 11 per cent -- the highest in Canada -- more people are turning to welfare and other social programs as their unemployment benefits run out, Francis said.
As the costs of maintaining those programs go up, the amount of tax revenue the city is collecting is plunging, he added.
"We're at a point right now where... we've cut to the bone in terms of city services," Francis said.
Last year, the city lost about $15 million in tax revenue -- the equivalent of a four per cent tax hike -- because property values are falling and companies are shuttering plants and factories, Francis said.
The loss of a GM plant alone would cost the city $3 million in much-needed tax revenue, he added.
Speeding up the provincial upload of costs from municipalities and the arrival of much-needed federal cash for infrastructure projects would ease financial burden many cities and towns are facing, he said.
"Everything is needed right now -- all the tools," he said.
