Faced with a massive shortfall in its capital budget, the City of Mississauga is looking into new revenue tools that could help fund infrastructure construction.

At its general committee meeting on June 23, City Council considered a staff report that recommends a series of tools the city could use to bolster its coffers, subject to legislative change. Council endorsed a motion to review five of the potential tools at its next Budget Committee meeting, which is scheduled for October.

The city faces a shortfall of $3.5 billion in its capital program, which includes state of good repair and new projects. It, like most other municipalities in the province, suffers from a lack of revenue streams through which it can fund infrastructure construction and maintenance projects.

Ontario’s Municipal Act limits municipalities’ ability to raise revenue. In fact, municipalities—excluding Toronto—can collect only property tax revenues and charge user fees for services. Local governments say those streams are limiting because they are not linked to economic growth. They are therefore not sufficient to fund services or to help cities close growing infrastructure gaps.

“Currently, Mississauga and many other Ontario municipalities are limited to collecting property tax revenues and user fees such as transit fares and recreation program fees. We are doing our research and looking at new tools to see what may be a good fit for Mississauga,” said Mayor Bonnie Crombie. “Under the current legislative framework, municipalities do not have the financial ability to maintain, rehabilitate and expand infrastructure, while keeping tax increases at inflationary levels. As a Council, we are studying this gap and what tools would best manage it.”

Crombie also said the city is encouraging the province to work with municipalities to develop new revenue tools that will allow them to deliver services and improve the quality of life for residents while keeping property taxes affordable.

Mississauga currently uses tools such as property taxes, payment in lieu of taxes, user fees, fines and penalties, and development charges to collect revenue. The staff report, which was prepared by Ernst & Young, listed a number of potential revenue tools not currently available to the city, and which would require amendments to the Municipal Act to implement.

The tools to be reviewed at the next city’s budget committee meeting include a vacant-home tax, an incremental property tax, a landfill levy, land value capture/tax increment financing, and an encroachment tax.

“We are looking outside traditional methods for our infrastructure needs. Our current revenue tools do not allow us to address our aging roads, buildings and bridges. A look at new revenue tools is a logical next step for us to consider to continue to meet the city’s infrastructure needs for our residents and businesses,” said city manager and chief administrative officer Paul Mitcham. “A study of new tools is a worthwhile exercise to ensure we have the ability to care and maintain the infrastructure our residents and businesses depend on each day. We will also continue to advocate for federal and provincial assistance to help meet these needs that cannot be ignored or deferred.”

The report suggests that if Mississauga were to pursue legislative changes to adopt those tools, in much the same way Toronto is authorized to do so under the City of Toronto Act, it should do so with the support of other municipalities to create momentum for the change.

Featured image: Mississauga City Hall. (City of Mississauga)