Mississauga proposes 2.3% tax increase for 2024 as future growth poses unprecedented challenge
External pressures are leaving Mississauga’s financial future uncertain.
In early 2023, as the City planned out spending for the months ahead, years of austerity budgets that froze property taxes and neglected needed infrastructure investments, forced councillors to make a number of difficult decisions for the municipality. Councillors are dealing with the same historical pressures now, but the last 365 days have introduced an entirely new set of challenges for the municipality to grapple with. There’s the added pressures from the PC government’s Bill 23—mainly the billions of dollars in infrastructure spending that will be required to service the growth—the impending break up of the Region of Peel; and the potential departure of Mayor Bonnie Crombie who appears to be the front-runner to win the ongoing Ontario Liberal leadership race.
But that’s not all. Ongoing increases in inflation; recovering from the unprecedented financial repercussions of COVID-19; and the City’s massive infrastructure spending needs are all combining to put staff and elected officials inside City Hall in a precarious position while trying to prioritize spending for future years.
This reality is detailed within the pages of the City’s 2024 financial blueprint, which lays out the municipalities proposed spending for the year ahead and beyond.
“Adding to the challenge all municipalities face to maintain and build needed infrastructure, inflation is impacting the City’s capital program, with increases in the cost of materials causing project costs to rise significantly,” the budget document states. “After many years of budget reductions it is becoming increasingly challenging to find savings that do not negatively impact service delivery.”
While City staff work to ensure there are no impacts to services the municipality provides residents, the looming regional dissolution that will make Mississauga independent by 2025 has created a number of question marks for the City as it studies municipal spending for 2024. A five-member transition board, appointed by the Province in July, has been tasked with facilitating the dissolution process, including looking after the “equitable division and distribution of assets and resources,” all while ensuring there is no interruption to service delivery for taxpayers. The government has promised the process would be fair for all three of the Region’s lower-tier municipalities and would ensure the transition would be “seamless and effective.” However, it remains unclear how the Province will divide up the upper-tier municipality’s assets, while “winding down” regional finances and overseeing the disbursement of programs and departments to the lower-tier municipalities. It means Mississauga could be set to inherit billions of dollars in infrastructure assets previously maintained by the Region of Peel. While Mississauga will be able to pay for the maintenance of these assets through tax dollars that previously went to the Region of Peel, it remains uncertain just how much of a financial impact the entire dissolution process will have on the City.
“The transition costs of this dissolution will be determined through the transition process and are not included in the City’s budget at this time,” the 2024 proposed budget states. “It is expected and understood that there will be one-time costs incurred to complete this phase. The impact on taxes cannot be determined until decisions are made by the transition board, and after final implementation of those decisions.”
The budget document also notes that “although this transition will be a significant undertaking for City of Mississauga staff,” and the other municipalities, “there will be long-term benefits to taxpayers once the City of Mississauga becomes a single-tier municipality. Decisions about where Mississauga taxpayer dollars are spent will be at the sole discretion of the City and there will also be administrative savings from eliminating the second tier of government.”
For 2024, staff are proposing a 2.3 percent tax increase on the City’s share of the overall bill for residential property owners to help fund $679.5 million in operating costs — a $45 million (6.3 percent) increase over 2023. The overall gross capital budget for 2024 is a proposed $531.3 million “and includes substantial investments in maintaining the City’s infrastructure in a state of good repair.” What the City will have to cover is approximately $437 million due to assistance of upper levels of government and departmental recoveries totalling $94.3 million.
Staff note the Region of Peel forecasted a budget increase of 6.5 percent for 2024 in its 2023 budget, which, if approved, would translate to a 2.96 percent for residential taxpayers. Combining the Region’s forecasted increase with the City’s tax increase would result in the total impact on a City of Mississauga resident’s tax bill of 5.3 percent, according to the budget.
(City of Mississauga)
While new initiatives typically affect the operating budget, in 2024, 14 of the 22 new initiatives staff are proposing are either self-funded or funded from capital and will have no impact on the 2024 property tax. Key proposed projects for 2024 that will require additional operation spending include an expansion of the City’s MiWay transit service at a cost of $3.9 million for additional staffing and the opening of a new fire station in Ward 9 at a cost of $2.2 million to fund the 20 employees required to service it.
As part of the PC government’s “strong mayor powers,” now granted to a number of municipalities across the province including Mississauga, authority to propose the budget now rests solely with the mayor, despite the fact that Mississauga’s leader has taken a leave of absence from her mayoral duties as she campaigns for a political promotion. In July, just a few weeks after announcing her bid for the Liberal leadership, Crombie directed staff to prepare the 2024 budget. During a budget meeting in October Crombie confirmed that regardless of her campaign, or whether she is successful in her leadership bid, that she would return from her leave to oversee Mississauga’s 2024 budget process, adding she is “deeply committed to this community.”
Question marks also exist around the impacts of provincial legislation on the City’s bottom line. How the PC government’s Bill 23, which drives the ambitious target of building 1.5 million homes by 2031, will impact the budget still remains unclear. As part of the legislation to accelerate the construction of new homes, Mississauga has been tasked with the target of getting 120,000 homes built over the next decade — the same number of new homes that had been planned to be added over 30 years. It’s a development push the PC’s rammed through despite significant backlash from elected officials and municipalities which have argued it strips revenues away, forcing growth into areas that do not have the infrastructure to support it.
In May, prior to the government’s introduction of the Hazel McCallion Act, the Province announced it would be working with six municipalities to ensure municipal finances can support the increased housing supply legislated by the Bill, something many cities have said is impossible with existing budgets. Mississauga was among the municipalities named. The audits will be used to “reach a shared understanding of any potential or perceived impacts of the [Act regarding] changes to development-related fees and charges,” a spokesperson for the Ministry of Municipal Affairs and Housing previously explained, “to ensure that there is no funding shortfall for housing-enabling infrastructure” as a result of Bill 23.
Mississauga has done its own preliminary research to determine the financial demands of the PC government’s accelerated housing plan, which revealed it could cost them hundreds of millions of dollars. An overview presented by City staff to Council in November last year revealed the City would lose an estimated $815 to $885 million in development charges for infrastructure over the next decade—a 70 percent loss to the City’s revenue stream. Reports presented to Mississauga council in February, state the municipality is able to accommodate the mandated number of units it has been assigned, but only if the Province provides financial support to build the necessary infrastructure to service these homes.
“Accommodating this level of housing growth will require government and industry support,” the proposed budget states. To begin to meet the projected infrastructure needs, the City has added $5 billion to the 10-year capital forecast as part of the 2024 budget. While Bill 23 aims to accelerate housing growth, it lowers the rates of the development charges and parkland fees that municipalities collect from developers that help municipalities offset the cost of the infrastructure required for services like roads, transit, community centres, and fire stations, to support the associated growth in the population.
While the increase remains around the regular rate of inflation, the $5 billion added as a result of Bill 23 over the next 10 years will place significant pressure on the tax base if further funding assistance is not offered by the Province.
Premier Doug Ford has repeatedly claimed the Province will financially support municipalities with the infrastructure required for new housing, but the details on what that funding will look like, remain unclear.
(Alexis Wright/The Pointer)
During a visit to Mississauga earlier this year, Premier Doug Ford claimed the Province would make municipalities “whole,” providing the necessary financial support required for the infrastructure to service the 1.5 million homes. But the Ontario Premier has offered few details on when and how this assistance will be delivered. It leaves municipalities like Mississauga on uneven footing, struggling to prepare for the growth while facing the pressures of funding the infrastructure to accommodate it, with no sign of money from the PC government on the horizon.
In an effort to prepare for the complexities caused by the PC’s legislation, the latest budget proposes four new initiatives within the City’s planning and building department which includes the requests for seven new employees to be hired in 2024 “to respond to the challenges of Bill 23 and its impacts.” This includes hiring new staff that will oversee enforcement and inspections, zoning planning and building services technologies.
Following several years of austerity budgets and tax freezes leading to decaying infrastructure across the city, similar to last year, the 2024 proposed budget focuses on maintaining and replacing Mississauga’s current infrastructure. The report notes, “state-of-good-repair projects, for the maintenance and replacement of existing infrastructure, are the City’s first priority.” Under the facilities and property management portion of the budget, staff note key objectives over the next three years include addressing the aging infrastructure needs by investing $40 million in 2024 for building new and renovating existing infrastructure.
“The City’s current funding does not fully fund all capital requirements, but balances the need to maintain City infrastructure, fund new projects as required, and minimize debt,” the budget document notes. It adds that while the City appreciates federal and provincial infrastructure funding programs like the Investing in Canada Infrastructure Program, “this funding does not keep up with the increasing challenges the City faces to keep Mississauga’s infrastructure in a state of good repair.” With a 65 percent of City buildings pushing more than 30-years-old, it means a large proportion of them (63 percent) are listed as in only fair to good condition, as identified under in the Facility Condition Index.
City staff have included a three percent infrastructure levy in each of the 2024–2027 budgets that will provide funding to maintain and replace critical infrastructure. The report notes while the City’s infrastructure levy funds and funding from federal and provincial government provide the municipality with money that can be used to manage its infrastructure replacement, there continues to be a gap and “the City’s current funding sources do not allow for full funding of the City’s state-of-good-repair needs,” with Mississauga reporting a $44 million infrastructure gap in 2024.
The City previously projected that over the next ten years, on average, it would be required to spend $206.6 million annually to maintain and replace existing assets noting that additional funding of approximately $40 to $45 million per year would be needed to keep infrastructure in decent condition. Now, 2024 estimates show that over the 10-year period, on average, the City must spend $240.2 million annually to maintain existing assets in a decent state and replace assets that are too far gone.
Transit draws the largest commitment from the City’s 2024 capital budget, with staff proposing $144.2 million (or 27 percent) — a decrease from the $168 million in 2023. The majority of the funding is allocated for the purchase of hybrid buses. The City has been making a push toward electrifying its transit fleet after MiWay announced in 2022 it would no longer purchase any new diesel buses — and the refurbishment or replacement of other buses that remain in the fleet.
Staff note a proposed decrease of 3.2 percent (just under $3.4 million) from the City’s 2023 operating budget as a result of decreases in lower diesel prices; an increase in higher fare revenue due to ridership growth; and a surge in future revenue anticipated from fare increases approved by council in October after a staff report highlighted demand for the City’s transit services have exceeded pre-pandemic levels. A report to the budget committee noted MiWay ridership has recovered well over pre-pandemic levels in 2019, to 109 percent as of August 31, with ridership expected to continue to increase through the remainder of 2023 and into 2024.
Transit is responsible for the largest portion of the City’s 2024 capital budget at a proposed $144.2 million.
(Alexis Wright/The Pointer)
Additional capacity is required to meet the demand and address overcrowding on routes where ridership has grown significantly. The 2024 proposed transit budget includes a request for a four percent increase in service hours (57,000 hours) in 2024. To accommodate the additional hours, new permanent positions are required at a cost of $3.94 million. This includes 44 operators, two route supervisors, a general service person, a report clerk, and an operations trainer.
Staff are also proposing $29.8 million for Mississauga’s Fire and Emergency Services (MFES) to help meet the department’s long-term infrastructure plan to address the recommendations made in the 2019 Building Condition Audit. That report revealed MFES’ infrastructure was in a severe state of disrepair. The Pointer previously reported how the department requires significant investment to get critical buildings to meet even the basic standards for safety, after decades of financial neglect at the hands of City officials and council members.
The proposed budget states capital investments are required for the purchase of new equipment and the refurbishment of existing equipment, with $24.6 million of the proposed budget directed towards stations and auxiliary buildings. A further $5.25 million is allotted for vehicles and equipment. The budget states MFES plans to focus on decreasing emergency response times by investing in new fire station infrastructure, developing and executing a rigorous lifecycle replacement plan for fire fleet and equipment and investing in the training of emergency services staff.
The department has been taking strides to improve response times, which sit well below the established national standard of 240 seconds 90 percent of the time. MFES met the travel time target an estimated 45 percent in 2023, a decrease from 47 percent in 2022 and 50 percent in 2021. The 2024 plan is estimating the department will meet the travel time 47 percent of the time.
To address the City’s highly criticized response times, MFES previously committed to building six fire stations over a 12-year horizon as part of Mississauga’s 2019 Fire Master Plan. For a city its size, and to meet national safety standards for fire-response times, Mississauga should have about 44 stations. It currently has 21 and staff have acknowledged there are 17 that require renovation, 13 of which were built more than 30 years ago. As part of the 2024 budget, staff are proposing five new initiatives, which include 20 new full-time employees to staff Station 125, anticipated to be completed in 2024, three new staff for the department’s fire inspection program (an ongoing multi-year initiative), and a division chief.
Station 125, located at Tenth Line and Aquitaine Avenue, is scheduled to open in 2024 and will put the City’s fire station count at 22. The department’s 10-year capital program includes the design and construction of six new fire stations, three of which were included as part of the City’s 2023 budget, and the land purchases for two of them — stations 127, located at Lorne Park and 128, located in the North Lakeview area.
Other major spending as part of the 2024 proposed budget includes $33.7 million for stormwater infrastructure and a $104 million investment in local roads.
As budget discussions swiftly approach and with new pressures like the City’s split from the Region of Peel and the PC government’s daunting Bill 23 looming, it's unclear how City Council will manage the 2024 budget. Each of these factors must be considered as Mississauga staff and elected officials make difficult decisions while prioritizing spending for the year ahead.
The City’s budget deliberations are scheduled for November 27 to 29, with final budget approval anticipated for no later than January 2.
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