Sections of the Local Governance Act: 99-105
Part 9 sets out the powers and limitations a local government has with respect to financial matters.
Provisions in the Municipalities Act dealing with financial matters have been re-organized and reworded in the Local Governance Act. Other than the new provisions relating to economic development and annual reporting, substantial changes were not undertaken in this part.
The areas covered in Part 9 include:
- Fiscal year and budgets of local governments
- Borrowing powers
- Operating and capital reserve funds
- Grants for social or environmental purposes
- Adjustments for payments made under Payments in Lieu of Taxes Act (Canada)
- Economic development
- Annual report
New Provisions and Intent:
Fiscal year and budgets of local governments
Under the new Act, the Minister may fix a local tax rate for any local government that fails to submit their budget within the time prescribed by regulation. This new authority is intended to be a safeguard when a council refuses to fix a local tax rate, or is unable to as a result of a loss of quorum.
The Municipalities Act allowed local governments to borrow for their current operations up to 4% of their operating budget or $5,000, whichever was greater. In the Local Governance Act, the $5,000 has been increased to $15,000.
Grants for Social and Environmental Purposes
The conditions and limitations in the Local Governance Act for social and environmental purposes are similar to the provisions in the former Municipalities Act.
The authority of a local government to provide grants has, however, been expanded to include grants for encouraging economic development, which is addressed in a separate section.
The new Act gives local governments the authority to establish by-laws respecting economic development, to the extent that the activity expands or maintains the local tax base. This can include:
- selling land at a price below market value;
- providing grants, or
- entering into agreements with other local governments, the Province, an individual or corporation, or a regional service commission.
While local governments are being granted this new authority, the Act does contain limitations. Specifically, a local government may not acquire or hold securities; provide loans or guarantees; or borrow money for the purpose of encouraging economic development. Furthermore, a local government cannot make a grant for economic development purposes that directly reduces or reimburses the taxes or utility charges paid or payable to the local government by the recipient of the grant.
Local governments will now be required to prepare an annual report for the public. The details of the information required and the timeline for publication will be outlined in a new regulation and will include information on grants, economic development activities, and service provision. This new requirement extends to local government corporations. There is no requirement for local governments to submit their annual report to the Province. However, annual reports will need to be posted on a local government’s website and be available for examination by the public during regular working hours at the office of the clerk. Please note that financial reporting requirements to the Province remain the same.