Report to: General Committee                                Date Report Authored: November 12, 2009

 

 

SUBJECT:                          Provincial Offences Act Courts Amended Intermunicipal Agreement

PREPARED BY:               Barb Cribbett, extension 4735

 

 

 

RECOMMENDATION:

1)                  THAT the report “Provincial Offences Act Courts Amended Intermunicipal Agreement” be received:

 

2)                  AND THAT the Council adopt Option #2 as the Town of Markham’s preferred approach to the funding distribution contained within the new  “York Region Courts Intermunicipal Agreement “:

 

3)                  AND THAT a separate Service Level Agreement for Court Services between the Region of York and the Town of Markham be developed:

 

4)                  AND THAT a new York Region Courts Intermunicipal Agreement be developed and executed, reflecting the Option #2 funding distribution  and achieving a more accountable and sustainable governance model:

 

5)                  And that Staff be authorized and directed to do all things necessary to give effect to this resolution.

 

EXECUTIVE SUMMARY:

N/A

 

PURPOSE:

The purpose of this report is to update Council on the recommendations contained within the report to the Region of York Finance and Administration Committee regarding “Provincial Offences Act Courts Amended Intermunicipal Agreement” and the resulting impact and implication to the Town of Markham 

 

BACKGROUND:

 

In 1998, the Province of Ontario enacted legislation to reduce duplication and streamline the administration of the provincial offences act courts.  Through agreements between the Attorney General and municipalities the government transferred to the municipality’s responsibility for court administration, court support functions, the conduct of routine prosecutions and collection and enforcement of fines.  In return the municipality retains a portion of the revenues generated.  York Region agreed to administer Court Services on behalf of all of the municipalities.

 

Three agreements provided the framework for the transfer, governance, service and financial arrangements.

1.      The Memorandum of Understanding with the province transferring Court Administration to all the municipal partners to ensure that the Court is adequately maintained.

2.      The Local Side Agreement that deals with matters that is specific to this judicial district.

3.      The Intermunicipal Agreement provides that the Region will administer the daily operation of the Court on behalf of the ten municipalities in York Region and form a Joint Board of Management to oversee their responsibilities under the Program.  Under that Agreement all expenses are borne by the Region, the Region retains revenue from tickets issued by York Regional Police.  Any excess above costs from this revenue source is retained by the Region.  Area Municipalities keep their respective fines revenue generated by by-law enforcement and share in OPP tickets and all other revenue proportionate to their respective annual Regional Tax levy.  Currently a Stakeholder Group has replaced the Joint Board of Management

 

In December 2004 at the Area Municipal CAO’s Meeting it was agreed that a review of the court services system be conducted.  The Review focused on five key areas including the financial arrangements, the Intermunicipal agreement and the Ministry of Attorney General arrangement.  The final report was completed in January 2006 and contained key recommendations outlined on page 4 of the Region’s Report attached hereto. The two remaining areas to be addressed from the 2006 report are governance, and revenue sharing.  The November 5, 2009 report to the Region of York Finance and Administration Committee discusses these areas.

 

The recommendations set out in the November 5, 2009 report to Region of York Finance and Administration Committee are as follows:

 

It is recommended that:

1.      Subject to receiving the concurrence of all local municipal Councils, Regional Council authorize the Chair and Clerk to execute a new “York Region Courts Intermunicipal Agreement” reflecting the changes set out in this report.

 

2.      Upon the execution of the new Intermunicipal Agreement, funding distributed to the local municipalities be increased from $2.9M to $4.3M in 2010 conditionally upon:

a)      The Region retaining all revenues except those specifically resulting from local municipal prosecutions, and

b)      The increased amount ($4.3M) being transferred from the Regional to local portion of the property tax bill starting in 2011.

 

3.      Regional staff prepare and implement a communication plan outlining the property tax implications for 2011 in consultation with all of the local municipalities.

 

 

 

 

OPTIONS/ DISCUSSION:

The Report recommends that a new York Region Courts Intermunicipal Agreement be executed.  Upon execution of the agreement, the Region proposes to distribute revenues to the local municipalities in 2010 at an increased level (increased from $2.9M in 2009 to $4.3M in 2010).   It further recommends, starting in 2011, the revenue distribution to the local municipalities cease.

 

Eliminating revenue distribution to the local municipalities

The Report recommends that the distribution of revenue to local municipalities cease in 2011 save and except with respect to Building Code, Fire Code and municipal by-law fines which would continue to accrue to the Town. This would have the affect of reducing  local municipal revenues by $4.3M,  and increasing the Region of York’s net revenues by the same amount ($4.3M).     The reduction of revenues at the local municipal level will require an increase in the tax rate to generate replacement revenues, whereas in the Region’s case, the tax rate will be reduced, as the Region will be retaining the $4.3M in revenues. In principal, this methodology, known as exchanging tax room between the two municipal levels, has no effect on the taxpayer, as the associated tax rate increase at the local municipal level is offset by the same tax rate decrease at the Region’s level.

 

Explanation of Tax Room Methodology

As discussed above, a “tax room” methodology would require the Town to increase our tax rate in 2011 to compensate for the lost revenue, and the Region would decrease their tax rate to reflect the increased revenue.  In effect the Region gains “tax room”, while the Town of Markham (and the other 8 lower tier municipalities in York Region) lose “tax room”.

 

The following is a simple illustration of the proposed “tax room” methodology, based on 2009 tax rates, and assuming that both the Town and the Region approve zero percent tax increase for 2010:

 

Example Illustration of Tax Room

 

 

 

 

 

 

Assessed Value

$422,000

 

 

 

 

 

 

 

 

 

 

 

2009 Tax Rate

Tax Paid

2010 Tax Rate

Tax Paid

Increase (Decrease)

 

 

 

 

 

 

Town of Markham

0.256940%

$1,084.29

0.258996%

$1,092.96

$8.67

 

 

 

 

 

 

Region of York

0.500081%

$2,110.34

0.498025%

$2,101.67

-$8.67

 

 

 

 

 

 

Total

0.757021%

$3,194.63

0.757021%

$3,194.63

$0.00

 

 

The communication of this methodology to the public can be challenging.  The Region’s report suggests that the Town and Region would have to restate the prior year tax rate to be comparable. For example, using 2009 and 2010 years as an example, when the Town’s 2010 tax rate is published with the message that the tax rate increase is zero, the communication to the public would state that the Town’s 2009 tax rate of 0.256940% is restated to 0.258996%, thus reflecting the zero percent increase when compared to the 2010 tax rate of .258996%.

 

 

Options:

  1. Status Quo – Develop the Intermunicipal Agreement to reflect the current practice, with the local municipalities receiving their share of the gross revenues (Markham’s share of $816,000 until 2009, increasing to $1,208,801 in 2010)

 

  1. Agree with the Region’s proposed approach, receive the increase amount of $1,208,801 in 2010, discontinue the revenue sharing in 2011 and implement the “tax room” methodology.

 

As stated above, Option #2 is theoretically neutral to the tax payer, as the increase at the local municipal level is offset by the decrease at the Regional level.  Previous application of tax room methodology in York Region occurred for the transfer of transit costs from the York local municipal level to York Region in 2001, and the transfer of garbage disposal costs from the York local municipal level to York Region in 2003.  In both of these cases, the local municipal levels gained the tax room (reduced costs theoretically reducing the tax rate) and York Region lost the tax room (increased costs theoretically increasing the tax rate).

 

Staff recommend Option #2, which aligns with the Region of York recommendations.  The impact of Option #2 is theoretically neutral to the tax payers, and will allow the Region of York to budget and report the revenues and expenditures of this program on a more typical basis.

 

Service Level Agreement

Town of Markham Staff note that there has been improvement with prosecutorial communication, including staff relationships over the past number of years.  The majority of Markham’s cases are successful and fewer cases are withdrawn on the basis of “no reasonable prospect of conviction”.  Regional Prosecutors consult with Town Staff on those cases with serious implications for the Town, for the most part, the Town’s fine recommendations and/or plea arrangements.  Town staff continues to prosecute some of its own matters where the Region declines to do so.  Staff recommend that, as providing excellent service is an important consideration, a Service Level Agreement between the Town of Markham and the Region of York be developed to ensure that these improvements continue.

 

 

 

FINANCIAL CONSIDERATIONS AND TEMPLATE: (external link)

Refer to the Options and Discussion section of this report.

 

 

HUMAN RESOURCES CONSIDERATIONS

Not applicable

 

 

ALIGNMENT WITH STRATEGIC PRIORITIES:

Not applicable

 

 

BUSINESS UNITS CONSULTED AND AFFECTED:

Discussions have involved staff from Clerks Department and Legal Services.

 

 

 

 

RECOMMENDED

                            BY:    ________________________          ________________________

                                      Barb Cribbett                                     John Livey

                                      Treasurer                                            Chief Administrative Officer

                                                                                               

 

 

ATTACHMENTS:

York Region Report of the Finance and Administration Committee entitled “Provincial Offences Act Courts Amended Intermunicipal Agreement”