New Report Breaks Down Costs Associated With Dissolving the Region of Peel

 

Brampton and Caledon have said no to leaving or dissolving the Region of Peel, but Mississauga says it's time for Peel's biggest city—which boasts a population of over 700,000 people—to strike out on its own.

And now, a new report suggests Mississauga residents would enjoy some savings if the province allows it to proceed with a "MissExit."

Earlier this year, the Region of Peel commissioned an independent financial analysis on the fiscal impact of potentially dissolving or carving up the region. The push for the report emerged after a Deloitte report—which the City of Mississauga disputed—suggested it would cost billions for Mississauga to exit Peel.

The new report, conducted by Ernst & Young (EY), was released around the same time that Brampton city council officially voted to keep the region intact.  

In a statement, Mississauga Mayor Bonnie Crombie said that the report vindicates the city and makes a commendable case for separation.

"The newly released independent financial analysis conducted by Ernst & Young (EY) confirms what Mississauga has known for 45 years: our taxpayers have not been getting a fair deal and have been carrying the financial burden at the Region of Peel for far too long," Crombie said.

"EY confirms that if Mississauga were to separate from the Region, Mississauga taxpayers would see $84 million in savings. This report proves Mississauga's long-held position that our C=city would be better off, both financially and from a governance perspective, should we become independent."

EY's analysis, which was was conducted between April 26, 2019, and May 21, 2019, was governed by a steering committee that included each chief administrative officer of the four relevant municipalities (Brampton, Caledon, Mississauga, Peel Region) and their CFOs as advisory board members.

According to the report, approximately 10 steering committee meetings were held, and interviews with approximately 100 municipal officials were conducted. EY says over 1,500 calculations of financial impact have been completed.

The analysis looks at the financial impact of potential changes to service delivery models under three scenarios: Keeping the Region of Peel as is, amalgamation and dissolution.

The report looks at the municipal service level (e.g., roads, transportation, public works, police, water and wastewater, etc.), and at the consolidated level for each municipality.

In the report, assumptions about the potential impact of amalgamating or dissolving the region are presented in comparison to maintaining the status quo, focusing on the impact to the net cost of service (NCOS), capital allocation, and debt allocation over a forecast period to 2028.

Judging from the report, it would be costly to make the Region of Peel into a megacity.

The analysis indicates that on a consolidated basis over the forecast period, the total cost of amalgamation ranges from an increase of $13 million to $576 million (2018 dollars), or 0.0 per cent to 2.2 per cent of total status quo NCOS.

On an annualized basis, amalgamation cost ranges from a decrease of $11 million to an increase of $49 million, or -0.4 per cent to 1.8 per cent.

As for how much it would cost to break the region up, the report finds the total cost of dissolution on a consolidated basis over the forecast period is modelled in the range $16 million to $655 million, or 0.1 per cent to 2.5 per cent.

On an annualized basis, dissolution cost is in the range of a decrease of $6 million to an increase of $61 million, or -0.2 per cent to 2.2 per cent.

The report says a key driver of dissolution costs is the way Peel Regional Police would be dissolved. Residents can expect a range of a decrease of $1 million to an increase of $52 million (annualized 2022 in 2018 dollars).

Should Mississauga leave the region, the cities could see tax burden relief.

"The dissolution scenario has differential local tax impacts that result in a potential shift in tax burden as Regional services are transferred. A key driver in this is the Peel Regional Police dissolution model. On an annualized basis at 2022, the calculated shift for Brampton ranges up to $45 million; calculated shift for Caledon is as low as $53 million savings; calculated shift for Mississauga ranges as high as $84 million," the report reads.

Should the region dissolve, Brampton would gain $7.4 billion in capital assets and $749 million in debt. Caledon would gain $2 billion in capital assets and $71 million in debt.

Mississauga would gain $8.8 billion in capital assets and $1.1 billion in debt.

But while Brampton city council only voted to maintain the status quo last night, Brampton Mayor Patrick Brown has been critical of Mississauga’s exit proposal from the get-go, even going so far as to suggest that Mississauga would owe Brampton equalization payments in the event of a split. 

Last night (May 21), Brown insisted that the current model is working.

We did our homework, which makes this decision all the more easy. Regional government works best; it takes the financial pressure off of homeowners. The region has merits when it comes to the numbers (from two reputable agencies) and is rooted in facts. The wisdom they had when creating the region in 1974 still has merits and is still what is best today for taxpayers,” Mayor Patrick Brown said during the meeting.

In her statement, Crombie said she's not surprised that Brampton and Caledon are resistant to change.

"It does not surprise me that the other municipalities in the Region want to maintain the status quo because they are benefitting at Mississauga's expense. As I've said before, taxpayer dollars should stay in Mississauga, and we should have full control over all decisions related to the future of our city."

Crombie added that separation isn't exclusively about finances, but also about identity.

"Numbers aside, Mississauga has a unique identity and our own priorities that simply cannot be advanced if we continue to be a part of the Region. From our perspective, there is only one logical outcome for the third largest City in Ontario and the sixth in Canada: allow Mississauga to become an independent city and govern our own affairs."

The analysis says that should the province agree to alter the region as part of its plan to evaluate the efficiencies of regional governments across Ontario (it's currently examining regional governments in Peel, Durham, York, Halton, Niagara, Waterloo, Muskoka District and Simcoe Country), further work would need to be conducted.

"Change in overall governance structure would necessitate specific strategies and approaches to manage any transition; current and future municipal officials would need to make important policy and administrative choices in response," the report reads.

"The analysis indicates the key areas of potential impact, identifies further work that would need to be conducted and presents a financial model to help municipal managers analyze the impact of specific recommendations made by the Regional Government Review and any subsequent decisions taken by the government of Ontario."

Crombie believes the additional work will be worth it.

"This is the first comprehensive and indisputable analysis conducted on governance in the Region of Peel and helps answer many of the questions asked by residents and council over the last few months," Crombie wrote.

"I am thankful to our team of staff who worked around the clock on this project for the last four weeks. The consultation period has formally closed, and the province now has all the data they need to make an informed decision. Whatever the future may hold for our city, I will work closely with council and staff to ensure that the interests of our residents are protected as we work together to move Mississauga forward."

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