Teachable Moments

Teachable Moments is intended to highlight issues that municipal finance personnel should be aware of but may have slipped off your radar. Or perhaps you are newer to the sector and simply haven't gotten that far in your learning curve. With each monthly newsletter, there will be a brief commentary on a random topic, including links to more detailed information and/or training opportunities should you wish to pursue more in-depth learning or research on that particular topic.

Happy learning!

1612/4/2023 12:00:00 AMMPAC makes two important updates affecting farm properties for the 2024 tax year Farm Property Class Tax Rate Program

MPAC is responsible for maintaining the tax classification on properties that qualify for tax incentive programs including the Farm Property Class Tax Rate Program. Program eligibility is determined by Agricorp who provides MPAC with an inventory of qualifying properties for year-end. MPAC has processed the property approvals for inclusion in the farm tax class for the 2023 Assessment Roll for the 2024 taxation year but has paused the majority of property removals from the farm tax class until the revised inventory is received after roll close. The removals will be processed with the appropriate tax class updates through supplementary assessments issued in May 2024.

This is an improvement to MPAC's former practice of removing properties from the farm tax class based on the year-end inventory in advance of the Assessment Roll, only to reverse that change through a Tax Incentive Approval (TIA) once new information is provided through the revised inventory received after roll close.

Farm Forestry Exemption (FFE)

This year, MPAC implemented a legislative change to the FFE and included the eligible FFE amount as an exempt tax partition on the Property Assessment Notice. This exemption will also be included on the Assessment Roll delivered to municipalities for the 2024 tax year.

In March, MPAC began issuing Special Amended Property Assessment Notices (SANs) for properties eligible for the (FFE) legislative change (up to 10 additional acres included in FFE).

As we approach the end of the year, we are processing year-end updates on properties that have 20 or less eligible acres to apply for the new Unit Class of FF and Realty Tax Class of E. These properties will receive a Notice to show the FFE partition for the 2024 tax year.

The Notice reflects the value of the property plus the assessed value of the FFE applied to the property. Before this change, the assessed value for the FFE was deducted from the total assessment and not provided on the Notice. A FFE information sheet will be enclosed with Notices for the affected properties, further explaining the update to property owners.

With the inclusion of FFE values on the Assessment Roll for 2024 taxation, municipalities with FFE will generally experience an increase to their assessment base attributed to their Exempt property class. Municipalities can view these changes in Municipal Connect.

For additional information on how the FFE is calculated, please go to mpac.ca/FFE.
157/4/2023 12:00:00 AMWhy Do I Not See My Discount? - MFOA Member Benefits Follow these six easy steps to ensure you are receiving your municipality’s member discount

1) Do you know if your municipality is a member? If your municipality is a Member of the MFOA, then you as a staff member are also considered a Member. If you are not sure, please contact julie@mfoa.on.ca

2) While you are asking about your membership status, please be sure to request a login for our Website which enables you to register for events at a discount.

3) Always log into our website before registering for any event. This allows our system to identify you as a member and ensure that applicable discounts are applied.

4) After entering your registration information for a course and it is sitting in your cart, please take at look at the price before fully checking out. Members pay less! If you are uncertain about the price shown, please contact julie@mfoa.on.ca. You must fully complete your registration before moving onto registering others from your municipality. You must register and check out one person at a time to ensure applicable discounts are applied.

5) If you are registering someone else and notice that their name does not appear in the “select an existing contact” drop down menu, please stop for a moment and contact julie@mfoa.on.ca. Please send the person’s full name, title and email address and we will add them to the system and also email them a login. Once you have received the confirmation that they have been added to the system, you can proceed with the registration.

6) If you are interested in registering more than five people for an event, please contact julie@mfoa.on.ca. We would be happy to complete the registration on your behalf and ensure that your municipality receives the applicable multiple member discount.

146/5/2023 12:00:00 AMUnderstanding Surplus/ Deficit In a financial statement, the annual surplus/deficit shows whether the revenues generated were greater than the expenses incurred, including non-cash expenses such as amortization.
Surplus and deficit in a financial statement do not necessarily indicate performance.
For example: a surplus does not mean that a municipality has extra funds to spend. It could mean that a municipality that has funds reserved for future obligations such as paying retirement benefits.
A deficit could be the result of an unexpected emergency, or the reporting of amortization expense
When calculating the annual surplus/deficit,the costs of using capital assets over the lives of the assets is recognized — meaning a portion of the asset’s cost is charged as an amortization cost each year, until the asset is considered to be fully paid off.
133/3/2023 12:00:00 AMWhich Payments in Lieu are required to be shared? Are you unsure which payments in lieu are required to be shared with the school boards and/or upper tier, the province provides an informative table. The Financial Information Return instructions include several great resources. One such resource is the Distribution of PIL Tax Table 2022 (page 11-34)
122/6/2023 12:00:00 AMO. Reg 284/09 Reporting - Budget Impacts Are you aware that you must prepare a report for council as to potential budget impacts if you do not include items such as amortization expenses, post-employment benefit expenses and solid waste landfill closure and post-closure expenses? This requirement is set out in O.Reg. 284/09. A tip sheet to help guide you in the preparation of this annual report is available on our website.
111/9/2023 12:00:00 AMMake the Most of Your Intern/Student Relationships Typically, interns and students are hired to do a lot of the work that other staff don’t want to do. Regular staff are overloaded and rather than having the time, patience, or energy to actually train interns, more often than not interns get dumped with a load of work and learn by being thrown into things (however, sometimes that’s a great way to learn!) But don’t underestimate your interns! Although they may not have hands-on experience, they are often freshly informed of all the changes in legislation, education and most up-to-date best practices. They are the ones that can help you move forward rather than continuing to “do things the way they’ve always been done”. While the interns often are expected to be the ones being taught, the relationship should always be viewed in a reciprocal manner. As municipal staff, we can often learn just as much from our interns!
1012/5/2022 12:00:00 AMMPAC Property Assessment and Taxation Toolkithttps://www.mpac.ca/en/OurServices/SupportMunicipalities/PropertyAssessmentandTaxationToolkitTo better help property owners understand the relationship between property assessment and taxes, as well as the key roles different levels of government play, MPAC has developed a toolkit for municipalities to use. These resources include information and tools designed to help you educate property owners and answer any questions they might have.
911/8/2022 12:00:00 AMOPTA Training Videoshttps://opta.reamined.on.ca/OPTA provides a wide variety of training videos to help you navigate the tax options, tax planning functions and overall use of the website. A log-in to the OPTA website is required.
810/3/2022 12:00:00 AMOPTA Training Tools and Resources OPTA has several great resources for property tax professionals to help analyze and deliver tax planning information into the budget process. One such resource is the Knowledgebase. There are more options for your use further down the webpage. Happy tax planning!
79/6/2022 12:00:00 AMNew FIR Dashboards The Ministry of Municipal Affairs and Housing’s Financial Information Return website has introduced select dashboards. The tools allow for easy manipulation of data from schedules 10 (revenues), 40 (expenses), and 70 (statement of financial position). It allows filtering by region or municipality. The schedule 10 dashboard also permits filtering on different individual line items for trend analysis over the 2009-2021 period.
68/1/2022 12:00:00 AMReserves and Reserve Funds, Not Just Hoarding Cash As municipalities enter both a new budget and election cycle, a popular point of discussion is the purpose of reserves and reserve funds. Reserves and reserve funds are an important tool for a municipality’s long-term financial sustainability, but this can be challenging to communicate to both Councils and the public. To help municipal finance staff, MFOA has created an infographic to dispel some myths around reserves and reserve funds.
57/4/2022 12:00:00 AMLame Duck (Restrictions after Nomination Day and Voting Day ) As Nomination Day approaches, municipal staff must prepare for the possibility that the powers of council may be restricted as a result of Lame Duck Council. To prepare for this, a delegation of powers by council must be made before August 19. Ensure your report and bylaw is approved by council well in advance to reduce the impact of potential limited restrictions.

The legislation has not changed and it can be found in Section 275 of the Municipal Act. There are four restricted acts:
  1. The appointment or removal from office of any officer of the municipality;
  2. The hiring or dismissal of any employee of the municipality;
  3. The disposition of any real or personal property of the municipality, which has a value exceeding $50,000 at the time of disposal; and
  4. Making any expenditure or incurring any other liability which exceeds $50,000.
**Exceptions: The disposition of property and the disposition or liability exceeding $50,000 does not apply if these items were included in the budget adopted prior to nomination day.

Note: Section 275 (4.1) states that despite these restrictions, nothing prevents a municipality from acting in the event of an emergency.

What is a Lame Duck Council?
A council is considered Lame Duck if it will include less than three quarters of the members of the outgoing council. This could be determined after Nomination Day on August 19, 2022, or after Voting Day on October 24, 2022.

First time period: Nomination Day
  • If less than 75% of the incumbent council are running for re-election or acclaimed following Nomination Day
Second time period: Election Day to end of council term
  • If less than 75% of the old council are re-elected or acclaimed
The three quarter rule applies. Some examples: 39 Municipal Elections Basics For New Clerks 5 Member Council • ¾ of a 5- member council is 4 7 Member Council • ¾ of a 7- member council is 6 9 Member Council • ¾ of a 9- member council is 7
If your new council will have a different number of councillors than your old council, please refer to Section 275 (1) of the Municipal Act.

When does the period of a Lame Duck Council end?
The period of a Lame Duck Council ends when the term of a new council commences.
46/6/2022 12:00:00 AMAdjusting Your Budget Schedule in an Election Year Many municipalities begin their budget process in the fall. Some even pass their budgets prior to the Christmas break. As a reminder, the Municipal Act, 2001, clearly states that budgets for the year following an election must be passed in the year to which it pertains. Please see s.290(1.1) for details.
35/1/2022 12:00:00 AMFinancial Statement and Plain Language DO belong in the Same Sentence Municipal finance is a complex topic and Councils are often confused by financial statements. Check out this common language guide to help your Council understand your financial statements.
24/4/2022 12:00:00 AMPotential Budget Impacts Reporting Are you aware that you must prepare a report for council as to potential budget impacts if you do not include items such as amortization expenses, post-employment benefit expenses and solid waste landfill closure and post-closure expenses? This requirement is set out in O.Reg. 284/09. A tip sheet to help guide you in the preparation of this annual report is available on our website.
13/7/2022 12:00:00 AMHave You Got a Budget Surplus or Deficit? Did you know that ss.290(4) paragraphs b&c of the Municipal Act, 2001 requires municipalities to account for any cash or budget surplus or deficit in their next annual budget? This can often cause swings in tax levy requirements from one year to the next. Many municipalities include instructions to allocate a cash or budget surplus or deficit to one or more reserves in their reserve policies to avoid negative impacts to budgets.

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