Local government | November 4, 2021
Today in the Fall Economic Statement, the Government of Ontario announced plans to temporarily remove the existing cap on airport payments in lieu of taxes (PILTs) – a welcomed change for the City of Mississauga.
The Greater Toronto Airports Authority (GTAA) has paid the City of Mississauga a PILT since 2001 based on a per passenger rate, capped at five per cent growth per year, with a two-year lag on payments. Under the current PILT formula, the City of Mississauga is facing a potential $529 million loss over the next 35 years.
“This change is long overdue,” said Mayor Bonnie Crombie. “Thank you to the Government of Ontario and for the support from our local Mississauga MPPs for removing the five per cent cap. We are pleased to have been heard and to have action taken on this matter. Today’s change means the City and the airport can recover from this pandemic at the same time. The City will continue to support the GTAA’s call for assistance from the federal government, and we maintain that City property tax payers should not have to bail out a federally regulated business.”
The PILT formula has been in place since 2001. The GTAA is the City’s largest landowner who pays PILTs every year, based on a pay per passenger fee instead of property taxes. The five per cent cap has meant the revenue paid to the City of Mississauga has not kept pace with the growth of the airport.
“The potential losses to the City with the current formula could be catastrophic. As passenger volumes recover by double or triple-digit percentages, the City would be stuck at five per cent and could not recover until 2056,” said Paul Mitcham, City Manager and Chief Administrative Officer. “Thanks to the Government of Ontario, today’s decision will significantly limit the impact of PILT losses and avoid hundreds of millions in potential financial losses over the next 35 years. While the City will share in the financial pain of the GTAA’s drastically reduced passenger volumes in 2020 and 2021, Mississauga taxpayers will no longer be penalized for the next 30 years.”
Under provincial law, municipalities like Mississauga cannot plan for a deficit. With limited revenue tools, the City must use several tools including cost reductions, reserves and Safe Restart funding from the provincial and federal governments to close the gap.
“The City is anticipating a deficit of $50 million for 2022, driven in large part by the $21 million loss from the GTAA PILT,” said Shari Lichterman, Commissioner, Corporate Service and Chief Financial Officer. “We are thankful for the $136.4 million allocated to the City under the Safe Restart Agreement Program and $20.3 million under the COVID-19 Recovery Funding for Municipalities Program, which are being utilized to offset COVID-19 related losses. Changes to the PILT formula will help us recover from the pandemic more quickly.”
The City will continue to work with the GTAA on several shared priorities, including building transit, economic development and job creation. The City will also continue its advocacy to the federal government that more support is provided to the GTAA to ensure they fully recover from the COVID-19 pandemic.