Peel, Regional Municipality of

Geneviève Lavallée, CFA/Walter Schroeder, CFA

(416) 593-5577 x277

The Regional Municipality of Peel's ("the Region") rating on long-term debt is confirmed at "AAA", with a Stable trend. The Region continued to post strong fiscal results in 1998, and preliminary estimates suggest that the 1999 results will be equally strong.

The Region posted a $390 million operating surplus in 1998, and a $166 million surplus including capital expenditures. The level of accumulated funds (namely, reserves and reserve funds) continued to grow in 1998 to $1.4 billion, providing the Region with significant financial flexibility. The Region sets its development charges and annual contributions to reserves to ensure that sufficient funds have been set aside to meet future operating and capital expenditures.

Net tax-supported debt fell further in 1998 to $14 million, and it is expected to remain on a downward trend. Barring any changes in policy, the Region's gross tax-supported debt could be essentially eliminated within the next five years.

The outlook for the medium term remains favourable based on the Region's track record, good financial management, the continued robust economic and the transfer of ownership of the municipal electric utilities to the area municipalities, which provides them with a new source of revenue to fund future expenditure requirements.

While the Region has strong economic fundamentals and the strongest financial profile of all the major Canadian municipalities, it will continue to face some challenges. The Region will have to continue to deal with the pooling of social assistance and social housing expenditures in the Greater Toronto Area (GTA). GTA pooling is a provincial initiative whereby taxpayers outside the City of Toronto, but within the GTA, must contribute to the welfare and social housing costs of the City of Toronto. Although the impact on the Region's finances has been minimal to date, GTA pooling introduces uncertainty to the Region's fiscal forecast, as it has no control over this expenditure. Furthermore, it distorts the incentive to provide the services in the most cost-effective manner, as the City of Toronto is not accountable to the taxpayers in the other GTA municipalities. Other challenges include the ongoing management of expenditure pressures related to continued population growth and dealing with the implications of changes to the Development Charges Act.