• York Region’s 2026 Ontario budget submission outlines growing funding gaps related to provincially mandated service delivery.
  • The Region estimates a $77 million shortfall in 2025 across health and human services.
  • The submission also highlights funding uncertainty related to major infrastructure, transit, and community housing projects.
  • Legislative changes to development charges and a slowdown in housing construction have reduced revenues used to finance growth-related infrastructure.
  • The Region is calling for stable and increased provincial funding to meet growing service demands and reduce pressure on municipal property taxpayers.

 

York Region will again call on Queen’s Park to address the widening gap between provincially mandated service delivery and the funding provided to support it, saying municipal property taxpayers are increasingly being left to absorb related costs.

The Region’s consultation submission for Ontario’s 2026 budget process outlines a series of funding pressures driven by population growth, inflation, and legislative changes. It also reinforces advocacy aimed at bolstering health and community services, economic resilience, public safety, and housing delivery.

Under Ontario’s municipal framework, upper-tier municipalities like York Region are responsible for delivering a range of programs on the Province’s behalf. At the centre of the submission is an estimated $77 million shortfall in mandated human services funding in 2025.

Unlike provincial revenues, which grow alongside income and broader economic activity, municipal revenues rely heavily on property taxes. That funding tool does not automatically increase with service demand and has remained static through the Ontario government’s ongoing pause on property reassessments.

As provincial contributions fail to keep pace with growing needs, York Region warns that a larger share of mandated program costs is being shifted onto the municipal tax base. This constrains the Region’s ability to maintain service levels without additional levy increases.

Regional Staff argue that closing the funding gap is critical not only to protect vulnerable residents, but also to preserve broader economic stability by reducing homelessness, supporting aging populations, and maintaining strong emergency and public health systems.

Endorsed by Regional Council during their Jan. 15 Committee of the Whole meeting, the submission calls for a multi-year funding formula that fully covers the operating costs of municipal long-term care homes. For 2025, the Region estimates a $27.1 million gap between provincial funding and actual costs, requiring tax levy dollars to meet mandated standards.

While the Ontario government has committed to a 75-25 cost-sharing model for public health services, 2025 saw a $20.7 million shortfall in the provincial portion. Homelessness programs also face challenges, including a $24.5 million shortfall, and stable, long-term funding for paramedic emergency services beyond 2026 is being requested. According to the submission, the Region faced a $4.6 million shortfall in the Province’s share of paramedic costs last year.

Beyond operating pressures, the submission highlights the scale of infrastructure investment required to support additional housing and meet provincial targets. Of the Region’s $14 billion, 10-year capital plan, $3.3 billion is dedicated to growth-related water and wastewater infrastructure.

A major focus is the North York Durham Sewage System expansion. While the Province contributed nearly $140 million toward the project’s initial phase, an additional $1.9 billion is required to complete all three phases. Roughly $1.4 billion of that cost is due within the next ten years.

Staff caution that relying on development charges and developer-financed infrastructure carries increasing risk, particularly following legislative changes that reduced or exempted certain charges. Those risks are compounded by Ontario’s slowed housing market: fewer housing starts mean fewer development charges collected, reducing the Region’s ability to fund growth-related infrastructure as the Province pushes municipalities to accelerate housing delivery.

To help fill the gap, the submission calls on the Province to ensure municipalities are made financially whole following changes to the Development Charges Act and Ontario’s Bill 23 and Bill 17. In total, York Region estimates $265 million in resulting capital funding losses over the next decade. The Region is also urging the Province to allow it to apply for unallocated infrastructure funding under the Building Faster Fund, which is estimated at $390 million from 2023–2024.

Community housing features prominently, as well. With a subsidized housing waitlist of over 18,000 households in 2024, the Region’s capital plan includes funding for the construction of approximately 580 new community housing units and pre-construction work for another 765 units. However, funding gaps have forced the Region to rely temporarily on internal reserves for some projects, while others remain unfunded.

An estimated $216 million in provincial funding is required to cover the typical one-third cost share among federal, provincial, and municipal governments to deliver approximately 1,345 new community housing units over the next decade. Without financial commitments from senior governments, Staff warn the projects cannot proceed.

On transit, York Region is advancing Bus Rapid Transit projects along Jane Street in Vaughan and Highway 7 East in Markham, corridors expected to serve more than 271,000 residents and 59,000 jobs. While planning and design has been funded through the Region’s capital plan, $1.6 billion in construction costs remain unfunded.

The submission also urges the Province to make the One Fare Program permanent across participating GTA transit agencies, citing improved affordability and regional mobility. Additional requests include indexing Ontario Works rates to inflation and resuming Ontario’s property assessment cycle to ensure property taxes reflect current market conditions.

The complete submission can be viewed online and will be tabled for final approval during Regional Council’s Jan. 29 meeting.