Hospitals could face higher municipal taxes

Ontario municipalities may have a legitimate beef with the way hospitals pay taxes, but the timing couldn’t be worse.

All levels of government appear to be scrambling to make ends meet without having to pass increased costs on to citizens in the form of taxes. The results are one cash-strapped level of government going after another cash-strapped level of government.

Instead of paying municipal property taxes, universities, colleges, hospitals and detention centres pay something called a Heads and Beds payment.

The Heads and Beds rate has not changed since 1987 – a flat rate of $75 per head/bed.

Municipalities argue that had the tax kept pace with inflation, municipalities would be receiving $135 per head/bed instead.

A recent court ruling may have provided a means to achieve a fairer arrangement. A recent Supreme Court decision ruled in favour of the Halifax Regional Municipality, noting the Federal government was unfairly paying a nominal fee of $10 in taxes for the 42-acres it occupied in the center of that Nova Scotia city.

The Court ruled the government must pay fair value like any other entity.

This may open the door to municipalities to seek a greater contribution from universities, colleges, hospitals and detention centres just when the province is starving them of funding.

Hospitals this year face a freeze in their base funding. Further, some hospitals may actually see a drop in revenues from the province upon the implementation of a new funding formula. Without additional provincial support, the municipalities may end up digging these institutions further into deficit.