Some of Ontario’s largest cities say that while new federal investments in housing and infrastructure are helpful, it’s still not enough to prevent another round of property tax hikes in 2026.
With budget planning underway across the province, local leaders are warning that years of added costs, inflation and population growth are leaving municipalities with few options to balance their books without raising taxes.
Ontario’s Big City Mayors (OBCM), which represents 29 municipalities of 100,000 people or more, said members are facing continued pressures of homelessness, infrastructure costs and social services.
“We have tons of aging infrastructure, especially in rural communities. One area had to close down their roads because they couldn’t maintain things,” said Michelle Baker, OBCM executive director.
“These issues continue to get worse, despite some welcome investments from federal and provincial governments.”
Story continues below advertisement
Municipalities are legally required to balance their budgets, unlike federal or provincial governments, Baker added.
“Mayors want to lower property taxes, but there’s just not enough resources…. We understand the frustrations of our residents, and we often share those frustrations,” Baker said.
“Municipalities cannot run deficits and need to ensure sufficient funds to deliver the services residents depend on … which is why we’ve asked for a review of the municipal funding structure.”
1:50
Toronto begins public consultations ahead of busy budget season
A recent analysis by the Association of Municipalities of Ontario (AMO) found municipalities outspend the province by nearly $4 billion a year on services that used to be provincial or federal responsibilities.
These include areas such as social housing, public health and child care. Over the past five years, property taxpayers have seen a 200 per cent increase in costs to support homelessness services, AMO reported.
Story continues below advertisement
Last year, the federal government’s budget allocated billions for housing and infrastructure, including $25 billion over five years to “make housing more attainable” and $115 billion for public and regional infrastructure.
Get daily National news
Get the day’s top news, political, economic, and current affairs headlines, delivered to your inbox once a day.
In a statement, OBCM chair and Burlington Mayor Marianne Meed Ward said that while the commitments were a step in the right direction, they didn’t go far enough.
“We remain deeply concerned that this budget does not allocate sufficient funding to address the escalating crises of homelessness, mental health and addictions,” she said.
“These challenges continue to grow in our municipalities and demand urgent, sustained investment from both levels of government.”
Baker said that programs like the Housing Accelerator Fund and Canada Community Building Fund remain vital but are often tied up in long application processes.
“Because we have to apply for programs and funding, it takes time,” Baker said.
“Every time the federal government makes changes, we have to pull staff and resources. It’s never a preference to raise property taxes.”
1:45
Business group finds property taxes far outpacing population growth
In London, Mayor Josh Morgan tabled a 2026 budget that cuts the city’s expected tax hike to almost half to 3.6 per cent from 6.4 per cent down, but warned that the pressures remain.
Story continues below advertisement
“I’ve been lucky enough to have some offsets, but I think every municipality is facing similar upward pressures,” Morgan told Global News.
He said that despite local cost-cutting efforts, “decisions of provincial and federal governments can significantly drive whether property taxes go up or down.”
Trending Now
-
Bad week for the Conservatives puts Pierre Poilievre on the defensive
-
Intercepted communications link Indian government to B.C. Sikh leader’s assassination
“It’s basically baked into the structure of municipal governments, which I believe is an outdated structure of financing municipalities,” he added.
“It’s 150 years old and doesn’t work for building modern, fast-growing cities.”
More on Money
More videos
London’s deputy city manager of finance, Anna Lisa Barbon, said the city continues to face “pressures for investments to support housing, homelessness and building and maintaining infrastructure.”
While the pressures remain high, some mayors are still pushing for a lower rate.
In Windsor, Mayor Drew Dilkens said he plans to table a budget that provides “a pathway to a zero per cent increase in 2026,” while acknowledging the broader uncertainty facing his border city.
“The threat posed by Donald Trump on communities like Windsor is taking a toll in terms of job losses and fear in our community due to uncertainty,” Dilkens said in a statement.
“As we navigate these choppy waters together, the City will do its part to support residents at this challenging time.”
Story continues below advertisement
1:44
Toronto launches tax deferral program in response to tariffs
Markham is forecasting a 3.9 per cent increase, or around $54.99 per taxpayer, under Mayor Frank Scarpitti, who tabled the Markham Racing Forward: Budget 2026 in October.
He added that one way his city is tackling the ongoing pressures is by investing $680 million across more than 1,000 capital projects to build the infrastructure the growing city needs.
Municipal leaders say property taxes, which account for roughly 40 per cent of city revenues, were never designed to fund the growing list of responsibilities cities now carry.
“When there are additional obligations that aren’t being met by other levels of government … the only place we can go for the money is property taxes and user fees,” Morgan said.
“We have no other revenue tools.”
Story continues below advertisement
Municipalities own 57 per cent of Canada’s public infrastructure, but receive less than 10 cents of every tax dollar collected across all levels of government.
“Municipalities cannot continue to fund these programs and services on the property tax base that was not designed to do so,” an OBCM spokesperson told Global News.
“We need the provincial and federal governments to step up and take action.”
