For many, the Farm Tax Rebate program is a long lost relic that was put out of its misery by the Mike Harris government in 1997.

For finance officials at Grey County, the end of the rebate program a decade ago meant a loss of millions of dollars in tax revenue that other ratepayers have had to make up.

For several years, Grey County has been lobbying the provincial government to recognize an inequality that was created when the Farm Tax Rebate program came to an end. The inequality in question, county officials say, has cost ratepayers in every municipality millions of dollars in lost tax revenue.

Prior to the Common Sense Revolution, farm properties paid their taxes at the same rate as regular residential taxpayers. The province then issued each farm property - that applied - a tax rebate cheque for three quarters of the taxes they paid.

In the late 1990s the Harris government decided that the time had come to change the program. In order to save money the provincial government decided it would no longer cut rebate cheques to every single farm property owner in Ontario.

Instead, starting in 1998, farmlands would be taxed at one quarter the rate of regular residential properties. Farmers would no longer receive a rebate. From that point on the rebate was issued at the beginning of the process.

The province compensated municipalities with high concentrations of farmland that were going to potentially lose millions in tax revenue they would no longer be collecting through the Community Re-investment Fund.

At the same time as the farm rebate program was ending the provincial government and municipalities were engaged in the massive Who Does What transfer of services. This process has become known over the years as: downloading. Under that exchange the province traded a number of services in exchange for funding half of the cost of education in Ontario.

The switch was meant to be "revenue neutral" for property taxpayers. If the costs of the services sent down by the province to municipal governments exceeded the property tax space opened up by the government taking over half of the funding for education then those municipalities would be compensated through the Community Re-investment Fund (CRF). The CRF funding included money lost in the Farm Tax Rebate change.

In this scenario there was one problem. To access the Farm Tax Rebate program, a farm property owner had to apply to receive a cheque. Not all farm property owners applied. Ending the program and forcing municipalities to tax farm properties at 25 per cent of the regular tax rate affected the cash flow of many municipalities.

A decade later the impact is finally being realized.

"All kinds of farmers would pay property tax to us (the municipalities), but wouldn't have applied for the rebate," Grey County CAO Gary Wood explained during a recent interview. "Under the new method, everybody received the rebate up front. We don't think we've been adequately compensated for our loss," said Wood.

Grey County council recently passed a resolution to begin publicly lobbying the province to recognize the inequality in the system and develop a plan to deal with it. The issue is quite complex and involves pouring over more than a decade worth of property tax numbers, ratios and percentages.

Wood said the problem was compounded a few years ago when the province announced it was replacing the CRF with the Ontario Municipal Partnership Fund (OMPF). Every municipality will receive OMPF money - not just those that experienced a negative cash flow from the downloading exercise. Wood said this has led to a further splintering of a limited cash supply.

"The province said (OMPF) is much fairer. Some municipalities that weren't receiving a CRF grant will now receive money from OMPF," said Wood. "But, if those municipalities had lots of vacated education tax room they many not have needed a CRF grant," he said.

The County CAO said the province justified replacing CRF with OMPF saying nobody understood how CRF worked. Wood noted that CRF technical manuals were available to anybody willing to read them and they clearly outlined how the system worked.

For Grey County, the OMPF proposal was a disaster. In almost all cases, the county's share of the services it assumed in downloading cost below the provincial average - with the exception of social services. As a result, OMPF forecasted that Grey needed less money.

"We have said this isn't a fair deal. It's quite good for the administration part of the process for the farmer and the province - the province now only has a couple hundred municipalities to deal with as compared to a few thousand farmers that applied and had cheques issued," Wood said.

The County CAO presented numbers that show clearly that every single municipality in Grey County lost revenue after the Farm Tax Rebate program ended. Even the City of Owen Sound lost funding. The numbers show a combined $3.7-million loss for all the municipalities in Grey County.

The county's portion is approximately $1.6 million - four per cent of the total tax levy.

"We're saying, 'hold on, province.' The Farm Tax Rebate should be isolated and should only involve those municipalities that are impacted. The Farm Tax should be paid back to the municipalities affected by the administrative changes," he said.

Wood says provincial officials have constantly argued that the province pays out as much in compensation to municipalities for the Farm Tax Rebate program as it did to farmers when it issued cheques to them directly.

Wood says that's true, but that the key point in the debate is being missed.

Not all farmers received the rebate when the program required them to apply for the funds. With the rebate being shifted to the beginning of the process - it now is applied to 100 per cent of farm properties across Ontario.

"The last thing I want anyone to think is that we want our farmers to pay more. That's not the case. We have no qualms about how the system is set up. We're saying to the province: we feel you should help us out," said Wood. "We're trying to get some kind of fair deal for the farm tax discount," he said.

Thus far, Grey County has taken the lead on the issue. It has held several meetings with provincial finance officials and has begun lobbying members of the government. The county has received support from other areas of the province in its quest for fairness. A lot of the effort has been concentrated on showing provincial officials that the previous rebate system was not applied to farm properties 100 per cent like the new system.

"That's where a lot of the confusion comes into play. The province is saying they still pay out what was paid out in rebates, but that's not the same amount as what the rural municipalities were collecting," said Grey County Warden Kevin Eccles.

"They ask: where did the money go? Some properties just fell through the cracks. Some farm property owners rented their land to farmers. Or people in large urban areas owned them as weekend places. It's quite an administrative nightmare to get through. Before we collected 100 per cent of the taxes and the farmers received a rebate. Now we collect 25 per cent," said Eccles.

Warden Eccles said provincial officials the county met with at the recent Good Roads/ROMA conference in Toronto were sympathetic to Grey's argument.

"By the end of June, we should have some idea as to whether or not this will be a successful venture. We'll continue to press the case," said Eccles.

"Grey County has been the flag-bearer on this and we're lucky to have someone like Gary Wood working on this for us," he said.