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The bulletin is prepared by John Sewell, the site manager, with the assistance and under the guidance of the advisory committee. It is published monthly, and is being sent to a wide range of people across Canada. Past copies of the bulletin will be archived in this section of the site.

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Bulletin No. 55, March 2005
Local Government Bulletin No.55, March 2005

The purpose of this bulletin is to focus debate on the need to increase local self-government in Canada and to help local communities achieve more autonomy. The local self-government website is: http://www.localgovernment.ca

In this bulletin:
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1. Securing Local Democracy in the big city
2. Provincial status for cities?
3. More ideas on revenue sources for big cities
4. Subscribe to the Bulletin
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1. Securing Local Democracy in the big city

The last two Local Government bulletins have outlined an approach that would provide big cities with suitable legislative power and sources of revenues. This bulletin completes the picture by offering further details that must be considered in securing local democracy. .

A significant problem for a large city is establishing boundaries. Few municipalities occupy an entire urban area. Most urban areas are compromised of many municipalities. There are only two reasonable responses to this problem. One is to create one big city encompassing all urban municipalities. This seems only possible through unilateral provincial action, and has been done in Ontario, Quebec and Nova Scotia, although more to disempower cities than to make them stronger.

The other response is to create a regional framework for municipalities in the urban area. This might entail formally linking municipalities together in a two-tiered arrangement, or it could be by way of a consensual agreement such as with the Greater Vancouver District Council. Presumably other arrangements could be devised to meet particular circumstances, as in Montreal, where local governments have the ability to opt out of some parts of a larger municipal government framework. There is every reason to expect that these alliances will be both innovative and responsive.

But one of these two courses of action must be taken to permit the big city to consider levying sale or income tax, and to do the kinds of large scale planning that is needed to keep the city strong and to provide a context within which neighbourhoods can be strong. A big city can’t levy sales tax if that tax does not apply to the whole of the urban community, nor could it levy an income tax unless everyone was subject to it – otherwise the inequities would prove a much too powerful political counterforce.

A further requirement is some form of agreement between the province and the new entity (whether a region or a big city). This agreement is needed to limit the province’s ability to change the rules of the game unilaterally. Given what big cities have experienced in recent years (downloading, forced amalgamations, etc.), this will be absolutely necessary.

In summary, as well as new general legislative powers and new revenue sources, these two other changes are critical to the creation of strong and vibrant local democracy in big cities.

2. Provincial status for cities?

Some have suggested that whichever model is taken – one big city or an alliance of local governments - the final product should be to free the city from direct provincial control, and instead treat big cities like provinces. Provincial status for big cities seems pie-in-the-sky, but it is not as difficult to accomplish legally as it first appears. It can apparently be accomplished within existing constitutional frameworks.

Toronto lawyer Paul Lewin argues persuasively that it is relatively easy to create a new province. He notes that Sections 2 and 3 of the Constitution Act 1871 provide that Parliament can, with the consent of the Legislature of any province increase, diminish or otherwise alter the limits of that province: with the consent only of that province. These same sections allow Parliament to establish provinces in any territories, something that Prime Minister Paul Martin has talked about quite recently for the North.

Some object that Section 42.1 of the Constitution Act of 1982 limits the creation of a new province by requiring the consent of seven provinces comprising 50% of the population of Canada. Lewin argues that section relates not to the creation of a new provinces, but rather to changing the way to create new provinces. His argument seems persuasive. Accordingly, Lewin says, to establish the Greater Toronto Area as a province one simply requires the consent of the Ontario Legislature and Parliament. His paper, titled `The Province of Toronto’, is found in the library at http://www.localgovernment.ca While this paper addresses itself specifically to Toronto (Lewin has run for mayor with provincial status for the city as his main platform) the argument has general application.

Few may be willing to take this leap. A half-way house would be to create a regional system of governance with new relationships between the region and the province.

Strengthening cities is not a win/lose situation for a province. Empowering cities allows them to act in a mature fashion rather than as a teenager full of resentment, demands, and without a willingness to take full responsibility. An adult relationship would benefit both provinces and big cities. As well, added powers and revenues will allow the city to act in a more subtle and flexible manner, and it will be able to become a real partner with the province. Cities will be permitted to become more creative entities that are in turn will drive the provinces further into creativity.

One of the significant lessons that humans have learned in the past half century is that strong inter-relationships are useful for long term survival, that rigid relationships benefit neither party in the long term. Already we are seeing the limitations of a rigid relationship in the amount of time spent by city politicians trying to establish their legitimacy and their right to participate and problem solve. Creating more adult relationships is to everyone’s benefit.

3. More ideas on revenue sources for big cities

In Bulletin No. 54, it was argued that the best approach for cities struggling to develop appropriate sources of revenues was to bite the bullet and ask for the power to impose the big ticket items, sales tax and income tax. But there have been some strong reactions to that idea in Toronto (at a public meeting held recently at Innis College, University of Toronto). Those reactions are worth sharing since they apply to other large cities in Canada.

The first response is that the desperate financial situation that Toronto and other large cities are in is not particularly long standing. A decade ago, before forced amalgamations, before downloading, before federal decisions to cut funding for income support (welfare) and social housing, cities were doing quite well financially. Things might not have been perfect but in fact good services were being delivered and most physical and social problems were in hand. It is only since this new agenda has been rolled out that cities are now in financial trouble.

Keeping this bit of history in mind, the first rational response to the current spate of city problems is to simply restore the financial supports that were available before this period of big change. Once one restores the funding for transit, social housing, and income support that was there in the mid-1990s (when then Finance Minister Paul Martin started making big cuts), then cities can regain an even keel. When that stability is accomplished, it makes sense to then explore new sources of revenue and what purposes they will serve.

A second response to biting the bullet is that it would be folly to levy even higher taxes on large cities than are now being experienced. In a place like Toronto taxes generate a surplus to the provincial and federal governments of at least $10 billion a year and there is good reason to believe that other large cities also produce surpluses from the taxes levied. Imposing even more taxes simply compounds the problems. What is needed instead is an agreement by the senior governments to begin sharing this rich pool of revenue now being generated in cities.

One should not get into the trap of cost-shared programs, where priorities are always dictated by the major funder. The objective should be revenue sharing so that big cities get a generous slice of the revenue they generate. This would be much more preferable to the city than levying even higher taxes.

The limitation of these two suggestions is that they both require a strong enough local political constituency to wrestle these approaches from senior governments. Are city residents capable of creating such a constituency? This proved impossible in Winnipeg with then Mayor Glen Murray’s proposal to revamp the city’s finances. To date it has proven impossible in Toronto.

Maybe the problem lies in the inability of citizens to define the municipal cause with appropriate clarity. One might note for example that those who banded together in Ontario around the cause of public education have done much better with their cause. They created enough pressure to require the provincial government to create commissions (the Rozanski Commission at the primary and secondary level; and the Rae Commission at the university and college level) which have told provincial governments they must provide more funding. If that kind of constituency were developed on the city side one could see these revenue proposals being of some success.

4. Subscribe to the Bulletin
The bulletin is sent monthly, at no cost, to about 1500 individuals involved directly or indirectly in local government in Canada. Those who receive this Bulletin directly (not forwarded by a third party) are already part of the subscription list. Others who wish to subscribe should go to http://www.localgovernment.ca and follow the instructions. To unsubscribe, please send a message to info@localgovernment.ca indicating your wish to unsubscribe.
More information about the sponsors of the bulletin, a library of relevant and useful documents, and an archive of past Bulletins, can be found on our web site. We appreciate your comments, your feedback (to j.sewell@on.aibn.com ), and items of interest that you wish to share with us and others who visit the web site. Our next Bulletin will be in April.

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