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Bulletin No. 58, July 2005
 Local Government Bulletin No.58, July 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 issue:
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1. Law Commission report on city government status
2. Pennies from heaven?
3. The latest on the New City of Toronto Act negotiations
4. Subscribe to the Bulletin
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1. Law Commission report on city government status

The Law Commission of Canada has waded into the city debate by commissioning a new report entitled “Still the creatures of the provinces? Canadian cities’ quest for governmental status”.

The report is by Mariana Valverde and Ron Levi, both professors at the Centre of Criminology at the University of Toronto. Their emphasis is on the ability of cities to provide broad `policing’ functions, that is, municipal licensing and by-law controls.

The report begins with a fascinating discussion of the rise of the concept that municipalities are creatures of the province. They suggest that this idea comes from an 1872 American book by John Dillon. Dillon was very concerned about the way councils were spending money in the 1870s and he expressed a then popular sentiment that municipal powers were best constrained. To accomplish this he argued that municipalities were creatures of a more senior government, which became known as Dillon’s Rule.

This argument gained currency in Canada, and was endorsed by Canadian judges. The authors note that it was not until the 1990s that attacks were made on Dillon’s doctrine, the first example being Alberta’s new municipal legislation of 1994. The Supreme Court of Canada also turned back the rule with the Town of Hudson decision in which the municipality was permitted to regulate the use of pesticides on lawns since it was not expressly prohibited from doing so.

The paper notes that municipal legislative changes were made in other provinces following the Alberta initiative and close scrutiny is given to the Ontario Municipal Act of 2001. The authors conclude that this municipal legislation is probably more restrictive than what it replaced, and further that the Alberta Municipal Act probably does not create substantial change.

The authors also question whether giving cities charters is an effective method of giving cities independence. They review with some care a recent case in Montreal regarding the ability of that city to control noise nuisances from a nightclub, concluding that at least in this case the charter approach did not seem to provide particular strength. They suggest the same might be a reasonable interpretation of Vancouver’s limited charter.

The study reviews the initiative by Alan Broadbent and Jane Jacobs to move forward with the C-5 meetings of mayors (see Bulletins Nos. 17 and 23) and elucidates four general principles about the state of cities in Canada:

a) The present legal governance of Canadian cities keeps them infantilized;
b) The problem of dependency is a bad condition for cities regardless of the financial consequences;
c) Canadian cities are governed by a model that does not recognize the new challenges and functions of cities;
d) Canadian cities are governed by “one size fits all” thinking.

This report is a useful description of how limited the changes to city status have been in the last decade and how important it is that this debate be moved forward. The study is available in the Library at http://www.localgovernment.ca under the title `Law Commission report’.

2. Pennies from heaven?

During the last half of May and the full month of June there was a constant stream of announcements about more money flowing into cities. The Prime Minister met with many premiers; many federal cabinet ministers made press announcements; agreements were signed with several provinces about the gas tax; and to gain support for the government in Parliament, the Liberal party agreed to budget amendments by the New Democratic Party.

What does it all add up to? We decided to look at this money flowing out of Ottawa and make the best estimates we could about what it means for one city, Toronto. The impact on Toronto will in all likelihood be indicative of impacts in other large cities even if the sums are not the same.

There have been three kinds of money announcements regarding the federal and local governments. One is the federal Gas Tax Transfer, secured by a five-year agreement between the federal and provincial governments, and municipal associations. Second are specific announcements made by ministers for certain policy areas such as child care and immigrants. Third is the new money flowing from the NDP amendments to the Liberal budget for the fiscal years 2005-06 and 2006-07.

1. The Gas Tax Transfer agreement covers five fiscal years starting this year and in general transfers about $30 per capita to each municipality each year. But the money is not allocated in equal yearly amounts; instead the allocation starts small and gets large in a few years. The allocations for Toronto are as follows:

2005-06: $48.9 million
2006-07: $48.9 million
2007-08: $65.5 million
2008-09: $81.4 million
2009-10: $162.9 million
(Total: $407.3 million)

2a. Child care. Ken Dryden, the minister responsible for child care made an announcement in early May, 2005 about monies being transferred from the federal government to Ontario for child care. Again the transfers begin small and end up larger. One can only estimate the amounts coming to Toronto, but they appear to be as follows:
2005-06: $75.0 million
2006-07: $85.0 million
2007-08: $100.00 million
2008-09: $120.00 million
2009-10: $140.00 million

2b. Immigration settlement. Prime Minister Paul Martin and Premier Dalton McGuinty talked about this in May after McGuinty had complained that Ontario received $800 for each immigrant whereas Quebec received $3,800. Martin’s response was to say that Ontario would get more, although nothing like the amount that Quebec would receive. For instance, he suggested that he would double the allocation from $800 per immigrant to $1,600 and within three years he would quadruple it to $3,200, which of course is still considerably below what will be received in Quebec. The transfers to Toronto will work out approximately as follows:
2005-06: $50.0 million
2006-07: $100.0 million
2007-08: $150.0 million
2008-09: $200.0 million
2009-10: $250.0 million

3. Various transfers occur because of the NDP amendments to the federal government budget. These include the following:

a) Public transit. This money is transferred according to ridership and the subsidy seems to be about 25 cents per rider. The allocation to Toronto in 2005-06 will be $98 million, and in 2006-07 a further $98 million.

b) Affordable housing. The allocation for affordable housing is $800 million a year, over two years. Toronto will probably receive about $150 million a year for the next two years for affordable housing.

c) Kyoto and green infrastructure. The budget allowed about $450 million extra a year for two years. The estimate of what will be received by Toronto is probably $75 million per year.

In summary the following allocations to Toronto seem likely:

2005-06, a total of $496.9 million
2006-07, a total of $556.9 million
2007-08, a total of $315.5 million
2008-09, a total of $401.4 million
2009-10, a total of $552.9 million

Are these sums significant? It depends on the bench-marks used. The best evidence is that the tax surplus generated by senior governments from Toronto equals about $11.0 billion annually. That is, $11.0 billion more is raised through taxes in the city annually than is delivered in services. $500 million represents about 5 per cent of the surplus. So, in the case of Toronto, the federal government is willing to dish out 5 per cent of the surplus but retains 95 per cent of it. It’s not a lot of change. Pennies from Ottawa.

Figures for other large cities are not as readily available, but it seems clear that other large cities also generate tax surpluses, and it’s likely the monies returned to them through these federal payments represent only a portion of that surplus.

3. The latest on the New City of Toronto Act negotiations

A new publication, `Towards a New City of Toronto Act’, summarizes some of the issues of concern about that matter, which has been discussed in several recent bulletins. The new publication has contributions from: Alan Broadbent, Paul Bedford, John Cartwright, David Crombie, Frank Cunningham, Anne Golden, Ken Greenberg, John Sewell, Enid Slack and Don Stevenson. It can be downloaded at no charge from http://www.ideasthatmatter.com/cities .

Mayor David Miller and the provincial government convened information discussions on June 22 to give the public a chance to discuss these matters in a facilitated program. Five meetings were held throughout the city and attendance was 6 – 700. There was general support for change but little in the way of detail, save for a general consensus that the Ontario Municipal Board is a problem. Opinion was divided on whether the “strong mayor” system should be implemented. This has become a contentious issue now that the Board of Trade has proposed an American-style system where the mayor appoints senior staff responsible to him rather than to Council, and where an executive committee appointed by the mayor would have strong budgeting powers and the ability to set priorities for council. City Council would continue to hold debates and reach decisions, but the key decisions about money and staff would be beyond its control. The Board of Trade’s report “Setting the Course for Strong Toronto”
Is available at http://www.bot.com .

Several leading provincial politicians have implied that any new powers given to the city may be contingent on the city agreeing to this kind of strong mayor system, but it is unclear whether this is the province’s position. Mayor Miller has expressed his opposition to a strong mayor system.

Meanwhile, a group of six community leaders has proposed a package of changes to address financial issues, new powers, governance, and regional structures, to be the basis of a New City of Toronto Act. The group includes two former mayors, a former head of United Way, and three other prominent Torontonians. They are now seeking broad support for the package, which is available at http://www.localgovernment.ca/Toronto/ for review and endorsement.
4. Subscribe to the Bulletin
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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 September.

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