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Bulletin No. 22, December 2001
 LOCAL SELF-GOVERNMENT BULLETIN – No. 22, December 2001

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 web site is http://www.localselfgovt.org

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In this issue
1. British Columbia’s Gold Slipping Away
2. New Federal Housing Program
3. Iffy infrastructure, the federal jest
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1. British Columbia’s Gold Slipping Away

When the new government of British Columbia Premier Gordon Campbell passed the Community Charter Council Act, it looked as though municipalities had a serious friend in cabinet. That legislation promised municipalities greater autonomy, a wide range of tax tools, and no provincial downloading without supporting money. (The legislation is fully described in Bulletin No. 19, September 2001).

But it seems the firm edge of the legislation is now being eroded. In early December the provincial government announced that it would not be continuing to monitor air emissions of some motor vehicles, but would allow municipalities to carry out that function. That immediately raised the question of whether this change was downloading, and how municipalities might pay for this new activity. These issues are still being discussed.

Also worrisome to British Columbian municipalities is the general principle of where funds will come from when municipalities are in given increased responsibility. Municipalities assumed that provincial money would accompany new responsibilities, but it seems the province is leaning instead to a model that would see municipalities increasing local taxes to pay for these increased responsibilities. If the province has its way, municipalities will be forced to bear the financial brunt – out outfall - of the downloaded responsibilities. It is causing considerable consternation among municipal leaders in British Columbia, particularly since the announcement of plans to slash provincial expenditure by about one third. The vision of local gold is leaching away from British Columbia.

2. New Federal Housing Program

At the end of November the federal government announced its new housing programme: it will provide funding up to $25,000 a rental unit in provinces where that funding is matched. The federal government has allocated $680 million for this program over the next five years.

This kind of shared-cost programme works perfectly well where the provincial government is willing and able to match federal contributions. In Quebec, for instance, the provincial government has already announced that it will be matching these federal funds and plans are to get construction underway just as soon as the winter is over. But that kind of clarity does not exist elsewhere in the country. There are two problems: getting provinces committed to match federal dollars, and agreeing on what is meant by `matched funding.’

The federal government is looking to sign operating agreements with other provinces by the end of the year, and these agreements will better define matched funding. The Ontario and British Columbia governments, for instance, proposed that monies spent in the past should be counted as matching funds, but the federal government has already put a cap on past expenditures – nothing before January 2001 will be counted as matching. Can, as Ontario appears to be arguing, subsidies to privately operated homes for the aged count as matching contributions? Obviously, such funds do nothing to help create new affordable housing, which is supposedly the intent of the federal initiative.

Municipalities are not included in these final negotiations. This is a serious shortcoming for the program, since municipalities are impacted by it. On the one hand, the housing crisis is felt most strongly at the local level; on the other there are suggestions (in Ontario, and maybe in other provinces) that property tax rebates offered by municipalities for affordable housing units might be considered matching funds. It doesn’t make sense to keep local governments from the negotiating table when it might be their money that is being committed.

3. Iffy infrastructure, the federal jest

In the federal budget released in early December, Finance Minister Paul Martin doubled the funds for the Green Municipal infrastructure to $250 million, while appending one fascinating condition – the programme will only be available if the federal government has enough of a surplus to pay for it. The same condition was appended to the $2 billion large infrastructure program which may benefit municipalities. It is clearly a condition made in jest. Municipalities have the least flexible tax revenue of any level of government, given that their chief (in some cases only) source of tax revenue comes from property. As has been pointed out on many occasions, while tax sources to other levels of government increase substantially with inflation, property taxes remain pretty stable.

Now municipalities will be saddled with the other side of this arrangement. As the economy verges on (or descends into) depression, tax revenues to other levels of government are bound to fall and there will be no surplus at the federal level to pay for this infrastructure program. Municipalities get hit on the way up and on the way down.

One of the clearest statements of the desperate tax situation of Canada’s largest cities – and the statement is one that applies to smaller centres as well – has been generated by the `C5’ group of Canadian mayors. Data on the web site http://www.ideasthatmatter.com (See tab `The Quarterly – Special C5 edition’) and in the recent publication `Ideas That Matter’ (Vol. 2, No.1), shows that in Vancouver the city has available to it 7 per cent of all tax revenues collected there; Winnipeg, 7 per cent; Montreal, 11 per cent; Toronto 5 per cent; and Calgary 8 per cent.

Tying infrastructure funding to federal tax surpluses is a cruel joke that broadcasts the shameful position in which Canadian cities find themselves. Perhaps municipalities should be adopting polices which state that they will provide services to federal government buildings located in their jurisdiction – providing, at the end of the year, there is money available to do so. Perhaps the federal government would get the message.

One hopes 2002 will bring a much improved status for local government in Canada.
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