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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. 30, September 2002
Local Government Bulletin No. 30, September 2002

The purpose of this bulletin is to focus debate on the need to increase the powers and authorities of local government in Canada and to ensure local communities achieve more autonomy. The new Local Government website is http://www.localgovernment.ca . This site replaces www.localself-govt.org .

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In this issue:
1. Challenge to the Municipal “Spheres of Jurisdiction” Approach
2. The Long History of Revenue Sharing
3. Layton takes urban issues national
4. Subscribe to this bulletin
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1. Challenge to the Municipal “Spheres of Jurisdiction” Approach

The latest salvation proclaimed for municipalities – expanded powers as defined by broad “spheres of jurisdiction” – has run into a serious road block.

The Alberta Municipal Government Act passed in 1994 was intended to broadened and strengthen municipal powers, and has been used as the blueprint for legislation in many other provinces, including Manitoba, Saskatchewan, Ontario, Nova Scotia and Yukon. It promises more flexibility to municipalities by giving them powers within broad spheres of jurisdiction, a legal mechanism intended to free municipalities from the minutiae of provincial regulation and invest them with general powers of governance. Instead of stating what a municipality can do, the legislation assumes the legitimate range of municipal activity is very broad, so it simply says what a municipality cannot do.

The MGA (as it was often called) is explicit in saying (in Section 3) that the power of the municipality is “to provide good government,” to “provide services, facilities or other things that, in the opinion of the council, are necessary or desirable,” and to “develop and maintain safe and viable communities.”. The general powers are amplified in the Sections 7, 8, and 9 which give municipalities broad bylaw-making authority. The `natural persons’ power (provided in Section 6), which is also intended to broaden local powers, does not figure in this decision as something worthy of court comment.

In spite of these intentions, the MGA has suffered a body blow at the Alberta Court of Appeal in a decision released in May, the United Taxi Drivers Fellowship of Southern Alberta v. the City of Calgary. The case deals with the city’s decision about how it will limit the number of taxi plate licenses that it issues.

One aspect of the decision has to do with the application of Charter of Rights and Freedoms but the more important part deals with the interpretation of MGA. The court rejected the broad outlines of municipal powers in the MGA and instead took a narrow view of the actual powers available to municipalities. It cited an 1895 decision that “municipal corporations in the exercise of the statutory powers conferred on them to make bylaws should be confined strictly within the limits of their authority and all attempts on their part to exceed it should be fully repelled by the Courts.” (para.54) The court stated, “Those powers that may be exercised by a municipality include those explicitly conferred by statute, those necessarily or fairly implied by the expressed powers and those indispensable powers essential and not merely convenient to the effectuation of the purposes of the corporation.” (para.57) It found that the city’s attempt to regulate the taxi industry by freezing and limiting the number of taxi plate licenses was “not within its jurisdiction as authorized by the MGA.” (para.90) The city’s bylaws were therefore declared ultra vires and were set aside.

In short, the majority of the Court of Appeal rejected the approach outlined in the MGA that attempted to bestow broad powers on municipalities. If permitted to stand, it would seem that no provincial law would be capable of expanding the very limited and constrained powers awarded municipalities in 19th century legislation.

Support for a more general interpretation of the MGA came from the dissent of Mr. Justice O’Leary. He argued that the case turned on the question of the expressed and implied powers given to a municipality by the MGA. He relied on the intention of the legislation, set out in Section 9, giving broad authority to councils with respect their right to govern municipalities in whatever way they consider appropriate. He concluded “the intent was to give comprehensive powers to the city to pass bylaws that have historically been within municipal jurisdiction. It was intended that the powers under the MGA be enhanced, that is, increased, compared to those granted by the former act.” (para.199) He noted that the MGA approach has been adopted by several other provinces and concluded “this indicates a growing movement towards granting municipal law making powers in broad and more flexible terms to facilitate governments of increasingly complex matters of municipal concern.” (para. 200).

But O’Leary’s is the dissenting opinion. The majority of the Court of Appeal takes the much more limited and traditional view of municipal powers.

The decision can be found at the Albert Courts website http://199.213.44.18:8080 and follow the links to Court of Appeal, Recent Decisions, Decisions by Month, going to May 2002, and looking for the United Taxi Drivers case.

Calgary has now applied for leave to appeal to the Supreme Court of Canada. It’s brief (prepared by Leila Gosselin of the Calgary legal department) in support of the application is a masterly summary of the intention of the MGA and its importance for Canadian municipalities. It can be found in the library of the Local Government web site, http://www.localgovernment.ca , and go to the Library tab.

The application for leave to appeal to the Supreme Court captures the tone perfectly in its first sentence: “This case raises issues of national importance to Canada, involving the relationship between municipalities and the provincial governments and the ability of municipalities to manage their own affairs.”

2. The Long History of Revenue Sharing

The last two Bulletins contained notes on revenue sharing in Quebec, Alberta and British Columbia, but there is more to the story. Manitoba has now announced a program of provincial/municipal tax sharing which will provide $82.5 million to Manitoban municipalities this year. This arrangement is a sharing of amounts equal to 2.2 points of the per cent of personal income tax paid under the Federal Income Tax Act, and an amount equal to 1 per cent of taxable income corporations earned in Manitoba. Payments were made before the end of July. The City of Winnipeg received $47.3 million of this tax sharing and a further $8 million grant respecting video lottery terminals.

Professor Andy Sancton of the University of Western Ontario notes that “much of what Canadian municipalities are arguing for now (in tax sharing) is to restore past autonomy not to create unprecedented (new) forms of autonomy.” He refers to Kenneth Crawford’s 1954 book, “Canadian Municipal Government”, which documents various kinds of tax sharing arrangements in mid-century. Crawford notes that in Quebec municipalities were permitted to levy a sales tax. In Ontario municipalities received 20 per cent of alcohol license fees. In British Columbia, municipalities received about one-third of the provincially-levied retail sales tax and a similar amount of the motor vehicle license fees. In Alberta municipalities received 4 cents on each gallon of gas sold subject to certain rules of apportionment. In short, there was a healthy diversity of schemes involving tax sharing. Crawford also notes that grants and transfers represented 27 per cent of municipal expenditure in 1948, a percentage similar to the situation in 1937 (see pages 245-247).

Thus there appear to be good examples municipalities can use to strengthen their arguments for more effective and more financially rewarding tax-sharing with senior governments. These are old arguments, as Sancton points out, not new ones.

3. Layton Takes Urban Issues National

Many local politicians hit the big time and gain a seat in Parliament, but the process seems to leach out of them any lingering interest in municipal issues. Their place in a national political party quickly squeezes out of them the open processes and procedures of decision-making and consultation that make municipal politics so innovative and consensual.

In fact looking at the federal scene it is very difficult to determine which MPs used to be proud of their municipal heritage. Two Toronto politicians who disappeared into the maw of the federal scene with hardly a municipal whimper were former Toronto Mayor Art Eggleton and Metro Chairman Alan Tonks. Nothing they have done has put municipal issues on the national agenda, although their colleague, former Councillor Judy Sgro, has been somewhat more successful chairing the Prime Minister’s Task Force on Urban Issues.

But municipal issues are gaining a national hearing through an unlikely source – Jack Layton’s bid to become leader of the New Democratic Party of Canada. Layton has been a city councillor in Toronto for most of the last 20 years, but his real credentials for finding a national audience came from his very strong role in the Federation of Canadian Municipalities, helping give it a clear voice with federal politicians. The fact that he was brought up in Quebec and speaks fluent French has also been helpful.

Layton’s recent campaign has been doing two things of interest to local politicians First, he has given a clear focus to community issues. His website, http://www.jacklayton.ca sets out “The Layton Solution” for Canadian communities, noting that municipalities in Canada receive five times less funding from the federal government than their American cousins; the extraordinary problems of affordable housing; the lack of funding for public transit; and worrisome problems about infrastructure, including water. Layton talks about giving municipalities a share of the gas taxes, significantly boosting funding for a national-municipal infrastructure programme; and returning to municipalities the GST they are now forced to pay. Few of his proposals are politically divisive for local politicians – they are common sense of generally agreed to by local politicians of all political stripes.

The other two leading New Democratic Party candidates, Bill Blaikie and Lorne Nystrom, have yet to be so clear about a municipal agenda, perhaps because sitting MPs do not have the opportunity to focus on these issues. (Their web sites are http://www.billblaikie.org and http://www.nystrom2003.com )

The other innovation in Layton’s campaign is his use of the strategy that is common practice in municipal politics, namely to reach out to others and create general alliances that cross party lines. As he did during his involvement with the Federation of Canadian Municipalities (he is now immediate Past President) , Layton seems willing to wade into an issue and engage others whatever their political affiliation. Of course this is something much easier done at the local level where parties formally do not have much standing. This modus operandi may be popular, but not of direct help in his campaign, since the only people allowed to vote for him as a leadership candidate are members of the New Democratic Party of Canada, and many of his friends and allies involved in these issues already belong to other parties.

The election of the New Democratic party leader takes place at the end of July 2003, but it will be fascinating to see the extent to which Layton can use his strengths as a municipal spokesperson in putting the local case on the national agenda, and perhaps reshape the way politics is practised nationally.

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