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Description:
Local Government Bulletin No.46, April 2004

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
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In this bulletin:
1. Winnipeg’s New New Deal
2. Ontario offers municipalities more taxing powers??
3. Electoral reform in Vancouver
4. Forced amalgamation in Montreal has negative economic impacts
5. Subscribe to this bulletin
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1. Winnipeg’s New New Deal

Winnipeg’s Mayor Glen Murray is following the old adage, if at first you don’t succeed, try again.

In October 2003 the Mayor proposed a New Deal for Winnipeg that would inject an extra $120 million a year into the city’s budget to address fading infrastructure. It was an interesting financial package with benefits flowing in several directions. Property tax for both residential and non-residential property owners would fall; business property tax would be abandoned and instead the city would rely on a sales tax, better reflecting a company’s ability to pay; there would be new and fairer kinds of taxes – on automobile gasoline, natural gas, and electricity, an income tax sharing scheme, and a rejigging of the property tax system to increase levies on larger lots.

The announcement of the New Deal was followed by intensive community consultation and feedback from the provincial level of government, which held the controls over city tax sources. There was community opposition to some of these proposals but the key problem was the provincial unwillingness to give the city the taxing powers it wanted.

Murray has now come forward with a New New Deal based on the assumption that the province has its own financial problems, and monies might be more readily available from the federal level. (Murray has a report of the Conference Board of Canada to back up this assumption.)

The New New Deal sees about $62 million coming to the city from a share of the federal Goods and Service Tax now generated by Winnipegers - this represents 2/3 of 1 per cent of the current GST taken from the activities in the city. A further $66 million would come from gasoline tax, either entirely from provincial revenues or half from provincial revenue and half from a new levy placed by the city on fuel tax. The New New Deal abandons any other revenue increases from the province, but it does request that the current grants from the province be replaced with a city-provincial sharing of current income taxes. Together the New New Deal elements result an extra $120 million to the city – about the same amount as the New Deal – and a 4% reduction in property taxes, which would be frozen or five years.

Murray has done a good job of defining clearly that there are different ways in which the city’s needs can be met, and that more than anything Winnipeg requires commitment and imagination from senior government. Murray notes that many other municipalities await the outcome of this initiative. “A New Deal for Winnipeg can support the interests of municipalities across Manitoba and cities across the country.” Murray says.

Further information can be found on the city’s website www.winnipeg.ca/NewDeal

2. Ontario offers municipalities more taxing powers

On March 29 Premier Dalton McGuinty wrote to municipal leaders in Ontario suggesting serious consultation in the coming months to cement better provincial/municipal relations and “to begin a dialogue with our municipal leaders that will result in a new partnership between the provincial government and our municipalities, including new governance and financial tools for municipalities.”

Several paragraphs later in the letter there’s a further hint at change: “Our government will be moving forward with phasing in new financial resources for municipalities, including the dedication of two cents of the existing provincial gas tax for public transit. As part of the dialogue on a new provincial-municipal partnership, we also want to review new municipal own-source revenue tools.”

This represents something of a change, given the stance of the McGuinty government on several municipal issues noted in Bulletin 45. The Toronto Star’s provincial columnist, Ian Urquhart, wrote in his April 10 column that senior figures within the Liberal Party are considering giving new taxation power to municipalities, including the power to tax gas, but likely not incomes.

Confirming Urquart’s hints has not been successful. Pat Vanini of the Association of Municipalities of Ontario is pleased with the provincial interest, but takes a wait-and-see attitude. “There’s a definite difference in tone and approach,” she says. “You have to get something to work in this environment.” She says property taxes in Ontario are higher than in any other province, so giving municipalities more taxing power will not be popular. She think perhaps the government may be thinking of nothing more than loosening some of the strings it holds on the property tax system.

But the big cities like Toronto and Ottawa can be assumed to be much more in favour of more taxation power, particularly on gasoline, since this would be a popular source of more funds for public transit.

Discussions on these issues will happen quietly over the next few months, but with the provincial budget expected by mid-May, it is unlikely than any changes will become effective within the current fiscal year.

3. Electoral Reform in Vancouver

Tom Berger’s Commission on Electoral Reform for Vancouver will be reporting next month. To date it has held a number of meetings throughout the city and has produced some research about past voting arrangements. Vancouver’s City Charter – a document that allows the city marginally more powers than would occur under a standard Municipal Act – contains provisions that allows City Council to set its own voting and ward systems. The result has been that the city has used different election arrangements at different times.

The first election In Vancouver was in 1886 and an at-large voting system was used. The new council immediately divided Vancouver into five wards and a ward system was used for the next four decades. In the early 1930s a proportional representation system was put in place for one term, then the city reverted back to wards and, later that decade, returned to an at-large system where councillors are elected across the whole city.

Attempts to re-institute a ward system did not meet with success. In a 1973 referendum 59% of voters said they wanted to keep the at-large system, although five years later 52% supported a ward system. That second vote was nullified by the provincial government which amended the Vancouver Charter to require a 60% support for a ward system. In 1996 59% decided they liked keeping the at-large system. Vancouver voters bounce back and forth, presumably depending on who is in power and whether like the Council or want to see it replaced.

It is thought that Berger will be proposing some form of proportional representation combining a ward system with at-large voting using a party system. Vancouver is one of the few Canadian cities which has developed a municipal party system, presumably because of at-large voting.

Further information may be found at http://www.vancouver./bc.ca/erc/ , the website of the Electoral Reform Commission.

4. Forced amalgamation in Montreal has negative economic impacts

A new study released in Montreal on April 13 concludes that the creation of the Montreal megacity is causing a negative effect on the economic growth on the city. It estimates a loss of $2.1 billion in economic activity, and a loss in real estate values of up to $3.7 billion.

“For taxpayers of the former cities, demerging from the megacity will mean an increase in both their property values and disposable income, “ concludes the press release accompanying the study. “For example, demerger could mean an increase in market value of $2,000 for a typical house.”

The study was done by the Analysis Group for the Association of Elected Officials for Demerger. The study was written by Patrick Petit, principal economist in the Analysis Group’s Montreal office, along with Professor Marc VanAudenrode of the Université Laval and Vice-President of the Analysis Group, Professor Pierre-Yves Crémieux of UQAM, and Professor Philip Merrigan of UQAM. Peter Trent, former mayor of Westmount, is a spokesman for the Demerger group.

The Minister of Municipal Affairs is expected to release demerger impact studies which, according to the Analysis Group “will be just accounting exercises, only dealing with the short-term financial effects of demergers, rather than their long-term economic effects.”

A copy of the study, in French, is in the Library, http://www.localgovernment.ca under the title ‘Defusions Municipales.’ The study includes an Executive Summary in English.

5. 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 May.

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