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LOCAL SELF GOVERNMENT BULLETIN No. 6, April 2000
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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This issue:
1. Tighter straightjackets for Ontario municipalities
2. Lessons from an amalgamated Toronto
a. Amalgamation costs more than it saves.
b. The transition period involves extraordinary confusion.
c. Amalgamation results in decreased services to the public.
d. User fees were increased
e. Harmonization is very expensive and very difficult to achieve.
f. Most councillors refuse to speak out.
g. Suggestions for citizens.
3. Subscribe to this newsletter.
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1. Tighter straightjackets for Ontario municipalities

The Ontario government continues its attack on municipalities in that province. In mid-April Minister of Municipal Affairs Tony Clement introduced Bill 62 and his idea of `direct democracy', decision-making by municipal referendum. The Bill requires that any question put to the voters by the municipality needs the approval of the Minister of Municipal Affairs, and is binding if more than 50 per cent of electors voted and more than 50 per cent of those who voted, approved.

Those seem like impossible hurdles to get over. Given the very shoddy state of the voters list (a provincial responsibility), the turn-out at municipal elections in Ontario is rarely higher than 40 per cent of the electors on the list. And even the Harris government in Ontario has never received the support of half the voters of Ontario.

The real impact of Bill 62 is to stop municipalities from exercising the functions of responsible government. The province will in all likelihood bring in legislation making property tax increases and capital borrowing illegal unless approved by `direct democracy.' The intention seems to be to tie municipal hands so they are in financial straight-jackets. This course has been pursued in the past decade with drastic results in California, where most local services have been crippled.

It is unclear whether the Harris government will permit public deputations on this Bill. Of the 12 bills the government pushed through its 42 days of sittings last Fall, hearings were permitted on only one bill, and then only for four hours.

2. Lessons from an amalgamated Toronto
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The financial and staffing information in this document is taken from City of Toronto staff reports. These issues have been more fully described in three articles written by John Sewell in `eye weekly’ (a Toronto weekly), March 2, 9, and 16, 2000.
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The reality is beginning to set in for residents of Ottawa, Hamilton and Sudbury: the municipal councils in all cities are now under the trusteeship of provincial appointees, and those councils will be forcibly amalgamated by the end of the year. Many residents wonder what they can expect, and what they should be planning for. The example of the recent amalgamation of municipalities in Toronto and the creation of the megacity there in 1998 are instructive, as is the 1996 amalgamation of municipalities in the Halifax area. Details and emphasis will obviously change from city to city, but there are common elements of forced amalgamations which can be expected to appear whatever the city.

Based on the recent Toronto experience, here’s what residents of Ottawa, Hamilton, and Sudbury can expect:

a. Amalgamation costs more than it saves.

Provincial officials argue that amalgamation saves money, but the reverse is true – amalgamation costs more than it saves. The cost of amalgamation includes such matters as making different commuter and other technical systems fit together, undertaking studies needed for pushing together various departments, arranging space for new staff organizations and facilities. In Toronto these costs totalled $154 million over the first three years of amalgamation.

In the case of Toronto, with a budget of $5.5 billion a year, this might be taken to be a small extra cost to impose. However, $4 billion of this budget was spent on services already being delivered at the regional level, such as public transit, policing, and social services. The services being amalgamated cost about $1.5 billion, so the $154 million in extra costs represents a premium of about 10 per cent.

Those responsible for implementing amalgamation set a goal of reducing costs of the previously unamalgamated services by 10 per cent. This proved impossible to achieve: the savings during the first three years of amalgamation in Toronto, amounted to $134 million. This level of savings was only achieved by slashing many of the services that were being amalgamated, including those offered by the staff of the Building Departments, Planning Departments, Parks and Maintenance, Clerks, and libraries. Further, savings were accomplished by cutting staff in these areas by a total of 1960.

The extent of the cost of amalgamation can be seen from the fact that the city was unable to balance its operating budget during each of the two years following amalgamation. Although it seems to run contrary to the Municipal Act, which requires municipalities to have a balanced budget, the operating shortfall was covered by loans of several hundred millions of dollars provided by the provincial government. If a law suit were brought, it’s hard to see how any councillor supporting the operating budget could escape personal liability for these loans.

b. The transition period involves extraordinary confusion.

In Toronto, the number of departments was reduced from 52 to 6. The number of divisions within these departments was reduced from 206 to 37. Executive management positions were chopped by two thirds, from 381 to 154 positions. Area manager positions were cut by one third, from 1837 to 1204 positions.

This very significant downsizing in mangers resulted in very low levels of morale for at least the first three years of amalgamation. The loss of morale is a result of the loss of organizational memory that follows the loss of senior staff and the reduction in problem-solving abilities among staff, particularly since the very good staff tend to find other places to go to more quickly than others. The loss of so many people means there is general confusion about who should be doing what. Remarkably, in the face of this confusion most operating services continued to be delivered in the normal fashion – a testament to the quality and determination of line staff.

The result of this confusion was that for several years Toronto City Hall has not been a place in which innovative policies could be developed or delivered. Virtually everything has been put on hold as the amalgamation has occupied centre stage.

c. Amalgamation results in decreased services to the public.

Services already amalgamated – those run by the regional level of government - are only marginally affected by amalgamation, and the cost savings expected from them are minimal. But locally delivered services that many people rely on (parks and recreation services is a good example) seem to suffer enormously. Unfortunately, there is no good analytical data on exactly how these services change, but there is a great deal of anecdotal information.

For example, in the amalgamated city, the waiting time for having the city attend to a tree on city property climbed from a matter of about a week to five or six months. Part of the reason for this change was the confusion that amalgamation caused, but another reason was simply the loss of an adequate number of staff. Many think that litter-picking and street cleaning downtown has suffered enormously.

d. User fees were increased

Amalgamation is an opportunity to change user fees to increase the total amount collected. This can be done by `harmonizing’ fees – that is establishing a common rate across the amalgamated city. In Toronto, that usually meant lowering fees in the former suburban municipalities and increasing them in the centre. Thus user fees were increased for permit parking for most users (who happen to live in the old city where permit parking is one of the few residential parking options available). User fees were imposed on many people for recreation services (in the former city all recreation services were previously offered at no cost) , and increased for commercial garbage removal, planning applications and building permits.

The amount of revenue generated by these user fees was relatively small but the impact of the new fees was felt directly by people who had become familiar with older fee structures. In most cases the impact of higher user fees was on downtown residents, that is, the older part of the city.

e. Harmonization is very expensive and very difficult to achieve.

Those who claim it is less expensive to run one fire department than to pay six fire chiefs and their support staff don’t know what they are talking about. That was the example the Minister of Municipal Affairs consistently used in advocating amalgamation. In Toronto the six fire departments have finally been amalgamated and the new operation is more expensive – about 3 per cent more expensive – than the old operations.

The rationalization of fire stations and equipment turned out to be more expensive than envisaged – it didn’t save money after all. But the key cost was staff: it proved impossible to reduce numbers of firefighters (in fact city council decided to increase staff), and the salaries were changed to the highest level paid in each job category.

More than two years after amalgamation, Toronto city council has not yet found a way to harmonize staff levels or job categories for other services. Staff work side by side doing the same work under the different job descriptions and rates of pay that survive the original seven municipalities that were amalgamated. City council has decided it would be too expensive to raise everyone doing the same job to the level of the person highest paid for that job and simplify the number of job categories, particularly since the former Toronto and Metro had implemented a plan of pay equity which finally paid women the same as men for similar work. No one has proposed a reasonable alternative that has attracted the necessary union support.

An eleven day strike at the beginning of April 2000 was finally settled after the city and the union agreed to negotiate this issue of harmonization over the next 27 months. Once this issue is settled, it’s clear the back pay that must be paid will be a very large sum of money.

A related issue is how city council can restructure staff when employees have guarantees of job security, that is, the city just can’t delete positions and then tell staff they no longer have jobs. The compensation for the lower pay offered by government is some form of job security – about three years of guaranteed employment in the some former municipalities now in the megacity - for people who perform their duties in a satisfactory manner. Why would staff ever agree to weaken job security when the city says it has no money and more job reductions seem certain?

f. Most councillors refuse to speak out.

Provincial legislation has thrown all local councils in the Ottawa, Hamilton and Sudbury areas into trusteeship. This means the decisions of all those councils are now monitored by provincial appointees (Transition Boards) with the power to overrule these decisions. The stated reason for the necessity of these appointees is to ensure that reserve funds are not spent foolishly, and that staff are not given massive severance packages.

In Toronto, the Transition Boards were inept at these tasks. In fact some councils squandered their reserve funds and the trustees did nothing. It’s unclear the trustees had any impact on staff severance packages.

The real effect of the transition boards in Toronto was to induce timidity in local councillors, a timidity that spilled over to the citizenry. Few councillors spoke up for local interests as the transition board started to lay down the groundwork for the amalgamated council. Most councillors looked first for some way to preserve their own status in the coming election. Where there should have been strong comment and solid reaction against the usurpation of democratically elected power by provincial appointees, there was reticence and cowardly behaviour. In Toronto, trusteeship was an interesting lesson in why coups of elected governments in other countries seem to be carried off with so little trouble.

g. Suggestions for citizens:

On the basis of Toronto experience, the following suggestions are offered to residents of Ottawa, Hamilton, and Sudbury as they deal with those implementing amalgamation in their communities.

(i) Recognize that no savings will result from amalgamation. Refuse to consent to any changes promising to save money since such changes will only be possible by cutting services.
(ii) Refuse to agree to any reductions of management staff during the three years following amalgamation. The imagination, ingenuity and talent of all senior staff will be needed to deal with trying to make amalgamation work tolerably well.
(iii). Recognize that costs will increase because of amalgamation and discuss how these extra costs can best be funded. The two most viable options are property tax increase or increased user fees. Taking a municipal loan to balance the operating budget is contrary to the Municipal Act and is a cruel disguise of the costs of amalgamation.
(iv) Require that all meetings of the Transition Boards be public, with publicly accessible agendas and minutes. This is important for two reasons:
a) The Boards will try to hire senior staff .(In the case of Sudbury, advertisements have already been run in the national newspapers for a new CEO of `our city’, as the Board calls the new municipality.) These new staff will be given an agenda to cut staff, services and expenditures to hide the costs of amalgamation. Community organizations should demand seats on the selection committee to ensure those hired are committed to local concerns, not to a provincial agenda.
b) The Boards will set in place schemes to cut staff and services in future years, and establish a budget for Year 2001 that confirms these changes. Community groups should demand involvement in processes about staffing, services, and budget setting, all based on the principles that there should be no staff or service reductions.
(v) Demand from elected councillors their commitment that they intend to maintain the power of the positions there were elected to. They should agree to fight any moves by the Transition Board to change any decision of council, using public announcements, debate, and strong objections in order to make themselves heard.

3. Subscribe to this bulletin

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