By Etienne Kishibe
Prime Minister Paul Martin has consistently made cities a priority for his government.
He even said he would handle the municipal file himself; however, over the past few weeks Martin has been backtracking on this issue.
So far, his actions as prime minister have left some municipal representatives thoroughly underwhelmed.
Martin’s original idea, of diverting revenues from the gas tax to help fund cities, looks to be off the table for now. The federal surplus for 2003 is expected to come in at a mere $2.3 billion, although some reports say it may end up being closer to $4 billion.
Finance Minister Ralph Goodale only plans on allocating about $300 million for spending. Therefore, major spending projects will probably be put off until after the Liberals call an election, expected this spring.
Martin has now suggested a GST exemption for municipalities, instead of gas tax revenues, and has taken to calling his plan for the cities a “long-term” project.
Although he publicly committed himself to the gas tax revenues plan last September, Martin said earlier this month this was only one of many options for helping municipalities.
But the problems cities face go beyond what can be solved by tossing a few dollars around.
Cities need actual power over their own budgets. It may well be time now that Canadian municipalities begin constituting a genuine third level of government, with powers and jurisdictions of its own, rather than continuing as an administrative subsidiary of the province. This would add a much-needed balance to the Canadian political arena and make local government more responsive to the public.
It would make municipalities independent of the federal and provincial governments’ fickle dole.
Ottawa Councillor Clive Doucet, for one, is unimpressed by cries of poverty from the federal government. He calls them “bullshit.” In his view, the very surplus that Martin is trying to preserve was attained by downloading costs to the cities in the past.
Both the federal and provincial governments passed responsibilities down the administrative ladder during the 1990s, saddling municipalities with major expenditures on top of those they already had to deal with.
“We only control 45 per cent of our budget,” says Doucet. “The rest is all mandated by the province. Right now, we’re running a $50-million annual deficit from downloading, and we spend 23 per cent of our budget on provincial social services.”
Doucet’s rationale is that under Canadian law, municipalities are much too weak to assert themselves against other levels of government.
Since municipal governments are wholly subject to provincial legislation, they have to do as they’re told. He doesn’t hold much hope that cities will get any help from Martin’s Liberals because the federal and provincial governments are happy to keep the status quo. So long as they can shift costs onto municipalities, they can continue pretending their budgets are balanced. Only a concerted, country-wide push for municipal power could change that.
But Doucet says cities should be getting both gas tax revenues and a GST exemption, if not a reorganization of tax distribution across the board.
“We get eight cents on every tax dollar that people pay,” Doucet says. “A whole group of taxes need to be redistributed to the city level.”
Right now, even the taxes cities administer themselves are being taken over by the province.
In Ontario, provincial legislation caps taxes on commercial property, meaning that property tax increases must be levied on residential properties. In other words, unless they get help from other levels of government, cities can only pay for new services by taxing residential property.
While this hasn’t happened in Ottawa yet, some property taxes in Toronto have more than doubled in the past two years.
Doucet says the funds to support his city must come from somewhere. Extra burdens on the municipal purse- such as provincial health services- make it difficult for the municipal government to keep up with Ottawa’s growing population. While expansion is good for the local economy, nevertheless, as cities receive such a small share of tax revenues, they don’t end up benefiting from growth the way they should.
“Growth costs the city money. Every time we grow a person in this city, it costs us money. More police, more social services, more health services, more roads, more sewer, more water, more fire. Eight cents on every dollar doesn’t cover those costs,” says Doucet.
Extra costs put the most basic services that municipalities provide at risk. City councils across Canada are claiming to be in crisis and Doucet expects that there’ll eventually be a backlash against higher level governments abusing municipal councils.
Doucet believes municipalities may be ready to demand more political clout.
“It’s going to be an interesting few years.”