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The Globe and Mail

Cities deserve bigger share of tax dollars

The snow capped slopes of Mount Baker in Washington State looms over Vancouver and freighters anchored in English Bay Monday, May 14, 2012.

Jonathan Hayward/The Canadian Press/Jonathan Hayward/The Canadian Press

Cities are a country's lifeblood. They are the economic engines, the drivers of wealth. They are where most people live and work today.

Yet never have the politicians running them been under as much pressure as they are now to deal with a complex and mushrooming set of problems while being constrained by a fiscal straightjacket.

Despite their importance, cities in Canada are treated as the ugly stepchild by senior levels of government. Ottawa and the provinces are the stars of the show and the cities take their positions behind them, often in a beggar's pose. But in a 21st century world where cities dominate, the relationship seems increasingly at odds with the realities on the ground.

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Cities have been complaining about their shabby treatment for years. The essence of their grievance, I'm sure you'll be surprised to hear, centres around money. They are tired of receiving only eight cents of every tax dollar, while the provinces get 42 per cent and Ottawa the rest.

Meantime, Ottawa and the provinces regularly off-load programs and services on to cities and municipalities without also offering a sustainable means of funding them. More and more, this has left cities in a bind. They get most of their money through property taxes. But councils are loath to hit citizens with increases every time they get handed something that was once the responsibility of the provincial or federal government.

Complaints by Canada's mayors have mostly fallen on deaf ears. Yes, the senior levels of government seem to say, we all have funding issues – get over it. If you need more money then raise property taxes. If you don't want to raise property taxes, then shut up.

No, Ottawa and the provinces have little sympathy for our civic politicians.

In B.C., mayors are rising up. They recently formed the B.C. mayors' caucus, which held its inaugural meeting in Penticton. The 86 mayors in attendance finished their two-day meetings calling for a new partnership with the federal and provincial governments to deal with spending issues.

Currently, granting funds to municipalities is done on an ad hoc basis. But mayors are tired of going cap in hand to government to finance different projects. They insist the current system needs to be replaced by one that will give cities more certainty over their funding so they can do the kind of long-term planning that is better for communities.

Among other things, the mayors would like to see a new – more generous – cost-sharing formula for major public-works projects.

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Given the dismal record of Canadian mayors in making any headway on the funding front, I don't give B.C.'s group much chance in their quest. Even before the mayors' meetings concluded, the B.C. government was dismissing any notion that cities and municipalities in the province are underfunded.

Moreover, Ida Chong, the minister responsible for local government, told The Vancouver Sun that by forming their caucus, the mayors were looking for new ways to spend taxpayers' dollars.

So much for constructive dialogue.

I'm not sure where B.C.'s mayors and their counterparts in the rest of Canada turn at this point, short of hiring some Quebec students to show them how to get a government to bend. But clearly, mayors are reaching some kind of breaking point. There would appear to be a very unpleasant confrontation on the horizon unless the mayors' concerns are legitimized by at least an honest and open discussion with senior levels of government.

Some kind of change is going to have to be made to recognize the increasing cost burdens cities are experiencing. In Canada, income taxes and general sales taxes, which produce growing revenues, are not available to municipalities in the same way they are in other countries.

The Conference Board of Canada is among a number of groups that has suggested this be changed. Big-city mayors have been calling for access to 1 per cent of the GST. Whatever avenue it is, a redressing of the fiscal imbalance that exists among our cities is necessary.

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Fact is, there isn't a city or municipality in the country that isn't strapped for cash, some far more than others. And as many of our cities begin to creak under aging, deteriorating infrastructure, those needs are only going to be exacerbated.

If we want our cities continuing to be the bedrock of our prosperity, they need to be able to share in a little bit more of it.

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