William Robson is chief executive officer and Nicholas Dahir is a research assistant at the C.D. Howe Institute.
The festive season should be a time to look back on work well done. In far too many Canadian cities, however, one key task is still incomplete.
Canadian municipalities outside Nova Scotia run on a calendar year. They should have presented – and ideally, their councils should have approved – their 2023 budgets by now. If Jan. 1 comes and goes with no budget, a city is taxing and spending without proper scrutiny and approval from elected representatives and voters. That is an affront to democracy. Sadly, it is the situation in most major cities.
The C.D. Howe Institute does an annual survey of fiscal transparency in 32 of Canada’s most populous municipalities. Thirty-one of them have fiscal years that begin on Jan. 1. As of today, only four – Edmonton; Gatineau, Que.; Longueuil, Que.; and Richmond, B.C. – have approved their 2023 budgets. A further nine – Calgary; Halton, Ont.; Kitchener, Ont.; Laval, Que.; London; Montreal; Quebec City; Regina; and Vancouver – have at least presented theirs. The remaining 18 – including too many of the economic heavyweights of the Greater Toronto Area – will start the new year with no formal fiscal plans.
This sluggishness would be objectionable even if city budgets were easy for councillors and voters to understand. But most are not. Unlike the federal and provincial governments, and unlike well run businesses and not-for-profits, municipalities typically use different accounting in their budgets than when they report their results. That makes even simple questions, such as how much a city plans to spend or tax in the upcoming year compared to past years, tough to answer. Even trained accountants will struggle to figure out what a budget’s bottom line implies for the surplus a city will actually report – hardly anyone knows they do report surpluses! – at year end.
Sorting through the numbers takes time. Heading into the holiday season with no budget even presented means that people will not have the time they need.
Councillors and voters should not accept this situation. Budgets are essential for everyone, representatives and citizens alike, to understand how their cities pay for and deliver services. If city staff are taxing and spending without approval from elected officials, local democracy is breaking down.
Fiscal accountability at the municipal level matters in 2023 as much as it ever has. The cost of operations is up. Key functions such as permitting have huge backlogs. Households are stretched, and many businesses that did not go under during the COVID-19 pandemic are struggling.
Furthermore, cities provide many of the front-line services that matter most for our quality of life. Funding them in this environment is inevitably contentious. Budget presentations and debates are indispensable for discussing these issues, resolving them when possible and ensuring people feel heard even when things do not go their way.
Yet the tally of budgets approved or at least presented to date tells a story of backsliding. At this time last year, 20 of the 31 municipalities had presented budgets. And 2022 was nothing great. More than one-third only presented budgets after the year started, and some of the delays were outrageous: For example, Ontario’s Durham Region and Toronto did not present theirs until February, and Hamilton waited until the end of March. Yet 2023 will be worse.
Late budgets matter because of details. Setting property tax rates, managing the costs of policing, water and sewage, electricity, snow removal – none of these are simple, and their outcomes help determine where people live and whether local businesses thrive or fail.
They also matter in the big picture. Civic engagement is bound to be lower if city council and staff not only present confusing numbers, but don’t bother to present them on time. The municipalities of Ottawa and Toronto have said that they will not even begin their budget processes until January. With such a casual attitude on the part of city officials, why would anyone else take budgeting seriously?
The officials in the majority of the big Canadian cities that will begin 2023 with no budgets in place have little to celebrate during the festive season. They are behind, and have work to do.