Last weekend I said farewell to the hundreds of city councillors visiting from across the country. During the conference I attended a plenary session about the fiscal framework of municipalities which is in dire need of being updated.
Enid Slack is the Director of the Institute on Municipal Finance and Governance at the School of Cities, University of Toronto. She outlined the following challenges faced by municipalities across Canada:
Challenges for Municipalities
Inflation and rising interest rates. Costs are increasing while citizens are having a harder time. This results in more people needing services. Also, the cost of borrowing for building infrastructure is going up. It would take 175 Billion to rehabilitate all municipal assets.
Extreme weather. Climate change with huge clean up and remediation costs. Green house gas emissions are going up. We need to invest in greening our cities which places financial burden.
Shift to living online. As people shift to working and shopping from home there is a significant impact on commercial property values and taxes.
Immigration and refugee settlement. We have increased our targets and these people generally settle in our cities and need services.
The homelessness and opioid crisis along with rise in mental health challenges has resulted in more expenditures and less revenue.
The fiscal framework for cities was designed in the 1800s when property taxes would cover the cost of infrastructure. Cities now take on a lot more responsibility with many pieces of responsibility downloaded to municipalities including social housing and newcomers support. Lisa Raitt, the Co-Chair for Coalition for a Better Future says that municipalities are often seen as a lesser partner or lesser level of government and somehow are seen as untrustworthy with money shown in the reluctance to allow municipalities to access income or sales tax. Yet, we are trusted with fire, police and water services. “We can save lives, but not be trusted to handle money.”
Many cities get a percentage of sales and income tax. New York and Chicago have 20+ taxes that support their municipal budget. While I do not support building a complex system of taxing - I do think that cities need a new deal. More and more Canadians are growing their families in cities and how cities are funded directly impacts the quality of life for a majority of Canadians.
Toronto needs visionary investment in infrastructure for us to fulfill our potential as a world-class city. As the contributor of 20% of the GDP, we should benefit directly from our contributions to the Canadian economy. This issue should be a key election issue for voters for the next 3 elections. Without a new fiscal framework, we are currently burning through our reserves and incurring a debt through the 9.5 Billion dollar state of good repair backlog. Unfortunately, due to the complexity of the subject, it is not easy for people to understand the problem. One person at the conference said, “You can only provide a solution after people have identified the problem.”
Councillor James Pasternak said the buzz words should be “Cities need a new deal.” Together, I hope we can amplify this to all candidates - especially at the next provincial and federal election.