Tech Explorer

How to help the cities

The feds are once again ready to give money to cash-starved urban Canada, but it’s not the best solution

Mary Janigan April 8 2002
Tech Explorer

How to help the cities

The feds are once again ready to give money to cash-starved urban Canada, but it’s not the best solution

Mary Janigan April 8 2002

How to help the cities

The feds are once again ready to give money to cash-starved urban Canada, but it’s not the best solution

Mary Janigan

Arecent spat between Ottawa and the Ontario government over arts funding could be dismissed as merely another pitiful example of a dysfunctional relationship. But buried beneath the snappish exchanges are fascinating hints that Ottawa will intervene far more often and far more directly to assist beleaguered city governments across the nation. The federal and Ontario governments were supposed to hold a glitzy press conference last month to bestow funds like gracious patricians on Toronto’s impoverished cultural institutions. Instead, outgoing Ontario Premier Mike Harris unilaterally doled out more than $91 million to six centres. David Collenette, the feisty federal minister responsible for the Greater Toronto Area, responded that Ottawa would discuss matching funding for a wider range of projects with Harris’s successor, Ernie Eves.

But Collenette also told Macleans that Ottawa may use much of its new $2 billion infrastructure program to become a far more activist player in cash-starved cities—even if it does not have provincial agreement. Previous infrastructure programs have required provincial consent and partnership in each project. “We should look where we can help within our own jurisdiction, such as railways, where we do not need the province’s consent to make capital investments,” says Collenette, who is transport minister. When asked if provinces should be involved because they have a better grasp of local needs, he is blunt: “It is great to have theories—but you have to do what works. The art of politics is the possible.”

That new activism comes nearly a generation after Ottawa withdrew from spending in many areas, such as social housing and transit. And while it likely means more federalprovincial clashes, it is also belated recognition that Canada’s cities face problems too dire to ignore. Jurisdictional quarrels are a luxury. “The revenue base of our cities is increasingly inadequate to deal with their needs,” says Meric Gertler, economic geography professor at the University of Toronto. “It is ludicrous that we are effectively starving them.”

The situation is grim. The Federation of Canadian Municipalities has compiled a litany of statistics on urban needs, ranging from $9.2 billion for capital investment in public transit over the next five years to the cleanup of 4,000 contaminated industrial sites. But despite their immensely complex challenges, city governments must largely rely on the antiquated mechanism of property taxes for 54 per cent of their revenues. When incomes increase, revenues from property taxes do not automatically rise in response. In the last five

years, the federation says, municipal government revenues have gone up 7.7 per cent—compared with 26 per cent for provinces and 33 per cent for the federal government. Worse, it is difficult to increase property taxes without penalizing poorer residents.

Federation president Jack Layton, a Toronto councillor, points out that U.S. cities are in the midst of a major revival after decades of decay—because the U.S. federal government is pumping billions of dollars into their infrastructure. It is a virtuous circle: healthy cities attract investment and talented workers who generate growth. To capture the dilemma, Layton has a breathtaking figure: Washington pumps US$54.55 per person per year directly into municipal budgets; Ottawa contributes US$10.22 for comparable services. “In the old days, when there were a few horse and buggy carts, city governments just had to make sure that the bridge didn’t collapse,” he says. “Today cities must supply sophisticated infrastructure for our quality of life. But there is a massive mismatch between what they must do—and what they can collect.” Urban governments have a wish list. They have asked Finance Minister Paul Martin for $4.3 billion per year for the next five years to fix up everything from water systems to toxic sites. Layton is pressing for so-called “dedicated” funding: Ottawa should agree to transfer a set number of percentage points of tax revenue to city governments each year— either from personal or sales taxes. That way, cities would be able to plan multi-year projects such as transit construction.

It’s a worthy request. But, although Collenette personally advocates “innovative” approaches to funding, including the possibility of dedicated taxes, this government will almost certainly not surrender long-term control over its revenues. Instead, it is creating new programs to meet urban needs. The 55-year-old Collenette likes urban life: he was born in London, England, and brought to Toronto at the age of 11. So his proud chronicle of Ottawa’s ongoing activism is almost certainly a taste of the ventures ahead: $680 million for affordable rental housing, $1.6 billion in community infrastructure funds, $753 million for the homeless, $125 million for municipal environmental projects, a “minimum” contribution of $2 billion to a new infrastructure program for everything from sewage to transit. “The federal government cannot say it does not have an interest in cities—when 80 per cent of Canadians live in them,” says Collenette. “We have to find some way of getting money to cities.” Dedicated taxes would be the best way. And the best time would be now. E3