Demergering Cities

Commentary, Municipal Government, Frontier Centre

Beyond its cautionary swipe at the global warming industry, a brutally cold winter has its satisfactions. Municipal budgets for snow clearing are hitting bottom along with the thermometer, but the prospects for a rethinking of urban dynamics are warmer than ever.

Canadian mayors sat down with the new Prime Minister and pressed him to share federal wealth with the cities. Mayor Glenn Murray must have been gratified to hear Paul Martin adopt his New Deal lingo, a far cry from the chilly reception his tax-sharing ideas received from the provincial government.

Most Canadians don’t expect federal finance minister Ralph Goodale to plough their sidewalks. The intensely local nature of municipal services dictates the opposite. Their delivery ought to be held as close to home as possible, to give the community more control and strengthen accountability by local politicians. That motive has inspired positive news from Québec, which is inaugurating a process to reverse the 2002 municipal mergers of the now defeated Parti Québecois government. Of course, Winnipeggers have heard all this before — the rationale for amalgamating local government is that larger government units are somehow more efficient than a collection of “fragmented” municipalities.

A new Frontier Centre backgrounder, Reassessing Local Government Amalgamation, provides new evidence that larger, amalgamated cities are in fact more expensive to operate. The stunning data assembled by author and urban policy expert Wendell Cox shows that consolidated cities in the United States almost uniformly report higher spending levels than municipalities outside their borders. He highlights huge differences between per capita city expenditures in amalgamated cities and those in fragmented areas. On average, per capita city expenditures in the amalgamated cities were 57.3% higher.

People in municipalities with populations above a quarter million pay an average US$1,209 per capita for city services, versus a national average of US$1,112. This disproves the argument that larger administrative units will capture economies of scale. The reason, he posits, is that they necessarily grow more distant from neighbourhood control. They tend to become dominated by the interests who deliver the services, particularly public sector unions. Mergers do provide generous economies of scale in wage bargaining, with especially debilitating consequences when skittish, risk averse politicians sit on the other side of the bargaining table. It also explains why provider interests enthusiastically support amalgamations within our health and education systems. Typically, labour agreements are “leveled up” to the highest salary levels among the merged entities.

The mega-city created in 2002 has predictably left Montréal and its suburbs with higher taxes and more bureaucracy. Montréalers are already feeling the pinch of residential tax hikes, a far cry from the “bigger is better” theories of merger proponents. They and their counterparts in Toronto are learning the hard way the lesson Unicity taught us here. Amalgamations are synonymous with higher costs and service cuts. Even though the efficiency argument is proving false, a loss of local identity, expressed in grassroots pressure to restore neighbourhood control, drove the Liberal government’s municipal demerger process.

Cox admits to “municipal government functions that need to be administered at a metropolitan level, or above. For example, air pollution, highways and public transit are best administered at the regional level. But there are many more government functions that do not need to be administered much higher than the neighborhood level.” Other research shows that cities prosper best when their populations don’t exceed 200,000.

Why is this so? Beyond the value of superior information about local needs, a key element in the relatively more successful performance of smaller municipal units may be the issue of consent. The Independent Institute in Oakland recently published an anthology of essays called The Voluntary City: Choice, Community and Civil Society. The writers outline the development of cities in Europe and America, where local governance often took the form of service provision through the market, without any political or bureaucratic involvement.

Cox points out that “some of the world’s most successful metropolitan areas have highly fragmented government. Paris has seven regional governments and more than 1,300 municipal governments. Yet Paris has developed a governance structure that effectively delivers quality public services throughout and regional services that would be the pride of any area.

“The best guarantee of effective local government is a populace with a strong stake in its performance. In a smaller jurisdiction, the stake of the individual citizen or neighborhood group can provide an important counterbalance to interests that would prefer to siphon off the resources of local government to their own advantage. Larger governments are harder for the citizenry to control.” A productive discussion on creating vibrant cities needs to go beyond the mechanics of city funding.

As Québec restructures the scale and form of its cities, why not do this across the country? We can’t control the weather. But we can be the masters of traditional city services, and other public services, if we refuse to let our needs be buried in the false theories of amalgamation and the snowdrifts of unresponsive mega-governments.