Diversity in Governance: A New Deal for Cities (Part 3 of 8): Province must respect local democracy

Bryan Schwartz, Commentary, Local Government, Taxation, Uncategorized

 Manitoba’s chronic reliance on transfer payments, its ever-inflating public sector and its increasing concentration of sectoral decision-making power in the hands of a few on Broadway is having an enervating effect on the province, Law Professor Bryan Schwartz argues in The Supplicant Society. It doesn’t have to be that way, Manitoba can change for the better, Schwartz demonstrates in this series for the Winnipeg Free Press and the Frontier Centre for Public Policy. The series continues weekly on Saturdays, ending on March 5. Footnoted versions of this article can be found at WinnipegFreepress.com and at www.fcpp.org.

As mayor of Winnipeg, Glen Murray was a national leader and an advocate for a new deal for Canadian cities. A central feature of the new deal was that provinces would pass legislation to provide cities with the tax base and taxing powers to match their responsibilities. Cities would no longer be largely confined to property taxes but would also have access to growth taxes such as sales taxes, where revenues would grow along with the local economy. The city would have an increased right to taxes generated within its borders, such as a percentage of the GST derived from activities in Winnipeg. The argument was that this would create an economic incentive for city governments to adopt the policies and investments needed to grow their local economies and thereby their tax receipts.1
Winnipeg, for example, is too dependent on property taxes. Raising them does not generate much extra money. It may even lose revenues, as homeowners and businesses fleeing high taxes relocate just outside the city perimeter but continue to use City of Winnipeg services and resources. The property tax system does not adequately recognize that many non-residents of Winnipeg carry on business and employment here and the City must pick up the costs of facilitating their activities. Thus, the City incurs major costs in attracting business—such as fixing roads or building a convention centre, but it does not capture its fair share of the resulting tax revenues.
So far, the province of Manitoba has largely resisted a new deal. The general subsidy that each local government receives each year remains subject, to a large extent, to the exercise of provincial discretion. The province also intervenes in local budgets on a line item basis—such as funding half the cost of new positions in the police force.2
The province’s support for public works projects sometimes displays contempt for local democratic processes.3 Case in point: the Southdale Community Centre. The City set up a volunteer, non-partisan committee to prioritize the building of new recreational centres.4 But during the 2007 election, Premier Gary Doer determined that the Southdale Centre would go to the front of the line. Doing so helped to secure the election of an NDP candidate in the previously opposition-held riding.5
More of the new deal should be adopted in provincial legislation. The City should have a fiscal base that is less subject to shifting and detailed provincial preferences, one that grows more in line with the economy and that recognizes and rewards the efforts of municipalities to host economic activity. Winnipeg could then reduce its overburdening property and business taxes. Legal arrangements, however, cannot be the whole solution. Part of the answer is a change of attitude on the part of provincial leaders.
The province will always have an overlapping role in many areas of City jurisdiction. In some cases, intervention in local politics is justified to promote a compelling provincial policy object or to ensure equitable treatment among different municipalities. There will always be some need for provincial oversight and the exercise of judgment about how far to intervene in local matters. However, a provincial government, without foreswearing any of its legal authority, can make it clear by its words and actions that it genuinely places a high value on respecting the wishes of elected local politicians. The Doer-Selinger government has proceeded in a different direction. The title of a Winnipeg Free Press article in 2007 might have captured the reality: “‘Mayor Doer’ runs this town.”6
The latest move is for the provincial NDP to endorse candidates in municipal elections.7 Doing so is disrespectful of the concept that local government is a distinct level of authority, that it has a special role in reflecting the conditions and aspirations of local communities and that a balanced society disperses governmental authority, rather than concentrating it in a few hands.

1. Glen Murray, “New Deal for Canadian Cities,” presentation at CABE Outlook Conference 2004, November, 6, 2003. Available online at http://www.cabe.ca/jmv1/index.php?option=com_docman&task=doc_details&gid=419&Itemid=38. Also see Bryan Schwartz, “Making the Case for Urban Autonomy: The Legal Framework” Ideas that Matter, Vol. 3, No. 1, p 16. Available online at http://ideasthatmatter.com/quarterly/itm-3-1/ITMV3N1.pdf.

2. Province of Manitoba, Press Release, “Province Provides Support for Police Officers, Prosecutors,” March 24, 2010. Available online at http://news.gov.mb.ca/news/index.html?archive=2010-3-01&item=8041.

3. Another example: the proposed Point Douglas provincial park, explained in Editorial, “King Gary decrees a park,” Winnipeg Free Press, July 18, 2009, A14. Available online at http://www.winnipegfreepress.com/opinion/editorials/king-gary-decrees-a-park-51090822.html. See also Bartley Kives, “Verbal vent at city hall: Councillors attack province, feds on their infrastructure priorities,” Winnipeg Free Press, June 25, 2009, B1. Available online at http://www.winnipegfreepress.com/local/Verbal-vent-at-city-hall.html.

4. Bartley Kives and Aldo Santin, “$5.7M for community centres: Project priority list mostly ignored,” Winnipeg Free Press, September 22, 2009, B2. Available online at http://www.winnipegfreepress.com/local/57m-for-community-centres-60187142.html.

5. Discussed in “King Gary decrees a park” in supra note 36. See also Bartley Kives, “Southdale centre jumps city’s funding queue: Councillor says Doer playing politics,” Winnipeg Free Press, B1, June 13, 2009. Available at http://www.winnipegfreepress.com/local/southdale-centre-jumps-citys-funding-queue-47992366.html; Bartley Kives and Mary Agnes Welch, “NDP keen on Southdale centre,” Winnipeg Free Press, April 12, 2009. Available at http://www.winnipegfreepress.com/historic/32808219.html; Mia Rabson, “McFadyen launches verbal attack on Doer,” Winnipeg Free Press, May 18, 2007. Available online at http://www.winnipegfreepress.com/historic/32239674.html; Bartley Kives and Mary Agnes Welch, “Rec officials caught off guard by NDP promise,” Winnipeg Free Press, May 16, 2007. Available online at http://www.winnipegfreepress.com/historic/32229074.html..

6. Catherine Mitchell, “‘Mayor Doer’ runs this town,” Winnipeg Free Press, May 3, 2007. Available online at http://www.winnipegfreepress.com/historic/32210964.html

7. Also see Bartley Kives, “Coalition enters civic arena,” Winnipeg Free Press, June 18, 2008. Available online at http://www.winnipegfreepress.com/historic/32903994.html; Bartley Kives, “NDP to field council candidates: Veteran Coun. Harvey Smith facing challenge from within party,” Winnipeg Free Press, December 11, 2009, B1. Available online at http://www.winnipegfreepress.com/local/ndp-to-field-council-candidates-79038547.html.