The growing recognition of the importance of cities has been accompanied by a demand that cities be given additional revenue sources and more effective governing models. Let us take a closer look at both of these demands.
Additional Revenue Sources?
On December 13, the mayors of Calgary, Edmonton, Ottawa, Toronto, and Vancouver issued a letter requesting increased revenue powers. It stated that city governments had to rely only [emphasis added] on property taxes to support their growing operating budgets and that vital infrastructure is suffering “from decades of neglect.”
Let me concede at the outset that the infrastructure in many cities has deteriorated badly and will now cost a great deal to upgrade. But we need to recognize that it was the cities that were responsible for those “decades of neglect” when they failed – year after year, and decade after decade – to put money aside to build up the funds that would be needed to maintain and upgrade this infrastructure. Too many councils held the line on taxes instead (even raiding reserves to do so) while the neglected infrastructure – much of it underground and out of sight – steadily worsened. This irresponsible practice ceased about a decade back when the financial reporting rules were changed and required municipalities to address the depreciation of capital assets and to develop asset management plans – but we are now faced with an infrastructure funding crisis that was largely created by the municipalities themselves.
It is also an exaggeration for the big city mayors to claim that they have had to rely only on the property tax. In fact, municipalities have authority to use a variety of miscellaneous local revenues including – depending on the province – amusement taxes, land transfer taxes, hotel taxes, rentals, concessions and franchises, licenses and permits, interest, penalties, fines and user fees. The latter have become particularly prominent, now accounting for more than 20% of municipal revenues as a Canada-wide average. User fees, if properly employed, also have the potential to promote desirable behaviour (such as encouraging recycling) and to make municipal services more self-financing (such as cost recovery rates for metered water billings).
Another reservation that I have with the demand for additional revenues by the big city mayors is that many do not fully utilize the revenue sources they have now. Toronto is particularly notorious in this regard, having lobbied fiercely for years to be given additional taxing powers, then using only two before dropping one of them. Toronto has also consistently levied property taxes well below those in other municipalities in the GTA and has also failed to derive the financial potential available from imposing higher development charges – all the while lamenting its sorry financial state.
A Stronger Governing Model?
In addition to more revenue sources, there has been a recent call to strengthen the powers of mayor, in recognition of the challenges faced in governing today’s increasingly large and diverse cities. With limited and minor exceptions, Canadian municipalities operate under a “weak mayor” system of government, with heads of council exercising less power than American strong mayors who often gain media attention. The well-known urban thinker Richard Florida called for strengthening the position of Canadian big city mayors in an article in the December 5th issue of the Globe and Mail – albeit in the context of promoting a new training program for mayors to be offered by the University of Toronto.
As with the financial panacea examined above, I have my reservations about strengthening the position of mayor. While mayors with greater powers would have the potential to accomplish more good things, they would have the potential to do more bad things as well. Apart from at least some members of the Ford Nation, are there any others who wish Toronto had enjoyed a strong mayor system when Rob Ford was mayor? Canada has had some strong mayors over its history, especially when they were backed by a majority of members of a local political party, with Jean Drapeau being perhaps the best known example. He was certainly a larger than life figure but many of his accomplishments were overshadowed by the fiasco of the massive cost overruns associated with the construction of the Olympic stadium which came to be known as “the Big Owe.”
It should be borne in mind that there have been a number of instances of individuals ostensibly working within a weak mayor system who were still able to provide strong leadership. They did so by articulating a vision, building a consensus behind it, and creating council support for the measures needed to move forward. While a strong mayor system can be nullified or abused by ineffective incumbents, strong leaders can flourish even within a supposedly weak mayor system. As a result, I remain unsure about the notion of beefing up the powers of the Canadian mayor.