When the Federation of Canadian Municipalities asked Stephen Harper to their meeting last week, municipal leaders probably expected him to rollover and accept their demand for a slice of Ottawa's GST and income tax revenues. The Prime Minister would have none of it. He understands the votes of taxpayers are more valuable to him than accolades from mayors.

On the specific issue of providing tax room to municipalities, Mr. Harper simply said, "We have no plans to do that but obviously we're listening to all kinds of proposals." And what proposals might there be Ottawa, he suggested, would be pleased to discuss ways to divvy up future federal surpluses. But don't hold your breath because he cautioned "we do not anticipate large federal surpluses in the future." If cities want more money, he told mayors, they should look to the provinces: "I do have to point out that municipalities are the responsibilities of the province."

None of this is meant to suggest Canada's cities have not received help, indeed the opposite it true. The three federal parties all support the GST rebates to municipalities as well as the "New Deal for Cities and Communities" which will transfer $5-billion of Ottawa's gas tax money to them over five years. In addition, the recent federal budget included $16.5-billion in infrastructure spending over the next four years.

Because "no" is a word Canada's big cities mayor don't often hear, Federation of Canadian Municipalities President Gloria Kovach insisted afterwards the door somehow remained open for the federal government to transfer some of its taxing power to cities. She outlined the view of municipalities that property taxes are used to pay for basic infrastructure needs, like roads, police and fire services and other traditional costs like garbage collection. This is an exhaustive list. So what else is there

According to the federation's president, additional taxes are necessary for cities to tackle other new priorities, like culture subsidies and climate change. With cities jumping into these provincial and federal jurisdictions no wonder municipal property taxes have jumped by 24% nationwide since 2000.

The mayors even adopted a resolution to abide by the Kyoto Protocol. Ottawa believes it impossible for Canada to fulfill the targets to reduce greenhouse gases as spelled out in the international treaty without spending billions of dollars and crippling the economy. But not the Federation of Canadian Municipalities it seems.

A recent report from the C.D. Howe Institute concluded Ottawa's (now defunct) plan to implement the protocol would cost $12-billion over seven years and still not achieve the targets. Continuing the plan would cost $80-billion over 35 years and emissions would be 50% higher than today. Little wonder budgets are stretched at City Hall.

One important responsibility of lawmakers is ensuring tax dollars are used efficiently. This is a lesson lost on the Federation of Canadian Municipalities and it is why granting additional tax powers is a nonstarter. Our municipal governments have a spending problem, not a revenue problem. Between 2000 and 2004, revenues collected directly by municipalities increased by over 16%. By way of comparison, Ottawa's revenues over the same period grew by less than 9%. Cities need to begin prioritizing their spending, which is not happening. More money will only enable councilors to find new ways to spend it.

The Prime Minister's message to municipal leaders was welcome. Next, taxpayers hope he is prepared to display a similar resolve when dealing with the country's other group of whiners - Canada's premiers. Provincial leaders will be meeting this week in Edmonton and they all want one thing from Ottawa. You guessed it, more of your money.

June 22, 2006
Lies, damn lies and statistics, choose your poison -

Recently the Federation of Canadian Municipalities challenged my statement that property taxes have jumped 24% since 2000 and suggested the number was "pulled from thin air." In fact, the data was pulled from Statistics Canada's webpage. According to Canada's official statistical agency, local governments collected $32.3-billion from property and related taxes in 2000. The amount increased to $37.3-billion in 2004, which amounts to an annual growth rate of 3.5%. Based on this information, my office estimates that in 2006 municipalities will collect $39.9-billion in property taxes. In fact, given the robust housing market and rising property taxes, the figure will likely be higher. But at the Canadian Taxpayers Federation we prefer to keep our estimates cautious.

Here is one other comparison for municipal leaders to chew over. Between 2000 and 2004, total revenues raised by local governments increased by over 16%. Ottawa's revenues over the same period grew by less than 9%. Canadian cities have spending problem, not a revenue problem. This data is also publicly available.