1. 1 The Fiscal Basis for Civic Endeavour Enid Slack Institute on Municipal Finance and Governance University of Toronto Conference on “Building Spaces that Work: A Canada-Brazil Dialogue Devoted to Enhancing the Public Realm” October 20, 2005

2. 2 Outline of Presentation Background on municipal finance in Canadian cities Fiscal challenges facing Canadian cities Implications for the public realm The way forward: a role for each order of government

3. 3 Background on Municipal Finance – Expenditures Municipal expenditures, Canada, 2003: Transportation (19%) Fire and police protection (17%) Social services and social housing (15%) Water, sewers, solid waste (17%) Recreation and culture (12%) Debt charges (4%) Other (16%)

4. 4 Background on Municipal Finance – Expenditures Municipal expenditures, Canada, 1988: Transportation (22%) Fire and police protection (15%) Social services and social housing (9%) Water, sewers, solid waste (15%) Recreation and culture (12%) Debt charges (10%) Other (17%)

5. 5 Background on Municipal Finance –Revenues Municipal revenues, Canada, 2003: Property taxes – 53% User fees – 23% Provincial grants – 15% Federal grants – 1% Other revenues – 8%

6. 6 Background on Municipal Finance –Revenues Municipal revenues, Canada, 1988: Property taxes – 49% User fees – 20% Provincial grants – 22% Federal grants – 1% Other revenues – 8%

7. 7 Background on Municipal Finance -- Financing Capital Infrastructure Property taxes User fees Intergovernmental transfers (incl. federal gas tax revenues) Development charges Reserves Borrowing

8. 8 Background on Municipal Finance – Role of the province Provincial legislation determines municipal responsibilities and what taxes municipalities can levy Municipalities cannot run an operating deficit Municipal borrowing is restricted

9. 9 Fiscal Challenges Facing Municipalities Offloading of services International competitiveness Urban sprawl Amalgamation No diversification of revenue sources

10. 10 Implications for the Public Realm – Success on Fiscal Measures Municipalities have done well on fiscal measures: Size of the operating deficit Amount of borrowing for capital Rate of property tax increases Reliance on provincial grants Extent of tax arrears

11. 11 Implications for the Public Realm –Infrastructure and Services Fiscal health may been achieved at the expense of the overall health of Canadian municipalities: The state of municipal infrastructure (water, sewers, roads, recreational facilities, etc.) The quality of service delivery (e.g. performance measures)

12. 12 Implications for the Public Realm –Infrastructure Deficit Many studies estimate the infrastructure deficit; measures are wide-ranging Different methodology; some cover all municipal infrastructure while others cover only specific types of infrastructure; some separate replacement/rehabilitation from investment needs while others do not; most obtain their data from surveys. Nevertheless, economic and social costs of not replacing infrastructure can mount very quickly and can affect the quality of life of residents

13. 13 The Way Forward - A Role for Each Level of Government Federal government: Carry out its own responsibilities effectively Strategic investment in infrastructure Provincial governments: Revisit local services realignment; broaden municipal financial tools (“new fiscal deal”) Municipal governments: Make better use of existing financial tools: user fees, development charges, property taxes, borrowing

14. 14 Concluding Comments Fiscal health may have been achieved at the expense of the overall health of our cities (the public realm) To enhance the public realm, cities need to be able to match expenditures and revenues All three orders of government have a role to play