This past week, I attended the Federation of Canadian Municipalities (FCM) conference in Toronto. This year’s theme was Strong Cities, Strong Communities, Strong Country. The theme has an important message; all levels of government must work together if we are to have a strong country. The Constitution of Canada does not recognize municipal governments which can provide some barriers to how we all work together; however, times have changed. Today, municipalities are important to the success of our country. Unlike 1867 when Canada was incorporated, cities provide more than water, sewer, police and roads; however, the funding for delivering the increased services has not followed. Consequently, municipalities are limited to property tax for funding which is a regressive tax. Former Prime Minister Paul Martin addressed the delegates and called this situation “unfair and dumb”.

According to Martin “the fact that municipal governments did not have access to some taxes at least that grew with the economy but had responsibilities that grew regardless of the economy was lousy economics.” This is a key statement and something municipal governments need to work on with the Federal and Provincial governments. For example, over the past few years we have all experienced an increase in costs – fuel has increased from 0.60 per litre and today it is $1.14. As the price of gas increased the GST revenue increased which benefits the Federal government but hurts the municipal government as it costs us more to provide the same level of services. It was a mistake for the Federal government to decrease the GST from 7% to 5%, one percentage point should have been delivered to municipal government (see Mayor of Toronto One Cent proposal ). This would have provided municipal government a new dynamic source of revenue which would have provided relief for property tax and provided an incentive as the economy grows.

Municipalities are ready and willing to work with all levels of government. Let’s sit down and work on how we can provide equitable funding to the services that all levels of government provide. Right now municipalities only receive 8% of all tax dollars, yet provide an ever increasing scope of services. Many will argue that local government is best situated to deliver many of the services, however we need the funds.

NOTE: Here is a copy of Paul Martin%u2019s speech at the Federation of Canadian Municipalities 2010.