The federation, which is meeting in Vancouver for its annual conference, released a report Friday titled The State of Cities and Communities, outlining why the status quo is hurting local governments and needs to changed.
The report notes there is no formal constitutional relationship between the federal government and municipalities, which technically fall under provincial and territorial jurisdiction.
That reality, the report says, leads to short-term funding decisions that are often driven by political considerations and don't properly take into account the long-term needs of local communities.
A national framework between Ottawa and municipalities would clearly define the federal government's role when it comes to spending money on local issues, such as infrastructure or transit, the report says. The federation says any such framework should also include measurable goals to ensure the relationship is transparent and accountable.
"What we're looking at is a renewed partnership and a new partnership with the federal government," federation president Karen Leibovici said as the report was released.
"I think that what we're seeing now is, at times, overlaps, downloading, finger-pointing — and that has to stop with the delivery of basic services and services that Canadians want across this country."
The 29-page report is vague on specifically what should be such a policy framework.
The report says the federal government must first publicly recognize the issues that are of major concern to municipal governments, though it doesn't specify the issues.
The report also says the federal government, the provinces and municipalities should strive toward what it describes as "collaborative policy development" to recognize the three levels of government have overlapping jurisdiction over many issues.
Leibovici said the federal government must recognize there is a range of issues, such as public transit, climate change and infrastructure development, that are essentially local issues but for which the federal government contributes significant funding.
"I think there is a sea change that is happening across the country," she said.
"I think what we're starting to see is a lot of recognition by the public that we need to get together as the three orders of government in this country in order to make sure our communities and cities are prosperous and successful."
The report also calls for long-term, stable funding in the areas of policing and housing. A day earlier, the federation's Big City Mayors' Caucus urged the federal and provincial government to address what the mayors said was a national housing crisis that has left many people unable to afford homes.
The federation says there have been some recent successes in municipalities' relationship with the federal government, such as a 10-year federal infrastructure funding plan announced in the most recent federal budget and the addition of a now-permanent Gas Tax Fund for municipalities.
The report points to such initiatives as evidence the federal government is exerting more influence on municipal affairs, which, the federation argues, demonstrates the need to spell out just how that relationship should work.
The federation sent copies of its report to the federal and provincial governments, and Leibovici said she is awaiting their responses.
Denis Lebel, the federal minister of intergovernmental affairs, issued a written statement that said he will be carefully reading the report.
Lebel, who is scheduled to address the federation's conference on Saturday, boasted about the Conservative government's record on infrastructure funding and its decision to make the Gas Tax Fund permanent.