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Alberta's Big City Charter: Getting It Right

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Cities are, and will continue to be, of increasing importance in the 21st century. Increasingly, the planet's population is becoming urbanized and cities are where the action is. Cities with the ability to attract human capital will prosper. Hence, more and more, the role of municipal governments will be to do more than simply ensure that the garbage is picked up and that roads are paved. Municipal governments will instead be expected to engage citizens in finding new ways of delivering services which will go towards building economically, socially and environmentally sustainable cities. This signals a new role for cities and their municipal governments.

Unfortunately, municipalities in Canada continue to operate under an outdated federalist model. As the acclaimed constitutional scholar Jennifer Smith claims in her book Federalism [1], "municipalities have no constitutional footing, as they fall under provincial jurisdiction"[1]. Thus Alberta's two largest municipalities, Calgary and Edmonton (which both have a population of over one million people), have the same constitutional powers as smaller ones, such as Olds or Brooks.

Olds and Brooks are two wonderful communities, however, they do not serve the same purpose as Alberta's two biggest cities when it comes to national economic and political influence, as well as giving Alberta a presence on the global stage. Thus from a big city perspective, there is a need for provincial recognition of the unique position that both Calgary and Edmonton find themselves.

The Alison Redford government has acknowledged this, sort of. Last June, Alberta Municipal Affairs Minister Doug Griffiths signed a memorandum of agreement with both Calgary and Edmonton to develop a big city charter by sometime in 2013 . Although the details of such a charter were not settled at the time, it was a promising step in the right direction. However much of the promise a big city charter seemed to have was dashed when Griffiths announced on October 31st that Calgary and Edmonton would be denied new taxing powers . He claimed that (Calgary and Edmonton) "have a lot of avenues for taxation that they could always raise if they wanted to."

This, in my opinion, is the wrong way to go about setting a premise for negotiations regarding a big city charter. It seems to indicate that the province expects municipalities to find new ways to fund their responsibilities that will be outlined in a big city charter, and that they (i.e., Calgary and Edmonton) will continue to be reliant on funding from the provincial government for municipal projects. Both instances are problematic for Alberta's big cities. As Derek Fildebrandt of the Canadian Tax Payers Association points out, having cities being reliant on provincial funding for municipal projects will result in more of the same problem; jurisdictional confusion on who is responsible for funding and providing which services .

Further it will not solve the problem that Calgary and Edmonton currently face; of funding for projects being left to the whim of the province (or in some cases the federal government). This type of approach will only force cities to either run deficits, or raise/establish new taxes to fund any new responsibilities incurred to municipalities by a big city charter. Increasing tax rates will only raise the cost of living in Alberta's two biggest cities, putting them at an economic and social disadvantage in terms of attracting world class talent and business.

Instead, what needs to result from a big city charter is a devolution of taxing powers from the province to cities, resulting in a zero net tax increase (i.e., no new taxes). The purpose of a big city charter should be to provide the governments of both Calgary and Edmonton the autonomy they need to have sufficient administrative and fiscal capabilities to provide the services which will make them both economically competitive for businesses, and socially desirable for current and prospective citizens. For this to happen, Calgary and Edmonton will need to have mechanisms in place to sustainably fund the services they offer in order to hold a competitive economic and social advantage over other global cities also competing for human capital.

A good start would be to allow municipalities exclusive access to their own property tax base.
(Yes, the property tax is not the best model of taxation, however, this could be a short term solution while an alternative to the property tax is developed for the exclusive use of cities.)

In Calgary, such a shift in the property tax base could allow the municipal government to have greater autonomy in allocating funds for much needed transportation and infrastructure projects such as acquiring four-car C-Trains before 2015, and/or the building of a South East - North Central LRT line.

Again, it is these type of projects that will increase the quality of life for those living in Alberta's two biggest cities. At the same time it will also maintain current levels of property taxation, and will not increase the tax burden on citizens. This would help create the proper conditions to entice people to come live, and do business in Calgary and Edmonton.

So when Alberta Municipal Affairs Minister Doug Griffiths says that cities won't be allotted new taxing powers in a big city charter, it sets a concerning tone for charter negotiations. It suggests that the resulting charter, while outlining the roles of municipal government for Calgary and Edmonton, will lack the appropriate financing mechanisms for Alberta's two big cities. It also shows a reluctance on the part of the province to fully embrace the new role that big cities have in a 21st century economy; where municipal governments, as opposed to provincial or federal governments, will be tasked with creating the proper economic, social and environmental conditions that will attract human capital to our cities.

What should result from a big city charter is a devolution of provincial taxing powers to both Calgary and Edmonton.

[1]: Smith, J. (2009). Federalism. British Columbia, Canada: UBC Press.