09/22/2011 05:15 EDT | Updated 11/22/2011 05:12 EST

Naheed Nenshi, Calgary Mayor, Touts Urban Agenda On Eastern Tour


MONTREAL - Canada's cash-strapped 21st-century cities are being held back by an outdated tax system better suited for a pastoral 19th century, Calgary's mayor suggested Thursday.

Naheed Nenshi used an out-of-province speaking tour to argue that Canadian cities need an overhaul of revenue sources if the country is to mount a successful economic recovery.

Many of the country's major urban centres have complained about the financial strain they are under, a result of aging infrastructure and limited taxation powers.

Nenshi warned that unless the federal and provincial governments take action soon, the financial situation of cities will only get worse as the global economy weakens.

At the top of his wish list is long-term, predictable funding. Its absence, he says, is the result of a division of powers that leaves cities as almost an afterthought.

"The very big problem is that our Constitution was written when we were an agrarian society and now 80 per cent of us live in cities," Nenshi said in an interview with The Canadian Press.

"Every single city is facing the exact same financial constraints in providing the services people need every day."

Nenshi was in Montreal as part of a whirlwind tour through eastern Canada designed to sell Calgary as a place of business. He joked that his stay in Montreal was so short, he wouldn't even have the chance to sample any of the city's famous smoked meat.

But he did manage to sprinkle some basic French into a speech attended by about 100 people, including the like-minded mayor of Montreal.

Nenshi argued that the mismatch between the services that cities provide, and their ability to pay for them, has reached a critical point.

He said improved access to revenue can't be done without changes to the most potent financial tool cities have — property taxes, which he criticized as an inflexible and inefficient means of raising revenue.

"The property-tax system is horribly broken, and as baby boomers age it will become more horribly broken," Nenshi said.

"It's time for the federal and provincial governments to really understand that we've got to fix it because it is cities that will pull us out of the economic doldrums that we're in."

He found a vocal ally in Montreal Mayor Gerald Tremblay, who is also keen to wrench more powers for cities.

"We can't pick up all the tabs and bills," Tremblay said in a speech that followed Nenshi's address to a meeting of Montreal business leaders.

"Because that's what happens. We pick up all the bills and all the economic growth goes to the two other levels of government."

Montreal's infrastructure shortfall became painfully obvious this summer as a tunnel roof collapsed and monster traffic jams clogged city streets while crumbling bridges were closed for emergency repairs.

Tremblay echoed Nenshi's call for diversified revenue sources, pointing out that property taxes account for 75 per cent of Montreal's revenues.

Overhauling the revenue streams of cities wouldn't necessarily require complicated constitutional change, Nenshi said.

He cited as an example Ottawa's decision to transfer gas-tax revenues to cities, which he described as "probably the most meaningful thing the federal government has done for municipalities."

Paul Martin's Liberal government began the transfer and it continued under the Tories, who recently pledged to make it permanent.

Currently the federal government transfers about $2 billion annually to municipalities from proceeds of the levy on gas.

Nenshi wants to see more of the same. Financing big infrastructure projects, such as Calgary's light rail extension, requires a dependable, long-term source of funds, he said.

"Some governments just prefer to write checks," he said. "That's okay — I'll still cash them."

Adopting this approach, however, ignores what cities are really asking for — new ways to make money so they don't have to rely on the benevolence of higher levels of government.

But Nenshi wonders whether this message has been lost on the Conservatives.

"Really, mechanisms would be better than dollars," he said. "But I suspect this federal government is more likely to talk about dollars than mechanisms."

He outlined four key areas where Ottawa could help cities ease their financial stress: public transit, roads, water and affordable housing.

"There is a need for the federal government to engage in all of these," Nenshi said.

"What we have to do is find a long-term, predictable source of funding — that's such a politician phrase, but we do need that."