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The do's and don'ts of city funding

After an ill-conceived idea to hold up resource companies, a better idea to solve Metro Vancouver's fiscal woes

Municipalities are the poor step children among Canada’s levels of government. They are creatures of the province in which they are located with no autonomy beyond what is extended by that province. Their taxing powers are extremely limited and rely very heavily on property taxes.

The many basic services that cities provide, (e.g. schools, water, roads and police protection to name just a few) are absolutely essential if we are to have functioning communities. Both expectations and costs for such services are rising. The limited revenue sources available to municipalities are not keeping pace.

Higher levels of government are not stepping in to fill the gap. Faced with their own financial pressures including push back from the one taxpayer (us!), the senior governments are not averse to downloading costs to the cities.

In BC, a new payroll tax replacing medical service premiums will hit the municipalities hard.

Additional expenses that cities have to bear are those related to climate change and environmental issues. These can include anything from installing electric charging stations for vehicles to building more dikes for flood protection.

One example – the sand bags against high tides that were seen in the shore line parks in Vancouver over the holiday season. Who is there to blame for these increased costs and how can we get them to pay?

West Coast Environmental Law (WCEL) is an activist group that has been working out of Vancouver since 1974. They blame oil and gas producers for environmental problems, so they went to municipalities with a facile solution. Write to the 20 biggest oil and gas companies and ask them to pay you for dealing with environmental issues.

One hopes that the folks at WCEL, with their background in law, were aware that this was a non-starter and were only doing it as publicity stunt for their organization. It has succeeded in bringing their name to the public.

Blaming oil and gas producers shows an ignorance of basic economics and its fundamental  tool – supply and demand. No company produces a supply of anything unless there is demand,  that is customers to sell to.

The Environmental Protection Agency (EPA) in the US states that 80% of greenhouse gas emissions come from private passenger vehicles. We have seen the enemy and it is us.

Companies exist to provide goods and services that people want and are willing to pay for. They also have to offer a return to any shareholders who give them the capital that organizations need to function.

Company support to the greater community is largely in the form of taxes paid to the various levels of government. In addition, some firms choose to make philanthropic contributions. Getting a letter from diverse communities saying ‘hey, you guys have to pay us for cleaning up the environment’ is likely at best to create mirth in the boardroom.

Nevertheless, many municipalities did take WCEL’s advice and sent letters seeking payment to the major oil and gas companies. Of course, none have received a favorable reply. Far from benefitting, the resort town of Whistler paid for its presumptuousness by losing convention business from the energy industry.

How are communities to deal with the problem of insufficient revenue versus rising costs of which environmental activities are only a part? Here is a modest proposal for the Greater Vancouver area.

Metro Vancouver contains one electoral area, 21 separate municipalities and one treaty First Nation. If we were to follow the examples of Toronto, Montreal and other major cities and amalgamate, many benefits would follow.

Duplication (or should I say multiplication?) of all municipal serves would be avoided. This would include the local government itself, police, fire and rescue, waste management and many others. Effective transportation systems could be implemented. Costly and time consuming inter-governmental co-ordination would no longer be needed. Companies thinking of opening businesses in the Metro Vancouver area would no longer be able to play one municipality against another to get ever greater concessions.

This would free up significant amounts of revenue for Vancouver.

The only way this will ever come about is if it is legislated by the province. I can hear the shouts of indignation already from each separate entity, including Belcarra, population 643.

Other municipalities have survived such changes and prospered. Local interests can be dealt with in less costly ways, perhaps through a ward system. The First Nation would have to work with the new metro government in ways compatible with its treaty. It could well choose to participate in and gain the advantages of the new and efficient metro structures.

Such a change will not happen in the short term even though it would benefit the province of BC and its residents and taxpayers. In conflicts between the greater good and local political interests, the latter often wins.

However, a unified Metro Vancouver government is something to think about as a viable solution to help deal with our fiscal problems including the cost of fixing the environment.

Troy Media columnist Roslyn Kunin is a consulting economist and speaker.

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