Toronto can’t get no respect, no respect at all. Despite being the largest city in the nation and the heart of Ontario's economy, the perennial complaint goes, the city is stuck with a backwards form of municipal government held over from before Canada was even a country, and only slightly modified since.
There’s a lot of truth to this complaint, and Toronto isn't the only one making it: municipalities have exactly and only as much power and responsibility as provincial law say they do. (Thank you, Section 92 of the British North America Act.) If we were rewriting the constitution today, it’s unlikely we would keep cities as mere adjuncts of provincial responsibility. But when Canada was created it was 80 per cent rural; what was considered “urban” back then would be barely recognizable today.
Before going further, it’s important to separate the structural question from recent events. Toronto mayor John Tory's complaint that he’s tired of being “a little boy going up to Queen’s Park in short pants” because Premier Kathleen Wynne reversed herself on whether the city would be allowed to levy road tolls isn't evidence the entire system is rigged: telling Toronto that it can’t levy a tax on people outside its own borders to the tune of thousands of dollars a year isn’t inherently unfair, and municipalities always will — and should — have some provincial oversight.
Nevertheless, other big cities around the world have access to more than just the property tax that makes up a third of Toronto’s revenues. In Germany, cities predominantly rely on income taxes (which are remitted by the national government), while in the Netherlands almost half of local revenues comes from sales taxes — two forms of taxation all Ontario cities are explicitly prohibited from raising. One key advantage of these particular revenue tools: Income and sales taxes grow with the economy without forcing governments to make politically painful choices to increase them, while property taxes do not, and need to be adjusted yearly almost everywhere.
One complication in all this is that money doesn’t always mean freedom. Even in the global metropolises that Canadian cities envy, taxation powers are often constrained, too — just in different ways than they are here. New York City has a sales tax, but any increases must be approved by the state legislature. Los Angeles needs to hold a referendum before it can increase its sales tax. Even for Toronto — which already has taxation powers other Ontario cities don't, but still faces persistent structural budget gaps — those alternatives would be preferable to the status quo, but it’s important to note that limits drawn by higher orders of government are part of the bargain around the world. Greater revenues are available elsewhere, but cities almost always have hurdles to clear before they can get their hands on the really big pots of money. Either that, or they share the revenue from taxes they don’t have the power to control.
The Liberals, for their part, haven’t disagreed with Toronto's fundamental point — that it needs new money — even if they’ve rejected many of the obvious options for raising it because they aren't politically expedient (most recently road tolls, but in 2014 as well when they ruled out an HST hike or gas taxes).
The government has two more budgets before it heads to the polls, and it’s possible it might yet bring in a massive restructuring of municipal finances in year 14 or 15 of Liberal rule. But large cities should be careful what they wish for. The last time there was a major push to reorganize it didn’t end the way municipalities hoped — an unavoidable risk when it is the province that will be doing the reorganizing.
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- Steve Paikin: Is it time to get our big-city mayors out of the "short pants, begging cap-in-hand" business?
In 1995, then-NDP premier Bob Rae asked for a report on the future of the GTA in response to public calls for changes to municipal law. But by the time the commission, chaired by Anne Golden, issued its report in 1996, the NDP had been replaced by the Progressive Conservatives under Mike Harris. The Tories had different ideas for municipal reorganization, and they amalgamated — first Toronto, then other cities large and small across Ontario.
With Tory and other mayors in the GTA making the case for more money for cities, and more autonomy generally, and given there’s a decent chance the next election will see a change in government at Queen’s Park, there’s more than a little sense of déjà vu to all this.
Do the Liberals try to make a major change before they hit the campaign trail and, in effect, dare the voters to risk reversing it? (It’s already the implied threat behind the government’s publicity campaign for its infrastructure spending.) Major new money for cities either means new taxes or throwing the province back into deficit, given the shape of the province’s books. Either is an electoral risk for the Liberals.
And if the Progressive Conservatives do win the next election, there’s precedent for them taking the baton of municipal governance reform and running in unexpected directions. With the Tories still developing their platform it’s unclear which way they’ll go on the issue, and it could almost literally be anything: former leader Tim Hudak proposed taking the TTC’s subways from the city of Toronto and folding them into Metrolinx, while then-premier Mike Harris briefly downloaded GO Transit to the cities of the GTA.
More broadly, there’s a reasonable argument that the province shouldn't feel pressured to give cities more money in exchange for nothing. Handing hundreds of millions of dollars annually over to local councils to use for their own ends, when even in larger cities that have substantial oversight measures in place, there are serious problems with good governance and accountability, is a recipe for eventual disaster. Cities have clamored for new money without any strings. What happens when and if Queen’s Park insists on new forms of scrutiny before any cheques are cashed?
Or, in the nightmare scenario for municipal councils around the GTA, what if the provincial government decides that new tax revenues are contingent on another round of amalgamations?
There is and will remain a strong argument for giving Ontario’s cities new chunks of money, and specifically forms of tax revenue that grow more consistently with the economy and population. But the political reality is that mayors and councils probably want to be careful when they talk about changing the way their governments work in the first place.
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