Which government pays the tab?

Hey there, time traveller!
This article was published 12/07/2007 (6648 days ago), so information in it may no longer be current.

AFTER 35 years of shrugging at each other, the City of Winnipeg and the province could be close to finally deciding which level of government is responsible for public health inspections in Manitoba’s capital city. Right now, both the city and province deliver this service in different regions of the capital — evidence of just how dysfunctional the relationship between the city and the province truly is.

Currently, the city provides inspections in the central and northwestern districts of Winnipeg; the province holds responsibility in all other areas of Winnipeg. Business owners have long argued that having two levels of government offering essentially the same service is inefficient and inconsistent.

The good news is the city is currently examining a study on the consolidation of the delivery of public health inspections. The bad news is the study is less a solution than it is a reminder of the intractable, circuitous debate on this issue.

With a stunning grasp of the obvious, the study noted the city could take over public health inspections, and bear a $5-million increase in annual costs, or try to convince the province to take over delivery of the entire service.

Mayor Sam Katz and his Executive Policy Committee decided Wednesday to reject the status quo but could not decide which level of government should provide this service. Once again, a near miss on progress.

The inefficiency of public health inspections is just one minor example of the odd relationship that has evolved over the years between the city and province. The two are bound by multiple funding and cost-sharing agreements that ultimately make it impossible to determine which level of government is providing a service, and at which level the taxpayer is paying for it.

The province will provide about $188 million in grants to the city to help pay for civic services this year alone. There are grants for the operation of Winnipeg Transit, repair of critical infrastructure, the hiring of police officers, ambulances, libraries, mosquito fogging, and Dutch Elm disease control. These do not include an array of other essentially civic services (after-school recreation for at-risk kids, inner-city housing renewal) the province funds and delivers directly.

In exchange for this largesse, the province hauls in millions of dollars in revenue from gasoline and sales taxes, profits from the two provincial casinos and — the big one — tax on property to pay for public education, a provincial service.

So there you have it. We have the city tax base — the only source of revenue for the city in fact — being used to fund provincial services while the province pumps hundreds of millions of dollars into city services.

The illogical nature of this situation is not lost on city and provincial politicians — hence the effort to study the delivery of public health inspections. However, despite having struggled with it for decades, they seem unable to find a way out.

The problem is that all these funding agreements and tax grabs are so tightly intertwined, neither level of government can see that unwinding them is really part of the solution. And the first step to the unwinding process is undoubtedly disconnecting the education system from the property tax base once and for all.

The NDP has consistently refused calls to remove education funding from property tax bills, opting instead to maintain a moribund funding model that tries to soften the blow of education taxes with a provincial tax credit. The result is both the school system and the city are short of cash.

The NDP government has deflected calls for removal of education property taxes by pointing to the enormous cost, which some estimate as much as $800 million provincewide. The province believes that removing education taxes from property would put the provincial budget into deficit. So concerned, in fact, that the province may be missing a chance to trade off education taxes with grants to municipalities.

If the province took full responsibility for public education, the city could likely pay the entire cost of public health inspections, operating its transit system, hiring police officers and paving its roads and still charge property owners less than they’re being charged now. The province would be freed from having to maintain dozens of separate funding agreements, and could concentrate on funding public education while choosing services or projects to support in Winnipeg.

And most importantly, taxpayers would have the comfort of knowing that their municipal property taxes were paying for municipal services, and provincial taxes were paying for provincial services such as education.

So, before Mayor Katz and council make a decision on public health inspections, perhaps they could give some thought to the bigger picture and whether there’s a better solution.

dan.lett@freepress.mb.ca