New fiscal deal should be 2018 ballot question

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Winnipeg’s 2018 budget passed Tuesday, but not without some acrimony. The fact is that hard decisions were made — sort of like a “Sophie’s choice” budget exercise that forced the city against a wall, trying to balance the needs of a number of critical services against very limited revenues.

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Opinion

Hey there, time traveller!
This article was published 15/12/2017 (1754 days ago), so information in it may no longer be current.

Winnipeg’s 2018 budget passed Tuesday, but not without some acrimony. The fact is that hard decisions were made — sort of like a “Sophie’s choice” budget exercise that forced the city against a wall, trying to balance the needs of a number of critical services against very limited revenues.

Setting priorities is a basic budgeting task. But fundamentally, the tough choices city council was forced to make illustrate that Manitoba’s largest city and all municipalities are at the point of trading off one vital service against another.

The truth is, municipalities simply cannot raise revenues sufficient to the task, because as creatures of the province, their hands are tied by an antiquated revenue model.

WAYNE GLOWACKI / WINNIPEG FREE PRESS It's time for the city and province to sit down and discuss a new fiscal deal.

It is time to change the model. Mayor Brian Bowman and Winnipeg’s city councillors should lead a partnership with the Association of Manitoba Municipalities along with the many stakeholders in the business community who have long held the view that Manitoba municipalities need to strike a new fiscal deal with the provincial government. That new deal must also involve the full participation of the federal government.

This partnership of common public best interests should lay the groundwork to make the imperatives of a new fiscal deal the key ballot question across all municipal elections in 2018.

What should be obvious to any impartial observer of municipal fiscal governance is that our towns and cities are working off a turn-of-the-century model which, in fact, has not worked for decades. This model now sees municipalities receiving only eight cents of every tax dollar raised, while their ownership of public infrastructure has skyrocketed to more than 60 per cent.

Every year at budget time, Winnipeg and Manitoba’s municipalities are forced to decide which vital services will see the required investments — and which, once more, are told “not this year.”

That will not change unless we repair the broken relationship that exists now between levels of government. Municipalities are forced to operate within an antiquated revenue model that limits their sources of revenue. And that model cannot meet the task our cities face as they operate on new economic platforms and must be able to pivot quickly to respond to the pressures of shifting global economic and trade realities.

It simply is not sufficient today to tie the bulk of municipal revenues to property taxation, which shoulders the substantial burden for the operating budget.

We saw, in the 2018 preliminary budgets, the juggling game that must be played to compensate for the lack of revenues against the weight of the demands, including those of priority areas such as transit or core infrastructure.

How can those needs be met by a modern, metropolitan city? We need a new fiscal deal whose basic elements in protecting the interests of one taxpayer should:

• Recognize that infrastructure investment programs must consider balanced sharing, not just of initial capital costs, but for life-cycle costs, as well;

• Recognize that municipalities require diverse means to raise revenues, perhaps through broader revenue-stream sharing and/or new taxation powers;

• Compel municipalities to work together, putting regional interests ahead of local priorities for the greater good of the economy; and,

• Lay the foundation for program sustainability, predictability and revenue certainty.

We support the mayor and executive policy committee’s direction to the chief financial officer, to examine multi-year budgeting, to conduct core-service reviews, to challenge existing service-delivery models to manage and contain expenditures and to explore new revenue streams within the city’s existing legal capacity. Reviewing “legal capacity” must also be part of a “new fiscal deal” discussion.

This is not a new problem; in fact, some saw this coming 80 years ago. In 1937, then-mayor Frederick Warriner petitioned the federal Royal Commission on Dominion Relations, asking for a re-write of “the extremely unsatisfactory financial conditions under which Winnipeg operates as a municipality required by provincial statute to maintain certain services and given only restricted revenues for the purpose of financing said services.”

In 1961, the Blake-Goldenberg Report on metro financing suggested that the 12 municipalities in Greater Winnipeg introduce a gas tax or a tax on vehicle registration to fund streets.

In 1974, the Federation of Canadian Municipalities proposed reducing municipal responsibilities, expanding revenue transfers from senior governments to municipalities and expanding the tax base of local governments.

In 2003, then-mayor Glen Murray proposed a major shift to move Winnipeg’s funding away from realty taxes to growth-based taxes.

There has been plenty of foresight. Yet, today, we are still mired in an antiquated revenue model, with municipalities facing challenges never imagined by that model’s framers.

If we do not address the basic weaknesses in Winnipeg’s (and all municipalities’) revenue capacity, all of the hard decisions made in Budget 2018 will get harder, each year.

The wall we will hit is not far off.

There is no better time than now to advocate for a new fiscal deal. This should be the ballot issue as we head into the 2018 civic election.

Chris Lorenc is president of the Manitoba Heavy Construction Association.

History

Updated on Friday, December 15, 2017 8:17 AM CST: Corrects byline

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