New deal for Cities Redux

By Paul Shaker

Almost 10 years ago, former Finance Minister Paul Martin addressed the Federation of Canadian Municipalities (FCM) conference in Hamilton and proclaimed the need for a “New Deal for Cities” where better federal-municipal relationships would forge a stronger urban Canada. Jack Layton, then president of the FCM, looked on enthusiastically, as he had pushed for a higher profile urban agenda since he took on the top job at the FCM.

Indeed, there was some progress on the municipal file when Martin briefly became Prime Minister and Layton took the reins of the federal NDP. A department of Infrastructure was created and financial tools like the Gas Tax were shared with cities. Federal departments started talking directly with local municipalities to share their plans and priorities. For once, cities, the poor cousins of Canadian confederation, were gaining the respect that was commensurate with their contribution to the prosperity of the country. However, progress was fleeting as there was a change in the federal government. The Harper Conservatives clearly believed that, aside from short-term stimulus spending, no long-term solution for cities was needed.

If you think about it, the situation is rather absurd. Almost 80 percent of Canada’s population lives in cities, yet they have no official standing nationally, being creatures of provincial legislatures for what is essentially the purpose of carrying out the local administration of services. Revenue-generating tools for most cities are confined to property taxes, which do not come close to paying for the renewal of infrastructure and maintenance of services that are delivered by City Hall.

This issue of municipal revenue is a constant theme that impacts Hamilton’s ability to plan for the future in a responsible way. Right now, other than property tax, and a few smaller sources of revenue like the gas tax, and the Future Fund, Hamilton has no other streams of consistent funding. For any infrastructure projects of significance, City Hall needs to appeal to upper levels of government for funding, which triggers the all too familiar spending sprees prior to elections. One obvious problem with this approach is that it doesn’t allow for sound decision making as political influence and expedience trump strategic planning.

There was an attempt to fix this not too long ago. One proposal by former Toronto Mayor David Miller sought to allocate one cent of the federal sales tax to cities, distributed based on population. How would this have affected a place like Hamilton? Well, one- cent of the GST would have resulted in about $100 million more dollars into local coffers each year. Think about the local debates of late, ranging from the stadium, to rapid transit, to waterfront development, to water-wastewater expansion. That $100 million would have gone a long way in contributing to our infrastructure goals.

Further, it would have allowed City Hall to accelerate implementation of plans for economic development and urban renewal both large and small. Take the LRT project, a transformative investment with widespread community support ranging from citizens, to developers, to local businesses. Unfortunately, funding for the project is a major stumbling block as the province waits for signs of municipal commitment before delivering funds and vice-versa. If Hamilton had additional revenue streams, it could signal its commitment to the Province by setting aside a portion of revenues every year to go towards the LRT project.

At a smaller scale, consider the Gore Park ped- estrian plaza, a concept planned out, costed, and endorsed by local businesses. Unfortunately, funding for this initiative didn’t make it through the budget process, throwing into question planned ancillary initiatives that were dependant on the plaza concept. While it is understandable that City Council would make choices and set priorities during these times of lean municipal finances, the fact remains that this investment in Gore Park was meant to spur economic development and other people were waiting for the City to take the lead before spending their own money.

Cancelling or delaying the investment just set back that particular part of economic development. This situation, while small in the bigger scheme, is not unique as the City constantly juggles many priorities with limited funds. Some see these funding restraints as the right way to provide fiscal discipline. However, there is a distinct difference between responsible priority setting and starving an entity of required funding needed to bring about future prosperity.

This is where the national plight of cities to gain additional sources of revenue has its foundation. Cities produce most of the wealth, yet they don’t have the required resources to sustain and create cycles of wealth-generation. Watch any annual municipal budget process and you’ll see that we are nickel and diming ourselves out of future success.

So what of the “New Deal for Cities” that was proclaimed almost a decade ago? Some of Canada’s new crop of Mayors such as Calgary’s Naheed Nenshi are picking up the torch renewing calls for one cent from the sales tax to be dedicated to cities. For the sake of Hamilton’s future prosperity, here’s hoping that this time they are able to close the deal.


PAUL SHAKER is senior planner and Executive Director of the Centre for Community Study, a Hamilton-based urban research firm. He has worked at the federal and municipal levels of government on issues related to the revitalization and sustainability of cities. Paul is a member of the Canadian Institute of Planners and a Registered Professional Planner in Ontario.

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