For decades Alberta politicians have blustered over how Albertans send more money to Ottawa, over $21 billion a year, than we receive back in transfer payments. Equalization, the National Energy Program and a Parliamentary system favouring central Canada have been the omnipresent thorns in Albertans’ sides for what now seems like ages. The identification of voters with the conservative parties selling these popular narratives, both federally and provincially, has cast Alberta a bright, nearly immutable shade of Tory blue.
This seething hatred of supposedly-ill-conceived tax redistribution is only stoked by the need for the province to go hat in hand to Ottawa to get back what they can via the Canada Health Transfer to help pay for Alberta’s nearly $15 billion annual healthcare bill. Premiers from across the country will soon have an opportunity to renegotiate these deals with Ottawa when the Canada Health Transfer and the Canada Social Transfer expire on March 31, 2014, after which new legislation, and perhaps a new approach, will be needed. We all know that former Alberta Finance Minister, cosignatory (along with our current Prime Minister) of the infamous “Firewall letter,” and now Alberta Progressive Conservative (PC) leadership candidate Ted Morton would try to pry back more of Albertans’ money from Ottawa. But we know much less about what out next Premier – whomever that might be – will do for Alberta’s cities.
Cities you ask? What do they have to do with this conversation on taxes and transfer payments?
Well, it may shock some of you to hear that the very same folks throwing Ottawa under the bus for transfers are giving the same sort of raw deal to Alberta’s cities.
Municipalities deliver many of the core services Albertans rely on every day. Roads, parks, land development, affordable housing, public transit, parking, electricity, water treatment, libraries and recreational facilities are only a handful of examples. Many of these services require massive and often ongoing capital investments to get and keep them running, but there’s a big problem: cities can’t afford to pay for any of them on their own. Municipal governments can barely handle the operating expenses even while raising property taxes every year, much less the capital investments demanded by citizens.
Even though Alberta’s cities are home to some 82 per cent of Albertans (2006 census), they must still beg Edmonton and Ottawa for much of the funds they need to construct just about everything most people actually use daily. In a throwback to an earlier, much more rural time, Alberta’s Municipal Government Act gives relatively few taxation powers to Alberta’s cities.
While Calgary can levy property taxes – one of the most regressive forms of taxation, particularly for those on fixed incomes, like seniors – the province still takes a full two thirds of those funds. Much of the City of Calgary’s revenues come from user fees, tickets and levies, like the hefty charges aside from your power consumption on your monthly ENMAX bill. The truth is, municipalities are left with few good options to ensure they have the predictable, stable funding required to run a city.
So it came as little surprise to me this week when Calgary’s city council decided to “take the room” left by the $42 million reduction in the provincial take of property taxes, even with The Dinger going off like a broken fire alarm about how the mayor has his hand in your pocket, or something like that.
Misplaced attempts at fiscal conservatism aside, Calgary is using debt to finance some important and some time-sensitive infrastructure projects like the airport (t)underpass in lieu of the regular allotment of infrastructure funding from the other levels of government which possess greater taxation powers. So using whatever funds the province can free up to help us pay down the principal on what we’ve borrowed now is better than having to pay hefty interest on a bigger debt later.
But having the province hand over random bags of money is hardly the best way to ensure Calgarians get the roads, new libraries and LRT cars they demand, but are reluctant to pay for via increased property taxes. In fact, this system of province-to-city transfers ends up leaving millions in extra piles of unallotted, must-spend cash lying around – in this case, the Municipal Sustainability Initiative – resulting in the much maligned $25 million pedestrian “Peace Bridge,” and a nearly a coronary for The Dinger.
So if the Harper Government loses one of the three confidence votes it’s facing this week, I recommend reviewing where each of the federal parties stands on funding for municipal infrastructure. And while you’re off pondering your provincial leadership choices for the PCs, the Alberta Liberals and the Alberta Party think about what each one will do for how cities pay for their services and infrastructure. You could ask “why should Calgarians hand two thirds of their property taxes to the province to redistribute to who knows where?” and hope Ted Morton has a good answer.
