Municipal finance and governance is a topic that doesn’t get much attention. But interest perks when the Mississauga mayor makes a stunning admission about cancelling a planned LRT if the province doesn’t pay the full cost. Or when the Toronto mayor presents a budget that is all about “caring investments” while proposing to maintain property tax below the rate of inflation.
Both instances are snapshots of the fiscal health and governance challenges facing Canada’s large cities and city-regions and how they affect our day-to-day living. Despite growing in importance as economic engines of the country, these municipalities have a constant struggle on hand stretching budgets to meet growing demands.
It was this conundrum that led to the setting up of the Institute on Municipal Finance & Governance (IMFG). “Very few people had a grasp on managing finances, even within city governments,” says Alan Broadbent, chairman of the institute, as it gets set to mark its 10th anniversary this year. “The idea was to lay down the architecture of municipal finance, highlight how it is different and educate more and more people about its uniqueness.”
Along with Enid Slack, Alan launched IMFG in 2004 at the University of Toronto’s Munk School of Global Affairs. And he points out that even after a decade the institute finds itself in a rarefied field. He recalls Enid declaring herself to be one of the top five experts in the area of municipal finance and then quickly admit that there are only five of them in the entire world!
Attempt to broaden the conversation
“Apart from filling the knowledge gap by providing solid research and analysis to inform policy, we want to broaden the conversation on issues that are important to cities and encourage graduate students to take up the work by giving out two scholarships each year,” says Alan.
In its full length IMFG Papers on Municipal Finance and Governance and shorter Perspectives and Forum reports, the institute addresses topics that include expenditure and revenue trends in cities, the fiscal health of cities, financial transparency and accountability, municipal borrowing and infrastructure financing, affordable housing, and transit finance.
One of IMFG’s recent papers on Toronto’s fiscal health even explains how the Toronto mayor could increase investments without raising taxes. The paper points out that user charges and fees have been an important and growing source of Toronto’s revenues. It calculated that an average household paid nearly $400 more in charges and fees in 2012 compared to what they paid in 2000 for the same services.
Creating a knowledge hub
Alan says the enormous costs that city services entail cannot be funded by the limited revenue tools that Canadian municipalities currently have at their disposal. Larger cities like Mississauga and Toronto are forced to go to the provincial and federal governments for help and in the process deal with uncertainties posed by wild card politics.
While cities would benefit if they had more leeway to manage their finances, that responsibility comes with certain political risks, says Alan. Many city leaders are not courageous enough to face the certain heat if they raise taxes and are happy to let the other levels of government take steps to raise revenue and then pass it on to them. “I guess only mayors like Calgary’s Naheed Nenshi might be prepared to take unpopular steps and face the consequences.”
Acknowledging that different cities have different needs, Alan says IMFG’s mandate is to focus on tailor-made solutions based on research and continuous learning from across the world. To achieve this IMFG holds several events each year which bring together academia and participants from the public, private, and non-profit sectors. It also hosts visiting scholars to understand how urban finance and governance issues are addressed in other countries.
“The goal is to iron out inefficiencies and ensure everybody can take part in the good life cities offer without being squeezed out. In other words, to make cities just and equitable places through evidence-based planning,” says Alan on what IMFG would be doing in its coming decade.