Towards a New City of Toronto Act · 2016-12-13 · and Premier Dalton McGuinty amplified this commitment by signaling his intention to write a new City of Toronto Act. In September

Towards a New

City of Toronto Act

With contributions by:

Alan BroadbentPaul BedfordJohn CartwrightDavid CrombieFrank CunninghamAnne GoldenKen GreenbergJohn SewellEnid SlackDon Stevensonand comments from selected civic leaders

Copyright 2005Ideas That Matter ©TM is a registered trademark of Avana Capital Corporation Inc.Published by Zephyr Press

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From these discussions also came two guidingprinciples deemed as fundamental in a democ-racy where governments need to remain effec-tive and responsive. The first was subsidiarity,where policy and program decision-making ismade as closely as possible to the citizen.Specifically, national or provincial governments

should legislate only if the objectives cannot beeffectively achieved at the local or regional level(i.e. when there is agreement that uniform reg-ulation is necessary across jurisdictions). A sec-ond was fiscal accountability, where the gov-ernment that delivers goods and services is alsoresponsible for raising the monies that pay for

Towards a NewCity of Toronto Act

Since1999 Ideas that Matter has convened with civic leaders across thecountry about the need for Canada’s urban regions to be given

more fiscal and legislative autonomy. Initially, a small group of former politicians,academics, activists, journalists, and business leaders met regularly to look at theneeds of Toronto, the degree to which the current governance and financingarrangements were constraining the city, and what changes were needed. A bookToronto: Considering Self-Government (Ginger Press, 2000) was produced collectingviewpoints from diverse perspectives on the nature of the mis-match betweenToronto’s current powers and fiscal tools and what it needs. A consensus that sur-faced during these early discussions was the recognition that the need to empowerToronto was not simply about the city itself, but equally about the region that sur-rounds it: “Across the Greater Toronto Region there is a richness of economic activ-ity, race and ethnicity, cultural vitality, civic engagement, and generosity of spirit:there is more that unites citizens than divides them.”

them. The final output from this process wasThe Greater Toronto Charter (see page 40), whichproposed that the city be more fully empow-ered and resourced to plan and manage itself.The Charter was widely distributed across theGreater Toronto Area, and garnered significantmedia attention. Presentations on the Charterwere made to several municipal Councils in theGTA at their request. Response was positiveand thoughtful. Agreement was building thatthe time had come to empower Toronto and itsRegion differently.

In 2000 policy makers in Ottawa initiated astudy process to look at the needs of Canadiancities. A federal Task Force was created andurban experts were invited to discuss the needsof Canadian cities. “The problem with Canadais that we don’t have enough large cities,” saidJane Jacobs at one of these sessions, “it isn’t agood habitat for them, and they don’t relate toeach other in as productive a way as theyshould.” Jacobs, together with businessmanand philanthropist Alan Broadbent, initiated aprocess to bring together five of Canada’slargest cities to discuss their mutual needs forgreater power and autonomy. The “C5”Mayors began meeting, joined by leaders fromthe business, labour and civil society from eachcity, to discuss the unique needs of Canada’slargest and most economically vibrant urbanregions. These events, together with the sus-taining efforts of the Federation of CanadianMunicipalities, created the momentum forwhat has become known as “A New Deal forCities”.

In 2003, the Ontario Liberal government waselected on a promise of more power for cities,and Premier Dalton McGuinty amplified thiscommitment by signaling his intention to writea new City of Toronto Act. In September2004 a joint working committee of provincialand municipal staff was charged with rewritingthe legislative framework for the city.

In late 2004 a group of interested andinformed community leaders began meeting todiscuss the opportunities and implications of anew City of Toronto Act process. Convenedby Broadbent, the group met regularly, devel-oped and delivered papers, encouraged variouscity groups to convene their own discussions,and as requested, participated in briefings withstaff and elected officials at both the city andprovincial levels. The group was not seeking aconsensus; instead they saw this as a means ofcontributing a core of ideas for considerationby decision-makers within the city andprovince. Therefore the ideas proposed heredo not reflect the views of the whole group; infact, some may take exception to particularpoints of view. However the group agreed onthe fundamental proposition that the new Cityof Toronto Act needs to empower the City ofToronto and its region in three critical areas:powers, fiscal capacity, and governance. Thisvolume contains highlights of the discussionsof ‘The Broadbent Group’.

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Alan Broadbent is the Chairman and CEO of Avana CapitalCorporation, Chairman of The Maytree Foundation, Chair of the CaledonInstitute of Social Policy and Chairman of Tamarack - An Institute forCommunity Engagement.

The City of Toronto and the Province ofOntario face an historic opportunity in

2005 to create a new Canadian model for governing bigcities. In the renegotiation of The City of Toronto Act,the legislation that sets the relationship between thecity and province, they can end the anachronistic pater-nalism that characterizes such relationships in Canada.In an age when cities have become vital instruments ofeconomic, social and cultural prosperity, the new actcan equip Toronto and Ontario to face its global chal-lenges. Whether the city and province can embrace thisfuture will be a telling test of each.

Both sides agree that the Act needs changes. MayorDavid Miller and Premier Dalton McGuinty have bothspoken powerfully about the need to end the paternal-ism, and recognize the modern context of cities asdynamic engines of growth. Premier McGuinty in par-ticular has taken political risks, articulating his view thatToronto is different in its needs and capabilities fromother places in Ontario, and requires particular tools todo the jobs it faces. It has been a significantly bravestep for a Premier to speak of Toronto’s particularity.He has not said, of course, that Toronto is better thanother places.

For his part, Mayor Miller has been a strong local andnational advocate for the so-called “new deal forcities”, which has received wobbly and uncertain sup-port from the federal government, despite the gallantefforts of cabinet minister John Godfrey, and tepidrecognition from other federal parties. Miller is on ahot seat in these issues. Legitimately, he does not wantto reduce the high level of democratic access local gov-

ernments offer, nor does he want to be handed abunch of tax tools which would make him the onlylevel of government faced with raising taxes in a polit-ical environment obsessed with lowering taxes. But healso may be frustrated by the lack of powers in the cityand Mayor’s office to set and achieve an ambitiousagenda, and certainly by the lack of revenue. To para-phrase historian and journalist Goldwin Smith’s lineabout Canada at the start of the 20th century, Torontois rich by nature but poor by policy, and Miller is theman who has to try to make daily sense of that discon-nection.

But it remains to be seen if the city and province cansucceed in grasping this historic opportunity. There ismuch that can get in the way of a newly defined rela-tionship: politics, personalities, timidity, short-termvision, and fear of sharing power. If the new Act isgoing to be successful in embracing the future, it needsto deal with three things: powers, money, and gover-nance structure. It might be very hard to coordinateachieving success in all three, but they all need to bedealt with in significant ways if the city is to be able tomove forward.

POWERSA First StepThe current City of Toronto Act is modeled on TheMunicipal Act, and is “prescriptive” by nature. That is,it sets out in some detail what the city can do, as theMunicipal Act sets out what cities can do in theprovince. If something is not specifically mentioned inthe Act, the city can’t do it, and must seek permissionfrom the province. Such permission, for the most part,has not been hard to come by, for the province seesthings like changing speed limits on a street as beingroutine and the processes have become expedited.

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The desire of the city is that the Act becomes “permis-sive”. That is, the province states in the Act what thecity cannot do; the province preserves a number ofareas of jurisdiction for itself, and the city operatesfreely in all other areas. It appears that the province haslooked into this qualitative change of approach, and isincreasingly comfortable with it. So it may be possibleto move the City of Toronto Act from being prescrip-tive to permissive. Within such a framework, theprovince would grant the city legislative powers whichare broad and expansive, free of the need for provin-cial approval of city decisions, permitting the city totake actions which `meet or beat’ provincial and feder-al laws or regulations, and which meet the `dual com-pliance’ test laid out by the Supreme Court of Canada.

A Bolder StepBut many people think that is only a good beginning asfar as powers go. A bolder argument would be that anexpanded Toronto Region should have essentially thepowers of a province.

The City of Toronto currently has nearly three millionpeople. It is the fifth biggest government in Canada,after the Ontario, Quebec, B.C. and Alberta govern-ments. Yet it has fewer powers than Prince EdwardIsland, which has 140,000 residents. By comparison,Toronto Community Housing Corporation, the city’spublic housing authority, has 164, 000 residents. In the138 years since Confederation, the country haschanged enormously, but the governmental arrange-ments have barely budged, and we are left with thesedisparities between political units and their powers.

In Toronto, the geography is arguable. Some peoplesee the Toronto Region being what is called theGreater Toronto Area. Others would extend that toinclude Hamilton in what is called the GoldenHorseshoe around the western end of Lake Ontario,and some would even extend that to include theKitchener-Waterloo area. In her great book Cities andthe Wealth of Nations (Random House, 1984), JaneJacobs describes a city region as including the sur-rounding communities which supply labour and prod-ucts to the central commerce of the main city, whoseprosperity relies significantly on the commercial activi-

ty of the main city. For some years, many bureaucratsin the Ontario government thought of the TorontoRegion as the area where one could get home deliveryof The Toronto Star newspaper. Both Jacobs and theStar notions would include an area larger than just theGTA in Toronto’s case.

A Toronto region which includes the GoldenHorseshoe area, with a population of almost six mil-lion, would become the third largest political unit inCanada, behind only Quebec and a reduced Ontario.Why this is a good idea has to do with the differencebetween the Toronto Region and the rest of theprovince, much of which is related to immigration.

The Toronto Region accommodates half of Canada’simmigrants, and they make up half of the populationof the region. That puts specific demands on theschool system, the health care system (in terms of bothpathologies and protocols), the social support system,the labour market, and infrastructure such as parks,community centres, and other amenities. It is clear thatthe more relevant government action can be to theneeds of a population, the better. It is also clear thattrying to find a solution that fits too wide a range ofdifference in a population is worse. Increasingly, thenotion of “particularity” is accepted as desirable. Itlinks with the idea of subsidiarity, which suggests thatgovernment powers should flow to the most appropri-ate level of government to the task, which in the caseof services is often the level closest to the user of theservice, the local government. And most people acceptthat trying to find “one size to fit all” is a bad ideawhose time has passed.

To create in the Toronto Region a virtual province withsignificant control of its own destiny would be an actof immense bravery by an Ontario government. Evenwere it to be a virtual province which continued toshare its generated wealth with the rest of Ontario andwith Canada, as it has done for decades, it would stillrequire a significant act of courage and vision. Thepolitical world rarely sees these kinds of acts:Gorbachev breaking up the Soviet Union, De Klerkreleasing Mandela and preparing South Africa for anew day, Ernesto Zedillo in Mexico breaking his gov-

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erning party’s stranglehold on elections and ushering instronger democratic reforms. More typical is a doggedattempt to hold on to old ways and tired practices,which fail to recognize new realities and current chal-lenges.

How both the province and city handle the question ofpowers will be telling. The province might flinch, fear-ful of creating a monster which will threaten its prima-cy in Canada’s governmental hierarchy. The city toomight flinch, fearful of taking on too much power forfear of the accountability, that will go with it. It is easyfor some politicians to point a finger when somethingfails, and under the current setup the province is a like-ly culprit. After all, they’re the ones with the power andmoney. Will Toronto politicians rise to the challengeand assume responsibility without the finger of blame?

MONEYThe Toronto Region needs to stand on its own feet fis-cally. To do so, it needs more diverse sources of rev-enues. It has to have control over its revenues, and notbe dependent on grants from other levels of govern-ment. In effect it means a broader range of tax and feetools.

Canadian cities began to encounter more financialstress in the wake of the federal government down-loading of expenditure obligations to the provinces inthe mid 1990’s, when the provinces responded bydownloading obligations to the cities. These obliga-tions were not accompanied by the money to pay forthem, so cities began to squeeze their budgets to breakeven. Some provinces, like Ontario, not only down-loaded but also constrained municipal revenues by lim-iting the tax base for cities.

The result is that Canadian cities raise almost half oftheir revenues from property taxes, compared to about15% in the US and about 5% in Europe. Cities in theUS and Europe have access to a much broader rangeof revenues, from income and retail sales taxes toexcise taxes such as the gasoline tax, liquor taxes, andhotel taxes.

The TD Bank (A Choice Between Investing in Canada’s Cities orDisinvesting in Canada’s Future, TD Economics, Special Report,2002) has suggested that the other levels of governmenttransfer tax points to the cities, rather than simply let-ting them levy new taxes. They suggest that download-ing resulted in the federal and provincial governmentsdoing less; consequently they should “do less withless”, and not simply keep the tax revenues. It will, ofcourse, make it somewhat more challenging for thoseother levels of government to balance their budgetswithout the same level of revenues flowing in, butgiven recent evidence of loose expenditure practices,both levels have the capacity to tighten their disci-plines. Of course, it will not be their first choice toforego some revenues. Such abundance can be addic-tive and hard to give up.

But it will serve both effectiveness and accountabilityto align better where taxes are raised and where theyare spent. For example, city residents expect to receivea set of services from their municipal government,such as garbage collection. When downloading causesbudget cutbacks, and collection goes from twice toonce a week, they blame their city councillor. It isn’tmuch use to explain the complicated process of down-loading to the citizen. They blame the councillor.

Similarly, people expect the city to be able to do some-thing about homeless people begging on the streets.Experts agree that the right solution is the building ofassisted housing. But the city does not have the finan-cial capability to build assisted housing, so they are lefttreating the symptoms of homelessness through theprovision of temporary shelters, waiting for the otherlevels of government to do something with their larg-er financial resources. A better situation would be forcity council to have the authority to levy and adjusttaxes to pay for these things directly, adjusting taxes upand down in relation to expenditures.

Perhaps more importantly, it is difficult for a mayorand local leaders to create and promote a powerfulvision for the city when their capacity to deliver it is somuch at the mercy of others. In Canada mayors havebecome wary of relying on the kindness of strangers.Too many promises, usually made in the heat of an


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election campaign, have evaporated in the cold light ofthe morning after. Mayors need to be able to articulatetheir vision with the confidence that they can find therevenues to achieve it; if that requires raising taxes,they need to have the control that can link taxes toachievements.

A critical issue on finance is borders. If a municipalitygets a new taxing authority, how will exercising it influ-ence behaviour at the border of a neighbouring munic-ipality? Will consumers buy in the city next door whichdoesn’t exercise the new tax? What difference isenough to make people behave differently?

Little work has been done on analyzing this problem oron proposing solutions. An organization like theInstitute for Municipal Finance and Governance atThe Munk Centre at the University of Toronto shouldwork on this issue. One solution might be a bundlingof revenue tools with powers that are sufficientlyattractive and useful to encourage neighbouring munic-ipalities to “opt in”.

The biggest tax tool in Canada is the income tax fol-lowed by the retail sales tax. A variety of excise taxeslike hotel tax or gasoline surtax do not produce largeamounts of money, compared to the city’s revenuerequirements. Canada’s large urban regions (Toronto,Montreal and Vancouver) need to receive income andsales tax points from the federal and their provincialgovernments. They need to be transferred withoutstrings. That is, the transferring government cannotdictate what the tax revenues will be spent on. Thecities must be allowed to make those decisions directly,or the purpose of giving them greater control of theirdestinies will not be served.

In addition, the large cities must be given access to arange of other fiscal tools, such as tax incrementfinancing, bond issuance and other debt financing, anda variety of development levies. Some of these theyalready have but are reluctant to use, for without a fullcontrol of destiny there is the danger of assuming riskwithout the ability to put together and deliver a fullpackage.

GOVERNANCECanada’s cities have a “weak mayor” system of govern-ment. That is, mayors are elected in a citywide electionbut have few more powers than any member of citycouncil. They usually have a bigger budget to run theiroffice, a higher visibility for ceremonial leadershipfunctions, a better bully-pulpit because of their city-wide source of support, and they chair the councilmeetings, but few have any real executive powers.

Compared to the “strong mayor” system in most UScities and in Europe, Canadian mayors have few toolsto lead their cities. Strong mayors have executive pow-ers, larger staffs, and considerably more powers. Inmany cases the city administrative staff reports tothem instead of the council. They develop an operat-ing plan for the city, along with a budget, which theypresent to council, and which often requires a super-majority to overturn. They appoint the executive com-mittee and key committee chairmanships.

By contrast, in a weak mayor system the mayor hasinfluence only through cobbling together a coalition ofcouncil on each issue. Sometimes that coalition canhold for a long time over a great number of issues.Other times it is an ongoing, enervating exercise in‘brokerage’ politics.

Advocates of the weak mayor system say it empowerscouncillors, and is therefore more democratic in theway it spreads power around. They point admiringly tothe lines of citizens waiting to make direct appeal tocity council on an issue important to them, and theynote this is the only level of government which seescitizens directly in its main chamber. They say that sucha system forces city business on to the council floor, infull view, and keeps decision making out of the handsof backroom elites. And they say that in the hands ofa strong incumbent, the weak mayor system works wellindeed.

Opponents doubt some of these claims. They suggestthat trading on each vote, if not simply inefficient anddistracting, can lead to corruption and the distortion of


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outcomes. They note that most councillors, during thecourse of most citizen submissions, are either absent,reading something else, talking to a colleague or aide,and apt to vote in a way unrelated to what has beenpresented. They claim that most deals are still pre-cooked in some backroom or other, by a group some-one would probably describe as an “elite”. And theynote that when the incumbent mayor is weak that littlegets achieved.

Most of those seeking some change in Toronto’s sys-tem look at the last decade and note the decline in thecity. In fact, they say that if significant changes are notmade, it won’t matter if we have a good or bad mayor,it will simply be a question of who will manage thatdecline. If the weak mayor system can be so good, theyask, how can the city be in such trouble?

There is, however, a more troubling and underminingaspect to a weak mayor system. A mayor who cannotdeliver a comprehensive plan because of an inability tocommand all the necessary tools, because of a lack ofpowers, money, and clout, may in fact lower her or hishorizons. The result may be a mayor who does notwish to have taxing authority, because of an uncertain-ty in being able to exercise necessary powers or, alter-natively a mayor who does not wish to have powers,because of a lack of money to exercise them.

For this reason, reform must be three-pronged: pow-ers, money and governance change.

A big question on governance change is how it mightcome about. Will a city council decide to cede some ofits powers to a mayor? Will a mayor want to be seen tobe grasping for more powers? Will a provincial govern-ment, given the scorn flung at the Ontario Harris gov-ernment for amalgamating Toronto, want to imposechanges? All are unlikely.

One suggestion is the appointment of an independentcommission, appointed by the Mayor of Toronto andthe Premier of Ontario, made up of well-regarded cit-izens. The commission recommendations need not bebinding on either government, but either would need agood reason to dismiss them.

A TIME TO ACTOntario has a Premier prepared to be courageous onmunicipal reform, particularly regarding Toronto.Toronto has a new mayor, with broad support, whounderstands these issues as well as any politician in thecountry. There has been close to a decade of discus-sion on “a new deal for cities” in Canada, with thelargest circulation newspaper in the country endorsingchange, and other leading commentators agreeing it istime for change. There will not likely be a better timefor progress on empowering Canada’s large urbanregions.

Ontario has the opportunity to show the way for thecountry, and taking the right steps will be a brave act incountry-building.

To make the change meaningful, steps will have to bemade on all three fronts; powers, money and gover-nance. Omitting one will result in a wobbly stool. Mostworrying for the province at the moment may be thefinancial leg, because of the dire financial situationinherited from the previous Conservative government.It has been clear that managing the deficit is a three-year task, to a balanced budget. It is also clear thathealth care and education are higher priorities. So tim-ing is crucial. At the very least the province can cedetax points on excise taxes, and permit the city to levyother excise taxes. And while it might not want to dealwith the income or sales taxes at the moment, it shouldat least not take them off the table, but leave them forfuture implementation when the provincial fiscal situa-tion is less tight.

On powers, the province can act immediately. Theappointment of a commission to recommend on gov-ernance can be done immediately, with a very shorttime frame. This is not a deeply complex topic, andmuch is already known about it.

This is the time to act. History waits for the Premierand Mayor to step forward to help Canada meet thechallenges of the new century.


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John Sewell is a journalist, author and a former councillor and Mayor of theCity of Toronto. He is a frequent commentator on city issues as a columnistfor eye weekly, a Toronto newspaper. His most recent book is A NewCity Agenda. (Zephyr Press, 2004).

Considerationof the legisla-tive authority

for the City of Toronto raises a complex set of issues,not all of which can be resolved in one fell swoop.The question of the new powers desirable for the cityquickly becomes tangled with revenues available tothe city. The big revenues are from sales and incometax, but they can’t be levied in a confined area wherethese taxes are not imposed across the street, and thatimmediately raises the question of the city’s relation-ship to the neighbouring regional governments, thepowers and revenues available to them, and questionsof regional governance.

To complicate things even further is the proper gov-ernance of the city itself. Some believe city gover-nance needs to be radically changed; others argue thecurrent city model is at least as good as parliamentarygovernment used at the federal and provincial levels.In short, these four issues are intertwined. Makingchange in one area requires changes in others.

Related to these questions is the realization that con-tinuing to freeze the city’s powers in rigid legislationappropriate for a different age helps neither the citynor other governments. Legislation which allows citygovernments to act in a supple and flexible mannerbenefits everyone, just as a teenager growing tobecome an adult benefits other adults. Allowing gov-ernments to have the powers to act in a mature fash-ion will allow them to act as adults, and to pursue rela-

tionships that in turn involve both cooperation andcompetition. Indeed to ask for the maximum degreeof creativity in any organization, it is appropriate forit to be fully empowered.

Giving a city more power does not mean that othergovernments have less. The paradox is that empow-ering the city helps to empower other levels of gov-ernments and creates opportunities for them to besupportive of each other. Forcing the city to continuewithin the rigidity of antique legislation creates reac-tions of resentment and belittlement and does notencourage creativity, flexibility and maturity.

The legislative package proposed here must be seen ina context of the complexity of real relationshipsrather than in a false analogy of zero sum gains and“ownership” of different responsibilities.

GOVERNANCEThere has been considerable focus since amalgama-tion in 1998 on the question of governance in thecity. Many fear that the city as now structured is ableto reasonably address neither larger city-wide issuesnor smaller local issues. Some suggest that a strongerdecision-making body is needed within council, eitherwithin an empowered executive committee or withinthe Mayor’s office. Some suggest the best response tothe council’s inability to deal well with local concernsis to introduce community boards or arrondisse-ments. Many agree Toronto must find better linkswith other local governments in the Greater TorontoArea to help with coordination and longer termregional planning.

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Thinking AboutA New City of Toronto Act


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Are these issues that should largely be left to the coun-cil and the people of Toronto to decide? There’s astrong argument to be made that Torontonians andtheir representatives should have the opportunity ofconstructing their own style of government - one thatsuits the city’s needs - and that it would be inappropri-ate if structures were imposed on them.

But as with all structural elements in government,those already serving on the council may not be thebest group to make decisions about the structures inand by which they will govern; councillors have toomuch of a self-interest to make good decisions. Aswell, there’s a fear that city council as currently struc-tured may not be capable of grappling well with theseissues.

In the past the provincial government has set council’sstructure, and the Ontario Municipal Board has moni-tored and approved changes, such as the number andsize of wards. As a step forward it probably makessense at this time for an independent study to beundertaken with a commission appointed jointly byboth the city and the province to look into the mostappropriate general structure for council. The citizens,the city council and the province should all be consult-ed in such a process and in the resulting decisionsabout what is put in place and by what process (such asa referendum). The legislation should outline this kindof process.

A mechanism is also needed to deal with on-going gov-ernance issues, such as have been considered in thepast by the Ontario Municipal Board. This should alsobe the work of the independent commission.

GENERAL LEGISLATIVE POWERSVirtually everybody agrees that provincial approval ofmany kinds of city decisions adds no value to thosedecisions. Given the size and sophistication of the city,this is not appropriate. Legislation should specify thatprovincial approvals of city decisions are no longerrequired.

At the same time it is clear that there are many issues

in the city that council itself may wish to deal with if ithad the power and authority to do so. As the city getslarger, some issues that unfold in the city seem toattract less interest than in previous years from the fed-eral and provincial governments, such as welfare andsocial housing. Some argue that the city is the mostappropriate venue for matters such as primary healthcare and community health clinics, child care, andmany environmental issues.

What is the appropriate balance between provincialand city powers? One approach would be to confirmpowers in respect to the general issues that the city nowcontrols: highways and transportation, waste manage-ment, public utilities, culture, parks, recreation and her-itage, draining and flood control, structures, and soforth; the so-called `spheres’ that are central to recentmunicipal law rewrites in Ontario and several otherprovinces. These are areas where the city has exercisedpower for many years and there is no question thatthese powers should be confirmed as within the ambitof the city and not subject to provincial approval.

An additional approach is to expand upon these exist-ing powers and include specific new spheres of powersfor the city, clarifying that the city is also given the “nat-ural person” powers. Yet there’s a limitation to thisapproach: city powers will be limited to what seemsimportant at the present time. In several years it may befound these are insufficient. Further, this way of look-ing at the problem does not permit a full range of sup-pleness and flexibility.

It may be more appropriate for the city to have thepower to do anything not proscribed by provincial law- if the provincial government has laws controlling aparticular matter then the city should not legislate therewithout provincial approval. In this way the ambit ofthe city’s powers would be as broad as possible whilenot impinging upon provincial powers. If this generalgranting of powers is worded appropriately (that is, invery broad terms in the manner in which provincialpowers are defined in the British North America Actof 1867) then there would be no need to specificallydefine the city as having “natural person” power.


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This approach would involve legislating that the citycould pass a law on any matter providing it is not oper-ationally inconsistent with a provincial or federal law.The city could act to “meet or beat” federal or provin-cial law, but could not require a person to act in a man-ner which is inconsistent with such legislation. TheSupreme Court of Canada tagged this the “dual com-pliance test”: the city’s action would be disallowed onlyif compliance with the city bylaw compels what theprovincial or federal law forbids.

Admittedly, such broad powers may have little meaningwithout appropriate revenue sources, and they may notbe fairly exercised without an appropriate governancestructure – these are the complexities which new legis-lation creates. But the granting of new powers in thisform does not obligate the city to act in new areas themoment the law is passed. Instead the city would beable to take up new responsibilities when and if appro-priate.

Thus it is appropriate to grant general powers to thecity in as broad a manner as possible so that the citycan do anything that is not impinging upon provinciallaws or regulations, providing it meets the dual compli-ance test.

SOURCES OF REVENUEIt is clear that Toronto requires more revenue to meetits current financial needs revenues and even more rev-enue to fund programs that it believes are necessarybut now is unable to afford.

There are two ways of approaching this revenue short-fall. One is to ask for a revenue sharing arrangementwith the province and/or federal government as hasoccurred with the sharing of the gas tax. This wasdone in a broader fashion with the Ontario govern-ment in the 1970s and the device, named after the citywhere it was first announced, is the EdmontonCommitment. The Edmonton Commitment obligatedthe Ontario government to increase grants to munici-palities equal to the increase in general revenues avail-able to the province. It seemed like the perfect way tohelp municipalities share in the increase of wealth of

the province as reflected in sales, income and corporatetaxes.

The Edmonton Commitment lasted for several yearsbut then was abandoned by the province as it faced itsown financial challenges. This will always be the short-coming of revenue sharing. No government likes toraise revenues from taxes which it then has to pass onto a different level of government. It suffers two polit-ical problems: it is accused of taxes being too high andit may be blamed for funding municipal programs overwhich it has no control. It is hard to believe that anyprovincial government will think it wise to enter into abinding arrangement for revenue sharing on termswhich satisfy the city.

Another course of action is to give the city its ownpowers to levy taxes in a wide range of areas. It seemsclear that the city would not be able to engage in levy-ing corporate taxes since it is almost impossible to indi-cate with the appropriate specificity which corporateactivities are actually occurring in the city in a way thatwould attract tax. This leaves only two taxes with thecapability to raise serious amounts of money – salestax (which would include a goods and services tax) andpersonal income tax. It would be very difficult for thecity to levy these taxes if they were not also levied bysurrounding local governments. The city would havegreat difficulty explaining to merchants on one side ofthe street how they would benefit from a sales tax thatdid not apply to merchants on the other side of thestreet.

The problem in thinking about a new City of TorontoAct is determining how one moves forward into therevenue area given the constraints that seem to apply tothe levying of any new revenue source. Like otherissues discussed in this context the revenue issue hasregional implications.

A reasonable half-way point is to suggest a short termarrangement with the provincial government while thelong term opportunities are explored. A short-termarrangement would involve an agreement for eitherrevenue sharing or cost sharing (for specific programssuch as transit or affordable housing) while a study is


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done of how to proceed with other revenue sources.

At the same time the city’s own existing source of taxrevenue, property tax, should not be overlooked. Theway property tax is currently structured means the cityhas no flexibility in setting this tax or refining it, as wasproposed by Mayor Glen Murray in Winnipeg torespond to urban problems in that city. The city needsvery significant powers over the details of the proper-ty tax to ensure it is structured appropriately. Thesepowers should be subjected to principles of equity andfairness, given that the property tax is now imposedwithout equity or fairness. (Residents in multi-unitapartment buildings, for instance, pay several times thetax rate of home owners; and businesses pay a muchhigher tax than anyone believes is appropriate.) It willbe important to temper powers in respect to propertytax with principles of equity and fairness. One mightalso add that the expanded power to levy user feesshould be subject to the same principles.

There are many other areas of taxation which mayraise only small amounts of revenue, but are stillappropriate to the city - hotel tax, for instance, fuel tax,vehicle registration, or other sources of revenue whichdiscourage undesirable activity. The city may also wishto experiment with new kinds of taxes such as a car-bon tax, or taxes relating to emissions, or even a Tobintax on share transfers.

The city should be given the broadest possible man-date to levy these taxes as well. The city will then becharged with making the case to the voters of its wis-dom in certain taxing policies.

REGIONAL ISSUESRegional issues have been, and continue to be, a matterof great concern in the Toronto area, stretching backto the creation of metropolitan government inToronto in the early 1950s. Unfortunately there doesnot appear to be a consensus of what should be put inplace to meet broader regional needs. Some have sug-gested the ultimate objective should be to create a newprovince in Southern Ontario. Some have suggestedthat a reconstructed Greater Toronto Services Board

may be a useful interim step. (For a longer discussionon regional issues, see pages 29 and 32.)

In this circumstance it makes sense to take a half-waycourse. Local governments within the GTA should begiven the power to make agreements with each other inregard to matters of mutual interest. They may findthat they are able to work out comprehensive organiza-tions that address many of their problems, perhapsthrough models like the Greater Vancouver RegionalDistrict. At the same time the provincial governmentshould be encouraged to play an active role as a policycoordinator with local governments in the GTA. Withmature local governments interacting with each otherand the province, one may find that there are very use-ful structures satisfactory to all parties.

Then again, that may not be the outcome. It makessense to ensure that there is a review of the situationwithin a five-year period, and the province shouldundertake to create such a review in conjunction withlocal governments in the GTA beginning in the year2010.

CONCLUSIONThe proposals here – addressing governance, generallegislative powers, sources of revenue, and regionalissues – will empower the city to cope with issues thathave been widely raised but not resolved. New powersmust be strengthened by an agreement betweenprovincial and city governments stating that furtherchanges to legislation respecting the city powers willnot be undertaken without the consent of the city.

In brief the following is a summary of the proposalshere:

1. An independent commission will be establishedappointed jointly by the city and the province tolook into and recommend the most appropriategeneral structure for city council. The processshould include mechanisms for the ongoingreview of governance issues and proposalsabout the consultation, approval and implemen-tation for whatever recommendations are made.


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2. The general legislative powers given to the cityshould be stated broadly, perhaps in the samemanner as powers were given to provincial gov-ernments when they were established, allowingthe city to ‘meet or beat’ federal or provinciallaws in a way that meets the dual compliance testof the Supreme Court of Canada.

3. As a short term arrangement the city and theprovince should enter into a cost or revenuesharing agreement for a four-year term, and anindependent study should be undertaken by theprovince and the city on the best ways to pro-ceed with respect to the possibility of the citylevying sales and income tax. The legislationshould give the city power with respect toreshaping property tax and levying user fees,provided principles of equity and fairness aremet.

4. Local governments in the Greater Toronto Areashould be given broad powers to enter intoagreements with each other to address questionsof governance and service, and the provinceshould play an active role as a coordinator andpolicy maker. These arrangements should bereviewed by an independent commission estab-lished in 2010.


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Dr. Enid Slack is the Director of the Institute on Municipal Finance andGovernance at the Munk Centre for International Studies at the Universityof Toronto. This paper is a shorter version of a paper prepared for the launchof the Institute on February 21, 2005.

The City of Toronto faces increasing financialpressures from a number of different

sources, including the need to be internationally com-petitive (providing those services and infrastructurethat will attract skilled labour) and the need to deliverservices that have been “offloaded” by federal andprovincial governments. At the same time that the cityis facing and will continue to face increased expendi-ture pressures, there has been no diversification of itsrevenue sources. The city continues to rely mainly onproperty taxes, user fees, and transfers to finance serv-ices. But property taxes are a relatively inelastic sourceof revenue - that is, they do not increase directly withgrowth in the economy as do income and sales taxes -and are hence unlikely to provide the increased fundingneeded to cope with future expenditure needs.

With a population of 2.5 million people, Toronto islarger than six provinces; with a budget of $7 billion,Toronto also spends more than those six provinces.Nevertheless, Toronto is a part of a provincial-munic-ipal relationship in which cities were once character-ized as “puppets on a shoestring”1 and the provincialrole as “father knows best.”2 The province establishesthe very existence of local governments and their geo-graphic boundaries, mandates their expenditureresponsibilities, sets standards for local service provi-

sion, limits their own-source revenues largely to prop-erty taxes and user fees, sets the rules around levyingthe property tax, influences municipal expendituresthrough its grant programs, requires that municipalitiesnot incur a deficit in their operating budget, and deter-mines the extent to which municipalities can borrow tomeet capital requirements. In short, the city has limiteddiscretion over its own expenditure and revenue deci-sions.

A new City of Toronto Act could go a long way bothtowards increasing Toronto’s ability to raise revenuesand improving the provincial-municipal relationship.By giving the city the ability to raise revenues from newsources, Toronto would have the mix of taxes it needsto meet its responsibilities. By giving the city the abili-ty to set its own tax rates, it would increase local auton-omy and accountability and reduce the city’s financialdependence on the province. It might even end the“blame game” that has each order of governmentblaming the other for insufficient resources at the locallevel.

EXPENDITURE PRESSURESExpenditure pressures on the City of Toronto, most ofwhich are expected to continue in the future, are theresult of a number of different factors. First, Torontois a major driver of economic prosperity in Canada. Tobe competitive, the city must attract business andskilled labour. This means that it not only has to pro-vide transportation and communications infrastructure

EENNIIDD SSLLAACCKKTT

Easing the Fiscal Restraints:New Revenue Tools in the City of Toronto Act


1. Canadian Federation of Mayors and Municipalities (CFMM), “Puppets on a Shoestring: The Effects on Municipal Government of Canada’s System of PublicFinance” (Ottawa: CFMM), 1976.

2. Allan O’Brien, “Father Knows Best: A Look at the Provincial-Municipal Relationship in Ontario,” in Donald C. McDonald (ed.) Government and Politics of Ontario(Toronto: McMillan), 1975, pp. 154-71.

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but it also has to deliver services that enhance the qual-ity of life. These services include, for example, parks,recreational and cultural facilities, social services, pub-lic health, and police protection.3

Second, at the same time that Toronto attracts skilledlabour, it also attracts a disproportionate share of low-income individuals and households who seek employ-ment opportunities and who are able to take advantageof a wider range of more specialized social servicesthan are usually available in smaller municipalities.Toronto also attracts a very high proportion of thenation’s new Canadians and, while the long-run bene-fits of this inflow of immigrants are obvious, theshort-run costs to local governments of settlementand social integration can be significant.4

Third, the “offloading” of services by the federal andprovincial governments has meant increased responsi-bilities for Toronto. Offloading has taken a number ofdifferent forms. Federal and provincial governmentsshifted expenditure responsibilities onto the city suchas social housing in 1998. The provincial governmentreduced transfers to the city. Both the federal andprovincial governments downsized their own responsi-bilities (such as immigration settlement at the federallevel). Finally, federal and provincial requirements havemandated that cities meet certain requirements (e.g.water quality standards) without providing the funds tomeet those requirements (these are known as “unfund-ed mandates”). In all of these cases, the result hasplaced pressure on the city to increase its expenditures.

Fourth, the provincially-imposed amalgamation inToronto in 1998 increased financial pressures on thecity rather than producing the overall cost savings thatwere officially projected.5

Although there have been some savings from amalga-mation, the harmonization of wages and service levelshas, on the whole, resulted in higher costs for thenewly amalgamated city, which continue to be felt.

A MIX OF TAXESThe appropriate revenue tools for the city depend, to alarge extent, on the expenditures it is required to make.For example, property taxes are not a particularlyappropriate way to pay for social services whichshould, in principle, be paid from taxes that are moreclosely related to ability to pay. If Toronto continues toshare the costs of social services and social housing,for example, then it needs sufficient funding to deliverthese services. One option is for the province to takeover the funding of social services, as is done in all ofthe other provinces. If the city continues to be respon-sible for funding a portion of these costs, however,then another option is to give it access to income taxrevenues.

The changing demands on Toronto, coupled with theinability of the property tax to address all of thesedemands, provides a strong justification for revenuesfrom a mix of taxes. Although the property tax is alsowell suited to local governments because of the con-nection between many of the services typically fundedat the local level and the benefit to property values6, itdoes not operate as a benefits tax for commuters andvisitors who use municipal services (roads and polic-ing, for example) but do not pay property taxes in thecity. Other taxes (such as sales taxes and hotel andmotel occupancy taxes) are more effective than prop-erty taxes at linking the costs and benefits of serviceswhen people visit the city or commute to work fromother jurisdictions.


3. For a discussion of the impact of quality of life in attracting knowledge workers, see Richard Florida, Meric Gertler, Gary Gates and Tara Vinodrai, “Competingon Creativity: Planning Ontario’s Cities in the North American Context.” A report prepared for the Ontario Ministry of Enterprise, Opportunity and Innovation andthe Institute for Competitiveness and Prosperity, 2002.

4. Enid Slack Larry Bourne and Meric Gertler, “Vibrant Cities and City-Regions: Responding to Emerging Challenges.” A paper prepared for the Panel on the Role ofGovernment, August 2003.

5. Enid Slack, “A Preliminary Assessment of the New City of Toronto,” Canadian Journal of Regional Science, 23 (1), 2001, pp. 13-29.

6. Richard M. Bird and Enid Slack, International Handbook on Land and Property Taxation (UK: Edward Elgar), 2004.

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The property tax is not an “elastic” source of revenuemeaning that the tax base does not increase automati-cally as the economy grows. The reason is that proper-ty values respond more slowly to annual changes ineconomic activity than do incomes. Access to revenuesfrom a mix of taxes, particularly taxes that grow withthe economy, could also provide cities with an incen-tive to make those kinds of investments (in infrastruc-ture, for example) that stimulate economic growth.Currently, the contribution that municipal infrastruc-ture makes to economic growth is felt more by the fed-eral and provincial governments that have access togrowth taxes than by municipal governments.7

In summary, access to revenues from a mix of taxeswould give Toronto more flexibility to respond to thechanging expenditure needs and would allow it to ben-efit from taxes that grow with the economy. Othertaxes would also be more effective than the propertytax at linking the costs and benefits of services forcommuters and visitors.

WHICH TAXES?The benefit model of local government finance pro-vides some assistance in determining which taxes aremost appropriate at the local level. The model assertsthat the essential role of municipal government is toprovide local residents with those public services thatthey want and that they are willing to pay for. In otherwords, those who pay taxes or user fees to finance localgovernment should be the ones who are enjoying thebenefits of local expenditures.

In the local government context, the application of thebenefit principle is preferred to the ability-to-pay prin-ciple. Under the ability-to-pay principle, those payingtaxes and fees to finance local expenditures should bethose with the greatest ability to pay. Income redistrib-ution at the local level can be problematic, however,because those who are taxed more heavily can leave the

jurisdiction. For this reason, it is generally asserted thatthe ability-to-pay principle should play a smaller role atthe local level and that redistribution should be a rolefor the federal and provincial governments.8 There are,however, times when a strict application of the benefitprinciple is not possible (for example, where it is notpossible to identify the beneficiaries) or even desirable(for example, where the city is delivering social pro-grams).

The choice of taxes to be included in the new City ofToronto Act should, to the extent possible, adhere tothe benefit principle. Local taxes should also satisfyother public finance criteria: the tax base should be rel-atively immobile so that the city can vary the tax rateswithout losing a significant portion of the tax base; thetax yield should be sufficient to meet local needs andshould increase along with the increase in expenditureneeds; the tax yield should be stable and predictableover time; it should not be possible to export much ofthe tax burden to non-residents to pay for servicesenjoyed by residents of the taxing jurisdiction; the taxshould be visible to ensure accountability; taxpayersshould perceive the tax to be reasonably fair; and thetax should be relatively easy to administer.

The options are many and include local access to: per-sonal income taxes, payroll taxes, corporate incometaxes, general sales taxes (retail sales taxes and theGST), and excise taxes (including taxes on hotel/moteloccupancy, meals, fuel, liquor, tobacco, vehicle registra-tion, and land transfer). Although many of these taxesmeet the standard public finance criteria set out above,only the income and sales tax would bring in significantrevenues.

An evaluation of the different tax options suggests thefollowing:9 Personal income taxes are a more appro-priate way to pay for social services than is the proper-ty tax because income taxes are based on ability to pay.Local access to personal income taxes is common in


7. Casey Vander Ploeg, “No Time to be Timid: Addressing Infrastructure Deficits in the Western Big Six,” Western Cities Project Report #30 (Calgary: Canada WestFoundation), 2004.

8. See, for example, Richard M. Bird and Enid Slack, Urban Public Finance in Canada, Second Edition, (Toronto: John Wiley and Sons, 1993).

9. A more detailed evaluation of these revenue sources can be found in Enid Slack, “Revenue Sharing Options for Canada’s Hub Cities.” A report prepared for theMeeting of the Hub City Mayors, Toronto, September 17-18, 2004.

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Scandinavian countries where local governmentshave responsibility for social services. Access to per-sonal income taxes could potentially provide citieswith significant revenues. One estimate of theamount of revenue that the city could collect from a10 percent surcharge on the provincial personalincome tax (equivalent to 1 percent on taxableincome) is $450 million.10 A local income tax that ispiggybacked onto the provincial personal incometax would be easy to administer. Because income taxrevenues are responsive to changes in the economy,revenues will increase during an economic boom(but they will decline during a downturn).11 Themain disadvantage of a local income tax (with local-ly set tax rates) is that taxpayers are mobile and canavoid the taxes by working in or moving to a neigh-bouring jurisdiction.

Payroll taxes are imposed at a flat rate on earningsor wages and are the most common form of taxingpersonal income in U.S. cities. Payroll taxes wouldallow the city to tax both residents and commuters.It is fairly easy to administer and can yield significantrevenues. The main disadvantages are that the taxacts as a barrier to employment, it distorts produc-tion decisions, and the tax base is already heavilyused to finance the social security system.

Corporate income taxes are not an appropriaterevenue source for cities because it is difficult todetermine where revenues are collected, the tax baseis mobile, revenues are volatile, and the tax bears norelationship to the benefits received from municipal

services. Moreover, the city already over-taxes busi-nesses through the non-residential property tax.

Revenues from sales taxes are responsive tochanges in the economy but less so than incometaxes.12 Sales taxes could provide the city with sig-nificant revenues. An estimate of potential revenuesfrom piggybacking onto the provincial sales tax sug-gests that a 1 percent surcharge (increasing the retailsales tax rate from 8 percent to 9 percent) couldyield between $360 and $378 million in Toronto.13

The sales tax captures the benefits to non-residents(such as commuters and visitors) who use services inthe municipality but do not otherwise pay taxes tothat municipality. Locally set tax rates would be dif-ficult to administer because of the inability to deter-mine where revenues are collected. The sales tax isregressive14 but, as noted above, the main role oflocal government is to provide goods and servicesso it is more appropriate to apply the benefit princi-ple to local taxation than the ability-to-pay principle.As with the income tax, there are problems of tax-payer mobility. People will purchase goods outsidethe jurisdiction where they live if they can avoid thetax. Although income taxes are also subject tomobility problems, residence is less mobile thanconsumption.15

Excise taxes (also known as selective sales taxes)would add to the mix of taxes at the local level butthey generally do not yield substantial revenues. Forexample, one cent per litre on the provincial fuel taxbase would yield Toronto only between $36 and $38


10. The estimate is based on Harry M. Kitchen and Enid Slack, “Special Report: New Finance Options for Municipal Governments,” Canadian Tax Journal, Vol. 51,No. 6, 2003.

11. Income (and sales) tax revenues have declined in many U.S. cities and, coupled with restrictions on property tax increases, have caused fiscal stress. See MichaelPagano, “City Fiscal Conditions in 2002,”National League of Cities, Washington, D.C.

12. Sales taxes are less elastic than income taxes because they are levied at a single rate. Sales increase in line with income increases so, for example, if incomes double,sales could double. This is in contrast to the income tax, as noted above, where tax revenues more than double when incomes double. Moreover, the retail sales taxbase has been steadily declining relative to the overall economy because of the shift from a manufacturing to a service-based economy (services are not taxed by theretail sales tax) and the increase in purchasing through the Internet. See David Brunori, Local Tax Policy: A Federalist Perspective (Washington, DC: The Urban InstitutePress), 2003, pp. 75-76.

13. Kitchen and Slack, 2003, Supra.

14. This means that the tax is borne relatively more heavily by low-income taxpayers than by high-income taxpayers.

15. Mel McMillan, “Municipal Relations with the Federal and Provincial Governments: A Fiscal Perspective,” Prepared for the Municipal-Provincial-Federal RelationsConference, Queen’s University, May 9-10, 2003.

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million. A three percent tax (the rate currently leviedvoluntarily in the GTA) on hotel and motel roomswould yield between $22 and $27 million.16

Unlike general sales taxes, which are imposed on allgoods (and services in the case of the GST) exceptthose that are exempt from the tax, excise taxes areimposed only on designated items. This means thatthey are more likely to affect the behaviour of taxpay-ers (away from the taxed item) than a general sales taxthat applies to all goods and services. Of all of theexcise taxes, hotel/motel taxes probably make the mostsense for Toronto: hotel/motel tax revenues areresponsive to changes in the economy and could com-pensate the city for the benefits received by visitorsfrom municipal services. Other excise taxes could beused to a limited extent to provide the city with accessto revenues from a range of tax options.

LOCAL TAXING AUTHORITYRegardless of which taxes the city is given access to, itis critical for local autonomy and accountability thatthe city be politically responsible for levying thosetaxes. In other words, it should be required to set thetax rates. Unless the city can alter the tax rates, it willnot achieve local autonomy or accountability:

“…if a city government feels that it requiresmore money to do what it is expected of it by itscitizens, then it should be in a position to get thatmoney from the people who will be the primarybeneficiaries of the resulting expenditures and towhom they are ultimately accountable to at theballot box – the citizens and voters of the city.”17

Local tax rate setting provides predictability for the cityand gives it the flexibility to change rates in response todifferent circumstances. When federal or provincialgovernments allocate a portion of their taxes to cities

based on a formula, revenue sharing simply becomes atransfer. The city has no control over how much it willreceive from year to year.

Local taxing authority is not without problems, howev-er. Since individuals and businesses can easily movebetween jurisdictions within the GTA or beyond, a dif-ferential retail sales tax rate, for example, could encour-age individuals to purchase goods and services in thosemunicipalities with lower tax rates. A differential hoteland motel occupancy tax, fuel tax or income tax wouldresult in similar behavioural responses. These reactionswould, however, be similar to the location decisionscurrently caused by differential property tax rates. Taxcompetition can create an environment in whichmunicipalities become more efficient in their use ofresources and more accountable to taxpayers. If thecity can convince taxpayers that they are getting moreservices in return for the higher taxes, there may lessincentive to move. Nevertheless, there is a clear trade-off between the accountability and flexibility advan-tages of local setting of tax rates and the potential dis-advantages of differential local tax rates.

To avoid the problem that Toronto would face if onlyit has the authority to levy new taxes, the provincemight consider allowing other municipalities to levynew taxes as well. Municipalities that do levy new taxeswould likely impose tax burdens that are in line withtheir neighbours to prevent residents and businessesfrom moving to or shopping in other jurisdictions.Nevertheless, it may be necessary for the province toset a minimum rate to minimize tax competition and aceiling rate to prevent excessive tax exporting.18 Settingrestraints on “harmful competition” may be especiallyappropriate in the Toronto region where the locationof economic activities is especially sensitive to fiscaldifferentials.


16. These estimates are from Kitchen and Slack, 2003, Supra.

17. Ronald D. Kneebone and Kenneth J. McKenzie, “Removing the Shackles: Some Modest, and Immodest, Proposals to Pay for Cities,” In Boothe, Paul (ed.) Payingfor Cities: The Search for Sustainable Municipal Revenues (University of Alberta: Institute for Public Economics, Western Studies in Economic Policy), No. 9, 2003, p. 61.

18. See Richard, M. Bird and Enid Slack, “Fiscal Aspects of Metro Governance,” A report prepared for the Inter-American Development Bank, 2004, p. 37.

To the extent that the benefits of services (such astransportation, planning, and social services) crossmunicipal boundaries in the Toronto region, a case canbe made for a regional body to coordinate the deliveryof those services and to raise taxes to pay for them.The result would likely be a uniform tax rate across thebroader region for those services. Further discussionof regional authorities is beyond the scope of thispaper.

CONCLUSIONToronto, like other Canadian cities, has relied largely onthree revenue sources (property taxes, user fees, andintergovernmental transfers) for decades even thoughexpenditure demands have been increasing and cities inother countries around the world have access to otherrevenue sources (such as income, sales, and excisetaxes). A new City of Toronto Act that gives the cityaccess to revenues from a mix of taxes would give itthe flexibility it needs to respond to changing expendi-ture needs.

Although it would be very costly for Toronto to collectits own income and sales taxes, for example, there areadvantages to piggybacking onto federal or provincialtaxes and levying their own tax rates. The city needs toset its own tax rates if it is to achieve autonomy,accountability, predictability, and stability. Locally settax rates will require provincially-set limits (minimumand maximum) on the rate of tax that could be levied

locally both to minimize tax competition and reducetax exporting.

Once given these new revenue-raising tools, the citywill have to decide when and how to use them. Raisingtaxes is never easy. One option is for the city to intro-duce new taxes and, at the same time, reduce propertytaxes. Although a substitution of this nature wouldallow the city to have access to new tax sources overtime that are more progressive and grow with the econ-omy, it would not solve its current fiscal problems. Asecond option is for the federal or provincial govern-ments to reduce their taxes (say, lower the rate on thepersonal income tax) to provide the city with tax room.This option would require the city to convince theother governments that reallocating the tax burden inthis way would be beneficial to the province and thecountry. Tax room could also be justified on thegrounds that the city is paying a portion of social serv-ice costs that were “offloaded” by the province ontothe property tax base. If the province does not takeback social service responsibilities or provide increasedfunding for these services, it might consider providingtax room to the city. A third option is to raise new rev-enues with a commitment to improve service delivery.In other words, taxpayers would pay more taxes butthey would receive more services. The city would haveto convince taxpayers that they would actually bereceiving new and improved services in return forhigher taxes.

20 EENNIIDD SSLLAACCKKTT

Paul Bedford is the recently retired Chief Planner for the City of Toronto.He now speaks extensively on a wide range of urban planning issues acrossCanada and internationally.

Toronto has now lived through sevenand a half years of amalgama-

tion. It is a good time to take stock of our strengths, ourneeds and seize the opportunity we all have to make ourvoices heard on how to get the city we want. TheProvincial government has issued an invitation to theCity of Toronto to redefine the powers it currently holdsin the City of Toronto Act. The Premier has committedto introducing new legislation by the end of 2005. Thisis a once in a lifetime opportunity that must be embracedby broad public discussion to ensure that Toronto’s com-munity values, aspirations and principles for building agreat city are captured in the new legislation.

Many questions need to be answered. What new powersand revenue sources should be made available toToronto? Should the Federal and/or Provincial govern-ments allocate a percentage of existing income tax orsales tax revenue? What criteria should be used to deter-mine how the money will be spent? How will the city beheld politically accountable if revenue is simply given toit?

As an alternative to revenue sharing, should the city havethe power to raise its own revenue through a city incometax or city sales tax? What about the ability to chargeroad tolls? How do people feel about energy consump-tion, waste management or sewage treatment fees?Should these and other revenue generating ideas be sub-ject to a referendum or should the mayor and council bedelegated the authority to implement such measures?

With regard to city planning and development matters,should Toronto be given exclusive control over its ownfuture growth or should the Ontario Municipal Boardstill have a role? At present, a decision by Toronto’s city

council can be overturned by the OMB. Considerationsof building material, urban design and architecture arecurrently not allowed. In Ontario, the lawyers control theplanning and regulatory system, not the planners orpoliticians. How should this change?

UNFINISHED BUSINESS

When amalgamation was implemented on January 1,1998 it not only merged seven former governments intoone, it eliminated all previous funding for transit anddownloaded public housing and social services on thecity to operate with no financial resources to pay forthem. Toronto continues to suffer from the havoc thatresulted. The hard and simple truth is that over the pastseven years hundreds of millions of dollars have beendeliberately withdrawn from the city by the formerProvincial government and it shows. To make mattersworse, the former Premier’s Executive Assistant recentlyadmitted that amalgamation was a huge mistake!

Public transit and public schools are in decline, homeless-ness is a fixture of city life, urban poverty is increasing,tourism continues to suffer and the reputation ofToronto as a clean big city has changed. Most important,the pride of Torontonians in their city is at risk. No onewants this to continue but no matter how hard the Mayorand Council try to address the situation, they do not pos-sess the powers, the revenue or the governance structureneeded to get the city we all want Toronto to be.

What is perhaps most amazing about our current state ofaffairs is that this didn’t just evolve on its own! Toronto’spresent circumstances were artificially created by the poli-cies put in place by the former Provincial government.The great irony is that Toronto has experienced consid-erable decline in its quality of life at a time when theGreater Toronto economy has enjoyed unprecedentedprosperity and growth.

How To Get The City We WantPPAAUULL BBEEDDFFOORRDDTT

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To best understand the gravity of this situation think ofyour own family. You expect to provide for your ownfamily’s monetary needs. However, when your parents,your brothers and sisters, aunts and uncles and yourcousins all move in to live with you with no increase inyour ability to cover these new financial responsibilities,the situation quickly becomes unsustainable! The City ofToronto is in the same position.

It is an unsustainable financial position that must beresolved. The good news is that it is indeed possible tosolve our problems and restore the city to its tremendouspotential. The opportunity is now!

WHAT KIND OF CITY DO WE WANT?

Today, Toronto is a city held together by shared valuesrather than shared roots. This is important to understand.It is essential to achieve an accurate picture of the sharedcommunity values we want to pursue to get the city we allwant. Most people would probably say they want aToronto they can be proud of that incorporates theirdreams. Words like healthy, prosperous, inclusive, beauti-ful and sustainable over time all come to mind. Most peo-ple want a city where their life cycle needs can be realizedand where future generations can be successful and havea strong sense of co-ownership with their city. Perhapsmost fundamental is the desire for our city to be at homewith the world given Toronto’s wonderful multiculturalpopulation.

A strong public realm comprised of parks, public spaces,squares and vibrant sidewalk life are all essential for ahealthy city. Transit must become so good that there isalways a bus or streetcar in sight. Our waterfront mustbelong to all Torontonians and be our front door to theworld. It should be possible to live your life without own-ing a car and not feel deprived as a result. It should alsobe possible to have your life cycle housing needs metwithin your own community from your first rental apart-ment to the nursing home. It should be possible to walkto local shops to buy a quart of milk. Pedestrian ameni-ties must be at the heart of city life.

The kind of city I have described doesn’t just happen. Itis the product of a confident city exercising its valuesthrough legislation that allows it to make its own deci-sions. That is why the contents of a new City of Toronto

Act and related legislation is so important to allTorontonians.

It is important to test these assumptions with the publicin an intense citizen based dialogue over the comingmonths. People need to speak up and spell out the corevalues that will shape the future of Toronto. They needto react to the range of different ideas and solutionsbeing offered through various presentations, articles anddebate. Out of this will emerge key guiding principlesthat will form the framework and the approach to be fol-lowed in defining new powers to be given to the City ofToronto. This is a defining moment in the life of ourcity!

What are the barriers to achieving positive change? Notmuch! The biggest barrier is a lack of interest in one’sown life and the future well being of one’s children. Whowould ignore this? How more personal can it get!

Anything is possible to change when enough peoplewant to see it happen. The way Toronto looks and feelstoday is the result of deliberate changes made in 1998when amalgamation was implemented. The job was onlyhalf completed. The potential advantage of one big citywas never realized given the lack of revenue, an outdat-ed governance structure for the mayor and council andthe inability to regulate development in keeping with thevision and goals of the city’s Official Plan.

Now is the time to embrace the opportunity extended bythe province to complete the unfinished business ofamalgamation and create the city we want. To do thisTorontonians must feel passionate about their city’sfuture. They have to help define its needs and demanda new approach that enshrines public priorities in newempowering legislation.

WHY SHOULD TORONTO HAVE SPECIALPOWERS?

There is no question that cities and towns across Ontarioand Canada are in need of new revenue sharing and rev-enue generating powers to pay for their civic responsibil-ities. The potential of the “New Deal” is significantgiven the recognition by the Federal Government ofCanada’s urban reality and huge infrastructure needs. Ibelieve that the criteria for funding should be based on

PPAAUULL BBEEDDFFOORRDDTT

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sustainable city building values and practices, creativityand regional co-operation in city regions.

But what about Toronto? Toronto is unique given itssize, its responsibilities and its economic wealth generat-ing ability. It is also the only Canadian city that is both aprovincial capital and a very large city with very specialfunctions. Toronto generates approximately $36 billion ayear in federal and provincial tax dollars which in turnprovides benefits across the entire country. If the eco-nomic engine gets sick the whole country suffers.Toronto is equivalent in population to 4 Canadianprovinces, or 3 provinces and 5 cities, or 13 Canadiancities.

On a daily basis, the Toronto Transit Commission moves1.4 million people, more than the combined populationof Vancouver and Calgary. As in other big cities aroundthe world, transit is essential for the city to function. Toillustrate the point, a few years ago both Hamilton andVancouver endured transit strikes that lasted severalmonths. Both cities continued to function. A transitstrike in Toronto that lasts longer than a few days quick-ly grinds the city to an economic standstill. Transit inToronto is not a luxury or an option. It is the verylifeblood of the city!

With respect to housing, social services and immigrationToronto attracts people in need from across Canada andreceives the vast majority of new Canadians seeking eco-nomic opportunities. These onerous responsibilities areunique to Toronto yet the city is in a legislative straight-jacket with no ability to meet its financial, social, gover-nance and infrastructure needs. The province must nowaddress this situation by granting the City of Torontothe powers to govern Canada’s largest city instead ofallowing it to wallow from year to year in perpetualfinancial chaos.

Big cities are different. They need different financialtools and different powers and different governancestructures to get things done. Toronto is no exception.

PRIORITIES TO EMPOWER TORONTO

Before Torontonians can get the kind of city we want,we will have to be prepared to change our collectivemindset towards municipal government. There is truth

to the expression “ you get what you pay for”. As a start-ing point for public discussion, I believe that three prior-ities should be pursued. These include powers regardingrevenue, governance and sustainable city building. Hereare some ideas to consider:

Revenue MenuToronto depends on property taxes for approximately45% of its budget compared with an average of 15%for U.S. cities and an average of 5% for European cities.Given Toronto’s increased responsibilities of transit,housing and social services downloaded from theprovince after amalgamation, it is clear that new revenuesharing and revenue generating sources are needed fromsenior governments to pay for essential services to run abig city. The key problem is that the property tax isinflexible and unsustainable as it doesn’t grow with theeconomy. Simply put, it can’t begin to pay the bills. It isa huge problem that if not fixed will continue to dragthe city and the province into a downward spiral.

What are the options? How do other big cities in the U.S.and Europe fund city services? Generally speaking,many U.S. cities including New York have their ownincome tax and/or sales tax. In addition, hotel levies anda variety of fees associated with vehicle registration anddrivers licences, waste reduction, energy and water con-sumption charges are often part of the financial menu ofrevenue. Federal and state funding programs to encour-age transit, housing, revitalization of downtowns andvacant industrial brownfields, the redevelopment ofpublic housing in addition to sustainable regional growthare also available for different cities. Together, this rev-enue menu constitutes approximately 85% of the budg-et for a U.S. city. Municipal taxes only account for theremaining 15%.

In Europe, the municipal budgets of cities like London,Paris and Frankfurt are heavily dependent on a share ofnational government revenue derived from income andconsumption taxes. For example, in London 65% of thebudget of the Greater London Authority comes fromgeneral government grants, 27% comes from fares, feesand other charges while only 8% is generated throughthe local property tax. Perhaps the most well knowncharge is the congestion charge of roughly $12.00Canadian per day for each vehicle entering central


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London. Despite initial controversy associated with thisroad toll, it has been extremely successful. It has reducedtraffic in the central zone by about 15% and has resultedin the introduction of an additional 11,000 peak hourseats on new and more frequent bus routes. The conges-tion charge is now being expanded further in 2005.

The main point to focus on in these comparisons is thatToronto must obtain new sustainable revenue sourcesand powers from senior governments if it is going toprosper. It is clear that the major functions of transit andsocial housing that were downloaded on the city contin-ue to place sever stress on its health. Should these func-tions be assumed by the province? Torontonians shouldprovide direction on what options they would be pre-pared to support and whether the use of any new taxingpowers should be subject to the accountability of theelectorate through a referendum.

GovernanceAs Toronto’s Chief City Planner for the past eight years,serving under eight mayors and numerous councillorsover thirty-one years with the City of Toronto, I havebeen exposed to many different governance models. Inmy opinion, there is a serious need to make changes tothe existing political structure to more effectively governa large, complex city. Now is the time to examine all theoptions and devise a governance model for the next eraof city building that will ensure both big picture and localpriorities are addressed.

At present the mayor and 44 local councillors are electedfor a three year term of office. The mayor runs on a city-wide basis while each councillor is elected in a local wardrepresenting approximately 55,000 people. Councillors siton both city-wide standing committees and on four areaor community councils. Generally speaking, big pictureissues are to be dealt with by the various standing com-mittees while local issues are to be dealt with by the fourcommunity councils. Unfortunately, this model has notproduced the clarity that was originally intended.

It does not embrace the potential of one city. Seven yearsafter amalgamation, it is still too common for politiciansto fight for their former municipality and the programsand practices associated with them. The existence of 44ward based councillors creates a bias for the local per-

spective at the expense of advancing city-wide prioritiesand moving the whole city forward. A case can be madefor the mayor to have expanded powers to get his or heragenda accomplished, set the tone and deal with high pri-orities within a short timeframe.

I also believe the mayor and council should have a longerterm of office in the order of four years. This is com-mon in U.S. and European cities and recognizes that ittakes time to make positive changes in big cities.

Specific powers should be spelled out for the mayorregarding the budget and other key city-wide matters. Inaddition, an executive committee of approximately 5councillors and the Mayor should be explored with onecouncillor elected from each of 5 new districts. The exec-utive committee should be delegated specific powers forthe budget and key city-wide services.

I believe a strong case can be made to abolish all wardsand adopt an at-large system of governance with council-lors elected at large within each of 5 new districts. Thesize of the council could be slightly expanded to 45 withapproximately 9 councillors elected at large within eachof 5 new districts representing approximately 500,000people each. These districts would be based on logicaland natural boundaries encompassing communities ofinterest. None of the new boundaries should coincidewith former municipal boundaries. It could help to bringmore clarity and focus to the major big picture prioritiesfacing the city and would end the current ward bossmindset that has produced negative results for city build-ing.

This approach also has the benefit of capturing the bestof the former two-tiered system of municipal govern-ment within one Council. That system of governanceachieved a strong city building agenda and a strong com-munity presence throughout its life and was noted forexcellence around the world. It is no surprise that suchcities as London and Paris incorporate the principle oftwo-tiered governance today.

Standing Committees should communicate a philosophyof integration and the reality that everything is connect-ed to everything. Names such as the Healthy CityCommittee, City Building Committee, Community


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Services Committee and Executive Committee should beused with respective department staff reporting throughthe appropriate committee. This model would also helpto break down the mindset of silos that exists withindepartments.

In order to reconnect communities with their city,Community Advisory Boards could also be establishedcomprised of groups of neighbourhoods representingapproximately 100,000-150,000 people or more. Theywould consider the needs of the community and provideadvice to the Mayor and Council on the city budget, landuse and service delivery. Given their relatively small size,it would be possible for each Community Board to devel-op a true sense of involvement and co-ownership in thelife of their city. An examination of how other large citiesuse this model should be carefully studied to see whatmight work best for Toronto. New York seems to havethe most experience with this concept since the mid1970’s.

Council should focus on governing and make key policydecisions for the city and its communities. Staff shouldbe charged with managing the implementation ofCouncil’s policy decisions. Perhaps the three new posi-tions of Deputy City Managers adopted by Council inDecember, 2004 could be linked to the three DeputyMayors who could advocate and be responsible forgroups of department portfolios and services.

City BuildingCity building is the term often used to describe the plan-ning, redevelopment and continuous renewal process ofa city. It also covers the never ending process of guidingchange ,which in a large and growing city and region is ahuge challenge. The way in which the public, politicians,staff and developers interact and the results of thatprocess show up every day in the type of buildings con-structed, the quality of architecture and the comfort levelpeople have with the way the city feels.

People care deeply about how their city looks. There is apublic thirst out there to re-capture a sense of pride,beauty and cleanliness that Toronto used to have to amuch greater degree. A lot can be done from a legislativeperspective to give Toronto the powers it needs toimprove urban design, architecture and to generate a

sense of co-ownership in Toronto’s future renaissance.

The existing Planning Act also prohibits consideration ofbuilding materials or their colour in evaluating planningapplications. This is a flaw in the tools available to plan-ners who are often trying to encourage compatibility ofnew buildings with the existing character. Greater flexibil-ity in this area would give all parties more scope in the citybuilding process.

The overall quality of new buildings and new neighbour-hoods could be substantially improved through the estab-lishment of an urban design review panel by the city. Allnew development proposals in a designated districtwould first be subject to approval by the urban designreview panel before being submitted to council. To beeffective, the panel should be comprised of professionalarchitects, urban designers and planners and its powersshould be strong. A similar model has existed inVancouver for many years and has resulted in enormousimprovements to the quality and sensitivity of the build-ings and public spaces constructed in that city. To thecredit of some Toronto developers, they have voluntarilyagreed to a design review process which have resulted inpositive outcomes for all parties. It is time to incorporatethis concept into legislation and make it a formal powerthat can be exercised.

Other tools are needed to achieve the city we want. Theyinclude the use of tax increment financing as an incentiveto encourage the redevelopment of empty brownfieldlands such as on Toronto’s waterfront. With respect tosocial housing, Toronto should give serious considerationto the model practiced in France where a fixed percent-age of all new private sector housing is dedicated to thelocal municipal housing authority instead of constructingsingle purpose social housing buildings. This approachhas the advantage of allocating housing units across allneighbourhoods in the entire city. It results in a wide dis-tribution of affordable housing to the full spectrum ofthe population in a totally normal fashion. Both of theseconcepts could be incorporated into legislative authority.

ONTARIO MUNICIPAL BOARD

The role and future of the OMB is a very critical issuefor Toronto and for many other larger municipalities


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across the province who have well resourced city plan-ning departments. Perhaps a starting point is to realizehow much the current Ontario planning system is dom-inated by the power and influence of the OMB com-pared to other Canadian and U.S. cities. In my opinion,the legal industry controls the planning and developmentagenda in Toronto; not the planners, architects, urbandesigners or politicians. This is a result of weak legislationand the final authority of the OMB to determine all plan-ning applications regardless of the public and politicalprocess followed by the municipality. The 90 day appealprovision of the Planning Act has meant that many appli-cations are appealed long before the Council has made adecision on the merits of the development proposal. Thispractice has fueled the flames of community anger overthe years and has produced a situation where in my view,many councillors have not accepted their full responsibil-ity to make the tough development calls on controversialapplications because they know that the OMB will ulti-mately be responsible for the decision.

While an appeal body to a council decision may be justi-fied, I believe the powers of the OMB need to be con-fined to the actual merits of the appeal, not the entireapplication. As such, if the OMB is retained it shouldeliminate its practice of holding “de novo” hearings.However, I believe that if the changes to governancedescribed in this paper are implemented, the Councilshould ideally be empowered to make the final develop-ment decisions. It is simply a logical and normal powerfor the largest city in the country to be able to exercisebut not unless the current governance model is radicallychanged to hold the full Council accountable for its’actions.

Notwithstanding this view, I do believe in the right of anappeal as people do make mistakes. As such, it may bedesirable to give the OMB the ability to re-direct anappeal back to the Council for reconsideration based onprescribed criteria. Perhaps the Executive Committeecould perform this role within a defined scope.

Generally, planning appeals should involve a matter ofprovincial interest to merit continued OMB involvement.I do not see the merit of continuing to allow mostCommittee of Adjustment appeals to absorb the timeand resources of the OMB. Back-yard additions, setbacks

and other minor variances associated with applications inToronto and other Ontario municipalities should defi-nitely be decided locally by local appeal bodies.

BOTTOM LINE

It has now been over 170 years since the City of Torontowas first incorporated in 1834. Today it has the budget,needs and obligations of a major world city yet it retainsthe powers of a small Ontario town. This situation doesnot exist anywhere else in the world. It has to change. Itis time for Toronto to become an adult with the author-ity to conduct its own affairs.

An active public dialogue is needed to determine the val-ues, principles and priorities that should be incorporatedinto a new City of Toronto Act or City Charter.Torontonians want to be proud of their city and theservices that go with it. However, nothing is free. AsOliver Wendell Holmes noted “I don’t mind payingtaxes. They buy me civilization.” Collectively, we willneed to translate this thought into the kind of city wewant and how much we are willing to pay for to get it.

Mayor David Miller’s job is to lead and pull the cityahead. He has many challenges. So far he has establisheda good foundation, championed the cause for a share ofthe gas tax and GST exemptions for cities and has apositive agenda to help Torontonians get the city wewant. However, he is only human and is only one person.No one can do it alone. The mayor needs to have thetools to get the job done and the help of Torontonians .

The bottom line is the Province of Ontario and the Cityof Toronto need each other more than ever. It is hard toembrace change especially when the past has brought somuch mistrust and animosity. However, we have reachedthe point of no return. Things cannot remain the same.


Don Stevenson is an associate of the Canadian Urban Institute and was aformer Ontario deputy minister of Intergovernmental Affairs (which at thetime was responsible for municipal affairs). He is also the former Presidentof the Institute of Public Administration of Canada.

A new City of Toronto Act, providing forgreater autonomy to make deci-

sions about its own future and the fiscal capacity tocarry out those decisions makes obvious sense forCanada’s largest city, with a population larger than allbut four of Canada’s provinces. But the fact that thecity contains less than half the population of the con-tinuously built-up city region of which it is the heart,means that metropolitan region issues cannot be neg-lected.

One of the conclusions of the UN City Summit in1996 was that the major challenge of the world’s firsturban century - the twenty-first – would be the man-agement of its metropolitan regions. For two decadesafter its establishment in 1954, Metropolitan Torontowas recognized internationally as a “best practice” inmanaging a growing city region. Metropolitan Toronto

in 1954 contained over 80 per cent of the city region’spopulation. Local services in the most part continuedto be provided by the lower tier municipalities, whilethe infrastructure and planning requirements of themetropolitan area were handled by the metropolitanauthority. Over time, other regional functions such aspolicing, waste disposal and the transit system becamemetropolitan responsibilities. For many internationalobservers, Metro’s greatest success was the avoidanceof poverty ghettos across the metropolitan region, dueto a combination of Metro funding of social servicesand housing, and the equalization activities of theMetro School Board. The provincial government ofOntario became the recipient of international acclaimfor the political will and foresight it demonstrated inpioneering a successful model of metropolitan gover-nance.

When Premier Frost announced the creation ofMetropolitan Toronto, he said that its boundaries aswell as its functions should be periodically reviewed(the assumption was every decade) in response to pop-ulation growth and the changing social and economiccontext. The first review (the Goldenberg report of1965) led to new Metro responsibilities and fewer localmunicipalities but did not deal with geographic bound-aries. The second review (the Robarts report of themid-1970s) recommended direct election to the MetroCouncil and the creation of a Greater TorontoCoordinating Committee to provide for coordinationof planning and infrastructure development in theGTA. The belated provincial response to the latter rec-ommendation was the establishment of the office forthe Greater Toronto Area (OGTA) headed by a deputyminister, the creation of the Greater TorontoCoordinating Committee supported by the OGTA,

Over the past 30 years, numerousreports have recommended the disen-

tanglement of policy-making and fundingresponsibilities now scattered across a var-iety of provincial and municipal governmentareas. Virtually none of these recommend-ations has been implemented, despite per-suasive and practical arguments on how tore-assign roles for provincial and municipalgovernments more appropriately. GreaterToronto: The Report of the GTA Task Force. (1996).

Possible Regional Implications Of A New City of Toronto Act

DDOONN SSTTEEVVEENNSSOONNTT

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and later still, the establishment of the third majorreview since Metro’s establishment, the Golden TaskForce, and finally the inauguration of the GreaterToronto Services Board.

The Golden Task Force concluded after a world-widestudy of metropolitan issues that:

• The entire metropolitan region (the GTA) needto be treated as a single economic unit

• A body is needed at the regional level to dealeffectively with region-wide issues

• Business property tax differentials need to bereduced between the core and the periphery

• A healthy region requires a healthy core• More compact urban development is required to

enhance the environment, make transit moreviable, and economize on infrastructure expen-ditures

• A simplified form of government is required:one level to deal with broad regional issues, andthe other to deliver most services.

Other reports in the mid-1990s such as the Crombie“who does what” panel reinforced Golden’s main rec-ommendation that the top governance priority was aGTA-wide body to establish a regional vision and

coordinate its implementation. Similar reports inBritish Columbia and Quebec have led to the GreaterVancouver Regional District and the Greater MontrealMetropolitan Community.

Golden’s key conclusions remain valid in 2005 evenafter the creation of the new city of Toronto in 1998and the province’s Greenbelt strategy. They becomeeven more important in the context of a moreautonomous Toronto, containing less than half of thebuilt-up metropolitan area’s jobs and population and amuch smaller proportion of population growth.

It would be a mistake to abandon the concept of theGreater Toronto Area in favour of a wider, less-con-nected region such as the Golden Horseshoe. An argu-ment can be made that almost any proportion ofSouthern Ontario is Toronto’s economic region but itis difficult to imagine any local accountability to a bodybeyond the limits of the GTA. After two decades ofusage, the GTA is now a familiar term, used in the pri-vate and non-profit sectors as well as the media. TheGTA is a reasonable match for the Toronto commuter-shed and for the Toronto “bioregion” set out in theRoyal Commission on the Toronto Waterfront andcontaining the land east of the Niagara Escarpmentand south of the Oak Ridges Moraine (to just east ofOshawa.)

As surrounding cities such as Mississauga develop asimilar multicultural mix to Toronto and as they runout of developable land and the revenue from develop-ment charges, their needs, aspirations and attitudesmerge with the central city.

The anomalies in the governance structure of theGTA are now the four regional governments sur-rounding Toronto. They remain exact or slightly adapt-ed remnants of mid-nineteenth century countiesshaped around north-south colonization roads. Thecurrent controversies over representation on theRegion of Peel’s council or over the fate of the agricul-tural preserve in Pickering reflects a structure thatdetracts from a sensible approach to the GTA. No oneis advocating a three-tier approach to governance inthe GTA, but if the province’s Greenbelt strategy is to


Change in the GTA is urgently neededand, in many cases, long overdue. Our

economic growth is flagging. Inequities inour taxation system are deepening and,combined with an eroding tax base, arethreatening the region’s economic stability.Our infrastructure is outdated and is notkeeping pace with the competitive needs ofbusiness and industry. Current urban devel-opment patterns are too costly and ineffi-cient to be left unchecked. Municipal gov-ernments have neither the authority nor thecapacity to deliver services efficiently. Andour government structures are increasinglyill-equipped to meet the competitive chal-lenges facing the city-region. Greater Toronto: TheReport of the GTA Task Force. (1996).

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be effectively implemented and if transportation andinfrastructure development is to proceed in a compactand orderly fashion, a GTA body with at least a plan-ning and coordination function is obviously to be pre-ferred to four two-tier regional governments with theirown visions, often heading in different directions fromeach other and often failing to integrate basic infra-structure and services.

The Greater Toronto Services Board failed because ofa lack of political will of the kind demonstrated byPremier Frost a half century ago. It had insufficientresponsibilities and resources to be effective and theprovince was unwilling to overcome the debilitatingconflict between the lower and upper tier municipali-ties in the surrounding regions.

The City of Toronto needs to be able to deal with abody devoted to its metropolitan region context. Asalmost all experts acknowledge, a regional transporta-tion strategy needs to be tied to a land-use strategy anda focus on combatting sprawl. An anti-sprawl strategycannot be effectively implemented if differential taxrates encourage development (commercial and residen-tial) across municipal boundaries into low density areas.An ability by the City of Toronto to levy a sales taxwould quickly be negated if there were no sales tax onthe other side of Steeles.

The central city contains many region-wide resources –specialized education, cultural and health facilities, thezoo, community and cultural organizations, assistedhousing, homeless shelters, to name just some. Theprovince has rightly required a financial contributionfrom the four surrounding regions to offset some ofthe costs undertaken by Toronto to provide socialservices to 905 residents. The municipalities of the 905

region argue rightly that this is taxation without repre-sentation. The obvious way of overcoming thisimpasse is to have it dealt with through a GTA-widebody.

There are many other areas where a more autonomousToronto needs to have relatively autonomous partnerswithin the metropolitan region without having to gothrough the province. Policing is an obvious example.While community policing is local, an integratedassault on grow-ops or criminal gangs cannot stop atthe city limits.

In an age of global competition, Toronto’s competitorsare cities like Singapore (a separate country), Shanghai(a separate province), London (with a Greater LondonCouncil), Paris (a separate prefecture within an Île-de-France region) and Berlin (a separate province). Eventraditionally fragmented U.S. cities are being buttressedby massive federal support and new regional bodies. Asthe Golden Task Force’s main conclusion emphasized,the entire GTA metropolitan region needs to be treat-ed as a single economic unit if its potential is to be real-ized


…regardless of how the Governmentof Ontario is structured, it is inherent-

ly unable to meet Greater Toronto’s coordi-nation needs effectively. The region mustdevelop its own identity and focus as a city-region if it is to compete effectively withother city-regions internationally. GreaterToronto: The Report of the GTA Task Force. (1996).

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John Sewell is a journalist, author and a former councillor and Mayor of theCity of Toronto.

Not many political leaders would be willing toadmit it today, but when the provincial gov-

ernment amalgamated Toronto local governments in 1997,it snatched away the city’s key international attraction.

During the last three decades of the twentieth century,leaders had come to Toronto from around the world tolearn about Toronto’s two-tiered system of local govern-ment. They saw the benefits that it had delivered to theToronto urban area, and they wanted to determine howthey might structure a two-tiered system for themselves.They saw this system of government as a way of makingcritical links between the city centre and the suburbs, ofproviding mechanisms to share social obligations, and ofconsidering regional land use issues.

Two-tiered metropolitan government was established inthe Toronto area in the early 1950s almost by chance. Thedense urban centre had proposed to annex surroundingmunicipalities in order to accommodate growth after theSecond World War. The surrounding townships, largelystill farmland dotted with hamlets and small towns, object-ed to being swallowed up by the big bad city. A compro-mise was struck: the dozen or more local governmentswould be joined together in a regional framework, as a kindof local confederation, and the wealth of the city wouldprovide the financial base needed to fund infrastructurefor urban development. Local governments would keeptheir voices and many of their powers, but would jointogether for regional matters. The new system workedremarkably well. Growth happened and the municipalitiesmanaged to get along with each other relatively well.

The Metro system of governance has been reviewed on aregular basis - by Carl Goldenberg in the 1960s; by John

Robarts in the 1970s, and by Anne Golden in the 1990s.All have confirmed the wisdom of the two-tier model. Byway of comparison, the move to amalgamate was takenwithout study or consultation (indeed there was verystrong citizen opposition); it was apparently done for polit-ical reasons unrelated to creating a workable form of localgovernment for Toronto.

The advantage of the two-tiered system most often citedrelates to linkage, as noted above. But there’s a much moreimportant advantage which deserves praise and attention,namely the ability of the two tiers to provide two impor-tant and different perspectives on urban issues.

Anyone involved in local government in cities knows thatto be effective, leaders must work simultaneously on twolevels. They must grapple with the neighbourhood context,and at the same time understand and respond to regionalconcerns. As one can imagine, the two points of view arenot always similar. Often they involve different values, dif-ferent priorities, and different political biases. Often theycompete and pose important choices. If you take accountof only one perspective, you lose the value and importanceof the other, and are liable to run into trouble.

Take the example of policing. In a downtown neighbor-hood where there is plenty of street life, mixed uses, andmedium/high densities, the most effective policing is oftendone on foot or by bicycle, where officers can movearound quickly, see and be seen, and can directly experi-ence the mood and temper of the street. In a suburb, byway of contrast, there’s little street life, no mixed uses orlow densities, so policing best takes place in a car. Mostpolice forces are governed at the regional level, and sincemost regions are predominantly suburban in nature, policeforces usually focus on policing by car and downplay theimportance of officers on foot or decide foot patrols aren’tcost effective. Yet unless the police force has equal regard

The Incredible Lightness of the Two-tiered Model of Local Government



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for both perspectives, either the neighbourhood or theregion is not well served.

The same kind of argument made about policing appliesto most other local services. As well, many regional servic-es must be located in a specific place, and that createsanother kind of tension often referred to as ‘NIMBYism’- not in my backyard. The neighbourhood might object,for instance, to a regional service such as a jail, or a certainkind of half-way house, being located within its bound-aries. It would be folly in these situations to determine thatthe neighbourhood opinion will always trump the regionalvision, or vice versa; some sort of accommodation shouldbe made.

Both perspectives are legitimate, and both need to findstrong expression in order to ensure they are weighed, bal-anced, accommodated, and finally decided on. Where localgovernment is framed only on a regional level, the neigh-bourhood perspective will not carry much weight. Wherelocal government is established on a neighbourhood basis,the reverse is true.

Two-tiered government gives legitimacy to both points ofview, the regional and the local or community level. Bothperspectives can have a strong voice, and reasonable trade-offs and accommodations can be taken as decisions aremade. Staff will not have to make decisions internally as towhich perspective will prevail – that’s a process that usual-ly dooms the neighbourhood perspective, and causesimmense political repercussions.

This two-tiered arrangement will mean that the regionaland local levels of government will often seem to be atodds with each other as they express different values andperspectives. This was often the case in Toronto, and sometook it as a sign of failure. Instead, it was a sign of success- public debate means that the values at issue become veryevident, and the trade-offs made at decision-time becomeobvious. The openness of the debate between the interestsoften dictates that decisions be taken carefully, often in anenvironment of compromise.

That, more than anything, was what gave the Toronto sys-tem such a stellar international reputation: the two tiers ofgovernment ensured that neighbourhoods had a voice, andthat the regional point of view did not run roughshod overlocal interests, as happened in so many other cities.

Any consideration of new governance models for Torontomust certainly include some form of two-tiered structure.It need not revert to the exact model in place before amal-gamation, but it should be formulated to provide strongvoices for both neighbourhood and regional points ofview. It is much too narrow to limit the question of goodgovernance to a strong or weak mayor system: the primarychange must be to remake a two-tiered system of localgovernance for the urban area.

And as with any workable system, what’s worked in thepast can be modified to serve new purposes as well. In thecase of the Toronto urban area, any new system mustincorporate a very broad regional perspective. The region-al model established in the early 1950s included all thelands likely to be developed within the next few genera-tions, although so much development has occurred inrecent decades that the urban area has spilled far beyondMetro’s boundaries. Today, there are as many people livingoutside the boundaries of the old two-tiered governmentas within them. The new regional area for the twenty-firstcentury is certainly the whole of the Greater Toronto area.

Anne Golden proposed a two-tiered governance modelbased on the GTA. Whatever one thinks of Golden’s pro-posals for the number of local governments within thislarger region, or the distribution of powers, or the struc-ture of the regional government itself, the merit of two-tiered governance is not in doubt. It has served the urbanarea well, and can do so again.

Another advantage of the two-tiered structure for the larg-er Toronto urban area is its ability to deal with expandedrevenue tools. Many have noted that there are immensedifficulties with one municipality in an urban area levying,for example, a sales tax of its own, since shoppers will sim-ply go to a neighbouring municipality to avoid that tax.This is a drawback for any tax which benefits from eco-nomic growth. But in a two-tiered system, the upper tiercould easily exercise these taxing powers if granted, sinceit could impose the tax across the whole urban area.

Debate about governance in the Toronto urban areashould focus on the nature of the two-tiered system whichshould be introduced. Learning from our success as anurban area demands that we go in this direction as a firstorder of business.


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Mark Sarner is President of Manifest Communications, Canada’s leadingsocial marketing agency.

Torontois slipping away from itself.As things stand right now,

Toronto is a 19th century construct trying to be a 21stcentury city, living with the fallout from amalgama-tion, a half-baked attempt to make the city better.

Thankfully, however, we are now staring squarely atan opportunity to fix our future. Premier McGuintyhas shown laudable courage in taking the initiative torewrite the Toronto Act and in investing the enter-prise with a sense of acute urgency. It is one thing totalk about needs, as the federal government has donefor a decade; it is another to act, as McGuinty hasdone in establishing a tight timeline for getting a newAct into law.

Toronto’s Mayor Miller has himself been resolute instanding up for the city’s importance, in speaking outfor the need for new powers and for the means tofund the city’s responsibilities and aspirations. Hisefforts have made a difference on a number of fronts.He has given the city reason to hope again for a bet-ter future.

By joining together to work on the new City ofToronto Act, McGuinty and Miller have put a collab-orative and collegial face on the process of workingtowards new legislation in any orderly and friendlymanner. Sadly, however, as of this date, it doesn’t looklike it will go far enough. We may well be on the verge

of the most Pyrrhic of victories here: we may end upwith a new Toronto Act that tinkers with matters ofeconomies and efficiency but actually accomplisheslittle. Or we may end up lost in helplessness andhopelessness as factions end up unable to come toconsensus on the bigger issues and, as a result, thegood intentions behind this initiative lead to nothingbeing done and governments moving on to otherthings.

What’s needed? Simply stated, rewriting the City ofToronto Act must be consistent with the same big,bold ideas that brought it to the top of the province’sagenda. To unlock Toronto’s potential, everyoneagrees there are three interrelated issues: powers,finances and governance. If we are going to think big,we need to act big. As the papers here and discussionselsewhere define it, the agenda is clear and concise:give the city broad powers to govern itself; give thecity control over the means to finance its needs andambitions; and restructure governance to align formand function. It is that simple. There is no need tomake it more complicated.

This is not to say it isn’t challenging. The province willfind it hard to give up powers, however much it seesthe necessity of doing so. The city will find it hard torise to the realities of exercising new powers, howev-er much it has wanted to have them. The provincewill find it hard to define a new financial formula forallocating resources to the city without maintainingcontrol over their use. The city will find it hard toassume direct responsibility for new taxation, howev-

The Big PictureAnd The Big Fix

MMAARRKK SSAARRNNEERR


33

er much it has lamented its inability to raise sufficientfunds in the past. The province will find it hard to layout the new governance model it believes the cityneeds, even though it is the province’s sole responsi-bility to do so. The city will find it hard to accept anew model, even though it could not create one foritself.

There’s a difference between hard and impossible. Weare not flying blind here. The resources to supportthis undertaking are considerable: a large body ofknowledge to draw from; a large pool of experienceand expertise to call on (these papers are but onedemonstration); and a largely untapped supply ofenergy in the community at large to fuel the transfor-mation process as the new Toronto defines and pur-sues its destiny. In short, we are well equipped to meetthe challenge.

It is both exciting and scary to realize that Toronto isquickly approaching a defining moment. Excitingbecause we could be about to unleash all our pent uppossibilities. A new Toronto Act could and shouldhave exactly that impact. Scary because we couldinstead end up restructuring ourselves into a fate ofever diminishing returns and of blame for lost oppor-tunity. What will be the result?

What is required is a big bold step forward into theunknown, a leap of faith no less. It is for the Premier

and his government to take it. At the end of day, it isthe Government of Ontario that has the sole respon-sibility and the absolute authority to change the Act -to determine the powers granted, the financialmachinery to fund the city and the governance modelfor its future.

We hear too often ‘the politics of the possible’ as therationale for why big ideas so rarely translate into bigbold policies. This is one of those instances in whichwe should not be so quick to buy into yet anotherexcuse for a lack of leadership. Politics as usualshould not be an option. Now is the time to assumethe high ground, an excellent place to lay the founda-tions for Toronto’s future. It is already staked out andready.

City building is, to be sure, an often precarious andinevitably messy business. Toronto’s own wrestlingmatch with history will undoubtedly follow this pat-tern. Our place in the 21st century will be determinedby what transpires around the Toronto Act over thenext few months. It is important that all of us with astake in the outcome to call on those with the respon-sibility to decide: remain resolute on the focus on thebig picture, the big issues, the big ideas and the big fix.Be relentless in aligning form, function and financeaccordingly. This is probably the only chance we’llhave for who knows how long. Let’s get it done now.


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The ‘Broadbent Group’ was convened as a forum for the tabling of ideas and discussionon the City of Toronto Act; the group did not strive for consensus on all the issues. Asub-group of six individuals below met independently and arrived at an agreement onthe following proposal.

We believe the following recommendations form a sound basis foran agreement between the City of Toronto and the Province ofOntario regarding a new City of Toronto Act.

Paul Bedford, Frank Cunningham, David Crombie, Anne Golden,Ken Greenberg, John Sewell.

1. FINANCIAL ISSUES There are a number of financial issues which are intertwined anddeserve to be addressed at the same time. The objective is toensure that the city has reasonable, reliable, and sufficient sourcesof revenues and financial supports in respect to its obligations.

a) The structural mismatch between the city and the other govern-ments should be addressed by removing from the city responsibil-ity for the great bulk of the costs of two large social programs,welfare and social housing. These costs are better shared, as theyhave traditionally been shared, by the provincial and federal gov-ernments which have sources of income able to bear these expen-ditures.

b) Given the large number of immigrants living in Toronto, a fairdeal comparable to what is available in other provinces, must bestruck with the senior governments for immigration support and alabour market agreement.

c) Until recently, property tax has been the city’s independentsource of taxation revenue. That status should be restored so that,after a proper phasing-in period, the city may again be the sole gov-ernment receiving property tax. The provincial education propertytax on commercial properties in the city should be removed.

d) There are many problems with the current system of propertytax, including the fact that it is structured inequitably between dif-ferent classes of property. (For instance, the rate of taxation paidby rental residential properties is far higher than for owned resi-dential properties.) The city should be given the sole authority tostructure and levy property taxes, subject to provisions whichensure that system is structured and administered with equity.

e) The city should be given the ability to levy excise taxes includinghotel/motel occupancy, meals, fuel, liquor, tobacco, vehicle regis-

tration, land transfer, and tax increment financing (TIF) to supportlocal infrastructure development.

f) If the above measures are not implemented to improve the cur-rent fiscal situation, consideration should be given to permittingthe city to access growth taxes, such as a sales tax.

2. POWERSThe city should be granted legislative powers which are broad andexpansive, free of the need for provincial approval of city deci-sions. These powers should permit the city to take actions which‘meet or beat’ provincial and federal laws and regulations – that is,the city should be able to do things which strengthen (but do notweaken) standards set out in senior government legislation or reg-ulation. This was expressed by the Supreme Court of Canada asthe ‘dual compliance’ test: a municipal bylaw would be disallowedonly if it compelled what senior government law forbids.

3. GOVERNANCEAn independent review of governance for the city should beundertaken to ensure responsive and accountable governance bet-ter able to address both city-wide and neighbourhood concernsand issues. This review should also deal with the role and functionof the Ontario Municipal Board as an approval agency of city landuse decisions.

Independent reviews have invariably preceded governance changesin Toronto, and the city has a fine history of this process being wellused: Lorne Cumming’s review in the early 1950s which led to thecreation of Metro; Carl Goldenberg’s report in the 1960s; JohnRobart’s report in the 1970s; and Anne Golden’s report in the1990s.

4. REGIONAL DECISION-MAKINGIt is imperative that the institutional capacity be created to addressregional land use and infrastructure planning issues (includingtransportation), and the protection of natural systems in theToronto area. This is required to create and maintain a strategicgrowth management plan for the Greater Toronto Area congruentwith provincial policies and to provide a context for municipalplanning. A process should be undertaken by the province in con-sultation with the city and other local governments to forge a con-sensus on the shape and structure of this institution (or institu-tions) such as that proposed in the Golden Report {Greater Toronto:The Report of the GTA Task Force. (1996)}.

A Four Point Plan

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Commentary

Paul ReedThere’s no question that the re-drafting of the City of TorontoAct is going to be watched and will have an impact beyond its par-ticular process and content. If its expression of first principlesand ideals is not done effectively, it will reaffirm the belief by sen-ior levels of government that cities do things in a humdrum wayand need not be taken seriously. But if it has freshness andbreadth of vision, it will signal that there is a new reality in thiscountry - politically mature and competent metropolitan centresthat deserve to be taken seriously (Nov 24.04)

David CrombieWe are in sore need of having a public engagement process; weneed to create some energy so that people know that this is notsimply “inside baseball” about fiscal capacity and so on. My ownview is that the creation of a public constituency is crucial becausewhen it comes down to a push between the city and the province,there needs to be a constituency out there of folks who have givensome consideration to the ideas and a clear public process that hassome legitimacy. (Dec 8.04)

Anne GoldenFinally there is a window to do something that would free up thecity from the silly stuff like needing approval for speed bumps;that would do something around the revenue jam that the city isin; and that would help to improve governance. Those are thethree big things. …Rome is burning and everyone is fiddling.Let’s get on with this. (Jan 24.05)

Mark SarnerWhat is the goal? We in Toronto have aspirations for the city andfor ourselves. As things stand, however, there is a disconnectbetween our ideas and the means we have at our disposal to real-ize them. There was a time, twenty or thirty years ago, whenToronto was full of energy and promise. We were recognizedinternationally as a model, as a city that worked, as a city on theverge of world class status. We aren't on that track anymore. Weneed to get back on track. Much depends on us doing so: thefuture of Toronto, of the province, and even of the country as awhole, depends on it...

The ‘Broadbent Group’, comprised of the participants listed on page 39, met on a monthly basis from November 2004 to the present. The following areexcerpts from these discussions. Please note that not all participants were present at all meetings.

Anne GoldenThe fiscal imbalance is the fundamental issue facing the City ofToronto; however the debate about what rights it should have toset tax rates or what new taxes or financial tools it should be ableto use without going cap in hand to the province is a separatequestion. You will not solve the fiscal imbalance simply by broad-ening the scope of the powers of the city. There is not enoughmoney; unless you re-balance the load you will not solve the fiscalimbalance. The City of Toronto Act is NOT about solving fiscalimbalance as its main goal. The new City of Toronto Act is aboutunfettering the city so it can do a better job. (Feb 23.05)

Dan BurnsUsing the ‘growing the spheres of power’ model which has beenused in most municipal reform in Canada so far , if that is wherethe discussion ends up, it seems to be obvious that powers couldgrow quite dramatically. There are a whole lot of areas, where thecity is partially active or active in partnership. You could get a lot

better performance, activity and intelligence locally if those ter-rains were explicit and much, much larger – housing, urban renew-al, settlement are a couple of areas. Combined with that, I thinkit would be interesting to propose making explicit in the legislationthat if the city is acting in its own jurisdiction, that it can make anagreement with the federal government. The province wouldagree that they have no role to play where a municipality is oper-ating in its own authority in relation to the federal government.You get out of the federal government worrying about whetherthey can do anything with the city that the provinces don’t sign offon. You create an environment with explicit authority for localgovernment.

…There are impediments to the city being able to look morebroadly at using alternative service delivery and broader user feesnot only under the municipal act but under other acts. For exam-ple, with roads municipalities have the authority to use road tollsbut don’t have the authority to set up toll booths; there is an

EMPOWERING THE CITY

POWERS

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‘undergrowth’ of impediments to the city using its own explicit orpartial authorities now. It would make a big difference to theoptions that the city has, to clear away the restrictions in themunicipal act and the impediments in this legislative ‘under-growth’. This would give the city a lot more flexibility and abilityto finance its current and future activities. (Feb 23.05)

Ken GreenbergI don’t think people appreciate that the OMB is a unique institution inCanada; there’s nothing like it anywhere else in the world and it is in myview, absolutely pernicious. Its paternalism cripples the city, divertsresources, and ultimately prevents municipal politicians from makingdecisions that they should make. I would be for abolition but failing that,something drastic has to be done. If not, the ability of the city to planitself in any meaningful way is severely curtailed. This of course wouldmean that the city has to change its current modus operandi. (Feb 23.05)

Joe Berridge We need to have an adult discussion about the revenue needs forthe city and tackle the issue of ‘revenue neutrality’. Is it our posi-tion that the problem is that the federal and provincial govern-ments are scooping too much of our tax money and doing thingsthat we could do better, and that instead of giving it back (the gastax solution) the city should have the ability to raise that tax roomitself through income/sales tax, etc? Or are we saying that the citycan add new tax bites on Torontonians, in addition to current fed-eral and provincial taxes? If it’s the latter we should all appreciatethe realpolitik of new taxes and the inauspicious start that wouldbe for a re-invented city. If it’s the former then one of the key prin-ciples for a new governance structure has to be an ability to get thecity’s fair share from other levels. We must keep our eye on the ball.The Feds are the villains with the big fat wallet; that’s where thebulk of the money has to come from. (email dated Feb 20.04)

Don StevensonI think the time is right for a real look at the split nationallybetween the revenue capacity and expenditure responsibilities ofthe various orders of government. All of the premiers are call-ing for a look at the fiscal imbalance. It seems that the biggestimbalance is with the biggest cities.

…The last thing you need in a tax system is a different basis forsales tax or income tax at each order of government. You distortbusiness activity if you force different definitions. For examplein Sweden, social services being delivered by the larger municipal-ities are paid for by a share of the income tax. It may not be quiteas accountable as you would like, but this does end up with thelocal level of government delivering them and adapting them tolocal conditions. (Feb 23.05)

John CartwrightWith other forced amalgamations, I don’t recollect that othermunicipalities had a gun to their head with a 76% vote from citi-zens saying that they didn’t want a mega-city, and then told, “Youhave to do it and here’s the bill for the people we’ve put in place tocarry it out. We’ll put the costs in a loan and call it when we want.”I don’t believe that is what happened in Hamilton, or Ottawa orany of the other amalgamations. It was unfair then, it is unfairnow. It should not be hung over the City of Toronto; $200 millionwould go a long way to stop the furniture being burnt. (Feb 23.05)

Anne GoldenI don’t think you can come up with what the revenue mix shouldbe off the top of the head. What you want to do is to allow citiesto set their own tax rates and to give them the scope that theyneed…. If there is a concern, the province could have the rightto set mill rate bands for transitional periods.

…The problem is that by asking senior levels of government forthe capacity to address such issues as urban housing, poverty, andsettlement issues , there is no way that the city can get enoughmoney; the dollars don’t work and we will increase the fiscalimbalance by taking it on. A sales tax just won’t do it; there isn’tenough money there to take on the additional burden. (Feb 23.05)

Enid Slack…I am not a big fan of revenue-sharing. I don’t think it works allthat well. I think it increases the blame that you can always placeon the other level of government. When you have your own tax-ing authority, you have control. You can’t just give Toronto theability to levy income and sales taxes; you’ve got to let everyonedo it; you may have to put some restrictions on how high they cango; or how low. It comes back to regional governance again. Inthe short-term revenue sharing is a good way for Toronto to getthe money it needs, but in the long-term it gives the city no con-trol over what it is doing. (Feb 23.05)

Frank CunninghamGenerically it seems there are three options with respect to socialservices: upload the services, download the money or provide thecity with the tools it needs to raise its own money. The first ques-tion is, if you looked at the social services in question, would it beappropriate that some of them would fit into one box and someinto another? Does it have to be all or nothing? Also, there maybe more things than social services that could be put into one ormore of these boxes: infrastructure, transit. If so, it provides moreflexibility. (Feb 23.05)

George BairdThe fiscal imbalance must be redressed quickly and if this means‘uploading’ the services the city cannot afford, so be it. In addi-tion, the city also needs new taxing powers: some small ones andsome larger ones as well, especially if appropriate ways of framingthe relationship of revenues to expenditures can be achieved, butnot in exchange for reneging on the inequities which already exist.(Mar 14.05)

REVENUES

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John SewellWe don’t have local government any more in Toronto. Mostcouncillors say that they will support the ward councillor on anyward issue but the tradeoff is that the favour is reciprocated. Youcan see them getting into a position where where you won't beallowed to vote against the ward councillor on ward issues. Thisisn’t a council that is dealing any more with local issues.Governance is a really important issue. You have to start talkingabout other options to create local government again. (Jan 24.05)

One perverse criticism of the city model of government is that itis too open. Everything happens in the open; you get all thesediscussions by amateurs happening at city council. The worldsees them; they see how small-minded they are. The federal andprovincial governments are smart enough to have all those variousdebates in private, in a cabinet meeting. So that the only time youhear anything is when the ‘spin-doctor’ is helping some MP orMPP; That’s what gives Toronto government a bad name; it’s tooopen and transparent. (Mar 14.05)

John CartwrightAt Queen's Park there are few checks and balances, and in the pastthat has caused much destruction when short-sighted decisionswere rammed through their governance model. But, people aren'ttalking about changing that. We have a federal government whichseldom responds to Toronto as its largest city. Within that gover-nance model this city has been ignored for many years. Now,which particular pot is calling the kettle black? From the point ofview of the folks at the bottom, a strong City executive could eas-ily do more harm than good. It would certainly make every othercity councillor second-class. Queen's Park should not impose agovernance structure on the people of Toronto. (Jan 24.05)

Ken GreenbergI think it is possible to join together a strong mayor system withstrong local government simultaneously. In New York there are59 community boards; I have worked with four of them. Theybreak the city down into natural groupings; they have enormouspower; they have staff; they work on budget issues; they have sig-nificant control of major planning issues in their areas. It reallycomes down to restoring a balance, which we used to be muchbetter at, between power residing in neighbourhoods and effec-tiveness with the city as a whole being able to act. It’s dangerousto go with one in the absence of the other; you have to put themtogether. (Jan 24.05)

For many of us that work in other cities, there are two things thatyou can’t help observing. In the governance in other countries,politicians at all levels, regardless of whether it is a bipartisan or

multiparty system, rally around their city. So, for example, theMayor of Boston can call upon the senators and congressmenfrom Massachusetts, the state representatives and congressmenand the city councillors from both parties to advocate for the city.In Toronto there is no larger aspiration represented by MPs andMPPs that is ever vocalized or visible. Why is it that the party inpower at the provincial and federal level, elected by people in thiscity, does not rally to the city in the way that it does in other coun-tries? (Mar 14.05)

Joe Berridge While it may just be too much complexity to resolve in everydetail, the Act has to give some guidance as to what the city’s gov-ernance structure should be and to contain some principles aboutgoals for the new Council. If the goals were properly set out -recognising the Council’s responsibility for the whole city as wellas the neighbourhoods, for strategic long term budgeting andplanning, for efficient administration, for open local access - theywould clearly indicate the need for a stronger central capabilityand maybe also for stronger local democracy, as opposed to thecurrent confusion of those two ambitions. As to the specifics ofthe choice between the models being talked about - strong mayorstructure, a city-wide elected cabinet or a Mayor/Council-appoint-ed Executive Committee - that could perhaps be left to an inde-pendent body which would work quickly to review proposals, con-sult and report in the early fall. (email dated Feb 20.04)

Michael MendelsonIt is imperative that a city with this size of budget have an effec-tive executive. Right now the leadership of the bureaucracyreports to nobody, because it reports to everybody. You cannotoperate a $5 billion budget this way; it’s designed for a small ruralmunicipality. The one thing worse than politicians making all thedecisions is bureaucrats making all the decisions. (Feb 23.05)

Anne GoldenThere is no consensus among informed citizens as to what wouldbe the most appropriate system of governance for the amalgamat-ed City of Toronto. Most would agree that there are serious prob-lems with the current system, and that if a new City of TorontoAct gives the city new powers and revenue sources, there shouldbe changes to how the city is governed and managed. … To askthe current Council to take on the task of redesigning the systemin which it operates is inappropriate and unrealistic. At this point,it makes sense to have an independent study or task force to lookat options (including models from outside Canada), assess thepros and cons of each and make recommendations. (April 14.05)

GOVERNANCE

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Ken Greenberg is an architect and urban designer who has played aleading role on a broad range of assignments in highly diverse urbansettings in North America and Europe. Currently a Principal ofGreenberg Consultants, he is also the former Director of UrbanDesign and Architecture for the City of Toronto.

Is there really a “New Deal” for this city or is this a rhet-oric phase with little substance? All the obvious

things have been said: our relative impotence as a politicalentity is an historical accident or an anachronism; our popu-lation is under-served given the pressures we face; the wealthwe generate is disproportionate to our diminutive share ofthat wealth; and we need resources and powers commensu-rate with our responsibilities and/or a lightening of the load.

The current Toronto problematic flies in the face of a newparadigm for sustainable economic development thatemphasizes quality of life and ‘place’ values as much or moreimportant than the traditional focus on factor costs (i.e. land,labor, capital). At the heart of this new paradigm is theinsight that cities and regions which compete with each otherprimarily on the basis of cost are engaged in a losing game,whereby “beggar thy neighbor” policies inevitably lead to arace to the bottom and impoverishment of the public realmand public services. This game is particularly unproductivefor cities, as the cost ‘playing field’ is invariably tilted towardsthe outer suburbs, with their larger expanses of cheaper land;emphasis on privately rather than publicly owned amenities;and, heavy governmental subsidies for roadways and otherinfrastructure.

The new paradigm is also driven by the increasing globaliza-tion of economic activity. All locations within NorthAmerica can be seen as comparatively expensive as seenagainst the low wage rates available in Asian and third-worldcountries. Against this backdrop, where often the choice oflocation is not between Toronto and Montreal, but Torontoand Calcutta, the site location decisions within the countryand region are increasingly based on the value that a partic-ular location offers. This is especially true for the knowledge-based industries that are increasingly driving the Canadianeconomy.

An economic development strategy focused on value is fur-thermore sustainable over the long term. Unlike the coststrategy, which is ever at risk of being undercut by the com-petition, the value strategy:

• Builds on localized assets that endure over time,including the city’s natural setting, its historic fabric,and its cultural institutions;

• Does not starve the revenue for essential public serv-ices, such as education, parks, infrastructure mainte-nance, policing, etc.;

• Nurtures businesses whose leaders and employeesare vested in the civic life of the community.

So how will Toronto fare in the context of this paradigm?If things don’t change, I think that we do end up “manag-ing the decline’. We find ourselves unable to keep abovewater and do the necessary to maintain what we have, muchless plan and adapt for the future. Ultimately the city as thegenerator of wealth is undermined with significant oppor-tunity costs.

As things spiral down there is a vicious circle - e.g. lessmoney for transit means cutbacks in service, means less rid-ership, means still lower revenues with more cutbacks, etc.Not only is this a bad thing in itself, but it is demoralizingwith negative spin-offs. It results in a loss of optimism andconfidence and a general lowering of expectations. Withbasic needs unmet and increasing disparities between richand poor, we develop a sense of being in a zero sum gamewith a shrinking pie. This in turn fosters a sense of winnersand losers and harsh battles over reduced entitlementswhich severely inhibit the stewardship, creativity and inno-vation, critically needed for our success as a city. Pretty dis-couraging!

The argument for all the changes we have been seeking interms of powers, governance and resources are clear andthe opportunity costs of inaction obvious.

A Final WordKKEENN GGRREEEENNBBEERRGGTT

KKEENN GGRREEEENNBBEERRGG

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A Choice Between Investing in Canada’s Cities or Disinvesting inCanada’s Future. TD Economics, Special Report, April 22, 2002,www.td.com/economics.

A New City Agenda. John Sewell. Zephyr Press. 2004.

Achieving an Improved Legislative Framework for Toronto, “The RightDeal for Toronto is a Great Deal for Ontario”, Policy and FinanceCommittee Report No. 4(2), as adopted by Toronto CityCouncil, May 21-23, 2003.

Assessment of the Municipal Acts of the Provinces and Territories.Donald Lidstone. Federation of Canadian Municipalities. 2004.

Canada’s Urban Strategy: A Blueprint for Action (Prime MinistersCaucus Task Force on Urban Issues, 2002)

Early Warning: Will Canadian Cities Compete. Federation ofCanadian Municipalities, 2001.

Enough Talk: An Action Plan for the Toronto Region, Toronto CitySummit Alliance, April 2003, www.citysummitalliance.ca

Greater Toronto: The Report of the GTA Task Force. (1996). Toronto:Publications Ontario.

Ideas that Matter (C5 Report, Vol. 2, Number 4, 2001) and TheNew Urban Canada (Volume 3, Number 1, 2004), www.ideasthatmatter.com

Municipal Finance in a New Fiscal Environment, Harry Kitchen. C.D.Howe Institute Commentary, No. 147, November 2000.

Toronto: Considering Self-Government, Mary W. Rowe editor, withcontributions from Jane Jacobs, Joe Berridge, Alan Broadbent,David Crombie, Meric S.Gertler, Richard Gilbert, MichaelMendelson, David M. Nowlan, John Sewell and Enid Slack. TheGinger Press, 2000. www..gingerpress.com

"Towards a New City of Toronto Act", submission by the TorontoBoard of Trade to the Ministry of Municipal Affairs andHousing’s Review of the City of Toronto Acts and theMunicipal Act, October 2004.

The Greater Toronto Area (GTA): Canada’s Primary EconomicLocomotive in Need of Repairs, TD Economics, Special Report, May22, 2002, www.td.com/economics.

Websites:Canada’s Cities Unleash our Potentialwww.canadascities.ca/background.htm

Ideas That Matterwww.ideasthatmatter.com/cities

Institute on Municipal Finance and Governancewww.utoronto.ca/mcis/imfg/index.htm

Ministry of Municipal Affairs and Housingwww.mah.gov.on.ca

City of Torontowww.city.toronto.on.ca

PARTICIPANTS

George Baird, University of TorontoPaul Bedford, former Chief Planner, City of Toronto Joe Berridge, Urban StrategiesCecil Bradley, Toronto Board of TradeAlan Broadbent, C.M., Avana Capital CorporationDan Burns, former Deputy Minister, Ontario Ministry of Health andLong-term CareJohn Cartwright, Toronto & York Region Labour CouncilDavid Crombie, O.C., Canadian Urban InstituteFrank Cunningham, University of TorontoJulia Deans, Toronto City Summit AllianceMeric Gertler, University of TorontoAnne Golden, C.M., Conference Board of CanadaKen Greenberg, Greenberg Consultants Inc.Glen Grunwald, Toronto Board of TradeFrances Lankin, United Way of Greater TorontoPatricia McCarney, University of Toronto

Ross McGregor, Toronto Waterfront Revitalization Corporation,Toronto Region Research AllianceMichael Mendelson, Caledon Institute of Social PolicyRatna Omidvar, The Maytree FoundationBob Onyschuk, Gowling Lafleur Henderson LLPDavid Pecaut, Toronto City Summit AllianceSusan Pigott, St. Christopher HousePaul Reed, Senior Social Scientist, Statistics CanadaMark Sarner, Manifest CommunicationsJohn Sewell, C.M., Journalist and AuthorEnid Slack, Institute on Municipal Financing and Governance, MunkCentre for International Studies, University of TorontoDon Stevenson, former Deputy Minister, Ontario Ministry ofIntergovernmental AffairsFor Ideas That Matter:Mary W. Rowe, FacilitatorAnn Peters, Communications CoordinatorSarah Gledhill, Project Coordinator

RESOURCES

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ABOUT US

THE GREATER TORONTO CHARTER (2001)

Ideas That Matter, a Canadian publication to stimulate public discourse, concentrates on issues related to cities, urban economies and the values of diver-sity, community and the public good. Founded in 1997, the work of Ideas that Matter is inspired by the wide-ranging ideas and principles of Jane Jacobs.

Since 1999 ITM has convened extensively around issues related to the creation of healthier communities and the need for more autonomy for Canada’surban regions.

For subscription information, please visit: www.ideasthatmatter.com

Towards a New City of Toronto Act · 2016-12-13 · and Premier Dalton McGuinty amplified this commitment by signaling his intention to write a new City of Toronto Act. In September

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