When is bigger better?

• Author: Innes, Heather J.
• Position: FEATURE on municipal law

A competitive, global economy poses unique challenges for municipalities. People no longer necessarily live and work in the same town. Due to the competitive nature of today's economy, municipalities compete with one another for business and taxpayers. Many individuals prefer to move to a bedroom community; i.e., live in one municipality and commute to work elsewhere. Still others may decide, perhaps for financial reasons, to establish a business in a municipality where they do not live. These are just two common examples of how a person can live and pay taxes to one municipality but end up imposing a cost on another municipality in terms of use of services.

The ability of a municipality to respond to this financial imposition is restricted in a number of ways. First, municipalities are creatures of statute. All of their powers come from provincial legislation. In Alberta, this is primarily the Municipal Government Act (MGA). One of the objectives of enacting a new MGA ten years ago was to increase municipalities' ability to "respond to present and future issues in their municipalities" (s. 9(b)). However, municipalities are still constrained. For example, the MGA restricts municipalities' ability to borrow money.

Another problem municipalities face is that their primary source of revenue is generally the property tax, and the property tax is a very visible tax. There are, therefore, political implications that go along with raising property taxes to meet growing needs and expenses. After property taxes, municipalities must rely on user fees, including licensing fees, in order to raise revenue from their own residents. User and licence fees are generally restricted to offsetting the cost of the service for which they are imposed.

Given these unique challenges, provincial and municipal governments have a number of options that could result in a more equitable distribution of the tax burden.

Regional Services commissions

One concept, which can be used to offer a higher standard of services on a broader basis, is the development of a regional services commission.

In Alberta, cabinet may establish regional services commissions by regulation. Once established, a commission may provide approved services within the boundaries of its member municipalities, and outside those boundaries with the Minister's approval. In Alberta, services commissions have been established for sewage and waste systems, among other things. For example, three summer...