08) MUNICIPALITIES NEED STABLE FUNDING AND FAIR TAXES

Canada's largest public sector union says cities and towns across the country face unprecedented pressure and demand for investment in infrastructure, social services, immigrant settlement, social housing, public transit and child care services. But, says CUPE, municipalities are limited in their ability to generate revenue and face significant barriers when trying to properly meet these critical needs.

     In a June 1 statement, CUPE says that many factors are contributing to the crisis in municipal financing. Federal government stimulus funding is coming to an end, as is more than $1.5 billion annually in other federal funding programs for municipal infrastructure and housing.

     Infrastructure funding is set to decline in coming years, while communities face existing and new demands such as stronger environmental standards, climate change and growing social needs.

     Canadian communities continue to struggle with an infrastructure deficit of more than $120 billion, while relying on regressive property taxes and user fees for more than 75 per cent of their revenues. As a result, Canadians face some of the highest rates of property tax in the world. In contrast, most European and U.S. cities have access to revenues from income and sales taxes.

     CUPE says that municipalities need stable, predictable and increasing revenues to deliver on their growing responsibilities. The union argues that to improve its major funding programs for municipalities, the federal government should take several steps:

* renew the $1.2 billion a year Building Canada Infrastructure Fund, but eliminate the requirement to consider wasteful financing through public private partnerships;

* renew and expand federal funding for homelessness and affordable housing;

* commit $400 million a year to revitalize public urban transit systems;

* index federal gas tax funding to keep up with inflation and economic growth; and

* introduce a new national clean water fund to pay for the federal share of the $20 billion cost of meeting new federal wastewater standards.

     "Privatization and public private partnerships may be tempting for municipalities because they either offer a quick buck through asset sales or lower up-front costs for capital investments," warns the union. "But public private partnerships lock governments into much more expensive deals that heap debt onto future years. This is a penny-wise, pound foolish approach because these revenues and savings come at a major cost: reduced revenues and higher costs in future years. In particular, they make no sense when governments can borrow at a much lower rate than private investors. The federal P3 Fund should be eliminated and the money should be redirected to projects which keep community assets public."

(The above article is from the June 16-30, 2011, issue of People's Voice, Canada's leading communist newspaper. Articles can be reprinted free if the source is credited. Subscription rates in Canada: $30/year, or $15 low income rate; for U.S. readers - $45 US per year; other overseas readers - $45 US or $50 CDN per year. Send to People's Voice, c/o PV Business Manager, 706 Clark Drive, Vancouver, BC, V5L 3J1.)