The art of the possible in local governance reform

In last week's cabinet shuffle, Premier Blaine Higgs named a "minister of local government and local governance reform." Daniel Allain enters the elected provincial political arena with high expectations.

Policy wonks in this province have been fixated on local governance reform for over a decade. Many point to the 12-year-old Finn report as the panacea.

The Finn report proposes a complete reimagination of our municipal structure with huge changes and a series of complex implementation periods. Some say simply implement Finn, but there is a simpler solution to municipal reform.

This is a very emotional subject. It boils down to one's own identity. "Where are you from?" Many Miramichiers will answer that question with "Chatham" or "Newcastle" when those municipalities haven't existed since the last century. Frederictonians might answer with "Nashwaaksis" or "Barkers Point" when those municipalities haven't existed in 50 years.

Many politicians have uttered words like "no forced amalgamations" to temper fears about loss of identity or loss of community.

In Quebec in the early 2000s a number of forced amalgamations were so unpopular the controversy spilled over into the 2003 provincial election contributing in part to a change of government and a reversal of several of the amalgamations.

Minister Allain must work hard to find meaningful reforms that can achieve broad public acceptance. The worst thing government could do is impose reforms that are so politically toxic that an opposing party might propose to reverse them, get elected on that platform, and do so. Such a failure would likely mean significant reform is shelved for another generation.

In tackling local governance reforms, it is important to understand that the way people expect to be governed has changed. At one time, people generally elected a government and stuck to their knitting until the next election. Today, with an information-driven culture plugged-in instantaneously to networks of like-minded people to share it with, it is different. People expect ongoing and meaningful consultation. Government must secure buy-in from the people as they implement these reforms.

I do not believe that the Finn Report is the panacea that some suggest. It is 199-pages long, very complex and 12 years old. At its core, it proposes merging New Brunswick's 300+ local entities into 53 municipalities. This might perhaps be an ideal state, but it would cause so much controversy it would likely be a poison pill that would ruin any lasting reform.

Many plebiscites have been held in the last decade to allow voters to decide whether to merge or form municipalities in their area. Most of these have been voted down by the people. How could government justify municipalization in a place like Lincoln, when just a few years ago 75% of residents voted against it?

One of the recommendations of Finn that has been partially implemented is the creation of regional service commissions. Further implementation and refinement of this is the low-hanging fruit in reform. This can partially tackle two of the biggest problems that reform seeks to fix: lack of regional cooperation, and lack of governance in unincorporated areas.

These commissions were created in 2012 and have jurisdiction over regional planning and solid waste. Finn recommended that they also control policing, emergency measures, and economic development. Their mandate should be expanded to cover these services and I would argue also fire, recreational infrastructure and local highways. The commissions should have full municipal authority over unincorporated areas within their region, rather than the provincial government.

These commissions are currently unelected and have no direct control over their budgets.  That would have to change. Commissioners should be elected from wards of relatively equal population, with care taken to avoid any one municipality holding a majority of seats on the commission. The division of property tax revenue collected on behalf of municipalities by the province should be allocated between regions and local municipalities on a formula that reflects their relative division of responsibilities.

This model is similar to that which exists in Ontario where there are “tier-1” (regional) and “tier-2” (local) municipalities.  As in Ontario, if all of the communities in the region wished to merge and have one level of government for all services, this should be an option available to them.

This would accomplish the goals of full municipalization that many seek, without the emotional debate around merging municipalities and imposing new governments and new taxes on unincorporated communities.

Something does have to be done about taxes however.  Currently the provincial government maintains roads in unincorporated areas, from local highways to subdivisions.  The cost of this is subsidized by taxpayers around the province as the local tax levy only pays a fraction of the cost of maintaining roads.  This was formerly also the case with the cost of policing, but the full costs of rural policing were phased into property taxes over a four year period.  The same thing should occur with the cost of roads, allowing regional governments to have the budget to maintain these roads either on their own, or by outsourcing the work to the provincial government at true cost, or the private sector.

The final matter that has to be addressed is tax reform.  This is a complex and broadly misunderstood issue.  Two things in particular are misunderstood: the “double tax” on non-owner occupied properties, and the fact that the province keeps property tax revenue at all when in other provinces this is the exclusive domain of local governments.

The reason why there is a provincial share of property tax is because in New Brunswick, the province delivers a lot of municipal services.  In other provinces, housing, local courts and schools are funded and operated by local authorities.  In New Brunswick, the provincial government funds and operates these services partially out of property tax revenue.  As for why non-owner occupied properties pay “double” is in fact the opposite.  The reality is owner-occupied properties are only paying half, creating the perception of a punitive tax on non-owner occupied properties. This  is a policy from the 1970s, when the Hatfield government waived provincial property taxes on primary homes as a policy measure to encourage ownership.

Whether or not the province should continue to retain some property tax revenue is a matter that should be discussed in broader conversation about the division of powers between provincial, regional and local governments.  If the local governments want all of the tax revenue, they should also deliver all of the services.  That invites a question of equality of services in all regions, something New Brunswick lacked prior to the 1960s and the reason why the current system of provincial administration of education and justice came into play.

The reforms explored in this column are complex and would require strong leadership to succeed. They are far more likely to succeed, however, because they divorce the emotion of municipal amalgamation (forced or otherwise) from the conversation.

The delay of municipal elections to May 2021 creates a great opportunity to allow for the election of regional councils in short order which would be a key first step to ensuring democratic engagement and legitimacy in the implementation of reforms.