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Local GovernanceA Vision for

Local Governance in New Brunswick

Report of theMinister's Round Tableon Local Governance

June 2001

ACKNOWLEDGEMENTS

The Round Table members wish to acknowledge theProvincial Government for establishing a Minister’sRound Table on Local Governance, in partnership withrepresentatives of municipal associations, Local Ser-vice Districts and regional commissions. This RoundTable process provided a unique opportunity for keystakeholders to discuss and address a broad range ofissues impacting the local governance system in NewBrunswick.

Round Table members also want to acknowledge anumber of individuals that contributed to the processitself. The report could not have been completed with-out the dedication and assistance of the members ofthe Technical Committee as well as staff at the Depart-ment of the Environment and Local Government. Theseindividuals have worked countless hours in support ofthe Round Table to ensure that its members receivedrelevant information needed to develop their recom-mendations. The Technical Committee members, aswell as departmental staff involved in this process arelisted in Appendix A. Round Table members wish tothank them for their dedication, commitment and pro-fessionalism. Their tireless efforts did not go unnoticedand led to greater understanding by all members of theissues facing New Brunswick’s local governance sys-tem. As well, the effective facilitation of the meetingsprovided by Jacques Paynter was greatly appreciatedby the Round Table members.

TABLE OF CONTENTS

SECTION 1 – BACKGROUNDEstablishment of Minister’s Round Table....................................................... 1Mandate of the Round Table.......................................................................... 3Process for the Round Table.......................................................................... 3Report Overview............................................................................................. 4

SECTION 2 – CHANGES IN THE LOCAL GOVERNANCE SYSTEM SINCE 1966Changes in the System................................................................................. 5Strengths of the System................................................................................ 7

SECTIN 3 – VISION OF THE ROUND TABLE......................................................... 8

SECTION 4 – CHALLENGES FOR THE UNINCORPORATED AREASThe Unincorporated Areas: Description and Trends....................................... 9Governance Structures in the Unincorporated Regions................................. 11Issues Facing the Unincorporated Areas ....................................................... 12What Changes are Needed?.......................................................................... 16Principles Established to Guide Development of Options............................... 16

SECTION 5 – CHALLENGES FACING MUNICIPALITIESDescription and Trends.................................................................................. 20Local Government Structures........................................................................ 21Issues Facing Municipalities.......................................................................... 22What Changes are Needed?......................................................................... 24Principles Established to Guide Development of Options............................. 24

SECTION 6 – OPTIONS AND RECOMMENDATIONSGovernance in the Unincorporated Regions................................................ 26Collaboration on a Regional Basis................................................................ 33Provincial – Municipal Funding...................................................................... 38Property Taxation........................................................................................... 43

CONCLUSION........................................................................................................... 44

DEFINITIONS........................................................................................................... 45

APPENDICES:

Appendix A – Technical Committee and Departmental Staff Assisting Round Table.. 47

Appendix B – Presentations made to the Round Table................................ 49

Appendix C – Comparison of Local Governance Options............................... 51

Appendix D – Comparison of Regional Service Delivery Options.................... 53

Appendix E – Assessment of Potential Revenue Sources........................... 55

PAGE A Vision for Local Governance in New Brunswick

In recent years, much has been said aboutthe need to change various aspects of thelocal governance system in New Brunswick.The issues that continue to be raised focuson: provincial fiscal transfers to municipalities;local representation, land use planning andproperty taxation in the unincorporated areas(i.e., the Local Service Districts or “LSDs”);and the relationship between municipalitiesand surrounding unincorporated areas.

In light of the changing financial climate, par-ticularly in regards to provincial-municipal fiscaltransfers, municipalities are finding it increas-ingly difficult to balance the demand for qualityservices with acceptable levels of taxation. Inunincorporated areas (suburban and rural), de-velopment continues to occur without beingproperly planned and managed, resulting in avariety of land use conflicts and environmentalimpacts. Relationships between municipalitiesand their neighboring LSDs have, in some in-stances, become strained as a result of issuesrelated to cost-sharing for services, uncontrolleddevelopment adjacent to municipal boundariesand differences in property taxation rules. Whilethese issues are not new, the need to addressthem is becoming more critical.

Given that these issues are interconnected, itwas determined that they should be addressedin an integrated manner, with input from keystakeholders, to ensure that the recommen-dations ultimately developed, whether on struc-ture or finances, would complement one an-other. On this basis, a decision was made bythe provincial government to establish aMinister’s Round Table on Local Governance.

Establishment of theMinister’s Round Table

In December of 2000, the Hon. Kim Jardine,Minister of the Environment and Local Gov-ernment, formally announced the establish-ment of the Minister’s Round Table on LocalGovernance.

In establishing the Round Table, the Ministerrequested that the three associations represent-ing municipalities (Association francophone desmunicipalités du Nouveau Brunswick, Cities ofNew Brunswick Association and the Union ofMunicipalities of New Brunswick) identify indi-viduals who could be named to the RoundTable. Once the names were received, the Min-ister appointed these individuals to the RoundTable. The Minister also appointed individualsfrom the unincorporated areas and the regionalcommissions (Solid Waste, Land Use Planning,and Economic Development) to the RoundTable.

Round Table members were appointed by theMinister, as individuals, to provide their viewsand ideas on the local governance systemas a whole and not just from the perspectiveof their respective community or associations.This approach allowed for effective and posi-tive discussions.

The following individuals were appointed tothe Round Table:

From the Cities of New BrunswickAssociation (CNBA):

Bruce MacIntoshMayor of Campbellton

Paul OuelletteMayor of Bathurst (deceased) replaced by:Jacques MartinMayor of Edmundston

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SECTION ONEBACKGROUND

PAGEA Vision for Local Governance in New Brunswick

Peter TritesCouncillor, Saint JohnPresident, CNBA

From the Union of Municipalities ofNew Brunswick (UMNB):

Jim BlanchardMayor of Dalhousie

Yvonne GibbExecutive Director, UMNB

Raymond MurphyMayor of Rexton, President,UMNB

From l’Association francophone desmunicipalités du Nouveau Brunswick(AFMNB):

Raoul CharestMayor of Beresford, President, AFMNB

Roland J. MartinMayor of Saint Léonard,Vice-president, AFMNB

Léopold ChiassonExecutive Director, AFMNB(joined the Technical Committee)replaced by:Réginald Paulin,Mayor of Lamèque

From LSD Advisory Committees:

Réjean Bonenfant,Lac Baker LSD Advisory Committee Chair &member of COGERNO (Solid Waste Com-mission)

V. J. (Nick) Hachey,Former Allardville LSD Advisory Committeemember & member of the Nepisiguit-ChaleurSolid Waste Commission

Thomas McLaughlin,Pointe à Bouleau LSD Advisory CommitteeChair

Elizabeth Munn,Upper Miramichi LSD Advisory Committeemember

Sandra Speight,Greenwich LSD Advisory Committee Chair

From regional commissions:

Adélard Cormier,Chair, Kent District Planning Commission,President of the Association of PlanningCommissions

Wayne Flinn,Vice-Chair, Fredericton Region Solid WasteCommission & Chair of the NB Solid WasteAssociation & Chair of Estey’s Bridge LSDAdvisory Committee

Gwen Lister,Economic Development Commissions

From the provincial government:Five Ministers also participated on theRound Table.

Kim JardineMinister of the Environment and LocalGovernment (Chairperson)

Norm BettsMinister of Finance

Margaret-Ann BlaneyMinister of Transportation

Milt SherwoodMinister of Public Safety

Jeannot VolpéMinister of Natural Resources and Energy

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Mandate of theRound Table

The Round Table was asked to review fourfundamental aspects of the local governancesystem in New Brunswick and to makerecommendations for improvements. Specifically,the Round Table was to:

ØØØØØ Examine the various issues resulting fromthe current gap in local governance in theunincorporated areas and examine localgovernance models to address these is-sues.

ØØØØØ Examine the relationship between localservices and property taxation levels in Lo-cal Service Districts (LSDs) and examinehow property taxation reflects the servi-ces being provided and their associatedcosts.

ØØØØØ Examine how common services providedon a regional basis such as land use plan-ning, solid waste management, economicdevelopment, recreation and libraries, andwater and wastewater management couldbe more effectively planned, coordinated,financed and delivered.

ØØØØØ Examine the various issues related to thefinancing of local governments (e.g.,property taxation, unconditional grant,user fees, etc.) and the development ofrecommendations aimed at enhancing thefinancial stability and autonomy of localgovernments.

Process for theRound Table

The Round Table met on seven occasionsbetween January and June 2001, each ofwhich was a two-day meeting. The meetingsincluded a combination of presentations anddiscussions. The information andpresentations for the meetings were prepared,for the most part, by the Technical Committeeand staff from the Department of Finance andthe Department of the Environment and LocalGovernment.

During its deliberations, the Round Tableheard from representatives of differentjurisdictions across Canada including NovaScotia, Quebec and British Columbia. TheRound Table also had an opportunity to hearacademic perspectives on municipal financingand governance. A listing of all thepresentations is outlined in Appendix B.

Round Table participants had an opportunityto share their experiences, perspectives andideas, to debate the issues and to developpotential solutions. As part of this process, avision and guiding principles wereestablished, the key issues facing the localgovernance system were identified, a varietyof options to address these issues wereconsidered and a series of recommendationswere formulated.

This Round Table approach provided a uni-que opportunity to discuss critical issuesconfronting the local governance system inNew Brunswick and to develop potentialsolutions. This approach marked the first timerepresentatives from all three municipalelected officials’ associations, from LocalService Districts, from regional commissions,as well as Cabinet Ministers jointly developedrecommendations having the potential toshape the future of the local governancesystem.

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ReportOverview

The remainder of this Report includes thefollowing sections:

Section Two provides an overview of wherewe have been since the 1966 reformsrecommended by the Byrne Comission wereimplemented. A brief review of some of thestrengths of the current system is alsopresented.

Section Three outlines the vision that wasdeveloped and adopted by the Round Tableduring its deliberations. This “working” visionhelped guide members of the Round Table intheir development of options andrecommendations.

Section Four focuses on the situation in theunincorporated areas. A description of theunincorporated areas is provided (the rural /suburban picture), along with a discussion ofsome of the trends having an impact on theseareas. This is followed by a review of thegovernance structures in place, a descriptionof the critical issues confronting these areasand a summary of the changes needed toaddress the issues. In general terms, the is-sues focus on representation and localdecision-making, collaborative servicedelivery and property taxation. A series ofprinciples that guided the development of op-tions is also presented.

Section Five focuses on the municipalities.A description of municipalities is provided (theurban / suburban / rural picture), along with adiscussion of some of the trends having animpact on municipalities. This is followed bya review of the current municipal governmentstructure, the identification of the criticalissues confronting municipalities and asummary of the changes needed to addressthese issues.

Specifically, the issues deal with collaborativeservice delivery, the relationship betweenmunicipalies and the unincorporated areas,and provincial-municipal fundingarrangements. A series of principles that wereapplied in the development of options is thenpresented.

Section Six describes the options consideredby the Round Table to address the issues,followed by the recommendations of theRound Table.

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Changes to the system…

Though local government in New Brunswickpredates confederation, it is perhaps mostrelevant to outline the fundamental changesthat were introduced in 1966 as a result ofthe New Brunswick Royal Commission onFinance and Municipal Taxation, otherwiseknown as the Byrne Commission, named afterits Chair, Edward G. Byrne.

Prior to 1966, local government in NewBrunswick was characterized by two forms:municipalities (primarily towns and cities) andcounties (covering, for the most part, ruralareas). The Byrne commission identifiedsignificant disparities in both the range andcosts of services provided to citizens acrossthe province. These disparities wereparticularly evident in such service areas ashealth care and education. Furthermore, anumber of county governments andmunicipalities were experiencing majorfinancial and management difficulties. It wasrecognized that a major overhaul was needed.

Many of the recommendations put forward bythe Byrne Commission were subsequentlyimplemented by the provincial government byway of the program for Equal Opportunity. Thisresulted in significant changes in terms ofresponsibility for services, property assessmentand taxation, as well as local governmentfunding and structures. The essential aim ofthese changes was to provide all citizens withan “Equal Opportunity” to access and benefit

from minimum standards of service andopportunity regardless of the financialresources of the locality in which they live.

The Creation of Local Service DistrictsThe elimination of county governments left alarge portion of New Brunswick’s populationand land mass as “unincorporated areas”, thatis, with no local government. Local servicesto these areas would be authorized andcoordinated by the provincial government.Servicing areas were to be identified throughthe creation of Local Service Districts (LSDs).The remainder of the province would becovered by incorporated municipalities: cities,towns and villages.

The Division of Service ResponsibilitiesIn terms of servicing responsibilities, the pro-vince would be responsible for the moregeneral “services to people” including health,education, social assistance and justice,thereby ensuring a greater degree ofuniformity (in terms of access and standards)across the province. Municipalities would, onthe other hand, be responsible for the morelocalized “services to property” such as fireprotection, local road maintenance, garbagecollection, policing and recreation. The intro-duction of the Municipalities Act in 1966formalized the new alignment ofresponsibilities for municipalities as well asthe village, town, city and LSD structures.

Though there have been some minoradjustments to the division of responsibilitiesbetween municipalities and the provincialgovernment over the years, it remainsessentially unchanged. In large measure, thisdivision has worked well for the province byway of promoting greater uniformity andaccessibility throughout the province for suchservices as health, education and justice,while at the same time giving localgovernments specific jurisdiction over localmatters. In fact, many other provinces acrossCanada continue to wrestle with the

SECTION TWO

CHANGES IN THE LOCALGOVERNANCE SYSTEM SINCE 1966

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entanglement of service responsibilities.Along with the division of serviceresponsibilities, local government structuresare also essentially the same as whenintroduced in 1966, with the exception of theRural Community structure established in1995.

Local Government RestructuringThough the basic structures have remainedthe same, several local governmentrestructuring initiatives have taken place sincethe early 1970s. These have included 16 in-corporations, 93 adjustments to municipalboundaries (i.e., annexations or decrements),as well as 17 amalgamations.

Local Government FundingIn terms of local government funding, EqualOpportunity reforms resulted in the introduc-tion of an unconditional grant that had twopurposes:1) To provide block funding to municipalities

to help maintain property taxation at ac-ceptable levels; and

2) To equalize municipalities’ ability to payfor basic local services in comparison tosimilar municipalities.

The formula used to calculate the distributionof funding support to individual municipalitieshas changed over the years, but in generalterms, the main objective has alwaysremained the same, that is, to supportmunicipalities in financing local services.

Property Assessment and TaxationAs a result of the realignment ofresponsibilities under Equal Opportunity, theprovince now shared the property tax field withmunicipalities in order to cover some of thecosts for education. This realignment alsoincluded the province assuming theresponsibilities for assessment, property taxbilling and collection. These functions werestandardized across the province andmunicipal revenues from property taxationwere now guaranteed by the province. (The

province continues to remit the amount ofmoney levied by municipalities via the localrate, regardless of the amount actuallycollected.) While various adjustments havebeen made to the property taxation andassessment system over the years, thefundamentals of the system remainessentially the same.

Changes in Unincorporated AreasAs for the unincorporated areas, it is worthnoting that a number of studies wereundertaken to address various issues thathave arisen over the years, many of whichcould be linked to the fact that there has beenan absence of local government in theseregions. Of particular relevance was the 1976Task Force on the Unincorporated Areas ofNew Brunswick, which recommended thatLSDs be abolished and be replaced by 11 newmunicipalities covering all of theunincorporated areas. Various other reportswere prepared regarding such issues asurban sprawl. The 1993 Commission on LandUse and the Rural Environment (CLURE) alsohighlighted a variety of major problemsassociated with the absence of localgovernment in unincorporated areas thatshould be addressed. These included:conflicting land uses, ribbon development,unmanaged development just outside themajor centres, the protection of water sourcesand the management of wastewater. Oneparticular change resulting from the CLUREreports was the creation of the RuralCommunity structure, which allowed for theelection of a Rural Community Committeewith the power to adopt a land use plan.

More recently, the 1999 Municipalities ActReview Panel report entitled Opportunities forImproving Local Governance in NewBrunswick made a series of recommendationsaimed at improving the governance situationin the unincorporated areas. In making itsrecommendations, the Panel concluded “…

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the [provincial government] must moveforward to develop a more effective frameworkfor local governance for unincorporatedareas...”.

The Strengths of the System…

While a variety of issues having an impact onthe local governance system will be discussedin other sections of this report, the RoundTable also felt it was important to considerand recognize the strengths of the currentsystem that can serve as a foundation for thefuture. The following summarizes some ofthese strengths.

Ø Disentanglement ofservice responsibilities

As noted earlier, one of the legacies of theByrne reforms was the division ofresponsibilities between the province andmunicipalities, which was introduced as ameans of entrenching the notion of “EqualOpportunity. “Services to people” areprovided by the provincial government(primarily education, health, justice, socialassistance) and “services to property” (e.g.,policing, fire protection, recreation, land useplanning, water and wastewater, roads, etc.)are provided by local governments. TheRound Table sees this division of serviceresponsibilities as continuing to beappropriate and important for New Brunswick.

ØØØØØ Municipalities are the cornerstone ofthe local governance system

Municipalities are very much the cornerstoneof the local governance framework in NewBrunswick. It is difficult to imagine the pro-vince without municipalities to manage localroad networks, water and wastewatersystems, recreational facilities, police protec-tion services, fire prevention and suppression

services, solid waste collection and disposalservices and land use planning services.Services provided by municipalities not onlymeet the critical needs of local communities,but they also complement those servicesadministered by the provincial government.Municipalities should remain an important partof the local governance system.

Ø Building on establishedregional colaboration

There are a variety of services to propertiesprovided on a regional or sub-regional basis.Some of these include solid wastemanagement, land use planning, economicdevelopment, fire protection, policeprotection, and recreation. The benefits thatcan be derived through regional collaborationinclude improved effectiveness and makingbetter use of resources through theachievement of economies of scale and,avoidance of duplication of effort.

ØØØØØ Funding for local governments

Though it has been an ongoing source ofdebate and controversy, there has and conti-nues to be recognition of the need to levelthe playing field amongst municipalities toensure that they can provide a reasonablelevel and quality of local services atacceptable levels of property taxation. Thereis a need to ensure that the provincial-muni-cipal fiscal transfer relationship will continueto support municipalities in a fair and equitablemanner.

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One of the first tasks of the Minister’s RoundTable was to develop a vision. The visionadopted by the Round Table is as follows:

Through a comprehensive understanding ofthe roles, responsibilities and priorities of lo-cal governance, the Round Table willdevelop a governance concept, whichensures NB citizens:

may live where they want inconsideration of: an appropriatescope of locally desired services,associated costs, andrepresentative decision makingauthority;

may fully and equitably participatein decisions related to: localservices and their associated costs,formulation and application oflegislation, regulations and policyaffecting local activities, planning oflocal services and those naturalresources affecting local economicdevelopment; and

may contribute to the strengtheningof their communities and of theprovince as a whole throughenhanced collaboration on aregional basis.

SECTION THREE

VISION OF THE ROUND TABLE

8

This vision was used by the Round Table asa reference point with respect to the issuesand options that were debated. It was alsomeant to provide an overall direction andframework for the Round Table regarding thedevelopment of its recommendations. Thisvision was further refined through the adop-tion of a series of principles by the RoundTable.


This section focuses on the unincorporatedareas of the province. In particular, thefollowing sections are presented:

- A description of the unincorporated areas(the suburban / rural picture, population dis-tribution), along with an overview of someof the trends having an impact on theseareas;

- A review of the governance structures inplace – the LSD and Rural Communitystructures;

- A description of the critical issuesconfronting unincorporated areas;

- A summary of the changes / improvementsneeded; and

- A review of the principles that wereestablished to guide the development ofoptions.

The Unincorporated Areas:Description and Trends

The suburban / rural pictureThe unincorporated areas compriseapproximately 40% of the population and 80%of the land mass of New Brunswick. Despitebeing referred to in general terms as the“unincorporated areas”, there are significantdifferences between these areas, which haveover time been divided into Local Service Dis-tricts (LSDs). Some LSDs are located closeto, or immediately adjacent to cities or townsand are very much ”suburban”. These LSDs

are usually characterized by substantialresidential subdivisions and some commercial/ industrial development.

Some LSDs are very “rural” and are generallylocated at some distance from a city or town.They are often dominated by large farmingor woodland areas, and have a very lowpopulation density. Still other LSDs are largerthan many municipalities in terms ofpopulation and geographic area, and have alarge number of large-scale commercial andindustrial operations within their boundaries.Among LSDs there are substantial differencesin tax base and therefore varying levels offinancial capacity in offering local services.Moreover, it is more costly to serve a largeand sparsely populated area.

Another important consideration that should beemphasized is that not all areas withinunincorporated New Brunswick have the sameneeds, desires and attitudes in regard to localgovernance. Residents of some areas haveexpressed a strong interest in seekingincorporation as municipalities, in order to takebetter charge of their future. In some instances,increased interest in incorporation or someother form of governance is a reaction to aparticular situation in a community (e.g.,unwanted development, water and wastewaterproblems, land use conflicts). It should alsobe pointed out that while there may be a stronglocal desire for incorporation, this desire is oftentempered by financial realities; theestablishment of a municipality for an area thathas a low population density and limited taxbase is simply too expensive. This situationbegs the question: could there be a moresuitable option made available tounincorporated areas that would balance localdecision-making authority with financialcapacity?

In other unincorporated areas, there appearsto be very little interest on the part of residentsin moving toward a formalized local

SECTION FOUR

CHALLENGES FOR THEUNINCORPORATED AREAS

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governance structure. Residents arecomfortable with the current structure (i.e., theLSD system and the provincial role of ser-vice provider / coordinator) and are veryconcerned that any changes will result inincreased taxation.

The implication of this diversity is that any newgovernance / service-delivery approachesneed to accommodate wide-rangingdifferences in fiscal capacity and in terms ofthe needs and desires of residents ofunincorporated areas.

Growth in the unincorporated areasMost of the population of the unincorporatedareas is located in the regions surrounding theseven cities (approximately 26% of theunincorporated area population lives within 20a kilometre radius and 69% within a 50kilometre radius). Population growth in thesurrounding unincorporated areas is generallyoutpacing growth in municipalities (see Table1 below). For example, in the Frederictonregion, the population of the unincorporatedareas (within a radius of 20 kilometres of thecity) grew by 6,873 between 1986 and 1996.At the same time the population of the city grewby 2,155. Similarly, growth in the more ruralregions of the province is occurring primarilyin the unincorporated areas. For example, inthe Florenceville area, the population in the fourmunicipalities of Florenceville, Bristol, Bath andCentreville declined by 496 while in surroundingareas it grew by 693, between 1976 and 1996.

Table 1

Municipalities Unincorporated AreasPopulation PopulationProportion

of NB TotalProportionof NB Total

1991 Population(723,900)

1996 Population(738,133)

Growth from1991 to 1996(14,233)

452,105

452,904

2,799

62.45%

61.63%

19.67%

271,795

283,229

11,434

37.55%

38.37%

80.33%

The fact that a large portion of the populationresides in the unincorporated areas and thatgrowth is occurring in these areas with no lo-cal government has a number of verysignificant implications. Development, exceptin a few cases, is not being controlled,planned and managed effectively and thisinevitably leads to a variety of land useconflicts (e.g., farming vs. residential andcommercial development), impacts on watersupply and quality, and causes loss of naturalresources and wildlife habitats.

Lack of proper planning can result in asignificant change in a community’s characterand quality of life. When basic infrastructurerequirements are not property planned it canultimately lead to higher costs to propertyowners and possibly to the provincialgovernment. This situation may also presenta further obstacle to potential localgovernment restructuring. In addition, thelinear development that continues to occur ishaving significant cost implications forservices such as policing, fire protection,transportation (roads) and school busing.

Interdependence of communitiesResidents of unincorporated areas andmunicipalities are often closely connected ona regional basis by transportation networks,employment opportunities, social and cultu-ral activities, settlement patterns andgeography. While residents may live in onearea, they may work, shop and/or participatein recreation or cultural activities in severalother areas. In effect, residents are multi-community members and form part of a largernatural region of common identity and sharedinterests. Some of these regions are centeredaround cities: e.g., Bathurst, Edmundston,Fredericton, Miramichi, Moncton and SaintJohn. Other regions of common identity inthe province include the Péninsule Acadienne,the Kent County area, the Saint John RiverValley area, the Restigouche County area

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(primarily around the municipalities ofCampbellton and Dalhousie) the KingsCounty area and the Southwest corner of theprovince (Charlotte County).

The establishment of regional serviceagencies for such services as solid waste ma-nagement, land use planning and economicdevelopment have furthered these regionalrelationships. Smaller scale inter-municipal,inter-LSD and municipal-LSD servicingagreements (e.g., for fire protection andsuppression, recreation) are also an indicationof the cooperation and inter-relationships thathave evolved over time.

There may be an opportunity to build uponthese regional and sub-regional relationshipsto address some of the issues facing bothunincorporated areas and municipalities,given that so many of these issues crossjurisdictional boundaries (e.g., protectingwater supplies).

Governance Structures in theUnincorporated Regions

There are essentially two governancestructures available to unincorporated areas:the Local Service District or the RuralCommunity.

The Local Service District (LSD)The Local Service District structure isessentially a mechanism to facilitate thedelivery and coordination of optional localservices by the provincial government inunincorporated areas (e.g., street lighting,recreation, fire protection, etc.), which areoften provided by a volunteer organization(e.g., a volunteer fire brigade or recreationcouncil).

The Local Service District is not a form of localgovernment. An LSD Advisory Committee maybe elected via a public meeting process but it doesnot have decision-making authority. It serves inan advisory capacity to the Minister of theEnvironment and Local Government on mattersof local service provision. Public meetings arealso held to vote on the establishment ordiscontinuance of services, but the final decisionon whether a service is established rests with theprovincial government.

The Rural CommunityIn 1995, the “Rural Community” structure wasintroduced, enabling unincorporatedcommunities to elect, via universal suffrage,their own representatives (referred to as aRural Community Committee). A RuralCommunity Committee’s only decision-making power is the adoption andamendment of a land use plan for the RuralCommunity it is elected to serve.

The Rural Community Committee is alsoresponsible for receiving petitions from theelectorate of the Rural Community regardingthe establishment or discontinuance ofoptional local services (such as fire protec-tion, community services and street lighting),for calling and running public meetings for avote on service establishment ordiscontinuance, and for providing advice tothe Minister following a vote at a publicmeeting.

An initial “pilot” rural community, theBeaubassin-East Rural Community(comprised of six former LSDs), wasestablished in 1995. To date, it remains theonly Rural Community in the province. Whythere is only one Rural Community in placemay be partly attributed to the lack of aprovincial implementation strategy and theneed to bring about legislative changes tofacilitate their operation. It might also beattributed to the fact that the Rural Community,

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in its current form, does not offer enough tocommunities in terms of local decision-makingauthority.

NOTE: In the case of both the LSD and RuralCommunity, there are three types of services:1) Provincially provided mandatory services:

Policing, transportation (roads), adminis-tration and dog control (which are fundedpartially through a special provincial levyof 65 cents per $100 of assessment onresidential owner-occupied properties);

2) Designated services (through legislation):Land use planning, solid waste collectionand disposal, cost of assessment (paid forthrough property taxation); and

3) Elective services (optional): typically fireprotection, recreation, community servi-ces, street lighting (paid for through thelocal property tax rate).

Issues Facing theUnincorporated Areas

Unincorporated areas are facing a number ofissues, many of which can be attributed tothe lack of a formal local governancestructure. The issues described below havebeen identified through various sources and,as noted earlier, many are not new. Sourcesof information have included previous reportssuch as the 1999 Report from theMunicipalities Act Review Panel and theReport from the Commission on Land UsePlanning and the Rural Environment.Ongoing dialogue with representatives of theunincorporated areas (including theBeaubassin East Rural Community) anddiscussions with municipal officials and theirrepresentative associations have also beensources of information.

On local decision-making andgovernance…

Recognized and legitimate representationof communities:A need for a local decision-making body thatcan make decisions on behalf of a community(and be accountable for these decisions) onmatters of local concern and that is formallyrecognized by municipalities and the provincehas been identified. Currently, unincorporatedareas do not have representatives who areelected via universal suffrage (with the oneexception being the Beaubassin East RuralCommunity). The LSD Advisory Committeesthat are in place and elected through a voteat a public meeting have no authority to makedecisions. This lack of authority underminestheir ability to be a recognized and legitimatevoice within and outside their communities.

Enhancing citizen involvement in localaffairs:A desire has been expressed to enhancecitizen involvement in local issues. One wayto accomplish this might be to strengthen theirinfluence on decisions that affect their res-pective communities. Currently, there arenumerous Local Service Districts that do nothave an Advisory Committee (approximately30% of the 270). Part of the reason for thislack of interest is that these committeesultimately have no decision-making authority.While their involvement may vary from regionto region, there are many AdvisoryCommittees (including the Beaubassin EastRural Community) that feel that they do nothave influence on local matters. This feelingexists despite being elected via a publicmeeting process (or though universal suffragein the case of the Beaubassin East RuralCommunity Committee) to advise the Ministeron matters of local service provision.

Regulating local activities:

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Some communities have identified problemsin regulating activities such as noise causingpublic nuisance, dangerous or unsightlypremises and outdoor exhibitions andconcerts. LSD Advisory Committees and theRural Community Committee do not have anyregulatory authority to govern activities in theircommunities. Regulation making authority inthese areas rests with the provincialgovernment.

Emphasizing the need and value of landuse planning:Approximately 20% of LSDs have some formof local land use plan in place and many ofthese plans are not adequate. The lack ofland use planning has led to land use conflicts,loss of community character, problems withwater quantity and quality, as well asunnecessary duplication of infrastructure,facilities and services. Coordinated land useplanning can help to ensure the future well-being of communities. The establishment ofa local government body could result in acommunity being able to more actively pursuethe adoption and enforcement of an effectiveland use plan that would ensure moreappropriate and sustainable development.

Local ownership of public properties andlands:Often, there is a local desire to own and ma-nage public properties that support the so-cial, cultural and economic development ofthe community. However, local publicownership and management of suchproperties is difficult because the LSD is nota body corporate (and it is not always possi-ble for a non-profit organization to assumethe ownership / management function). Inmost instances, ownership of propertiesassociated with service provision inunincorporated areas is vested with the pro-vincial government (e.g. fire halls).

In addition, lands for public purposes or money

in lieu of lands for public purposes cannot bevested in a Rural Community Committee orwith a Local Service District AdvisoryCommittee as part of a subdivision plan. Thisresults in the loss of potential publiccommunity resources such as parks, tourismattractions, or historic sites. There is a needto enable local ownership of public propertiesand the vesting of lands for public purposes.

Strengthening natural communities:Over the years, many “natural communities”have been divided into several LSDs, andsometimes into further taxing authoritieswithin the LSDs themselves. These divisionshave, in some instances, resulted in aweakened sense of community and a reducedemphasis on collective decision-making.Opportunities to make decisions that wouldbe beneficial to the community as a wholeneed to be fostered (e.g., sharing of costs fora service, development of effective land useplans). If change is to occur, there is a needto emphasize communities of interest and theimportance of collective decision-making forthe betterment of communities as a whole.

Preserving community character:A key concern that has been expressed byRound Table members is the need torecognize that communities are different andthat citizens want to preserve the characterof their communities. Citizens should be ableto influence and guide the growth anddevelopment of their communities in order toensure a desired quality of life.

On budgeting, finances and propertytaxation…

A desire to have input and control on thelocal budget:There is a desire to have local decision-making authority on budget decisions that willaffect service delivery and ultimately, local taxrates. Currently, the LSD Advisory Committee

13


and the Rural Community Committee onlyhave a very limited advisory role with respectto establishing local budgets for service pro-vision. In LSDs where there is no AdvisoryCommittee, there is no citizen input providedto the Minister on matters of budgetpreparation.

Access to capital financing:In many unincorporated areas, there is a pres-sing need to upgrade or replace agingequipment and infrastructure, particularly for fireprotection. The present limitations for thefinancing of capital acquisitions on behalf ofLSDs and the unfavorable terms for suchborrowing needs to be examined. (e.g.,currently, fire trucks are acquired through theProvince’s Vehicle Management Agency, whichonly permits a five-year lease purchaseagreement, while the expected useful life of thevehicle is very likely to be 15 to 20 years. ) Thisshort financing period is an obstacle, for mostLSDs, to purchasing this type of equipmentbecause of the large increase on the local taxrates required to repay the debt). Access tospecial capital funding programs by the LSDs,such as the Canada – New BrunswickInfrastructure Program, is also limited. Attemptsto access funding for water and wastewaterinitiatives are extremely limited unless the LSDis able to establish and administer a specialcommission for this purpose.

Equitable property taxation rules:In the unincorporated regions, policing,transportation, administration and dog controlservices are provided by the provincialgovernment. A provincial levy of 65 cents per$100 of assessment, which is not directlylinked to the cost of providing these services,is charged to owner-occupied residentialproperties. This levy is not charged toresidential non owner-occupied properties(e.g., cottages and apartment buildings) or tonon-residential properties (e.g., businesses).The question is – should the cost of theseservices be borne by all property owners, as

is the case in municipalities?

Linking the cost of service provision toproperty taxation:There is no direct link between the costs ofprovincially provided local services in theunincorporated areas and the 65 cent levy,which has remained at this level since 1984.It has been estimated that the gap betweenthe cost of the services and the revenueraised is at least $22 million.

Members of the Round Table have identifieda need to determine more specifically the costof provincially provided local services(policing, transportation, administration, dogcontrol) and that this cost should be reflectedin the property taxes levied.

Application of the unconditional grant tounincorporated areas:Representatives of the unincorporated areason the Round Table also indicated that thereis a need to revisit the unconditional grantformula applied to LSDs in order to ensurethat the pool available to these areas(approximately $3 million) is distributed in themost equitable manner.

On collaboration and service delivery…

There are several issues to be addressed inregards to delivery of services on a regionaland sub-regional basis, which affectunincorporated areas.

Improving accountability of regional ser-vice commissions:While they are required to pay their share ofthe operating cost of regional serviceagencies, (Solid Waste Commissions, DistrictPlanning Commissions) residents ofunincorporated areas do not feel they haveenough say as to who their representativeswill be. The Minister appoints unincorporated

14


area representatives which means they areneither locally chosen or elected and thereforehave no direct accountability to the citizensserved. In the case of Economic DevelopmentCommissions, there is no representation (norany funding) from LSDs, yet these agenciesserve unincorporated areas.

Emphasizing land use planning:While all unincorporated regions pay for landuse planning services through property taxa-tion, they are not necessarily receiving theservice they expect and support financially.If communities are paying for the service ofland use planning, there is a need to ensurethat they receive an equitable level of service.

Growth in unincorporated areas continues tooccur without the benefit of adequate land useplanning. Land use planning commissions,in conjunction with the provincial government,need to be proactive in promoting the benefitsof land use planning and moving toward theadoption and implementation of rural plansto cover all areas of the province. Too often,land use planning is perceived as an obsta-cle to development and not as a tool to fosterproper and sustainable development. Plansshould respond to local needs anddemonstrate sensitivity to the regionalsituation (i.e., land use plans must becomplementary).

Adequate resources to meet planningresponsibilities:For some commissions, particularly land useplanning commissions, the availability ofresources, both financial and human, is anissue. While they have been mandated toprovide land use planning services to theirmember communities, their ability to respondto community needs is being hampered bythe lack of financial resources, which in turnmakes it difficult to attract and retain planningpersonnel in the province.

A forum to address regional issues:

There are many issues that spill overjurisdictional boundaries, yet there is noformal mechanism to address them.Municipalities and unincorporated areas donot have a framework that will allow them toeffectively engage in a dialogue over issuesthat cross their boundaries (for example, pro-tection of water supplies, determining infras-tructure needs, minimizing land use conflicts,protecting natural resources and agriculturallands). Regional issues most often requireregional responses, and there is no structurein place to allow this to happen.

Matching who benefits with who pays forservices:Municipal officials have on many occasionscomplained that residents of theunincorporated areas are benefiting from ser-vices their municipalities offer (e.g.,recreational facilities, libraries). However,residents of unincorporated areas do not havea say in these services provided bymunicipalities, which happen to benefit anarea larger than the municipality’s boundaries.Moreover, a number of municipal facilitiesaround the province were built withoutsecuring the initial support of surroundingunincorporated areas. A more formalizedmechanism would facilitate partnership,collective-decision making and cost sharingwith respect to services that benefit more thanjust one community. Such a mechanism couldhelp ease some of the tensions that havesurfaced between unincorporated areas andmunicipalities regarding cost sharing forservices.

A “fair sharing” approach:While it is important to consider approachesthat will foster the sharing of costs for servi-ces of a regional nature, it is equally impor-tant to consider how the decisions regardingcosts of these services can also be shared.Fairness not only implies sharing in benefitsand costs of a service, but also sharing in thedecisions that affect the costs of the service.

15


What Changesare Needed?

The preceding considerations suggest thatthere are several issues to be addressed inorder to enable citizens and communities ofthe unincorporated areas to take charge oftheir futures. It is clear that the status quo isno longer an appropriate option. The currentLSD and Rural Community structures are notadequate to deal with the issues confrontingunincorporated areas. The following is a briefsummary of the changes that should beconsidered in regards to structure, servicedelivery and finances for unincorporatedareas:

ØØØØØ Provide for formally elected representation(via universal suffrage)

ØØØØØ Provide for local decision-makingauthority on matters of local servicedelivery and local activities

ØØØØØ Provide for appropriate access to capitalfinancing for purposes of service delivery

ØØØØØ Provide for local ownership of property andfor the vesting of lands for public purposes

ØØØØØ Emphasize the strengthening of naturalcommunities of interest

ØØØØØ Emphasize collective approaches todecision-making: locally and regionally

ØØØØØ Provide citizens with the tools to preservetheir communities’ character and qualityof life

ØØØØØ Emphasize land use planning as essentialto the future sustainability of communitiesand the quality of life they offer

ØØØØØ Provide a mechanism through which ef-fective cooperation can occur on aregional or sub-regional basis (on serviceprovision and issue resolution).

ØØØØØ Provide for improved accountability, andinvolvement in, regional service deliveryorganizations.

ØØØØØ Ensure that all property owners in theunincorporated areas contribute torecovering the cost of provincially providedservices through direct property taxation.

ØØØØØ Provide for a better link betweenprovincially provided services andproperty taxation levels.

Principles

The following principles were used as a basisfor developing potential options to address theissues confronting the unincorporated areas.

On local decision-makingand governance…

1. A form of local governance for all citizens with:- Elected representation- Accountability of representation- Responsibility and authority

All citizens of New Brunswick should haveaccess to a form of local government,which means choosing electedrepresentatives through formalcommunity-wide elections (i.e., throughuniversal suffrage). Those personselected should have the authority to makedecisions on behalf of their community andmust be accountable to the community fortheir decisions. Local autonomy in makinglocal decisions regarding local mattersmust be enabled and respected.

ØØØØØ LSDs want input with authority onwhat happens in their communities,without seeking permission fromsenior levels of government: Thecurrent LSD Advisory Committee doesnot have decision-making power with

16


respect to local service provision orother matters affecting theircommunities. This situation needs tochange. Local matters require localdecision-making.

ØØØØØ Minimum level of local governance:There should, at the very least, besome minimal form of localgovernance covering all of NewBrunswick.

ØØØØØ Local autonomy to make localservicing decisions: Localgovernments should have enoughflexibility to act as they wish on matterswithin their jurisdiction. The level,quality, and scope of services shouldbe a matter of local determination(subject to provincially establishedstandards).

ØØØØØ Communities want to take controlof development within theirboundaries: There are increasingdevelopment pressures across NewBrunswick. For many communities inthe unincorporated regions, the abilityto control this development is verylimited. Communities want to have themeans to control and managedevelopment to preserve communitycharacter and quality of life and toensure sustainability for the future.

ØØØØØ Respect from the provincialgovernment: There is a need toensure that the provincial governmentrecognizes and respects locallyelected officials. This means ensuringongoing consultation and communica-tion with local representatives.

2. Recognition of the uniqueness ofjurisdictions: Any changes that do occurshould accommodate and recognize asmuch as possible the uniqueness ofcommunities across the province. Thereare significant differences between the

various unincorporated areas of the pro-vince (e.g., not all unincorporated areasare rural, not all are interested in full-scalelocal government). Flexibility of any newapproaches would be essential toaccommodate these significantdifferences. Some areas may be readyand have the financial capacity toincorporate as a full-service municipality,while others may only have the capacityand/or desire to take responsibility for oneor two services.

ØØØØØ Choices for a variety of localgovernance models withunderstood consequences: Thereshould be a choice in the type of localgovernment a community wishes toestablish, but the consequences ofthese choices must be understood.

3. Establishing boundaries in accordancewith communities of interest:If boundaries of communities areultimately to change, the changes shouldreflect established social, cultural,recreational, employment, environmentaland economic linkages.

4. Restructuring should be Communitydriven, facilitated by Government:If changes are to occur, they should, asmuch as possible, be driven bycommunities themselves. The provinceshould play a facilitation role in making thechanges happen. As part of the process,the benefits and costs of restructuringneed to be clearly identified andunderstood. Ultimately, the changesshould benefit both unincorporatedcommunities and existing municipalities.

17


ØØØØØ Any restructuring should bebeneficial to both LSDs andmunicipalities: If changes are tooccur, the benefits should outweigh thecosts for both municipalities andcommunities in the unincorporatedregions. Furthermore, the benefits andcosts must be clearly identified andunderstood.

5. Communities should be proactive inworking towards local government:Establishing some form of localgovernment that will allow for localdecisions to be made on local matters isseen as a necessary step by the RoundTable. It is important for communities tounderstand the benefits and costs oftaking charge of their future through theestablishment of local governments.

On service delivery and collaboration…

6. The aim of sharing responsibilities andcosts of services between jurisdictionsshould be efficiency and quality: Theresult of sharing of services and costsshould be to provide the needed range andlevel of services at a cost each communitycan afford.

7. Communities must be part of thedecision-making process if they are toparticipate in cost-sharing: Truecooperation requires that participatingcommunities not only be willing to pay forthe services they benefit from, but shouldalso be able to directly influence decisionsthat affect the cost, quality and level of theservice provided.

8. Activities between unincorporatedcommunities and municipalities mustbe transparent: If there is to be true andpositive cooperation, there is a need for a

framework that promotes consultation,openness and access to informationamong all parties involved.

9. Land use planning on a regional basisis essential: If land use planning is to beemphasized, there should be a strong linkmade to regional considerations.Individual land use plans within a regionshould not conflict or undermine oneanother, but rather should becomplementary.

On budgeting, finances and propertytaxation…

10.Communities are prepared to pay forwhat they get but must get what theypay for: If a service is paid for by propertyowners, the level of the service they arereceiving should reflect the amount beingpaid.

11. Taxation with local representation: Ifproperty owners are to be taxed for servi-ces, they must be formally representedwhen determining what services are to beprovided, the level of the service providedand the cost of this service. Local inputmust be more than an advisory role.

12.All property owners should share in thecost of policing and transportation ser-vices: Owners of residential, residentialnon owner-occupied and non-residentialproperties should share in paying for thecosts associated with policing andtransportation in the unincorporated areas.

13.Continuation of grant funding: Grantsupport should remain as a source offunding for communities in theunincorporated areas. No matter whatstructural changes might occur, it is verylikely that some form of funding support

18


will be required. If the unconditional grantfor unincorporated areas is to remain,there is a need to review the formula asapplied to unincorporated areas to ensurethe most equitable distribution of thefunding pool.

19


This section focuses on municipalities.Specifically, the following is presented:

- A description of municipalities – the urban/ suburban / rural picture, population dis-tribution, along with an overview of someof the trends impacting on municipalities;

- A brief review of the current municipalstructure

- A description of the critical issuesconfronting municipalities;

- A summary of the changes / improvementsneeded; and

- A review of the principles that wereestablished to guide the development ofpotential options.

Municipalities –Description and Trends

The Urban / Suburban / Rural pictureThere are currently 103 municipalities in NewBrunswick, including 7 cities, 27 towns and 69villages. Municipalities include approximately60% of New Brunswick’s population and 20%of the land mass of the province. As with thevarious unincorporated areas, there issignificant diversity amongst municipalities.They vary in geographic and population size,tax base and services provided (range, leveland quality). Some municipalities can beconsidered as “urban”, others “suburban” andothers “rural”.

There are also those municipalities that canbe considered as small-scale regional servicecentres and are usually located at some dis-tance from the cities (e.g., Caraquet, St.Stephen, Woodstock). Even amongst NewBrunswick‘s seven cities there are substantialdifferences. Whereas cities such as Monc-ton and Saint John could be considered aslarge “urban” centres, cities such as Bathurstor Campbellton are much smaller scaleregional centres.

While there are many common issues facingmunicipalities, the Round Table members feltthat it was very important to recognize andconsider the differences between variousmunicipalities when changes to the localgovernance system are contemplated.

One of the predominant features of manymunicipalities in New Brunswick is their smallsize. As illustrated in Table 2, thirty-six of the103 municipalities in New Brunswick have apopulation of less than 1000 and 33municipalities have a population of between1000 and 2000. Furthermore, these 69municipalities have substantially lower percapita tax bases than the larger municipalities.

Table 2

Total # ofMunicipalities

MedianPopulation

Per Squ. Km

Total # ofResidents

Avg. Tax baseper capita(Year 2000)

Less than 1,000

1,000 to 1,999

2,000 to 4,999

36

33

19

22,814

46,766

70,471

84

127190

35,128

33,54240,661

5,000 to 9,999 5 34,216 413 49,68110,000 to 19,999

20,000 and more

Total

7

3

103

104,866

178,961

458,094*

225

364124

47,352

53,99947,075

Ranges ofPopulation

*Includes First Nations population within municipalities.

The challenge that this situation presents tomunicipalities is in being able to provide areasonable range and level of quality servi-ces at acceptable property tax rates. Bythemselves, many small municipalities arehaving a difficult time achieving any

SECTION FIVE

CHALLENGES FACINGMUNICIPALITIES

20


substantial economies of scale when it comesto service provision. Their low populationdensity adds the further challenge of providingcost efficient services (many municipalitiesthat have small populations have a relativelylarge geographic area to cover). This situa-tion, combined with changes in provincial-municipal transfers, is posing significant chal-lenges to many municipalities in terms of theirlong-term viability. What are the options forthese municipalities? In some instances, oneapproach may be to increase cooperation ona regional basis for services through moreformalized means. Another approach may beto examine opportunities for more effectiveand efficient local governance throughannexation of nearby unincorporated areasor even through amalgamation with othermunicipalities.

Population Growth in MunicipalitiesAs noted earlier, the population growth isoccurring primarily outside municipalboundaries. This is generally the case in theareas surrounding urban centres, the smallerscale regional centres and around ruralmunicipalities. At the same time, populationgrowth in many municipalities is stagnant oreven declining. The implications of how growthin these regions is occurring are far-reachingand their effects are being felt bymunicipalities. The infrastructure (e.g., roads)and facilities (e.g., for recreation) are notnecessarily being used to their potential andthe costs for these services are not beingappropriately shared through property taxa-tion or fees by those who benefit from them.The costs of maintaining this infrastructure andthese facilities fall almost entirely to theresidents of the municipalities.

The Future of Urban CentresApproximately 80% of the population of NewBrunswick lives in or within 50 kilometres ofthe province’s seven cities. The reasons forthis are both historic and economic. Today,the major centres provide employment to a

high percentage of the New Brunswickworkforce. The focus on the urban centresas the job centres for the province will conti-nue and growth in the surrounding regionswill also likely continue. Given this anticipatedgrowth, it will become increasingly importantto find mechanisms through whichcommunities can share in the costs ofservices that have a regional benefit.

Furthermore, issues associated with urbansprawl (e.g., land use conflicts, water /wastewater infrastructure requirements) andlinear development must be dealt with in aproactive manner.

Aging populationAs our population ages, local governments willbe challenged to re-think how and whatservices are offered. Services such asrecreation, public safety, and land use plan-ning will need to be reconsidered in light ofthis changing demographic.

Local GovernmentStructures

Municipalities: Cities, Towns and VillagesMunicipalities are the only local governmentstructure in the province. They provide ser-vices of a local nature to a defined area. Thedecision-making body is the council that iselected via universal suffrage. The council ofa municipality has decision-making authorityon service provision, by-laws, budgets, userfees and tax rates. A council is elected tomake decisions on behalf of citizens for thebetterment of its community. While their size,capacity, services provided and needs maydiffer significantly across the province,municipalities, whether a city, town or village,have the same by-law making and serviceprovision powers.

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Generally speaking, municipalities are themain local service providers for theircommunities. However, some services aredelivered by regional commissions on behalfof communities (solid waste management,land use planning, and economicdevelopment). There are also smaller scalesub-regional arrangements in place for theprovision of services between two or morecommunities (e.g., for services such aspolicing, recreation, fire protection).

Issues FacingMunicipalities

This section provides an overview of the keyissues municipalities are facing. Asmentioned earlier, while many of them are notnew, there is a sense of urgency in havingthem addressed, particularly those issuesrelated to provincial-municipal fiscal transfers.

On collaboration and service delivery...

Collaboration to maintain serviceaffordability:Service costs are continuing to escalate, whiletraditional funding sources are diminishing.At the same time, there are demands fromthe public for efficient and high quality ser-vice provision.

Service provision according to administrativeboundaries does not always result in the mostefficient and effective delivery of services. Inaddition, administrative boundaries do notnecessarily capture all those who are actuallybenefiting from services. Municipalities needto collaborate if they are to remain viable andif they are to maintain or improve currentservices at reasonable cost.

Cost-sharing with the unincorporated areas:For many years, municipal officials haveargued that residents of neighboringcommunities, particularly of unincorporatedareas, avail themselves of the services offeredby a municipality, while contributing very little,if anything, to the ongoing operational andcapital costs associated with the service (e.g.,recreational facilities). Often, the contribu-tion of residents of the unincorporated areasis through the same program fees that arepaid by residents of municipalities, or possiblythrough a slightly higher user fee. However,these fees only cover a small portion of thecosts associated with the service (usually theprogramming component). There is a needfor a mechanism that will facilitate moreeffective sharing of costs and of decisionsaffecting those costs between municipalitiesand unincorporated areas for services thathave a regional benefit.

Accountability of regional bodies:From a municipal perspective, theaccountability of regional service commis-sions needs to be improved. Municipalrepresentatives on the commissions often findthemselves in the difficult position of trying tobalance the interests of the municipalities theyrepresent with the needs of the commissionson which they serve. This situation isparticularly evident on budgetary matters andis further complicated when, in some instan-ces, the municipal representative is not amember of the municipal council.

A forum to address regional issues:There are many issues that spill overjurisdictional boundaries, yet there is noformal mechanism to address them.Municipalities and unincorporated areas donot have a framework that will allow them toeffectively engage in a dialogue over issuesthat cross their boundaries (for example, onprotection of water supplies, on determininginfrastructure needs, on minimizing land useconflicts, on protecting natural resources and

22


agricultural lands). Regional issues mostoften require regional responses, and thereare no structures or tools in place to allowthis to happen. An enabling mechanism isrequired that will facilitate communitiesworking and planning together to find solu-tions to regional problems.

On municipal funding andproperty taxation…

The need for adequate funding:Municipalities have the authority to provide avariety of services. While some municipalitiesmay be well positioned to provide services ata reasonable tax rate (due in large part to astrong municipal tax base), many othermunicipalities are not. These municipalitiesneed funding support beyond what is receivedthrough property taxes in order to provideservices at an acceptable tax rate for theircitizens. Currently, this funding support isprovided through an unconditional grant. Formany municipalities, the funding madeavailable through the unconditional grant,which has been substantially reduced in recentyears, is not considered to be enough toensure appropriate levels of servicing atacceptable tax rates.

Upkeep of Infrastructure:In the coming years, municipal governmentswill have to make significant investments inbasic infrastructure and facilities (e.g., roads,recreational facilities, water and wastewatersystems). There is a need to ensure thatmunicipalities are well positioned financiallyto handle these costs.

The need for stable funding:For the vast majority of municipalities, theprimary source of funding after property taxesis the unconditional grant. The unconditionalgrant pool available to municipalities is subjectto an annual review by the provincial

government. Municipalities have expressedstrong concerns regarding the unpredictableand unstable nature of such an importantcomponent of their funding. The uncertaintysurrounding the unconditional grant has madeit difficult for many municipalities to planahead. This uncertainty has been particularlyrelevant in recent years, given the significantoverall reductions to the unconditional grantpool (from $103 million in 1993 to $67 millionin 2001). Any new funding mechanism shouldbe founded on the basis of enhancedpredictability and stability and not be subjectto significant fluctuations.

Need to reconsider the application of theunconditional grant formula:The 1997 formula, which is nearing the endof its phase-in period, is creating, in the viewof many municipalities, winners and losers. Ifthe formula were to be fully applied in 2002many municipalities would experiencesubstantial reductions in revenue. In responseto these concerns, the Premier announced onJune 14, 2001 that the 2002 grant distributionwould be maintained at the 2001 levels.

Property taxation in the unincorporatedareas:In municipalities, non owner-occupiedresidential and non-residential propertyowners pay for policing, transportation, ad-ministration and dog control services as partof the local property tax rate they are chargedby the municipality. In the unincorporatedareas, owners of non owner-occupiedresidential and non-residential properties donot pay for these services through directproperty taxation. This situation creates asignificant imbalance between incorporatedand unincorporated areas in the treatment ofthese types of properties.

From a municipal perspective, the tax regimeis not neutral and provides a direct incentivefor certain types of development to occur inunincorporated areas. This imbalance

23


impacts the potential for development withinmunicipal boundaries. It can also be arguedthat this situation is contributing to theproblems associated with the urban sprawlphenomenon. There is a need to addressthis inequity in the property tax regime.

What Changesare Needed?

The trends and issues described indicate thatchanges are needed to ensure thatmunicipalities continue to perform their roleeffectively. Following is a brief summary ofthe changes that should be considered toensure a healthy future for municipalgovernments.

ØØØØØ Provide for a mechanism that will facilitateenhanced cooperation on service deliverybetween municipalities, and betweenmunicipalities and the unincorporatedareas, in order to achieve economies ofscale and to ensure that quality servicescontinue to be available at acceptablerates of property taxation;

ØØØØØ Provide a mechanism and the tools tofacilitate the resolving of issues that crossjurisdictional boundaries (betweenmunicipalities and between municipalitiesand unincorporated areas);

ØØØØØ Improve the accountability andeffectiveness of regional service deliveryagencies;

ØØØØØ Provide for stability and predictability ofthe provincial-municipal fiscal relationship(i.e., stable and predictable transfers);

ØØØØØ Ensure that municipalities are able toremain viable entities that can providequality services;

ØØØØØ Ensure that there is equity in the propertytaxation regime.

Principles

The following principles were used as a basisfor developing potential options to address theissues confronting municipalities.

On cooperation and service delivery…

1. The aim of sharing responsibilities andcosts of services between jurisdictionsshould be efficiency and quality: Theresult of sharing of services and costsshould be to provide the needed rangeand level of services at a cost eachcommunity can afford.

2. Activities between communities mustbe transparent: If there is to be true andpositive cooperation, there is a need for aframework that promotes consultation,openness and access to informationamong all parties involved.

3. Land use planning on a regional basisis essential: If land use planning is to beemphasized, there should be a strong linkmade to regional considerations. Individualland use plans within a region should notconflict or undermine one another, butrather should be complementary.

On funding and property taxation…

4. Adequate Funding: Local governmentshave different expenditure needs andvarying ability to finance suchexpenditures from their own resources.Adequate funding, beyond those revenuesraised primarily through property taxation,is required to fulfill service responsibilitiesat acceptable rates of taxation.

24


5. Equitable distribution: Equity means thatlocal governments with the same fiscalneed should be treated in a similar manner.Fiscal need is a measure of a municipality’sexpenditure needs relative to its ability toraise its own revenues. Equity does notmean that each municipality will be treatedequally, but rather that each municipalitywill be treated fairly.

6. Neutrality: The principle of neutralitymeans that the funding transfers shouldnot influence the expenditure patterns ofthe recipient. Likewise, a localgovernment should not be able to in-fluence the amount of transfer it receivesthrough its expenditure decisions.

7. Predictability / Stability: Localgovernments should be able to rely on areasonable degree of predictability andstability regarding funding transfers fromthe provincial government. Localgovernments cannot plan for the futurewith confidence if they are subject to largeor unexpected variations in revenues.

8. Respect for Local Autonomy / Choice:Local circumstances, needs and prioritiesvary amongst communities. Localgovernments must be free to determinetheir levels of service, their spending levelsand their taxation rates.

9. Accountability for financial decisions:Local governments must be accountablefor the decisions they make regardingservice provision at the local level andcorresponding property tax rates they set.To help foster this accountability, fundingfrom the provincial government should bestable and predictable.

10.Understandable and transparent: Therecannot be true accountability in the fundingtransfer system unless there is an

understanding of what the system isintended to do and how it works.

11. Access to diversified sources ofrevenue : With increasing pressures to domore with existing resources, localgovernments should have the flexibility toaccess a wider range of revenue sources.Examples of these revenue sources mightinclude additional tax room and user char-ges.

Note: There are a number of other principlesidentified in the section dealing withunincorporated areas that could also beapplied in general terms. For the purposesof the current section, however, thoseprinciples that had the most direct relevanceto municipalities were highlighted.

25

PAGEA Vision for Local Governance in New Brunswick 26

Governance in theUnincorporated Regions

To address the issues identified with respectto governance in the unincorporated areas,the Round Table examined a series of struc-tural options that could be considered for ap-plication to New Brunswick.

Specifically, the following options werereviewed:

1. Administrative adjustments to thecurrent LSD system

2. Regional municipalities (one-tier)3. Regional municipalities (two-tier)4. Incorporation as, or annexation to, a

municipality5. Rural Municipality6. Enhanced Rural Community7. Community District

1. Administrative adjustments tothe LSD system

There are several adjustments that could bemade to the current LSD system to improveit. Examples include giving the LSD AdvisoryCommittee more of a role to play in budgetdevelopment, streamlining the public meetingand service establishment process, and givingthe Advisory Committee more flexibility to

engage the community on matters of localconcern.

While these are all improvements that couldbe made either by policy changes orlegislative amendments and would bebeneficial in the short term, the Round Tablefeels that these changes do not address thefundamental issues that were identified, nordo they reflect the principles that weredeveloped. The Round Table agrees that thisapproach should not be pursued.

2. Creation of Regional Municipalities(one-tier)

Another option that was discussed by theRound Table was the creation of large one-tier regional municipalities. Essentially, thecreation of these regional municipalities wouldresult from a series of annexations andamalgamations (including both incorporatedand unincorporated areas). These largemunicipalities would be established in orderto address region-wide issues that relate tocost sharing for services and urban sprawl.Once elected, one council would serve a regionthat would likely include urban, suburban andrural areas. This approach would be similarto the ones taken in the creation of the Halifaxand Cape Breton Regional Municipalities inNova Scotia. The Round Table felt that thisapproach would result in a loss of communityidentity and citizens would likely feel somewhatremote from and less able to access their localgovernment. Tax rates for some areas of thenew municipality might increase without acorresponding change in service level orquality.

The Round Table members agree that thecreation of such large centres is notappropriate in the New Brunswick context andthat this approach should not be pursued.

SECTION SIXOPTIONS AND

RECOMMENDATIONS


3. Creation of Regional Municipalities(two-tier)

A third option considered was the establish-ment of Regional Municipalities on a two-tierbasis – an upper and lower tier. The uppertier (regional government) is an elected bodythat provides a particular range of servicesnot offered by the lower tier (i.e.,municipalities). The upper and lower tierswould each be responsible for specificservices. The upper tier would be given theresponsibility for the more “regional” services,while the lower tier (existing municipalities orthe province in the case of the unincorporatedareas) would be responsible for local services.Representatives from member communitieswould be directly elected to the upper tier.

Concern was expressed that such anapproach would simply add another layer ofbureaucracy (i.e., another local government,albeit on a regional basis). There would likelybe tensions between the upper and lowertiers, particularly on matters related to thesharing of the property tax field. An increasein taxes by the upper tier would add pressureon the lower tier to keep its tax rate at aparticular level and vice-versa. Furthermore,this approach was seen as having thepotential to undermine or reduce the role ofexisting municipalities.

The Round Table agrees that this option isnot appropriate in the New Brunswick contextand should not be pursued.

4. Incorporation as, or annexation to,a municipality

A current option available to unincorporatedareas is either annexation to an existingmunicipality or incorporation as a distinct

municipality. From a municipal perspective,the potential benefits of annexation (of anunincorporated area to a municipality) includeachieving some economies of scale, animproved ability to address environmentrelated issues (e.g., protection of water sup-plies), more effective control over urban sprawl,ensuring the availability of land for futuregrowth and strengthening the financial capacityand stability of the municipality. Reorganizingthrough annexation can also result in a betteralignment of administrative boundaries with theareas benefiting from services.

From an unincorporated area perspective, thepotential benefits include more and better localservices (e.g., water and wastewater services),more effective land use planning, protectionof natural resources, as well as accountablelocal representation. While there may bevarious benefits to annexation, other factorsneed to be considered including financialfeasibility (i.e., do the benefits of extending theservices to the annexed area outweigh thecosts?) and local support for the change.

As for incorporation (as a municipality),potential benefits include having localdecision-making authority on matters of localconcern, greater ability to managedevelopment as well as enhancedopportunities to negotiate with nearbymunicipalities on matters of service deliveryand other matters of mutual concern. Thoughthe benefits are significant, the financialfeasibility of creating a new municipality mustbe carefully examined. While citizens of acommunity may see the benefits of movingforward with incorporation, the fiscal capacityof a community to be incorporated may notbe substantial enough to support a localgovernment structure at locally acceptablerates of property taxation.

The Round Table feels that annexation andincorporation are valid options that should

27


continue to be available for currentlyunincorporated areas, but also recognizesthat such solutions are not always financiallyfeasible and / or locally desired.

5. Rural Municipality (proposed option)

Another option considered was the conceptof a Rural Municipality. The essential featuresof this approach would include the following:

PurposeØØØØØ The primary purpose of this model would

be to enable existing unincorporatedcommunities to have their own localgovernment with a range of serviceresponsibilities they are able to finance.

ØØØØØ The Provincial Government would nolonger serve as the local government forunincorporated areas choosing toincorporate as a Rural Municipality.

Establishment and Representation:ØØØØØ Establishment would be based on a

community of interest (likely resulting inthe consolidation of LSDs), and on localdesire and financial capacity.

ØØØØØ Representatives would be elected attriennial municipal elections in the samemanner as municipal councils.

ØØØØØ The elected body: A Rural MunicipalityCouncil (RMC) would be the voice of, andpoint of contact for, the community.Decision-making authority would rest withthis elected body.

ØØØØØ The RMC would make its appointmentsto the various bodies delivering serviceson behalf of the Rural Municipality.

Service Responsibilities and Delivery:ØØØØØ The Rural Municipality could provide land

use planning, fire protection, streetlighting, economic / tourism development,community services, recreation, solidwaste collection and disposal, water and

sewage and dog control. It could offer anyof these services as needs arose andcapacity allowed.

ØØØØØ Policing and transportation services wouldbe provided by the provincial government.

Powers:ØØØØØ The inhabitants of the entire area would

be a body corporate (similar to amunicipality).

ØØØØØ The Rural Municipality could own property:land, buildings, and equipment.

ØØØØØ The RMC would have general authorityfor the adoption, amendment andenforcement of by-laws. This wouldinclude the authority to adopt, amend andenforce a Rural Plan as well as other by-laws it wished to have in place. (e.g., ani-mal control, unsightly premises).

ØØØØØ The RMC would be a member of anyregional agency that was delivering servi-ces on its behalf.

Funding:ØØØØØ Cost of services would be covered

primarily through property taxation.ØØØØØ Access to other revenue sources would

be available: e.g., unconditional grant,user charges.

ØØØØØ “Pay for what you get” approach would beused. Different tax rates for different partsof the community would be possible,based on the level of services received.

ØØØØØ The RMC could borrow money for capitalprojects and could access special fundingprograms.

ØØØØØ Policing and transportation costs would berecovered through a separate tax rateimposed by the provincial government.The rate would be uniform throughout theprovince.


6. Enhancement of the RuralCommunity Structure (proposedoption)

One option currently available tounincorporated areas is the establishment ofa Rural Community. As noted earlier, theRural Community is a structure that gives anarea, through a locally elected RuralCommunity Committee, the power to makelocal decisions regarding land use planning(in particular, the adoption and amendmentof a land use plan). However, as was alsopreviously noted, this structure does notappear to offer enough to communitiesinterested in taking charge of their affairs. Thequestion is whether the current RuralCommunity structure could be enhanced toallow for a wider scope of decision-makingauthority, without bringing about a full muni-cipal structure and its associated administra-tive costs. The following model – anEnhanced Rural Community – is oneapproach that could be pursued.

PurposeØØØØØ The primary purpose of an Enhanced

Rural Community would be to enableexisting unincorporated areas to have alocal government without theadministrative structure of a municipality.An Enhanced Rural Community wouldshare the administration and delivery ofservices through a regional service body.

ØØØØØ The Provincial Government would nolonger serve as the local government forunincorporated areas choosing theEnhanced Rural Community approach.

Establishment and RepresentationØØØØØ An Enhanced Rural Community would

continue to be a structure by which acommunity would elect a RuralCommunity Committee at the triennialmunicipal elections.

ØØØØØ Members of the Enhanced RuralCommunity Committee would continue toselect their own officers (e.g.,Chairperson) and would also appoint oneor more representatives on the regionalservice body providing land use planningand other services to the Enhanced RuralCommunity.

ØØØØØ The boundaries of an Enhanced RuralCommunity would be established to reflecta “community of interest”.

ØØØØØ The establishment of an Enhanced RuralCommunity would result, in most instan-ces, in the consolidation of LSDs.

Service Responsibilities and DeliveryØØØØØ The Enhanced Rural Community

Committee would also make decisions(similar to a Municipal Council) relative tothe provision of other services (e.g., fireprotection, solid waste collection anddisposal, street lighting, community andrecreational services). However, theseservices would be delivered by a regionalservice body, on behalf of the EnhancedRural Community. (Note: the RuralCommunity Committee currently advisesthe Minister on the provision ordiscontinuance of other local services,who in turn makes a recommendation toProvincial Government for a finaldecision.)

ØØØØØ Policing and transportation services wouldbe provided by the Provincial Government.

ØØØØØ The Enhanced Rural CommunityCommittee would also advise and assistthe regional service body in the adminis-tration of the services it would deliver tothe Enhanced Rural Community via itsrepresentative(s) on the board and staffof the regional service body. (Note: theRural Community Committee currentlyadvises and assists the Minister in theadministration of the Rural Community viathe Municipal Services Representative ofthe Department of the Environment andLocal Government).

29


ØØØØØ The regional service body would provideall the administration (staffing, equipmentand facilities) required by the EnhancedRural Community Committee to fulfill itsresponsibilities. The Enhanced RuralCommunity Committee would not employstaff. However, the Rural CommunityCommittee would work closely with theregional service body in supportingvolunteer organizations that provide ser-vices to the Enhanced Rural Community,such as a volunteer fire department or arecreation association.

ØØØØØ The Enhanced Rural Community couldown lands, buildings and equipment.

ØØØØØ The regional service body would acquirethe human and material resources it wouldneed to deliver the services it wasmandated to provide on behalf of theEnhanced Rural Community.

PowersØØØØØ The Enhanced Rural Community

Committee would be the decision-maker for local services, while theregional service body would be thedelivery agent of these services.

ØØØØØ Similar to a municipal council, anEnhanced Rural Community Committeewould have the authority to adopt, amendand enforce a rural plan (the enforcementof the plan currently rests with the Ministerof the Environment and LocalGovernment). The Plan would beimplemented and administered by aregional service body.

ØØØØØ The introduction of other by-laws wouldbe decided upon by the Enhanced RuralCommunity Committee. By-laws adoptedby the Enhanced Rural CommunityCommittee would be implemented andadministered by a regional service body(e.g., unsightly premises, animal control).

ØØØØØ Similar to a Municipality and a RuralMunicipality, the Enhanced RuralCommunity would be a body corporate.

FundingØØØØØ Costs of services would be covered

primarily through property taxation.ØØØØØ Access to other revenue sources would

be available (e.g. unconditional grant, usercharges).

ØØØØØ Policing and transportation costs would berecovered through a separate tax rateimposed by the Provincial Government.The rate would be uniform throughout theprovince.

ØØØØØ Since several Enhanced RuralCommunities could be established in aregion, they could benefit from economiesof scale by sharing the administration anddelivery of services through a regionalservice body, thereby making localgovernance and services more affordable.

ØØØØØ The Enhanced Rural CommunityCommittee would adopt its annual bud-get to cover the administrative costs (e.g.,meetings) of the Rural CommunityCommittee as well as the costs of the ser-vices delivered by the regional servicebody on its behalf.

ØØØØØ The Enhanced Rural Communitycommittee would set the local tax rate andthen pay the regional service body forservices received. (The Minister ofEnvironment and Local Governmentcurrently adopts the annual budget of theRural Community and sets the tax rate.)

ØØØØØ A “pay for what you get” approach wouldbe used. Different tax rates for differentparts of the community would be possi-ble, based on costs of services received.

ØØØØØ The Enhanced Rural community couldborrow money and access special fundingprograms for capital projects.


7. Community District (proposed option)

This approach would have the followingfeatures:

PurposeØØØØØ The Community District would enable an

unincorporated “community of interest” tohave a form of representative localgovernment, through a regional servicebody that would deliver local services andregulate local activities through by-laws, asdecided locally.

ØØØØØ The Community District option would begeared toward preserving communityidentity, enabling more equitable sharingof services, and achieving someeconomies of scale for governance andservice delivery.

ØØØØØ The provincial Government would nolonger serve as the local government forunincorporated areas choosing theCommunity District approach.

Establishment and RepresentationØØØØØ A Community District would be formed to

reflect a “community of interest”, througha grouping of LSDs.

ØØØØØ Former LSDs would be referred to as “Lo-cal Service Areas”.

ØØØØØ The area covered by a Community Dis-trict would remain unincorporated.

ØØØØØ Representatives of the Community Dis-tricts would be elected every three years,via universal suffrage, to sit on the Boardof Directors of a regional service body.

ØØØØØ Local Service Areas within a CommunityDistrict could choose (through a vote at apublic meeting) to have an advisorycommittee.

ØØØØØ These advisory committees would workclosely with their Community Districtrepresentative(s) on the regional servicebody, in supporting volunteerorganizations such as a fire department

or a recreation association. Alternatively,an Advisory Committee could beestablished for the whole CommunityDistrict (again, through the public meetingprocess), with representation from eachLocal Service Area. Again, this AdvisoryCommittee would work closely with theirCommunity District representative(s).

Service Responsibilities and DeliveryØØØØØ The regional service body would take over

the responsibility of delivery of all services(regional, sub-regional and local) providedto Community Districts, other than policingand transportation.

ØØØØØ Different ranges and levels of service couldbe provided to different Local Service Areasof the Community District or parts of LocalService Areas. However, the adoption ofa Rural Plan, for example, would involveand apply to the entire Community District(in other words, all of the Local ServiceAreas within the Community District wouldbe covered by one Rural Plan).

ØØØØØ Each local service area would determinethe elective services they would receive,through a local petition and vote (e.g.street lighting).

ØØØØØ Sub-regional services (e.g., a recreationfacility) would be provided or arranged, bythe regional service body, once agreed uponby the residents of the Community District.

ØØØØØ Land use planning, solid waste disposal andeconomic development would be deliveredby a regional service body on a regionalbasis, on behalf of all Community Districts.

ØØØØØ The regional service body would serve asa form of local government for theCommunity Districts. The regional servicebody would be the service provider for thecommunity districts and would adopt,administer and enforce by-laws theCommunity District wished to haveenacted (e.g. for unsightly premises andanimal control).

ØØØØØ Assets acquired for the delivery of servi-ces would be owned by a regional ser-

31


vice body on behalf of the Community Dis-trict (e.g., buildings, lands for publicpurposes, equipment).

ØØØØØ Policing and transportation services wouldbe provided by the Provincial Government.

FundingØØØØØ Services would be financed on a “pay for

what you get” basis.ØØØØØ Each service provided in a Community

District would have a defined service areaand its costs would be recovered from thetaxpayers of that area. For example, ifthe service of street lighting was providedto one Local Service Area in a CommunityDistrict, only the taxpayers of that areawould pay for the service.

ØØØØØ The regional service body would adopt thebudget for services it provides toCommunity Districts. The regional servicebody would then advise the ProvincialGovernment of the servicing costs for theCommunity Districts. In turn the Provincewould set the tax rate and pay the regionalservice body.

ØØØØØ Policing and transportation costs would berecovered through a separate tax rateimposed by the Provincial Government.The rate would be uniform throughout theprovince.

Summary

The range of options considered by the RoundTable to provide for local governance inunincorporated areas all have the benefit ofensuring democratic representation fordecision-making on local services. However,each option would provide communities withdifferent levels of local control over localmatters. Each option has administrative costimplications that would ultimately be borne bythe taxpayer.

The diagram below illustrates that theincreasing degree of local responsibility,accountability and autonomy would varydepending on the option selected. It is alsoimportant to recognize that the CommunityDistrict cannot be considered as a localgovernment. The Enhanced Ruralcommunity, the Rural Municipality and theMunicipality are all forms of local government.

Assessment of the OptionsThe Round Table concluded that theCommunity District, Enhanced RuralCommunity and Rural Municipality modelsshould be put forward as potential newgovernance options for the unincorporatedareas of the province for discussion andcomment by a larger audience. This rangeof models was developed in consideration ofcertain key governance principles articulatedby the Round Table including:

- A form of local governance for all citizens- Local autonomy in making decisions- Recognition of the uniqueness of

jurisdictions- Choices for a variety of local governance

models (with understood consequences)- Communities being proactive in working

toward local government- Authority and accountability for decisions- Taxation with local representation

Municipality(current option)

Rural Municipality(proposed option)

Enhanced RuralCommunity (proposed option)

Community District (proposed option)

Increasingresponsibility,accountabilityand autonomy


In light of the issues identified and of theprinciples and options developed, the RoundTable recognizes that the status quo in re-gards to governance in the unincorporatedareas is no longer appropriate and istherefore recommending :

1. That the development, evaluation andimplementation of local governancestructures in New Brunswick respectthe Round Table’s principles.

2. That the existing municipality structure(City, Town, Village) be retained.

3. That the entire New Brunswickpopulation have access to agovernance system that provides forelected representation.

4. That there be a more rationalorganization for the purposes of localgovernance and service provision.

5. That at the present time, acceptableoptions for the unincorporated areasof the province to voluntarily achievelocal governance include:

- Community District (in conjunctionwith a regional structure)

- Enhanced Rural Community (inconjunction with a regional structure)

- Incorporation as a Rural Municipality - Annexation to, or incorporation as, a

municipality

6. That the general public must be fullyengaged and made aware of the issuesconfronting unincorporated areas, througha comprehensive consultation process thatwould also facilitate the choice, adoptionand implementation of acceptable andappropriate local governance models,regional services delivery structures, localand regional boundaries and administrativeunit groupings.

Collaboration on aRegional Basis

Thirty-seven special purpose regional serviceagencies are currently in place in NewBrunswick, including 13 EconomicDevelopment Commissions, 12 Solid WasteCommissions and 12 District Planning Com-missions. In some instances, municipalitiesare not participating in an EconomicDevelopment Commission and/or a DistrictPlanning Commission. All municipalitiesbelong to a Solid Waste Commission. Othercommissions have been established to provideservices such as the operation of a recreationalfacility or facilities, to two or more communities.

Combining those special purpose agenciesunder one multi-purpose service agency foreach region of the province could provide amore integrated approach to the delivery ofservices. A multi-purpose service agencywould have the potential to generate cost-savings by reducing duplication, increasingeffectiveness in dealing with issues that crossjurisdictions, and improving cooperationamong the various participating administra-tive units.

Different approaches could be pursued inorganizing the delivery of services on a

33

Recommendations

on Local Governance inthe Unincorporated Areas


regional basis. The Round Table examinedvarious regional models from other provincesacross Canada and developed three potentialscenarios applied to the New Brunswickcontext.

While different in approach and structure,each of the three scenarios has the followingcommon characteristics and aims:

- would not be another layer of localgovernment, but rather an agent ofmunicipalities and unincorporated areasto deliver services

- would be established across the province,and their boundaries would be delineatedto reflect regions of common identity andshared interests.

- would allow for some decisions to bemade on the basis of representation bycommunity (one member – one vote) whileother decisions (mostly financial) would bedecided on a weighted vote basis(representation by population).

- would involve the establishment ofcommittees to assist with the delivery ofsome services given that existing regionalservice commissions would be integrated.

- would provide a means of achievinggreater economies of scale;

- would provide a forum to resolve issuesthat cross boundaries;

- would provide a mechanism to facilitatethe fair sharing of services betweencommunities (decisions related to theservices and their costs);

- would improve accountability tocommunities served; and

- would provide more effective land useplanning on a regional and local basis.

The first scenario is based loosely onQuebec’s Regional County Municipalitymodel. The second scenario has beenadapted from British Columbia’s RegionalDistrict model, while the third scenario isbased on the “Cooperative” model.

Scenario One:“Regional Services” District (RSD)

PurposeØØØØØ The RSD’s primary function would be to

serve as an agent of municipalities todeliver regional services.

ØØØØØ It would also serve as a forum to discussand resolve issues of mutual concern.

ØØØØØ The establishment of RSDs would requireunincorporated areas to be reorganizedinto municipalities through incorporationor annexation. Only those areas with veryfew inhabitants would remainunincorporated. There may also bebenefits to joining existing municipalitiesas part of such a re-organization.

RepresentationØØØØØ The RSDs would be administered by

councils made up of the mayors of themember municipalities. All membermunicipalities would be represented onthe RSD’s council.

ØØØØØ The Chairperson of the RSD would beelected by his or her peers on the RSDCouncil.

ServicesØØØØØ The RSD would be mandated by the pro-

vince to provide land use planning,economic development and solid wastemanagement.

ØØØØØ Facilities having a regional scope and benefit(e.g., a large recreation facility) would alsobe administered through the RSD.

ØØØØØ Other services could be delegated to theRSD by the member local governmentsfor provision on a regional basis.

PowersØØØØØ The RSD would be a body corporate.ØØØØØ The RSD could own land, buildings and

equipment required for service delivery.


FundingØØØØØ The RSDs would be financed by member

municipalities. Support from municipalitieswould be provided according to tax base.In other words, member contributionswould be based on respective portions ofthe combined tax base of all municipalitieswithin the RSD (the larger the tax base,the larger the contribution).

ØØØØØ Service fees and other non-tax revenuescould also be used as a means offinancing.

ØØØØØ The RSD could borrow money and accessspecial funding programs for capitalprojects.

ØØØØØ The RSD would adopt the budget for ser-vices it provides to municipalities incooperation with them.

Scenario Two:Regional “Service District” (RD)

PurposeØ The RD would serve as an agent of

municipalities and unincorporated areasfor the delivery of services on a regionalor sub-regional basis.

Ø It would also serve as a minimal form oflocal government for the unincorporatedareas, which would be organized as“Community Districts”.

Ø It would also serve as a forum to discussand resolve issues of mutual concern.

ØØØØØ Areas of the province that currently do nothave a form of local government, (i.e.LSD’s), would have to take on some formof representational local governance. Thiscould include an unincorporatedCommunity District, an enhanced ruralcommunity, a rural municipality,annexation to an existing municipality andincorporation as a municipality.

RepresentationØØØØØ A Board of Directors would govern the

operations of each RD, and a Chairpersonwould be elected among therepresentatives on the Board.

ØØØØØ Each local government would appoint oneor more council members to the Board.Representatives from unincorporatedareas (the Community Districts) would bedirectly elected to the Board of each RD.

ØØØØØ Representatives from unincorporatedareas (the Community Districts) would bedirectly elected to the Board of each RD.

ServicesØØØØØ All services to Community Districts would

be provided by the RD (regional, sub-regional and local). In effect, the RD wouldreplace the provincial government in thisfunction.

ØØØØØ Services would be delivered throughvarious methods: directly by the RD orthrough an agreement / contract withmunicipalities, the province or with aprivate firm or non-profit agency (e.g.,volunteer fire department).

ØØØØØ Services already delivered on a regionalbasis such as solid waste disposal, landuse planning and economic developmentwould be provided to all members of theRD.

ØØØØØ Local governments could choose to offera service on their own (e.g., land use plan-ning), if they had the capacity to do so.

ØØØØØ The RD would also act as a serviceprovider and arranger for and betweenmember communities.

ØØØØØ The RD would be responsible for adopting,amending and enforcing Rural Plans, aswell as other by-laws (e.g., unsightlypremises) on behalf of Community Dis-tricts.

PowersØØØØØ The RD would be a body corporate.ØØØØØ The RD could own land, buildings and

35


local government ranging from anenhanced rural community, a ruralmunicipality to annexation to an existingmunicipality or incorporation as amunicipality. Once assuming some formof local government, they would becomemember-owners of the Cooperativesalong with all the other local governmentsin the region.

ØØØØØ Could also serve as a forum to discussand resolve issues of mutual concern.

RepresentationØØØØØ A Board of Directors would govern the

operations of each Regional ServiceCooperative, and a Chairperson would beelected among the representatives on theBoard.

ØØØØØ Each local government would appoint oneor more members to the Board.

ServicesØØØØØ It would be up to the local governments,

working with their Regional ServiceCooperative, to determine which servicesare best delivered on a regional basis.

ØØØØØ Given that there is significant costassociated with offering some of theseservices (particularly solid waste disposal),it is expected that the three existingregional services would continue to bedelivered by local governments on aregional basis through a Regional ServiceCooperative.

ØØØØØ In addition to those three services, theRegional Service Cooperative coulddeliver any other service that was desiredby its members, either at the regional, sub-regional or local level.

PowersØØØØØ The Regional Service Cooperatives would

belong to the local governments. Theywould be fully accountable to theirmembers and derive their authority fromtheir members. The Cooperatives would

equipment required for the provision ofservices.

ØØØØØ Lands or money in lieu of lands for publicpurposes could be vested in the RD onbehalf of Community Districts.

ØØØØØ The RD would be responsible for thedevelopment of a “Regional GrowthStrategy”. This strategy would serve as aframework for interactive planningbetween communities and would rely ona cooperative process to ensure thatindividual plans work together to addresscross-jurisdictional issues and meetregional objectives (e.g., protection ofenvironmentally sensitive areas,protecting the quality and quantity ofground and surface water).

FundingØØØØØ Each service provided by the RD would

be separately identified in its budget andreported in its financial statements.

ØØØØØ RD servicing costs would be recoveredfrom member local governments and theprovince (on behalf of CommunityDistricts), and through user fees and othernon-tax revenues.

ØØØØØ The RD could borrow money and accessspecial funding programs for capitalprojects.

ØØØØØ The RD would adopt the budget for servi-ces it provides to Community Districts (andservices it provides to local governments),in cooperation with them.

Scenario 3:The Regional “Service Cooperative”

PurposeØ Provides a structure for local governments

to organize, own and operate their ownregional service agency in order to provideservices between and for themselves.

ØØØØØ Areas of the province that currently do nothave any form of local government, (i.e.LSD’s), would have to take on a form of


not be an agent of the provincialgovernment. The Province would not beable to direct the Cooperatives to performservices and could not download servicesto the Cooperatives.

FundingØØØØØ The cooperatives would be financed

entirely by their member-owners (i.e., thelocal governments.

ØØØØØ Service costs would be covered on a “payfor what you get” approach.

ØØØØØ The Cooperative’s servicing costs wouldbe recovered from member localgovernments and from user fees and othernon-tax revenues.

ØØØØØ The Cooperative could borrow money andaccess special funding programs for ca-pital projects.

ØØØØØ The Cooperative would adopt the budgetfor services it provides to localgovernments, in cooperation with them.

The table in Appendix D identifies the main similaritiesand differences between each of the three scenarios.

The Round Table conducted an exercise (pa-per pilot project) in order to adapt the B.C. Re-gional District Model to the New Brunswick con-text and to assess its potential by applying themodel to two regions of the province (the re-gions of greater Fredericton and Kent). Thisexercise proved to be beneficial as Round Tablemembers gained a greater understanding of themodel, which led to recommending it as one ofthe proposed options, both in terms of localgovernance and regional service delivery.

A similar exercise was also conducted regardingthe Quebec Regional County Municipality model,which was adapted to the New Brunswick contextand then applied to the Acadian Peninsula. This ex-ercise also proved to be beneficial, allowing RoundTable members to gain a greater understanding ofthe model, which lead to recommending it as oneof the proposed regional service delivery options.

37

In consideration of the issues identifiedand options developed, the Round Tablerecommends the following:

1. That a multi-service body beestablished in each region of theprovince to provide for:

ØØØØØ The delivery of the services ofland use planning, solid wastemanagement and economicdevelopment on a regionalbasis;

ØØØØØ A mechanism to arrange for,and/or deliver services on aregional, and possibly on a sub-regional or local basis;

ØØØØØ A mechanism to managefacilities and infrastructure thathave regional benefit ;

ØØØØØ The potential to achieve costsavings through economies ofscale and the reduction of dupli-cation;

ØØØØØ Greater effectiveness in dealingwith issues that crossjurisdictions and improvementof cooperation among thevarious administrative units;

ØØØØØ Accountability to communitiesserved in regards to servicesdelivered on their behalf;

ØØØØØ Fair sharing of services betweenand among communities(sharing of decisions related tothe services and sharing theircosts);

Recommendations

on Regional Collaborationand Service Delivery


with significant potential for growth whileothers have a much more limited tax base.These differences are generally beyond thedirect control of municipalities themselves. Aprovincial-municipal transfer to address thesedifferences equalize the ability of compara-ble municipalities to pay for local services. Inother words, funding transfers can be usedas a means of leveling the playing field amongmunicipalities.

3) Dealing with “externalities”An “externality” is a situation where thebenefits of a service (e.g., recreation or libraryfacilities) extend beyond the boundaries of aparticular jurisdiction. Ideally, a fiscal transfersystem would take into account this kind ofsituation. The current system does notdirectly recognize or compensate for theseexternalities; however, the fact that similarmunicipalities are grouped into categories forfunding purposes does, in part, recognize thatsome are regional centres and offer servicesthat may benefit those living outside their ownboundaries.

Alternative Funding Mechanisms

There are several issues with respect to thecurrent provincial-municipal transfer arrange-ments that need to be addressed. Aspresented in Section 5, the main concerns ofmunicipalities have focused on the need fora predictable, stable and adequate fundingmechanism. Ideally such a mechanism shouldlead to greater fiscal autonomy.

The Round Table considered and evaluatedseveral potential funding sources. Each wasevaluated on the basis of the followingprinciples and general considerations.

ØØØØØ More and better land use plan-ning at the local and regionallevels.

2. That a regional planning tool bedeveloped to bring about improvedcoordination and linkages betweencommunities in terms of land use plan-ning, infrastructure development andthe protection of the naturalenvironment.

Provincial -Municipal Funding

As described in Section 2, one of the strengthsof New Brunswick’s local governance systemhas been the division of serviceresponsibilities between the province andmunicipalities and the provision of a fundingmechanism to support the delivery of localservices by municipalities. In general, thesemechanisms have been in place to: 1) reducethe fiscal gap, 2) equalize the fiscal capacityof municipalities and 3) deal with externalities.

1) Reduction of the “fiscal gap”The fiscal gap refers to the mismatch betweenexpenditure responsibilities of municipalities(i.e., the services a municipality is expectedby its citizens to provide) and the ability toraise revenues from their own sources(through real property taxation on the strengthof their tax base). A provincial-municipaltransfer to reduce this “gap” helps to maintainproperty taxation rates at acceptable levels.

2) Equalization of fiscal capacityThere are varying levels of fiscal capacityamongst municipalities. Fiscal capacity refersto a municipality’s ability to raise revenuesfrom its own sources (property taxation).Some municipalities have a strong tax base


Principles –

Fiscal Autonomy:Refers to the capacity of a local governmentto meet its financial requirements through itsown sources of revenue.

Simplicity:Any funding mechanism should be easy tounderstand in terms of what it is intended toaccomplish and easy to administer in termsof its application to local governments.

Stability:Revenues from a funding transfer mechanismshould not be subject to large fluctuations.There should be a measure of stability fromyear to year.

Predictability:There is a need to be able to forecast, withsome degree of certainty, those revenues thatwill be received over the medium to long term.

Considerations –

It is important to consider the impact of chan-ges to the funding mechanism in terms of thefollowing considerations:

BeneficiariesWill only a few local governments benefit orwill the majority be better off as a result of thechanges?

Municipal DisparitiesWill the new system increase the disparitiesbetween local governments or will it narrowthe gap in terms of their revenue raisingabilities?

Fiscal GapDoes the funding mechanism address themismatch between expenditure responsibilitiesof local governments and their ability to raiserevenues from own sources?

39

Equalization requirementsWould the new funding mechanism result ina need for more or less equalization funding?

Effect on Tax CompetitionWould the new system increase taxcompetition by allowing some localgovernments to offer tax advantages in orderto attract development to their communities?

Funding Mechanisms Reviewed:

The Round Table considered and evaluatedseveral sources. They are organized into fivecategories and included the following:

1. Use of Other Tax Fields

Two approaches could be used in accessingdifferent tax fields. One approach wouldinvolve the provincial government continuingto apply a given tax but transferring apercentage of the tax collected to localgovernments (referred to as tax sharing). Thesecond approach, the “transfer of tax room”,would see the province reducing its tax ratein a particular field. The decision as to howmuch of the “vacated” room to take up wouldbe at the discretion of the municipality.

ØØØØØ Income Tax FieldLocal governments could either receive apercentage of income tax received by theprovincial government within theirboundaries or would impose their own taxon income.

ØØØØØ Sales Tax FieldLocal governments could either receive apercentage of the sales tax collected bythe provincial government within theirboundaries or would impose their own taxon sales.


exempted from provincial property taxes(i.e., they would not be charged the pro-vincial rate of $2.25 per $100 ofassessment).

ØØØØØ Elimination / reduction of inter-governmental chargesThis notion refers to the province foregoingrevenues by eliminating or reducing thefees it charges for various services. Forexample, the fee that municipalities arecurrently charged for the service of realproperty assessment could be reduced oreliminated.

In effect, both of these scenarios wouldreduce some of the required expenditures byall municipalities and could, to an extent, dealwith the impact of externalities.

4. User Fees

The charging of fees by a municipality forservices is most appropriate when these ser-vices are private in nature. For example, if amunicipality offers a specific recreationprogram such as swimming lessons, thebenefit of the service is private in the sensethat it benefits specific individuals rather thanthe general public. Therefore, the applicationof a special fee for this service is appropriateand can be easily administered. On the otherhand, a service such as snow clearing has abenefit to the general public and it would bevery difficult to determine specifically whobenefits more from the service.

Most local government services have a mix-ture of “private” and “public” characteristics.A service offered may be of general benefitto the community, but the service can befinanced through fees. For example,municipalities that provide water andwastewater services, which benefit the usersof that system and the community as a whole,are able to charge fees for that service. The

ØØØØØ Fuel Tax Field Local governments could either receive a

percentage of the tax collected as a resultof the sale of fuel within their boundariesor would impose their own tax on the saleof fuel.

ØØØØØ Hotel tax Local governments could be given the

authority to introduce a special hoteloccupancy tax. This tax could be addedto the room rates of hotels.

ØØØØØ Lottery RevenueLocal governments could receive apercentage of the profits received by theprovincial government that are generatedby the various lotteries. The amountsreceived by local governments woulddepend on sales levels within theirjurisdictions.

2. Per Capita Grants

An equal amount per capita would beprovided to all local governmentsregardless of their fiscal capacity or need.This type of funding is generally used toaddress the fiscal gap and is based strictlyon population levels. For example, if thepopulation of a community was 1,000 andthe per capita amount was designated as$10, the grant received by the localgovernment of that community would be$10,000.

3. Provincial Tax Expenditures (foregonerevenues)

ØØØØØ Tax Exemptions for certain propertiesThis option relates to the provinceforegoing tax revenues by excluding aparticular type of property from its taxbase. For example, libraries could be


application of fees helps to target the actualbeneficiaries of a service more directly. It isimportant to municipalities that they have theflexibility to charge fees, where practical, forvarious types of services.

5. Property Taxation

Municipalities and the province currently levyproperty taxes. Provincial levies of $1.50 or$2.25 per $100 of assessment are chargedto non owner-occupied residential and non-residential properties respectively to coversome of the costs associated with theprovincially provided services such as health,education, social services, and justice.Municipalities levy a local tax to raiserevenues for local services provided toproperties within the municipality (e.g.,policing, fire protection, transportation, etc.)

ØØØØØ Sharing of tax revenuesOne option would be to have the provin-cial government share a portion of the taxrevenues it generates from its provinciallevies on properties. For example, theprovincial rate of $2.25 per $100 ofassessed value would continue to beapplied to non-residential properties, buta percentage of the amount collectedwould be remitted to local governments.If the province was to share, say, 10% ofthe tax revenues on non-residentialproperty, it would transfer to themunicipality $225 of the $2,250 collectedfrom a commercial property assessed at$100,000.

ØØØØØ Transfer of tax roomAnother approach would see a reductionin the provincial rate and localgovernments taking up some or all of theroom vacated by the provincialgovernment. For example, the provincecould choose to reduce its provincial non-

residential tax rate from $2.25 to $2.00. Amunicipality could then levy up to $0.25per $100.00 of assessment withoutincreasing the overall tax burden. If themunicipality took up all the vacated taxroom, it would gain $250 on a commer-cial property assessed at $100,000.

Assessment of the FundingMechanisms

In assessing the various funding sources (seeAppendix E), the Round Table concluded thefollowing:

On use of other Tax Fields….

The use of other tax fields (income tax, salestax, hotel tax, fuel tax) would not satisfy thecriteria established by the Round Table. Ingeneral, the use of these tax fields could resultin increased disparities between localgovernments. In addition, predictability andstability may be difficult to achieve, the de-sign and application may be quitecomplicated, there would likely be additionalpressure for equalization measures, and taxcompetition between local governments couldresult. For similar reasons, the use of lottery-based revenues was deemed to beinappropriate as a means of local governmentfunding.

On per capita grants…

A per capita grant approach could help toreduce the fiscal gap and would be simple toadminister. However, it was noted that thisapproach does not consider the needs or theabilities of local governments to raise reve-nues. The Round Table concluded that the

41


per capita grant could be supported, but aspart of a broader solution.

On provincial tax expenditures…

The Round Table felt that tax exemptions forcertain properties as well as the elimination orreduction of inter-governmental charges wouldbe appropriate. In particular, it was felt thatthese changes would be simple to implement,provide for greater stability and predictability,and all municipalities could potentially benefit.It was also agreed that these adjustmentscould, in part, address externalities. However,it was determined that these changes wouldnot adequately address the fiscal gap, norwould they address the disparities that currentlyexist amongst municipalities. As such, it wasconcluded that these changes could only besupported as part of a broader solution.

On user fees…

Round Table members agreed that the use ofuser fees by municipalities as a means offinancing services was appropriate in somecircumstances. In particular, the use of feeshelps enhance fiscal autonomy and canpartially reduce the fiscal gap. However, itwas felt that the “user fee” option should notbe supported as an effective alternativefunding mechanism to the currentunconditional grant transfer, given that it wouldhave relatively limited application in terms ofpotential revenue generation by municipalities.

On Property taxation…

The Round Table agreed that the transfer ofproperty tax room would be more appropriate

than property tax sharing. Such an approachwould enhance fiscal autonomy, be relativelysimple in concept (but perhaps somewhatcomplicated to administer), enhancepredictability and stability, and have potentialbenefit to all local governments. However, itwas also noted that offering a large amountof tax room would cause greater disparities(because of different tax bases and growthrates) and therefore would necessitate some“equalization” funding. The Round Tableconcluded that the transfer of tax room couldbe supported as part of a broader provincial-municipal funding scheme.

should continue to be used in assessingproperties for the purposes of propertytaxation.

On Equalization…

It is important to note that none of the fundingmechanisms considered above address theneed for equalization of fiscal capacity betweenlocal governments. The Round Tabledetermined that any provincial-municipal fundingarrangement must have an “equalization”component if it is to be effective and fair.

Based on its analysis and evaluation ofthe options and of the current fiscalchallenges and issues facing the localgovernance system in New Brunswick, theRound Table recommends the following:

Recommendations

on Local GovernmentFunding

On a related matter, the Round Table alsoagreed that where appropriate, ”market value”


The Round Table recommends thefollowing with respect to property taxationin the unincorporated areas:

1. That the provincial rate for theprovincially provided local services(i.e., policing, transportation,administration and dog control) bebased, to the extent possible, on actualcosts.

2. That the levy for provincially providedlocal services in unincorporated areas(currently a rate of 65 cents per $100of assessment) be applied to allproperties: residential, non owner-occupied residential and non-residential.

It was felt that the implementation of theserecommendations would address theissue of equity in two ways: 1) all propertyowners within unincorporated areas(residential, non owner-occupiedresidential and non-residential properties)would share in covering the costsassociated with provincially provided localservices; and 2) non owner-occupiedresidential and non-residential properties,whether in a municipality or anunincorporated area, would be treated inthe same manner in regards to propertytaxation.

43

1. That the development and evaluationof funding mechanisms for localgovernments in New Brunswick bebased on the principles established bythe Round Table, including:

ØØØØØ Fiscal AutonomyØØØØØ StabilityØØØØØ PredictabilityØØØØØ SimplicityØØØØØ AccountabilityØØØØØ NeutralityØØØØØ Equity

2. a) That the development of anacceptable provincial-municipal fundingarrangement to replace the currentunconditional grant formula include ablend of the following components:

ØØØØØ Per Capita GrantsØØØØØ Transfer of Property Tax RoomØØØØØ Provincial Tax ExpendituresØØØØØ Equalization of Fiscal Capacity

b) That a new funding mechanism beapplied uniformly across the province.

3. That representatives of local servicedistricts, municipal associations andthe government of New Brunswickwork together to develop a new fundingproposal for implementation in 2003.

4. That the legislative changes identifiedas part of the Municipalities Act Reviewprocess regarding the charging of feesby local governments be supported bythe provincial government.

5. That as a basic approach to the assessmentof real property in New Brunswick, marketvalue continue to be applied.

6. That local governments and the provincialgovernment consider the feasibility of theadoption of a uniform fiscal year (April 1st –March 31st ) in order to enhance predictabilityand harmonization of the budgeting process.

Recommendations

on Property Taxation


CONCLUSION

Members of the Minister’s Round Table on LocalGovernance are pleased to have worked together andto bring forward to the Provincial Government rec-ommendations aimed at improving the local gover-nance system in New Brunswick. Although theRound Table has now completed its mandate, thereis still, in the view of Round Table members, muchwork to be done to bring about the required changesto our local governance system. In presenting thisreport to the Minister of the Environment and LocalGovernment, Round Table members are providing theProvincial Government with a number of recommen-dations that could bring about these improvements.

In developing a response to the recommendations,the Round Table is also urging the Provincial Gov-ernment to initiate a consultation process that will al-low for meaningful input from the public and key stake-holders. Round Table members feel confident thatthe recommendations in this report will have long termbenefits to citizens, to communities and to the prov-ince as a whole.

PAGE A Vision for Local Governance in New Brunswick45

DEFINITIONS

Assessment Assessment is the value for taxation purposes placed on properties.Assessment in New Brunswick is based on real and true value. Realand true value is generally interpreted as market value. Assessmentsof property provide the basis for the tax base used in establishingproperty tax rates.

Community of An area that shares a common identity and interests. These relation-Interest ships may be based on common cultural, economic, social, and geo-

graphic characteristics.

Election through In a New Brunswick local government context, refers to being elected“universal every three years, through a formal electoral process pursuant to thesuffrage” Municipal Elections Act.

Equity In the context of municipal financing, equity means that municipalitieswith equal fiscal needs are treated equally.

Fiscal Autonomy Capacity of a municipality to meet financial needs from own revenuesources.

Fiscal Capacity Measure of the ability of a municipality to generate revenues from itstax base relative to similar municipalities.

Fiscal Gap Mismatch between revenue-raising ability and expenditureresponsibility.

Fiscal Need Fiscal need is the difference between a municipality’s expenditureneeds and its ability to raise revenue.

Fiscal Transfer Fiscal transfers includes all transfers of monies from governmentto individuals, businesses and other levels of government.

Grant Pool A grant pool is the total amount of unconditional grant fundingavailable to all municipalities.

Linear Also referred to as ribbon development. Development which occursdevelopment along a stretch of highway.

Local governance Ability and authority to make decisions on provision of services andregulation of activities locally.

Local governance A notion that in unincorporated areas, there is lack of a localgap governance.


Local government A local government is an organization that is established to serve adefined community. Decisions are made by an elected body (via universal suffrage) on matters of service provision and regulation of localactivity, on behalf of the defined community.

Municipal The municipal tax base, which is used to calculate the residentialTax Base property tax rate in a municipality, uses the assessment of residential

property plus one and one-half times the assessment of non-residential property. This reflects the fact that because there is nobusiness tax in New Brunswick, non-residential real property is taxedat a rate that is one and one-half times the residential rate.

Provincial- All transfers of monies from the province to municipalities.municipaltransfers

Univeral Suffrage Refers to the right of all eligible citizens to vote.


APPENDIX A

Members of the Technical Committee

Chair Katherine Director, Local Governance Department of thed’Entremont Environment and Local

Government

Gérard Belliveau Association francophone Ville de Dieppedes municipalités duNouveau-Brunswick

Replaced by

Léopold Chiasson Association francophone Directeur exécutifdes municipalités duNouveau-Brunswick

Réal Gervais Association francophone Ville d’Edmundstondes municipalités duNouveau-Brunswick

Paul R. Stapleton Cities of New Brunswick City of FrederictonAssociation

Patrick Woods Cities of New Brunswick City of Saint JohnAssociation

Mike Brennan Union of Municipalities of Town of QuispamsisNew Brunswick

Adolphe Goulette Union of Municipalities of Village of CharloNew Brunswick

Martin Corbett Municipal Advisory Officer Department of theEnvironment andLocal Government

Roseline Maillet Municipal Services Department of theRepresentative Environment and Local

Government

Johnny St-Onge Local Governance Department of theDevelopment Officer Environment and

Local Government

Sandra Jessop- Manager – Provincial/ Department of FinanceRoach Municipal Fiscal Relations

James Turgeon Executive Director of Department of FinanceEconomic &Fiscal Policy

Jacques Paynter Facilitator Geoplan Consultants Inc.


Department of the Environment and Local GovernmentStaff Assisting the Round Table

Byron James Deputy Minister

Bonny Hoyt-Hallett Assistant Deputy Minister

Denis Deveau Project Manager

Dan Rae Director, Local Financial Support

Stephanie Whalen Coordinator, MSRs

Parker Gray Senior Policy Advisor

Michelle Boudreau Support Staff


APPENDIX BPresentations made to Round Table members

1. Examine the various issues resulting from the current gap in local governance in theunincorporated areas and examine local governance model(s) to address these issues.

Presentations

• The Gap In Local Governance In New Brunswick Key Issues (Technical CommitteePresentation)

• Local Government Representation For Rural Citizens — Examples From CanadianProvinces – David Bruce, Rural and Small Town Programme, Mount Allison University

• Potential Governance model options for LSDs (Technical Committee Presentation)

• Nova Scotia’s Rural & Regional Municipalities – Keith Robicheau, Chief AdministrativeOfficer - Municipality of the County of Annapolis

• Understanding the New Brunswick Context (Technical Committee Presentation)

2. Examine the relationship between local services and property taxation levels in localservice districts (LSDs) and examine how property taxation reflects the services beingprovided and their associated costs.

Presentations

• Policing in LSDs – N.B. Department of Public Safety

• Provincial Highways – N.B. Department of Transportation

• Financing of Services in LSDs – (Technical Committee Presentation)

3. Examine how common services provided on a regional basis such as land use planning,solid waste management, economic development, recreation and libraries, water andwastewater management could be more effectively planned, coordinated, financed anddelivered.

Presentations

• Solid Waste Commission – Environment and Local Government


• Economic Development Commissions – Business New Brunswick

• Land Use Planning Commissions – Environment and Local Government, PlanningCommissions

• Regional Service Cooperatives – (Technical Committee Presentation)

• BC Regional District Model - Representatives from BC: Kelly Daniels, CAO, NanaimoRegional District; George Holmes, Chair, Nanaimo Regional District; Gary Paget,Executive Director of BC Municipal Affairs

• Quebec’s Municipal System - Representatives from Quebec: Jean Beaudoin, ExecutiveVice-President, Roche; Michel Fernet

• Regional County Municipality (RCM) for the Acadian Peninsula (Technical CommitteePresentation)

• B.C. Regional District Model – (Technical Committee Presentation)

• Paper Pilot Projects based on BC Model: Fredericton and Kent County (TechnicalCommittee Presentation)

4. Examine the various issues related to the financing of local governments (e.g., propertytaxation, unconditional grant, user fees, etc.) and the development of recommendationsaimed at enhancing the financial stability and autonomy of local governments.

Presentations

• Financing Issues of Local Governments – (Technical Committee Presentation)

• Provincial-Municipal Fiscal Transfers – Union of Municipalities of New Brunswick andCities of New Brunswick Association

• Municipal Financing Across Canada – Professor Andrew Sancton – University ofWestern Ontario

• Proposed Provincial-Municipal Fiscal Pact – Association Francophone des municipalitésdu Nouveau-Brunswick (AFMNB)

• LSD presentation – Principles – Wayne Flinn

• Financing Options – (Technical Committee Presentation)

• AFMNB’S Proposal for Financing – (Technical Committee Presentation)


APPENDIX C

Comparison of Local Governance Options

Potential Local Governance Options

Local Governments Unincorporated Communities

Community District – part ofRegional “Service District”

Characteristics Municipality -via

Annexation &Incorporation

RuralMunicipality

Enhanced RuralCommunity–

part of RegionalService Body

(RSB)

The provision of services toproperty (except for policing androad maintenance), and by-lawsvia Regional “Service District”(RSD) to Community Districts(CDs)

Purpose Responsibilityfor all servicesto property

Responsibility forall services toproperty, exceptfor policing androad mainte-nance

Responsibility forall services toproperty (exceptfor policing androad mainte-nance), withdelivery ofservices and staffprovided by RSB

Boundaries established to serve acommunity of interest

Establishment Boundariesestablished toserve acommunity ofinterest

Boundariesestablished toserve acommunity ofinterest

Boundariesestablished toserve a commu-nity of interest

Representation viauniversal suffrage

Elected Council Elected Council ElectedCommittee

Election of representative(s) onRSD, with local advisory commit-tees elected via public meetings

Service Responsi-bilities

All services toproperty

Council makesservicedecisions

All services toproperty

Council makesservicedecisions

All services toproperty, exceptfor policing andtransportation

Council makesservice decisions

RSD assumes responsibilities forall services to property, except forpolicing and transportation

CDs residents vote on services,and RSD makes final decisions

Service Delivery Directly by themunicipality, orthrough anagreement withmunicipalities,Province,private andnon-profitsector, regionalservice body(RSB)

Directly by themunicipality orthrough anagreement withmunicipalities,Province,private andnon-profitsector, RSB

Policing andtransportationprovided byProvince

RSB deliversservices directlyor through anagreement withmunicipalities,Province,private & non-profit sector

Policing andtransportationprovided byProvince

RSD delivers services directly orthrough an agreement withmunicipalities, Province, private &non-profit sector

Policing and transportationprovided by Province


Potential Local Governance Options

Local Governments Unincorporated Communities

Lands, buildings and equipmentfor the provision of services areowned by the RSD

RSD adopts, administers andenforces by-laws, on behalf ofCDs, when locally desired

Powers Ownership oflands, build-ings, equip-ment

Adoption,administrationand enforce-ment of by-laws

Ownership oflands, buildings,equipment

Adoption,administrationand enforcementof by-laws

Rural Communityand also RSB (forthe delivery ofservices) can ownlands, buildings,equipment

Adoption andenforcement ofby-laws, whichare administeredby RSB

RSD adopts budget financed viaproperty taxation (Province setstax rate on behalf of CDs), fiscaltransfers and non-tax revenues

RSD can borrow and accessprograms for capital projects

Property tax rate (applied uni-formly across the Province)determined by Province forpolicing and transportation

Funding Council adoptsbudget financedvia municipalpropertytaxation, fiscaltransfers andnon-taxrevenues

Municipality canborrow andaccessprograms forcapital projects

Council adoptsbudget financedvia municipalpropertytaxation, fiscaltransfers andnon-taxrevenues

Municipality canborrow andaccess pro-grams for capitalprojects

Property tax rate(applieduniformly acrossthe Province)determined byProvince forpolicing andtransportation

Rural CommunityCommitteeadopts budgetfinanced viaproperty taxation,fiscal transfersand non-taxrevenues

Rural Communitycan borrow andaccess programsfor capitalprojects

Property tax rate(applieduniformly acrossthe Province)determined byProvince forpolicing andtransportation

APPENDIX C


Community District – part ofRegional “Service District”

Characteristics Municipality -via

Annexation &Incorporation

RuralMunicipality

Enhanced RuralCommunity–

part of RegionalService Body

(RSB)


Potential Regional Service Delivery Options

Regional ServiceCooperative (RSC)

Purpose A structure for localgovernments to organizeand operate their ownservice delivery agencyfor the provision ofservices between and forthemselves

A structure mandatedby the Province todeliver some serviceson a regional basis tolocal governments andCommunity Districts(CDs), and also with theresponsibility for localservices and by-laws forCDs

May also deliver sub-regional services onbehalf of local govern-ments and CDs, andlocal services on behalfof local governments

Characteristics Regional “ServiceDistrict” (RD) -

Based on BC Re-gional District

“Regional Services”District (RSD) - Based onQuebec Regional County

Municipality

A structure mandated by theProvince to deliver some serviceson a regional basis to municipali-ties

Other regional services may bedelivered by RSD as mandated bymember municipalities

Establishment Province provideslegislative framework forRSC, while RSC areestablished by localgovernments themselves

Boundaries established toserve a region of commonidentity and sharedinterests

Province provideslegislative framework forRD, and establishes RD

Boundaries established toserve a region of commonidentity and sharedinterests

Province provides legislativeframework for RSD, and estab-lishes RSD

Boundaries established to serve aregion of common identity andshared interests

Representation RSC Board made up ofrepresentative(s) appointedfrom all local governments

RSC Board elects a RSCBoard member aschairperson and estab-lishes committees to assistwith the delivery ofservices

RD Board made up ofelected representative(s)appointed from all localgovernments, and directlyelected by electors ofCDs

RD Board elects a RDBoard member aschairperson and estab-lishes committees toassist with the delivery ofservices

RSD Council made up of theMayors of all member municipali-ties

RSD Council elects a RSD Councilmember as Chairperson, andestablishes committees to assistwith the delivery of services

APPENDIX D

Comparison ofRegional Service Delivery Options

53


Potential Regional Service Delivery Options

Regional ServiceCooperative (RSC)

Service Responsi-bilities

No service responsibili-ties. Local governmentsare responsible forservices

Responsible for localservices to CDs (e.g.,fire protection, recre-ation)

Characteristics Regional “ServiceDistrict” (RD) -

Based on BC Re-gional District

“Regional Services”District (RSD) - Based onQuebec Regional County

Municipality

No service responsibilities.Municipalities are responsible forservices

Service Delivery Regional, sub-regional orlocal services as man-dated by member localgovernments

Regional services (landuse planning, economicdevelopment & solidwaste disposal), sub-regional and local servicesas mandated by memberlocal governments andCDs

Regional services (land useplanning, economic development &solid waste disposal)

Other regional services may bedelivered by RSD as mandated bymember municipalities

Funding RSC Board adopts budgetdeveloped in cooperationwith, and financed by,member local governments(via property taxation) andvia non-tax revenues

RSC can borrow andaccess programs forcapital projects

RD Board adopts budgetdeveloped in cooperationwith, and financed by,local governments andCDs (Province sets taxrate on behalf of CDs),and via non-tax revenuesand fiscal transfers (onlyfor CDs)

RD can borrow andaccess programs forcapital projects

RSD Council adopts budgetdeveloped in cooperation with, andfinanced by, member municipalities(via property taxation) and via non-tax revenues and fiscal transfers

RSD can borrow and accessprograms for capital projects

Powers Ownership of lands,buildings, equipment forthe delivery of services

RSC administers by-lawsas part of deliveringservices on behalf of localgovernments

Ownership of lands,buildings, equipment forthe delivery of services

RD adopts, administersand enforces by-laws, onbehalf of CDs, whenlocally desired

RD administers by-lawsas part of deliveringservices on behalf of localgovernments

Ownership of lands, buildings,equipment for the delivery ofservices

RSD administers by-laws as part ofdelivering services on behalf ofmunicipalities

APPENDIX D

Comparison ofRegional Service Delivery Options


APPENDIX E - Comparison of Local Governance OptionsI. OTHER TAX FIELDS : Can be a sharing of tax revenues or a transfer of tax room

e.g.: Tax sharing - % of sales tax revenues is returned to the municipalitiesTax Room - Province reduces rate, and allows individual Municipalities to impose a local sales tax

1. INCOME TAX

ENHANCEDif municipalitysets rate,otherwise taxsharing (formof grant)

SIMPLE inconceptCOMPLEX inapplication

Overall Poolwould berelatively stableand predictablebut individualmunicipalitiescould seerevenue varysignificantlydepending onthe economy.Single resourcebased munici-palities could bevulnerable

Areas withhigher percapitaincomes

Increased REDUCEDREDUCEDPartial tocompleteelimination(potential toover-fundsome)

INCREASEDpressure

2. SALES TAX

ENHANCED ifmunicipalitysets rate,otherwise taxsharing (formof grant)


Overall Poolwould berelatively stableand predictablebut individualmunicipalitiescould seerevenue varysignificantlydepending onthe economy.Single resourcebased munici-palities could bevulnerable

Areas withlarger salesbase

Increased REDUCEDPartial tocompleteelimination(potential toover-fundsome)

INCREASEDpressure

INCREASED

3. HOTEL TAX

ENHANCED SIMPLE inconceptCOMPLEX inapplication

Subject tochanges in theeconomy, thevalue of the $,development ofother attractions,weather

Hightourismareas

Increased

Increased

REDUCEDPartial

INCREASEDpressure

INCREASED

INCREASED4. FUEL TAX



NO NO Areas withlarger salesbase

REDUCEDPartial

INCREASEDpressure

5. LOTTERY TAX



NO NO Areas withlarger salesbase

INCREASED REDUCEDPartial

INCREASEDpressure

INCREASED


II. PER CAPITA GRANT

Providesthe sameamount percapita toeachmunicipal-ity

NOTENHANCED

SIMPLE STABLEover short-mediumterm if $payout isnotchanged

ENHANCEDif $ payout isnot changed

Municipali-ties withlowexpenditureneed /populationratio benefitmost

Could poten-tially IN-CREASEcompetition

Does notconsider needor ability toraise revenuestherebypotentiallyincreasingdisparities

Need forNOTELIMI-NATED

III. PROVINCIAL TAX EXPENDI TURES(exemptions forcertain properties)

NOTENHANCED

Potentially allIndirect“unreported”grantCan beappropriatemechanism topartiallyaddressexternalities(i.e. exemptlibraries,parks)

Little orNOIMPACT

REDUCEDPartial-expenditureresponsibil-ity reduced

NOIMPACT

NOIMPACT

IV. USER FEES Direct charge to users

ENHANCED Municipali-ties withstrongerbase forprivate typegoods

MayINCREASEdisparities –revenuebase wouldvarybetweencommuni-ties

INCREASEover time asmunicipali-ties withgrowingbases seerevenuegrowth andmunicipali-ties withstable ordecliningbases fallbehind.

REDUCEDPartial

Potential toINCREASEpressure onequaliza-tionprogram ascapacity toraiserevenues isincreased

CouldpotentiallyINCREASE– mix ofchargeswould makecomparingmore difficult(hiddentaxes)

Potential forcompetitionnotmarkedlyincreased,although itmayincreasestrongermunicipali-ties’ ability toattractbusinessandresidentialbymaintaininga very lowtax rate

V. PROPERTY TAX SHARING: Province imposes tax, and returns a portion to municipali ties

NOTENHANCEDWould not beconsideredown sourcerevenues,municipalitydoes notestablishrate. Relieson decisionsof anotherlevel ofgovernment

STRONGERmunicipali-ties -thosewith strongand growingtax basesbenefit to agreaterextent.

REDUCEDPartial – tocomplete(Potentialto overfund)

INCREASEDNEEDAs disparitiesgrow overtime, thepressure for/onequalizationpaymentsincreases

APPENDIX E


REDUCEDPartial tocompleteelimination(Potential toover fund)

SIMPLE STABLE ENHANCED

SIMPLE tounder-standMORECOMPLEXtoadminister

Depends on serviceprovided and demand

SIMPLE tounder-stand

MORECOMPLEXtoadminister

STABLEovershort –mediumterm iftransferlevel ismain-tained byprovince.

ENHANCED

56


APPENDIX C


VI. PROPERTY TAX ROOM TRANSFER: Province reduces rate of taxation allowing municipali ties to increase municipal taxation

ENHANCED byincreasing ownsourcerevenues andaccountability.Governmentthat spends alsotaxes

SIMPLEinconcept.MORECOM-PLEX toadminister

STABLEas longas baseis.

ENHANCED STRONGERmunicipali-ties thosewith strongand growingtax basesbenefit to agreaterextent.

INCREASEDPOTENTIALDependingon manner inwhichtransfer isdone, canprovideincentive tokeep use ofadditionalroom low inorder toattract newdevelopment

INCREASEOVER TIME

INCREASEDNEED As theability toraiserevenuesincreases forthe strongermunicipali-ties the‘standard’increasesresulting inincreasedpressure onequalizationprogram

REDUCEDPartial – tocomplete

APPENDIX E - Assessment of Potential Revenue Sources

RevenueSource

FiscalAutonomy

Simplicity Stability Predictability Beneficiaries MunicipalDisparities

FiscalGap

EqualizationProgram

TaxCompetition

I. OTHER TAX FIELDS : Can be a sharing of tax revenues or a transfer of tax roome.g.: Tax sharing - % of sales tax revenues is returned to the municipalitiesTax Room - Province reduces rate, and allows individual Municipalities to impose a local sales tax

Capacity of amunicipality tomeet itsfinancial needsfrom its ownrevenuesources

Easy tounderstand andadminister.

Revenue sources are notsubject to large fluctuations

Ability to forecastrevenue sourcesover time

Who gains? Difference inability to raiserevenues

Mismatchbetween ownsources ofrevenues andexpenditureresponsibili-ties

Addressesdifferences inability to raiserevenue(impact)

Can municipal-ity set tax ratesat levels thatinfluencelocationdecisions?

ENHANCED ifmunicipalitysets rate,otherwise taxsharing (form ofgrant)

SIMPLE inconcept

COMPLEX inapplication

Overall Pool would be relatively stable andpredictable but individual municipalities couldsee revenue vary significantly depending on theeconomy. Single resource based municipalitiescould be vulnerable

Areas with higherper capitaincomes

INCREASED REDUCEDPartial tocompleteelimination(potential toover-fundsome)

INCREASEDpressure

1. INCOME TAX INCREASED

2. SALES TAX ENHANCED ifmunicipality setsrate, otherwisetax sharing (formof grant)


Overall Pool would be relatively stable andpredictable but individual municipalities couldsee revenue vary significantly depending onthe economy. Single resource based munici-palities could be vulnerable

Areas with largersales base

INCREASED REDUCEDPartial tocompleteelimination(potential toover-fundsome)

INCREASEDpressure

INCREASED

Assessment of potential revenue sources based on principles and considerations established by the Ministers Roundtable on Local Governance

A Vision for Local Governance in New Brunswick

PAGE 55A Vision for Local Governance in New Brunswick


RevenueSource

FiscalAutonomy


FiscalGap

EqualizationProgram

TaxCompetition

Capacity of amunicipality tomeet its financialneeds from itsown revenuesources

Easy to under-stand andadminister.







3. HOTEL TAX ENHANCED SIMPLE inconceptCOMPLEX inapplication

Subject to changes in the economy, the value ofthe $, development of other attractions, weather

High tourismareas

INCREASED REDUCEDpartial

INCREASEDpressure

INCREASED

4. FUEL TAX ENHANCED ifmunicipality setsrate, otherwisetax sharing(form of grant)

NONOSIMPLE inconceptCOMPLEXin application

Areas withlarger salesbase

INCREASED REDUCEDpartial

INCREASEDpressure

INCREASED

5. LOTTERY TAX ENHANCED ifmunicipality setsrate, otherwisetax sharing (formof grant)


NONO Areas withlarger salesbase

INCREASED REDUCEDPartial

INCREASEDpressure

INCREASED


A Vision for Local Governance in New Brunswick


II. PERCAPITAGRANT

Provides thesameamount percapita toeach munici-pality

NOTENHANCED

SIMPLE STABLE over short-medium term if $payout is notchanged

ENHANCEDif $ payout isnot changed

Municipalitieswith lowexpenditureneed /populationratio benefitmost

Does notconsiderneed orability toraiserevenuestherebypotentiallyincreasingdisparities

REDUCEDPartial tocompleteelimination(Poten-tial tooverfund)

Need forNOTELIMI-NATED

CouldpotentiallyINCREASEcompetition

RevenueSource

FiscalAutonomy


FiscalGap

EqualizationProgram

TaxCompetition










III. PROVINCIAL TAX EXPENDITURES(exemptions forcertainproperties)

Changes topropertiesincluded in taxbase.

Elimination /reduction ofinter-govern-mental charges

NOTENHANCED

SIMPLE STABLE ENHANCED Potentially allIndirect“unreported”grantCan beappropriatemechanism topartiallyaddressexternalities(i.e. exemptlibraries,parks)

Little or NOIMPACT

REDUCEDPartial-expendi-tureresponsi-bilityreduced

NO IMPACT NO IMPACT



RevenueSource

FiscalAutonomy


FiscalGap

EqualizationProgram

TaxCompetition



Revenuesources are notsubject to largefluctuations




Addressesdifferences inability to raiserevenue (impact)

Can municipalityset tax rates atlevels thatinfluence locationdecisions?


IV. USER FEESDirectcharge tousers

ENHANCED SIMPLE tounderstand

MORECOMPLEXto administer

Depends on serviceprovided and demand

Municipalitieswith strongerbase forprivate typegoods

May IN-CREASEdisparities –revenuebase wouldvary be-tweencommunities

REDUCEDPartial

Potential toINCREASEpressure onequalizationprogram ascapacity to raiserevenues isincreased

CouldpotentiallyINCREASE –mix ofchargeswould makecomparingmore difficult(hiddentaxes)

V. PROPERTY TAX SHARING:Provinceimposes tax,and returnsa portion tomunicipali-ties

NOTENHANCEDWould not beconsidered ownsource revenues,municipality doesnot establish rate.Relies ondecisions ofanother level ofgovernment

SIMPLE tounderstand

MORECOMPLEXto administer

STABLEover short –mediumterm iftransferlevel ismaintainedby prov-ince.

ENHANCED STRONGERmunicipali-ties -thosewith strongand growingtax basesbenefit to agreaterextent

INCREASEover time asmunicipalitieswith growingbases seerevenuegrowth andmunicipalitieswith stable ordecliningbases fallbehind.

REDUCEDPartial – tocomplete(Potentialto overfund)

INCREASEDNEEDAs disparitiesgrow over time,the pressurefor/on equaliza-tion paymentsincreases

Potential forcompetition notmarkedlyincreased,although it mayincrease strongermunicipalities’ability to attractbusiness andresidentialdevelopment bymaintaining a verylow tax rate

VI. PROPERTY TAX ROOM TRANSFERProvince reducesrate of taxationallowingmunicipalities toincreasemunicipaltaxation

ENHANCEDby increasingown sourcerevenues andaccountability.Governmentthat spendsalso taxes

SIMPLE inconcept.MORECOMPLEX toadminister

STABLE aslong as baseis.

ENHANCED STRONGERmunicipalitiesthose withstrong andgrowing taxbases benefitto a greaterextent.

INCREASEover time

REDUCEDPartial – tocomplete

INCREASED NEEDAs the ability to raiserevenues increasesfor the strongermunicipalities the‘standard’ increasesresulting in increasedpressure on equal-ization program

INCREASEDPOTENTIALDepending onmanner in whichtransfer is done, canprovide incentive tokeep use ofadditional room low inorder to attract newdevelopment



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