City charters for Calgary and Edmonton—more local autonomy is good, more taxation isn’t

In the latest speech from the throne in Alberta’s legislature, a lot of attention was given to the province’s troubling fiscal situation. Tucked away towards the end of the speech, however, was mention of something very interesting to anyone active in the municipal sphere—the drafting of city charters for Calgary and Edmonton.

Basically, a city charter is a provincial law giving a municipality more autonomy in its governance. In key areas such as election processes, control over municipal budgets and land-use, Alberta will let Calgary and Edmonton city councils decide whether to stick to existing provincial law, or to chart their own course.

The prospect of decentralizing decision-making is undoubtedly exciting. Indeed, bringing powers closer to citizens allows for greater policy flexibility, avoiding one-size-fits-all solutions developed further away from people.

When properly designed, local autonomy can also lead to more fiscal efficiency. When local councils are more clearly connected with decisions over tax dollars, they are more accountable to citizens.

That’s one picture of decentralization. However, there is also the prospect of another, riskier scenario.

Rather than shifting revenue tools from the Alberta Legislature to the province’s two biggest cities, the charters could simply hand them new taxation powers. The result might not be more efficient, accountable service delivery, but a greater total tax burden for millions of Albertans.

Unfortunately, there’s good reason to believe the provincial government would choose this path. After all, the same choice presented itself when the province decided to introduce a carbon tax. It could have made it revenue neutral by cutting personal and corporate taxes to offset the increased burden, but chose to simply spend the new revenue.

Instead, the carbon tax came atop recent increases to personal and corporate income taxes. This precedent makes it seem less likely that the provincial government would actually do anything to offset the impact of higher municipal taxes.

Alberta’s push for greater municipal autonomy is without doubt a great opportunity. At its best, decentralization of decision-making can lead to more efficient, accountable local government. At its worst, it can lead to duplication of services and the layering of new taxes upon old ones. As the province prepares to consult citizens this spring, Albertans will have the opportunity to make clear which vision they prefer.