Local governance reform needed for N.B. prosperity

Jean-Guy Finn was the commissioner on the future of local governance. He produced a 200-page report that called for a major overhaul of the province's local governance system in December 2008.

Finn served as the clerk of the executive council, which is the top position in the New Brunswick civil service. He was also a deputy minister in the departments of health and advanced education and training.

Finn has also instructed political science and public administration courses at the University of Moncton.

He is now a consultant in public sector management and sits on boards of directors for organizations, including the Health Council of Canada.

Finn has also consulted overseas in South Africa, Qatar, Ethiopia and Jordan.

The last comprehensive reform of  local governance in New Brunswick occurred in the late 1960s, part of the broad set of political and administrative changes that were undertaken  in the context of the program of Equal Opportunity.

The county governance structure in existence at that time had become dysfunctional and constituted a major obstacle to New Brunswick's future development, both socially and economically. The need for structural transformation was undeniable.

Despite substantial opposition from many quarters, major new policy directions were set thanks to remarkable political and administrative leadership exercised at the provincial level of government.

Generally, the key policy thrusts in provincial-municipal relations instituted in the late 1960s have served the province's population well.

The dissolution of county government led to the basic redistribution of responsibilities between the provincial government and municipalities (responsibility for education, health, justice and social services was transferred from the municipalities to the provincial government), the provincial government's exclusive role in property assessment and in property tax administration (billing and collection), centralized municipal borrowing, as well as the provision of equalization transfers by the province to municipalities are highly valued features of the present system of local governance.

Taken together, the above elements have developed into a unique and commendable regime of provincial- municipal relations. They are the envy of most other provinces and should, therefore, be preserved.

Major reforms missed

It is also true, however, that not all local governance issues were addressed through the reforms of the 1960s.

First, the Byrne Commission report, on which most of the changes introduced to the local governance regime were based, shied away from making substantial recommendations on several important aspects of local governance (i.e., on the number of municipalities, on how local governments themselves should be organized, on how their boundaries should be drawn, on the criteria to be met for the creation of a local government, on the relationships between local governments themselves).

'It is time for New Brunswick to fundamentally rethink its local governance system by bringing the total number of local government units down (from over 400) to between 50 and 55 ... and by instituting compulsory service sharing among adjacent municipalities.' — Jean-Guy Finn

In fact, the patchwork of general-purpose local governments (incorporated cities, towns, villages and local service districts) that existed in the early 1960s only became more tangled following the dissolution of county governments.

Dozens more small villages, many of them barely viable, were born, in addition to a very large number (close to 300 by 1991) of local service districts (LSDs). The local government field became even more crowded over time with the establishment of numerous single-purpose or specialized service units in the form of ABCs (agencies, boards and commissions).

Inter-municipal collaboration

Second, and of great significance given what has transpired since, was the government decision not to implement the Byrne Commission recommendation regarding inter-municipal collaboration.

Indeed, Byrne had proposed to build the foundation for solid inter-municipal cooperation by creating, in existing adjoining municipalities, a metropolitan council made up of representatives of participating municipalities and by mandating the sharing of a number of key services among all of them.

The services suggested for mandatory sharing included water, fire protection, police protection, sanitary sewage disposal and community planning. In the words of Commissioner Byrne, mandatory joint provision was recommended "... to save municipalities from their own follies — a type of folly founded in human nature itself."

Had his proposal (and especially joint planning with non-incorporated areas on the outskirts of municipalities) been adopted by the government of the day, it would have likely prevented many of the problems associated with sprawl and ribbon development that have been so prevalent in New Brunswick since the municipal reform of 1967.

Unintended Consequences

It is fair to say that the set of local governance policies implemented in the late 1960s achieved most of their stated objectives, namely:

• improved and fairer health, education, social and justice services all across New Brunswick
• more objective, equitable and transparent rules and practices relating to property assessment and taxation
• more efficient collection and administration of property taxes
• more efficient delivery of municipal type services to rural isolated communities

However, it is also generally accepted that the very same policies have led to a number of unforeseen and unintended consequences.

Some of these unplanned consequences are due, in part, to piecemeal decisions (such as the introduction of the Provincial Residential Property Tax Credit in the 1970s and several ongoing modifications to the unconditional grant formula) made subsequently by successive provincial governments.

Whatever the explanation, a number of undesirable and unwanted outcomes are unmistakable, specifically:

• the multiplication of the number of small (mostly non-viable) municipalities and local service districts
• the proliferation of single-purpose agencies
• the emergence of a dual set of rules as it relates to property taxation (one applying within municipalities and another in unincorporated areas)
• uncontrolled developments (sprawl and ribbon development)
• an increasing number of New Brunswickers (living in unincorporated areas) deprived of  meaning full participation in the affairs of their communities
• overly fragmented local decision-making and services, leading to significant duplication and major inefficiencies
• a further widening of the urban-rural divide

Adapting local governance

A central element of the reforms implemented in the late 1960s was the establishment of local service districts.

Recommended by Byrne, they were designed as an effective way of bringing local-type services to New Brunswick's large number of small, isolated and very rural communities. 

The LSD is an advisory body to the minister of local government. It has no elected council to represent the people. It lacks structures which enable other New Brunswickers to participate more closely in the planning and provision of local services.

Excluding First Nations' governments, today's New Brunswick has 101 incorporated municipalities, three rural communities (a new type of municipality created in the early 2000s) 267 LSDs and 50 additional taxing authorities, for a total of 421 units serving a population of approximately 750,000.

Between 1971 and 2006, total population growth in New Brunswick has been 15 per cent, which means an average population growth rate of less than 0.5 per cent annually over a 35-year period.

However, changes of population among individual municipalities, rural communities and the LSDs have been much more dramatic.

The most significant growth has occurred in a very limited number of communities, basically in large scale suburbs and a limited number of LSDs located immediately adjacent to the major cities.

Only a handful of municipalities and LSDs have not seen a decline in population. Some have lost as much as 70 per cent of their population and the remaining population is aging rapidly. This portrait is valid for the north as well as the south of the province.

Governance evolution

Interestingly, major population concentration has not led to less local government units.

LSDs have evolved in a way that was not intended, serving more and more quasi-urban or suburban populations.

Several LSDs, mostly located on the outskirts of larger town and cities, have populations several times greater than most municipalities.

While people living in those LSDs may consider themselves rural, the fact is that they do not have a rural way of life and they are largely dependent on an urban economy to earn a living. In truth, there are many parts of New Brunswick that are unincorporated, yet are very suburban (and almost urban) in nature.

Conversely, there are also many municipalities that are indeed serving truly rural areas.

While in the 1960s the vast majority of New Brunswickers were living out of a rural economy (agriculture, fishery and extraction/transformation of natural resources), today most of them are dependent on an urban/service economy.

When the present local governance structures were instituted, New Brunswick had a very elementary transportation infrastructure. There were no four-lanes highways. Today, it has a modern road system with more miles of road per capita than most provinces. This ever-expanding road network is making services much more accessible.

Back in the late 1960s and early 1970s, all essential services to persons (such as health care, education, social services and justice) were organized and delivered on a purely local basis.

Today, for reasons of efficiencies, economies and quality, the same services are organized and delivered on a regional basis, regardless of local government boundaries.

Only municipal or local-type services are organized and delivered almost exclusively on a local community basis. In fact, it does appear that many local administrative boundaries have become largely artificial if one considers the movement and linkage of our populations and where settlements have occurred.

Too many governing bodies

In essence, the organization of local government in this province has not kept pace with the population shifts and the fundamental transformation of the economy that have occurred over the last four decades and that are expected to continue in the coming years.

At a time when globalization is turning the world into a village, our own local communities are being transformed in every respect but in how they govern themselves.

New Brunswick has too many local governance units for its population. Not only is civic engagement low (many smaller municipalities have consistently experience difficulties fielding enough candidates to have an election), but the present number of municipalities and LSDs leads to unnecessary competition and duplication of services and infrastructures.

A large number of municipalities do not have the population and tax base necessary to meet their service obligations.

Many are heavily dependent on the provincial government unconditional grant for their operation, and on federal and provincial largess for the building of their infrastructure.

The provincial and federal governments, through various infrastructure and economic stimulus programs, have made a bad situation worse by assisting several municipalities to build infrastructure that is beyond their financial capacity to operate and maintain.

A number of municipalities currently own recreational and sport facilities that are underutilized and that they cannot afford to operate due to a weak tax base.

Over time, unmanaged and uncoordinated development has occurred in many areas of the province. Fuelled by a dual (municipalities vs unincorporated) tax regime, development has often occurred on the immediate fringe of municipalities.

It has evolved in an ad-hoc and unplanned manner, with little regard for long-term service needs, cost implications and potential environmental impacts.

The current municipal service infrastructure is very costly because most of it is built on small scale operations and contains too much duplication. It cannot be sustained at the present level of property taxation.

Small governments struggling

Small municipal governments are struggling to pay for the services they presently provide. They need substantial (sometimes in the order of 30 to 35 per cent of their budget) subsidies from the provincial government to operate.

There is no room to make necessary improvements or introduce new services.

The present number and size of local governance units means that municipal decision-making and services are highly fragmented.

It is compromising economic and social development. Much like in the 1960s, the way local communities govern themselves today constitutes a serious barrier to New Brunswick's growth. In today's world, economic growth doesn't occur solely at the local community level.

Our local (community) economies can no longer operate in isolation. More and more, economies are becoming regional in nature, with local economies having to be an integrated part of this larger economic unit.

Economic development needs to be conceived on a regional basis, spanning urban and rural areas. To succeed, economic initiatives, services and resources must be integrated and coordinated at the regional level.

'[T]he issue of local governance sustainability must be tackled ... Failure to do so will negatively impact the availability and quality of essential local services in many areas of the province. It will also seriously jeopardize New Brunswick's future economic and social development.' — Jean-Guy Finn

It is time for New Brunswick to fundamentally rethink its local governance system by bringing the total number of local government units down (from over 400) to between 50 and 55 (thus reflecting today's population distribution and economic structure) and by instituting compulsory service sharing among adjacent municipalities.

Certain services and programs need to be planned, organized, delivered and funded on a broader scale.

Policing, elements of land-use planning and economic development are examples of services that should be integrated at the regional rather than the local level. No more than 12 regional service districts, each comprising between two and nine municipalities, should therefore be created to facilitate such service sharing.

These actions will not weaken or take away our local communities; quite the opposite in fact — the consolidation of local government and service sharing will provide the much needed opportunity to provide a sustainable future for our communities, by building capacity.

The new municipalities should also be self-sustained as much as possible. This is why each needs a minimum of 4,000 residents or approximately $200 million in property assessment, in addition to property tax room transfers from the province.

Given the sensitivity that exists around property assessment and taxation, it is vitally important that municipalities be able to meet their financial obligations through their own sources of revenue. In the interest of transparency and accountability, the government that spends should also be the one that taxes.

The provincial government should assist financially (through an equalization formula) only those municipalities whose tax effort, in order to deliver a comparable basket of services, would be well above average.

Whichever political party forms the government after Sept. 27, the issue of local governance sustainability must be tackled.

Failure to do so will negatively impact the availability and quality of essential local services in many areas of the province. It will also seriously jeopardize New Brunswick's future economic and social development.

Those who dread higher property taxes should be concerned with the status quo, not with changes to an antiquated local governance structure, elements of which are centuries-old and hold to boundaries, rules and a scale of operations established before the common use of automobile, let alone modern information technology and communication systems.

Local governance reform is about reflecting a changed New Brunswick landscape (demographically, economically and socially), about sustainability for the long term, and about renewal in how communities govern themselves.