Regional service commissions – another train wreck?

A few months ago, the government of New Brunswick released its plan for reforming local governance. This has been a long time coming and it appears that fiscal pressures have finally forced action. While problems in local governance and cost-sharing have long been recognized, political resistance to change has prevented action until now.

The Province has a significant and growing debt, and, given stagnant economic growth, there is little room for optimism. While a reversal of the corporate and income tax cuts of a few years ago, plus a rise in the HST, might balance the books for now, those measures will provide only a brief respite for the Province’s fiscal managers. The main driver in the decision to move forward with the formation of the Regional Service Commissions was, I am sure,  the desire to off-load certain costs to property owners, especially those in rural areas, where villages and local service districts have relied upon the province to provide local services at below cost. This reorganization provides an opportunity for the Province to eventually free itself of a cost burden. Moreover, the property tax hikes that are coming down the road (especially for rural residents) will be the laid at the feet of local governments rather than the Province.

The Finn Report proposed the establishment of a two-tier system of local government for New Brunswick, with regional services being delivered by Regional Service Districts and other services being delivered by the local municipality. Municipalities would appoint members to the RSDs which then would determine costs for shared services (e.g. waste management, police, fire, planning, zoning and road maintenance services) to be charged to each municipality. Finn rejected the single-tier approach used in parts of Nova Scotia; although that model might be more efficient, it was deemed to be a ‘bridge too far’, creating governments that were seen as too remote from residents.

The current provincial government has taken a few steps down this road. They call the RSDs ‘Regional Service Commissions’ (I suppose this name change was done so that they could say their proposal was ‘not Finn’) and LSDs are being given the option of incorporation, but it is not mandatory. They have also chosen not to provide Commission members with weighted votes (as recommended by Finn), meaning that members representing urban municipalities that represent the majority of the population of most RSCs may be out-voted by other  Board members. For example, in RSC 11 (Fredericton and surrounding areas) Fredericton will supply well over 1/2 of the population yet (apparently) has only one vote. That will be a recipe for strife and failure.

[Update: To clarify, according to current regulations, each municipality and a portion of the LSDs will have a vote on ‘day to day’ issues but votes are weighted by population for financial votes. Does that weighting make a difference? Let’s say the largest municipality (a city) wants the RSC to investigate regional policing or regional zoning, but the smaller and more numerous municipalities and LSDs say NO, on the basis that they fear the larger city will control both of those issues and impose extra costs / regulations on residents outside the city. Consequently, there is no budget item added for a study and no action. Thus the city, which might represent 80% of the RSC residents has little say, even if it can veto a budget. As I said above – a recipe for strife and failure.]

The provincial government also makes the astounding claim that the RSCs do not represent another tier of government. At the same time, the Province says that the RSCs are mandated to deliver services to municipalities and unincorporated areas. Those services may include policing, fire protection, road maintenance, waste management, zoning and planning. That means significant staffing, equipment and offices. All run by managers who, given the other responsibilities of RSC Board members, will not be closely supervised. The unelected Executive Directors of the RSCs will therefore have considerable latitude and thus quite a bit of power. That sure sounds like another tier of government to me, and a tier that will be relatively unresponsive to the average citizen.

The Finn Report recommended that various LSDs, villages and towns be merged into local ‘entities’ or larger municipalities and that these would then provide members to the Regional Service Commission. For example, the report suggested that Oromocto and surrounding LSDs and villages (Gagetown, Fredericton Junction,and Tracy) be merged into a single municipality. That municipality would join with others to form RSD 11. Finn also recommended (p. 89) that “a large, currently unincorporated area, along with the municipalities of New Maryland and Harvey, be annexed to the City of Fredericton.”  Those recommendations caused a great deal of alarm, especially in rural areas. No doubt that is why the current government has only gone part way, producing an unworkable, undemocratic structure that may create more problems than it solves. But one that, in the short term, ruffles the fewest feathers.

The long-term implications for property taxes are clear, especially for citizens living in rural areas. As stated in the Finn Report (p. 64),  “The 2008 report from the Office of the Comptroller – Review of Provincially Provided Local Services in Local Service Districts – estimated that for the 2006-07 fiscal year, the revenue shortfall for the provincial government was $55.4 million ($38.2 million for transportation, $16.3 million for policing and $0.9 million for administration). Moreover, we have to question why this 65-cent levy has not been increased since 1984, since all municipalities have seen their tax rates increase over this time frame”.  As a point of interest, I note that, if increased to account for inflation, that 65 cent rate would now be $1.32 in 2012 dollars. In other words the assessment rate has not kept pace with the costs of provided services. The Province has been relying on increases in assessment value to make up the difference, and that has not beem sufficient.

The new Act (Bill 61 – Regional Services Commissions) transfers considerable responsibility from the provincial government to the commissions. Road maintenance for example:

Maintenance services provided by DOT (including new developments/subdivisions) will be funded by the new municipal entity. Administration and control of all roads located in the new municipal entity will fall under responsibility of the new municipal entity, except those that will be classified as provincial and regional; municipal roads will be designated as per the Highway Act for capital funding purposes during the capital transition period (see # 4 below).”

Policing:

“Improving New Brunswick’s property tax system: A white paper recommends reducing the special provincial levy in LSDs of 63.15 cents by 22 cents and adding the cost of policing to the local rate in LSDs over four years. This will allow the effective implementation of the new cost-sharing model (starting in January 2013) that the Province is adopting for the way municipalities, rural communities and LSDs pay for and receive RCMP police services. Adding the cost of policing to the local rate in LSDs will ensure that all types of property pay for policing services, including non-owner-occupied residential (apartments, second homes and cottages) and non-residential (businesses).”

In conclusion, I see two main concerns with this reorganization:

1) The implications of these changes should be clear to rural residents and residents of small municipalities. While the Province has established a ‘transition’ period that may lower property taxes for some in the short run, in the long run property taxes will rise significantly, especially in those areas where slow economic growth has kept property assessments from rising enough to cover service costs. Costing-out of services is certainly fair, but I am not sure rural residents appreciate what is coming their way.

2) Providing each municipal ‘entity’ with one vote on the Board, regardless of population, strikes me as being fundamentally unfair. Consequently, the Board is not a democratic organization that fairly represents the residents of the region. We should either, as voters, be directly electing the Board members, or Board votes should be weighted to give the more populous municipalities more power.

 

 

 

 

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