Neighbours fighting neighbours

Written by Brenda Schimke

Sixty-nine counties, 264 urban municipalities, 74 rural municipalities, six specialized municipalities, eight improvement districts and three special areas to provide services to four million people, half of whom reside in two urban municipalities. That’s the reality of today’s local governance—a structure developed 120 years ago when horse travel defined municipal boundaries.

Alberta has a problem, simply slashing local municipal budgets and revenue sources is not a viable option moving forward. Today, ‘local’ is a circumference of hundreds of kilometres, not 20 miles, markets and competition are global, world-wide communication is instantaneous, and visiting the farthest corners of the world can be done in less than a day.

Competition works for businesses—it spurs innovation, brings down costs and improves quality and quantity for consumers. On the other hand, competition amongst local governments has the opposite effect—it becomes a race to the bottom, at a time where more than ever, cooperation is essential to keep local regions viable.

The Village of Cereal, in a close vote, approved moving to an unincorporated hamlet under Special Areas.

As reported in this issue of the ECA Review, two issues were paramount, financially it had become unsustainable. Second, the village had a consistent history of tardiness in completing financial information reporting and submitting audited financial statements.

The nine local municipalities within the County of Flagstaff set up a task force to look at the feasibility and advantages of governing as one, rather than nine competing bodies. Debra Moffatt, former chief administrative officer (CAO) of Forestburg, who was heavily involved in the process, said, “it failed for two reasons—it took too long—over five years—and allowed fears to grow about it becoming a political hot potato”. Sedgewick pulled out early, then others followed. Only three communities held public forums—Forestburg, Daysland and Hardisty to inform and seek community input. 

If it had gone ahead, nine local governments, nine CAO’s and nine municipal plans would have been replaced by one, and competition between so many multiple, tiny local governments would have been curtailed.

Part of the amalgamation agreement between the Village of Cereal and Special Areas was if the residents of the newly-formed hamlet spent more than what it collected from Special Areas’ tax assessments and utility fees, residents of the hamlet would be assessed a special levy or a differential tax to cover these excess costs.

This example is precisely why Moffatt argued a cooperative approach, as attempted by the County of Flagstaff, should be the preferred vehicle of amalgamation. In that way, every existing municipality becomes part of the whole, rather than, in the case of Cereal residents, subservient to Special Areas dictates.

Brenda Knight, representative for the hamlet of Mirror on the Lacombe County Council, is very positive about the move to an unincorporated hamlet. “The hamlet of Mirror has been treated very well (by Lacombe County), its population has grown, there are new businesses and recreation areas, such as baseball diamonds, have been improved”. It takes a while for people to wrap their heads around the change and a few will never”, said Knight, “but the name hamlet or village doesn’t make the community, it’s the people.” 

The hamlet of Mirror thrives because of a strong and active volunteer community group and its engaged residents. Botha, Gadsby and Erskine are other examples of villages becoming unincorporated hamlets. Yet the process of one village at a time folding into county governance is very inefficient.

Growing competition between rural and urban municipalities to attract businesses, the loss of regional economies of scale when big ticket items such as fire, garbage and water services are delivered through multiple players in a region, and the trend of local governments building themselves  “Taj Mahals” are all threatening fiscal sustainability of local governments. 

The County of Paintearth’s move to invest ratepayer’s money into Crowfoot Crossing and compete head-to-head with the Town of Castor clearly highlights why the current local governance structure is so out of touch with today’s global reality.

The proliferation of businesses just outside the Town of Stettler’s boundary is another example. Yet it’s towns and cities that support the high cost services that all citizens, rural and urban, use — government facilities (police, schools, hospitals, libraries, agencies); recreation facilities (pools, gyms, hockey arenas, curling rinks, golf courses, skateboard parks, baseball diamonds); and community services (seniors’ homes, social services and community halls). Recreation is most often the largest budget for smaller urban municipalities and we all know, it’s just not their ratepayers using these facilities.

Destructive competition between local governments isn’t restricted to smaller centers. The City of Red Deer is facing aggressive competition from the County of Red Deer as they grow and expand Gasoline Alley with ‘tax deals’ that have encouraged many professional services, retail, hospitality, housing and entertainment facilities to abandon the City. Another example of destructive competition was the City of Calgary paying Parkland Industries of Red Deer millions of dollars to relocate to downtown Calgary.

The three Special Areas, as well, are an out-dated form of governance. Enacted in 1938 to handle the hardships in south-eastern Alberta because of the 1930 droughts and administered by a provincial Special Areas Board. They operate essentially outside the public eye with citizens only having the opportunity to attend four quarterly Advisory Council meetings. It’s a great political gig if you can get it but so unaccountable in an age demanding transparency.

We’ve all lived through these grandiose plans where rural regions get provincial dollars to work together and promote regional economic development. “Regional agreements are easily broken”, said Moffat, “councillors and priorities change every four years, power struggles and jealousy issues arise, and there is often little stomach for the hard work of compromise and collaboration.” It’s just so much easier to activate the exit clause and move back into comfortable silos.

Finally, there is the petty politics and financial malfeasance that ECA Review reporters witness far too often. Power trips and personality tiffs between and among chief administrative officers (CAOs), the mayor/reeve and various councillors waste so much time and resources and accomplish so little. Today, The ECA Review continues to report on the soap opera unfolding in Morrin, previously it was Alix and Coronation.

There are many hard-working and competent CAO’s in smaller rural towns and villages, but these communities often can’t attract candidates with a Public Administration or Business degree and the necessary experience required to wade through and meet the multitude of accounting and legal obligations under the Municipal Governance Act (MGA). For example, the Review has been reporting on the Village of Morrin for successive years with the same story—the CAO has been unable, or unwilling, to keep up with Morrin’s financial and reporting obligations, and although aware, Municipal Affairs has done next to nothing to correct what appears to be another financial mess unfolding.

The smaller the size, the more impossible it is to maintain robust cash handling procedures which is critical given the large amount of financial transactions that flow in and out of municipal offices. With only one staff member, the CAO does both receipts and disbursements. Ratepayers must rely on elected officials for oversight even though many do not have the time, interest or expertise to catch fraud and mismanagement on a timely basis. Today, allegations of fraud are swirling around the Village of Big Valley.

Finally, there is the engagement of external accountants who provide audited financial statements. From our reporter’s perspective, it often appears that significant financial anomalies are missed as external accountants are over-reliant on information provided by CAO’s, rather than doing independent verification.

It’s time to move local governance into the 21st century and the facility to make these changes exists within the MGA—specialized municipalities. There are six specialized municipalities in Alberta today—Wood Buffalo which includes the unincorporated hamlet of Fort McMurray (75,009 residents); Strathcona County with the unincorporated hamlet of Sherwood Park (71,332 residents), the Municipality of Jasper, Mackenzie County, Municipality of Crowsnest Pass and Lac La Biche County. Rocky View County, bordering Calgary, is also considering this option.

If all towns, villages and cities, except Calgary and Edmonton, were amalgamated under their respective rural municipality or county, and the three special areas were split amongst their neighbouring counties—Paintearth, Provost, Starland, Acadia, Cypress or Newell—in a common sense way, Alberta could operate with two metropolitan areas, 149 specialized municipalities and eight improvement districts for a total of 159 local governments, instead of 424. 

Twenty-first century structural changes to local governance is the starting catalyst for Alberta to substantially reduce local government costs, maintain reasonable property tax increases, stimulate regional growth and cooperation, downsize Municipal Affairs, and reduce red tape.

Schimke is a graduate of the UofA with a B. Com. degree. While working for the ECA Review, she has covered and reported on village, town, county and school board meetings. 


Brenda Schimke

ECA Review

About the author

Brenda Schimke

Schimke is a Graduate with Distinction from the University of Alberta with a BCom degree. She has lived and worked in Alberta, BC and Ontario.