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Does Municipal Amalgamation Strengthen the Financial Viability of Local Government? A Canadian Example

Author

Listed:
  • Enid Slack

    (Institute on Municipal Finance and Governance)

  • Richard M. Bird

    (University of Toronto)

Abstract

Municipal amalgamation is often seen as one way to ensure that municipalities are large enough to be financially and technically capable of providing the extensive array of services with which they are charged. The idea is presumably that municipalities will be able not only to reap economies of scale, but also to coordinate service delivery over the enlarged territory as well as share costs equitably and reduce (even eliminate) spillovers of service delivery across local boundaries. This paper evaluates the extent to which municipal amalgamation in Toronto, Canada’s largest city, in 1998 achieved the provincially-stated objective of saving costs as well as its impact on taxes, financial viability, and local access and responsiveness. We conclude that the end result was the creation of a city that manages to be both too small and too big at the same time. The amalgamation probably increased the financial viability of at least the smaller and poorer municipalities in the newly created City of Toronto by increasing their access to the tax base of the amalgamated city as a whole and it also equalized local services so that everyone can enjoy a similar level of services. However, it had no significant effect on either the financial sustainability of Toronto or its capacity to deal with financial crises, nor did it achieve cost savings or solve any of the problems that the city and region faced in the last decade and continue to face in this one. The new city remains much too small to address the regional issues that plague the greater Toronto region (such as transportation and land use planning and economic development) while resulting in resulted in reduced access and participation by residents in local decision-making. On balance, it seems unlikely that anyone looking back with knowledge of the small and questionable gains that appear to have been realized would willingly have undertaken the complex, extended and painful process of metropolitan amalgamation.

Suggested Citation

  • Enid Slack & Richard M. Bird, 2013. "Does Municipal Amalgamation Strengthen the Financial Viability of Local Government? A Canadian Example," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1305, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    • Handle: RePEc:ays:ispwps:paper1305
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    File URL: http://icepp.gsu.edu/files/2015/03/ispwp1305.pdf
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    References listed on IDEAS

    as
    1. Enid Slack & Juan R. Cuadrado-Roura & José Miguel Fernández Güell & Eduardo Rojas & Richard Bird & Jeroen Klink & Christian Lefévre & Joan Subirats & Quim Brugué & Andrés Monzón & Alberto Etchegaray, 2005. "Governing the Metropolis: Principles and Cases," IDB Publications (Books), Inter-American Development Bank, number 79939 edited by Juan R. Cuadrado-Roura & José Miguel Fernández Güell & Eduardo Rojas, February.
    2. Enid Slack & Richard M. Bird, 2013. "Merging Municipalities: Is Bigger Better?," IMFG Papers 14, University of Toronto, Institute on Municipal Finance and Governance.
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    Cited by:

    1. Rambe, Roosemarina Anggraini & Wibowo, Kodrat & Febriani, Ratu Eva & Septriani, Septriani, 2020. "Assessing the Local Government Efficiency: Evidence from Sumatra, Indonesia," Asian Journal of Applied Economics, Kasetsart University, Center for Applied Economics Research, vol. 27(2).
    2. Sandeep Agrawal & Cody Gretzinger, 2023. "Local Governance in Alberta: Principles, Options and Recommendations," SPP Research Papers, The School of Public Policy, University of Calgary, vol. 16(3), January.
    3. Dino Rizzi & Michele Zanette, 2015. "A Procedure for the Ex-Ante Assessment of Compulsory Municipal Amalgamation Programs," Working Papers 2015:22, Department of Economics, University of Venice "Ca' Foscari".
    4. Rhys Andrews, 2015. "Vertical consolidation and financial sustainability: evidence from English local government," Environment and Planning C, , vol. 33(6), pages 1518-1545, December.
    5. Tavares Antonio F., 2018. "Municipal amalgamations and their effects: a literature review," Miscellanea Geographica. Regional Studies on Development, Sciendo, vol. 22(1), pages 5-15, March.
    6. P. V. Stroyev & M. N. Rawaiev, 2016. "Urban Agglomeration as an Element of Regional Policy (Canada example)," Russian Journal of Industrial Economics, MISIS, issue 2.
    7. Sad Dian Utomo & Irfan Ridwan Maksum & Teguh Kurniawan, 2023. "The Institutional Dynamics of Sub-District in Indonesia," Technium Social Sciences Journal, Technium Science, vol. 43(1), pages 1-36, May.
    8. Mihai Pascaru, 2017. "Inter-municipal cooperation: World realities and Romanian strategies," Journal of Community Positive Practices, Catalactica NGO, issue 3, pages 3-13.
    9. Tapan Kumar Sarker, 2015. "The role of fiscal sustainability in enhancing sustainable economic growth in South Asia: the case of Bangladesh," Asia-Pacific Development Journal, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), vol. 22(1), pages 143-164, June.

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    More about this item

    Keywords

    local government; metropolitan area; amalgamation; municipal reorganization;
    All these keywords.

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