CHAPTER 16 - MUNICIPAL REVENUES, 1946-56

The annual revenue of local municipalities may be classified into the following six categories:

1. Revenue from the taxation of residential property.
2. Revenue from the taxation of business concerns.
3. Grants from Senior Governments.
4. Fees, licences, etc.
5. Profit earned from the operation of public utilities.
6. Non recurring receipts. (e.g. from the sale of land.)

(1) Taxation of Residential Property

All residential and commercial real property in a municipality is assessed according to a prescribed formula, the main objective of the assessor within each municipality being to ensure that the assessments of different properties are in equitable relationship. The municipal council thereupon applies to the total assessment, residential and commercial, a mill rate calculated to yield the revenue which must be realized from this source. The revenue yielded by the assessment of residential properties will consequently reflect the mill rate applied, the market value of the buildings -- which will reflect in turn their age and quality, and the ratio which the assessments bear to actual market value. All these factors differ substantially as between one municipality and another; hence the revenue yielded by the taxation of residential property varies considerably as between the different municipalities of the Greater Winnipeg area.

(2) Taxation of Business Concerns

Land and buildings used for business purposes are assessed along with residential property, and the same mill rate is applied. In addition, municipalities levy a business tax on business firms operating within their limits, the tax being a percentage of the rental value, the rate of tax varying in some municipalities with the type and size of business. Hence business firms provide revenue in two ways to the municipality -- firstly in the form of the realty tax levied on the land and buildings which they occupy, and secondly, in the form of the business tax which they pay, based on the rental value of their premises.

The revenue contributed by business firms varies substantially as between one municipality and another, reflecting the concentration of industrial and commercial operations in some municipalities and their virtual absence from others. Thus, from the very beginning of settlement in this area, the city of Winnipeg has contained the overwhelming proportion of local commercial and industrial firms and has received a corresponding proportion of the municipal revenue contributed by such firms. St. Boniface, has, for many years, contained a significant number of industrial firms which have contributed to its municipal revenues. The plant of the Canada Cement Company, located in Tuxedo, has always made a substantial contribution to the revenues of that town.

Since the end of World War II, particularly since 1950, a considerable number of industrial and commercial firms have established themselves in other suburban municipalities. The largest such development has occurred in St. James, where, during the past half dozen years, scores of industrial firms and warehouses have been established. More than a dozen industrial firms have recently located plants in Fort Garry; similar development has been going on in East Kildonan. the Imperial Oil Company erected, in 1951, a refinery in East St. Paul to serve Manitoba and this establishment contributes substantially to the municipality's revenue.

In other municipalities, industrial development has been slight or negligible and there has been no corresponding growth of revenue contributed by business firms. (1) Tables 1, 2 and 3 indicate the size and relative importance of revenues derived from industrial and commercial firms by the larger municipalities of Greater Winnipeg in 1956. Table 1 indicates the total revenue, by source, of Winnipeg and the six major suburban municipalities for the year 1956. Table 2 indicates what proportion of the total revenue was derived from each source; Table 3 indicates how much was derived from each source per capita of municipal population.

The accompanying tables reveal the very great disparity in revenue realized by municipalities in Greater Winnipeg from the presence of business firms and government institutions. In the City of Winnipeg, where they are heavily concentrated, residential property contributed in 1956 only about one third of total municipal revenue; business firms and government institutions which made grants in lieu of taxes contributed approximately 50% of their total revenue. Taxation of business firms yielded slightly more than one quarter of municipal revenue in St. Boniface, and about one third in St. James. The St. James figure reflects the heavy payments in lieu of taxes by the Federal Government on behalf of its substantial property located in that municipality, including the Deer Lodge Hospital and the Airfield. In each of the other larger suburbs, the taxation of business firms yielded less than ten per cent of municipal revenue.

(3) Grants from Senior Governments

The Provincial Government contributes to municipal revenues both directly and indirectly. Traditionally the Government has made annual financial grants to School Districts and these have been substantially increased in recent years. Since the School Districts obtain their residual financial requirements from municipal taxation, the Provincial grants are indirectly contributory to municipal revenue, by reducing the need for local taxation.

The basic educational grant, by far the largest of the Provincial grants to local authorities, is arranged to allow for fiscal need, so that School Districts with limited resources, the purchase of equipment, (2) etc.

The total contributed by the province toward education in the Greater Winnipeg area was approximately $2½ million in 1956, of which half was received by the Winnipeg School District. Table 4 indicates the amounts received as provincial grants in this year, by the larger school districts of the metropolitan area.

In addition, the Provincial Government has traditionally accepted some responsibility for municipal welfare cots, particularly when these are very large. Thus during the Great Depression of the 1930's, the Federal and Provincial Governments both contributed to municipal expenditures on unemployment relief. Commencing in 1949, the Provincial Government distributed $300,000 among the municipalities of the province pro rata to their expenditures on welfare. In 1953, the Government increased this sum to $500,000, and, in addition, undertook to pay 60% of the welfare costs incurred by a municipality in excess of the sum produced by a levy of 4 mills on its equalized assessment.(1)

In 1957 the Provincial Government increased its contribution to welfare costs by undertaking to pay either 40% of any municipality's welfare costs, or 80% of the cost in excess of the sum produced by a one mill levy on the municipality's equalized assessment, the Province offering to pay on the basis of the method which produced the larger sum.

The Government has similarly increased its contribution toward municipal costs in regard to the hospitalization of indigent patients. Commencing in 1957, the Government began to contribute toward municipal costs of hospitalization for indigents on the same basis as it contributed toward welfare costs: i.e., whichever is the greater of: 40% of the actual cost, or 80% of the excess over one mill applied to the equalized assessment. The Government contributes further toward the cost of health services by paying two-thirds of the cost of operating Health Units (which serve practically all the suburban municipalities) and by contributing $60,000 annually toward the operating costs of the Winnipeg Health Department. The Government as well contributes substantially toward the cost of a number of other health programs, which are beneficial to residents of the metropolitan area, as well as the remainder of the province.

* The Winnipeg School District received in addition a total of $132,381 in provincial grants re Child Guidance, Evening School and Teachers' Pension Fund.

The Provincial Government makes two relatively minor grants to municipalities. It now contributes $2,000 to each municipality which operates a public library, (1) and $1,000 for each mile of streets which constitute links in the provincial trunk highway system. The Government also contributes substantially to the cost of paving Portage Avenue in St. James, and to the cost of the recently constructed Midtown Bridge over the Assiniboine River; and it has undertaken to pay the full cost of the Disraeli Bridge (the actual bridge structure only) over the Red River.

In addition to these grants made toward specific municipal costs, the Provincial Government undertook in 1957 to made unconditional grants to municipalities on a per capita basis, and the amount of this grant was increased in 1958.

It should be noted that the Provincial Government, while legally exempt from municipal taxation, has in recent years undertaken to pay municipalities grants in lieu of taxation on the land occupied by its administrative buildings. Commercial enterprises operated by the Provincial Government such as the Government Liquor Control Commission, the Manitoba Telephone System, the Manitoba Power Commission, etc., pay the equivalent of full municipal taxation on both land and buildings, plus business tax.

In addition to its direct financial contribution toward the cost of providing educational and municipal services, the Provincial Government contributes indirectly by assuming responsibilities which would otherwise be borne by municipalities. e.g. Under the Mothers' Allowance scheme, the Provincial Government extends financial support to persons who might otherwise become charges upon municipalities. The extent of such indirect provincial aid has substantially increased during the past several years.

Federal Government - Grants in Lieu of Taxes

Property owned by the Federal Government is legally exempt from the payment of municipal taxation, as is property owned by the Provincial Government. Until recently, the Federal Government took full advantage of this exemption, and local municipalities received no revenue on behalf of Federal property located within their limits. In 1955, however, the Federal Government undertook to pay grants in lieu of and equivalent to municipal taxes upon property it owned in any municipality in excess of two per cent of the total assessment of the municipality. (2) Commencing in 1957, the Federal Government paid grants equivalent to municipal taxation upon all its property. The main beneficiaries are Winnipeg and St. James, both of which cities contain large and valuable Federally owned properties.

(4) Fees, Licences, etc.

Each municipality collects license fees of various kinds, such as for building permits, etc. Rentals of municipally owned property and interest on securities provide small additional revenues to some municipalities.

(5) Utility Profits

While municipal public utilities are intended to be operated essentially on a non-profit, self-supporting basis, they generally have been profitable and some portion of the profits has been used for general municipal purposes. Thus in 1956, in the City of Winnipeg, $450,000 of City Hydro profit, and $175,000 of profit earned on the Water Works, was used for general municipal purposes. The suburban municipalities which operate water utilities also earn some profit thereon, which is used for general municipal purposes.

(6) Non-Recurring Revenues

Since the end of the War, many municipalities have substantial receipts of a non recurring character. They sold, sometimes at very good prices, property which they had acquired through tax sale proceedings during the 1920's and 1930's; in addition, they collected, particularly up to 1949, large sums in tax arrears, incurred previously when property owners had been unable to meet their tax obligation, but remitted when economic conditions improved. While these receipts were of a non recurring character, they were, nevertheless, of great assistance to municipalities, being used in some cases to help finance certain expenditures, and in other cases to pay for capital projects which would otherwise have had to be financed out of current revenue.