By Jeremy Davis
There is an old saying about how federal governments have all the money, the provincial governments have all the power and municipal governments have all the problems. Municipalities are responsible for creating and maintaining much of the infrastructure and critical services residents rely on to support our communities, yet they depend on a narrow and relatively inflexible revenue base to fund those obligations.
For example, municipalities are typically responsible for roads, water delivery and treatment facilities, wastewater removal and treatment facilities, garbage and recycling pickup, recreation centres, and police, fire and paramedic services and facilities, to name a few. As a result, municipalities are often required to request funding from federal and provincial governments to help pay for the big ticket items like infrastructure.
To underscore this even further, the Federation of Canadian Municipalities noted that between 2016 and 2021, year-over-year growth in municipal property tax revenue was less than inflation which means the real dollars municipalities collect are able to purchase less. Municipalities are required to balance their budgets on an annual basis which is positive but also ties their hands when it comes to long-term costs.
There have been discussions at all levels of government for decades about the need for a modern fiscal arrangement for municipalities that enables them to capture revenue that is more closely tied to growth like with the provincial and federal sales taxes. This is a discussion worth having and would add another growth-related benefit for municipalities and residents to offset costs and dedicate more funding toward the infrastructure and services they are responsible for. It is also important to note that growth requires careful planning to ensure that all the benefits can be properly and fully realized.
The lack of a growth-oriented way to raise revenue means that municipalities rely on property taxes and fees, and with the sky-high costs of the infrastructure and services residents rely on, municipalities don’t have many options to keep pace. This is why growth is so important for municipalities. Growth is important for any area but especially for municipalities because it helps offset costs. Infrastructure and municipal service costs shared among more residents and more businesses helps reduce the pressure on individual taxpayers. As an example, if four people split the cost of a pie, each person is paying 25%. If eight people split the cost, it’s 12.5% each. The same goes for multi-million dollar water treatment facilities.
According to The Benefits of Growth, an Urban Land Institute Working Paper on Land Use Policy by Robert W. Wassmer and Marlon G. Boarnet, there are many other short-term and long-term benefits of growth to residents.
Short-term benefits of growth:
• The standard of living is maintained
• Provides additional choices for work and living
• Raises the potential for new sources of income
• Higher residential and commercial property values
• Revitalization
Long-term benefits of growth:
• Provides more consumer choices, employment options and social diversity
• More housing options
• More opportunities to age in place
Undoubtedly though, the biggest benefit to municipalities is the generation of new tax revenue and the ability to offset costs among a greater number of people. This enables municipalities to run services more efficiently.
A 2025 paper by Jean-Philippe Meloche titled Fiscal Gains from Real Estate Development: The Case of Quebec Municipalities, analyzed Quebec municipalities with a population of one thousand or more during a period of ten years, from 2008 to 2018, with growth measured as population change and the number of units on the assessment roles. The results showed that in the municipalities that experienced this type of growth, tax rates fell more or rose less than in areas that didn’t grow. This shows that growing municipalities received a financial benefit when compared to those that were not growing.
This is an important finding because it reinforces how vital it is for municipalities to be focused on growth. Especially against the backdrop of a distribution of tax dollars among federal, provincial and municipal governments impacting municipalities so disproportionately, there is even less margin of error for how each dollar is spent.
The limits municipalities face in generating revenue means municipal governments need more support from provincial and federal governments while ensuring maximum efficiency for each tax dollar spent. Creating the conditions for economic growth and development are proven ways municipal governments can offset costs for taxpayers, fund and operate infrastructure more efficiently, and keep communities strong.
In short, growth is not a luxury for municipalities — it is a necessity. Without it, the cost of maintaining roads, water systems, emergency services, recreation facilities and other essentials falls more heavily on the same taxpayers, while communities have fewer resources to meet rising costs and expectations. With smart planning, stronger fiscal tools and meaningful support from provincial and federal partners, municipalities can turn growth into lower pressure on taxpayers, more efficient services and better infrastructure for everyone, now and into the future.
Jeremy Davis is the Winnipeg Regional Real Estate Board’s Director of External Relations & Market Intelligence.