A new memo, released by the CD Howe Institute, argues that municipalities are in much better fiscal shape than their provincial counterparts. The paper, written by CD Howe Director of Research Alexandre Laurin asserts:
Looking at consolidated GFS (Government Finance Statistics) data makes one point clear: municipalities collectively run large surpluses, while provincial governments are dragging us down. The balance sheet of all provinces looks much healthier once provincial governments are combined with their municipalities…
Laurin argues that that the explanation for this lies in the distinct budget accounting practices used by municipalities, which “exaggerate capital up-front costs and understate them later on expenses.”
Read the full memo here.