One of the most difficult problems for local governance is to determine institutional arrangements and boundaries for local goods and services that are preferred by citizens in different geographical areas or that possess different production characteristics.The local governance system in British Columbia, Canada, has a practical set of institutional arrangements, the British Columbia regional district system, which deals with the variety of boundary and institutional issues associated with local public services. Like most institutional innovations, it was created by politicians and administrators to solve pressing practical problems, and it is doubtful that they were aware of scholarly debates associated with the issues they were trying to resolve. Forty years after its origin, the system is still solving many of the problems posed, but not resolved, in academic and political debates over how to govern metropolitan areas in the United States. The system is equally useful for non-metropolitan areas.
Regional District System
Like states in the United States, provinces in Canada are responsible for local governments. British Columbia, along with Alberta and in contrast to the rest of Canada, has a long history of policies allowing local citizens to take the initiative regarding local government structure. Municipalities have responsibilities similar to those of municipalities in the United States, except that welfare is a provincial government responsibility. In the areas outside municipal boundaries, the provincial government provides roads and policing.The province contains no county governments, but it does have school districts and improvement districts (called special districts in the United States) for specific functions. Although British Columbia is geographically larger than Washington, Oregon, and California together, 87 percent of its population resides in the 156 municipalities that encompass 1.4 percent of its area, and 60 percent of its population resides in 19 municipalities of over 50,000. It has two major metropolitan areas: a population of more than two million in greater Vancouver and 350,000 around the capital of Victoria.
In 1965, provincial legislation set out procedural rules for the creation of regional districts.Twenty-nine areas were designated to cover the province, but it was up to the local governments in these areas to decide if they wanted to incorporate a regional district. If incorporated, they were essentially a shell, with procedures for representation, financing, adoption of activities, and definition of boundaries for different activities. However, except for authorization for land-use planning and zoning outside of municipal boundaries, it was up to the citizens in the municipalities and in unincorporated areas to determine how they were to be used.
Twenty-eight of the original twenty-nine areas incorporated themselves over the next four years, and today there are twenty-seven (one split into two and three have merged), covering all parts of the province except the northwest corner where very few citizens reside. Over time, the provincial government and municipal representatives have decided that municipal borrowing through the Municipal Finance Authority (MFA) should be processed by regional districts. The only local government functions that regional districts subsequently have been mandated to perform are planning for solid and liquid waste disposal, which they can do as an entire district or divide up among municipalities and unincorporated areas, as appropriate for their region. Otherwise, regional districts can perform as rural governments for unincorporated areas, serve as a forum for and administer local government services for any combination of municipalities or unincorporated areas, and serve as a regional government for the entire region, all as decided upon within the region.
Regional districts have an unusual combination of attributes. On one hand, they are forums for municipal representatives and representatives elected from unincorporated areas to get together and agree to engage in joint activities. On the other, they are a “government” with the powers of regulation and taxation when agreement has been reached locally on assigning jurisdiction over an activity to the regional district.To understand how regional districts work, it is necessary to examine their governance and financing structure and the services they provide.
Governance and Finance
Following incorporation, all regional districts have the same basic governing structure. The governing board is composed of directly elected members from electoral areas outside municipal boundaries and of municipal counselors appointed by their elected municipal councils. Individual members of the board are called “directors.”
The total number of directors and the nature of their weighted votes are determined by population, and voting rules vary for different kinds of issues.To adopt new services, including borrowing money to finance them, generally requires a referendum by citizens in the participating areas, but there are significant exceptions. One is that a municipal council may approve new services on behalf of its electors. Another includes provisions for regional district directors to override the objection of an electoral area director on area-wide services where no borrowing is undertaken.There are also limited provisions where a service can be adopted unless there is a citizen-sponsored counterpetition (a process similar to a citizen initiative).The net effect of the rules is that, for almost all new activities, the consent of the municipal council of each separate member municipality (or the voters in electoral areas) participating in the service is required.
What is also important to recognize is that activities do not need to be undertaken just for the entire region.Any combination of municipalities and electoral areas, or only part of an electoral area, can join together to provide an activity through the regional district structure.This offers infinite flexibility in the design of service areas, although municipalities do not divide themselves up internally as often as electoral areas. In practice, the boundaries for most activities appear to be set to include entire municipalities and developed parts of electoral areas but not to cover the entire regional district.
Once activities are adopted, different rules apply for governing individual services. In general, region-wide business is decided by one vote for each director, budgetary matters for region-wide services by the weighted votes of all directors, and services provided to subparts of the regional district by weighted votes from the directors in the participating areas. For most services, the costs are divided among the municipalities and electoral areas in relation to the property tax base.However, simply financing through shares of the property tax base also has led to conflicts.A 1999 review of regional district operation identified mismatches between control, financing, and benefits as the major source of disputes. This was because the relative property tax bases of different areas differed from the population and benefits received from the service.Thus, the area with relatively high property tax bases but smaller population was often dissatisfied with the arrangement—although because its population was relatively small, it did not have the votes to constrain expenditures or make changes to the agreement.
Custom Agreements
The solution to these problems turned out to be greater use of “custom agreements” for new activities and a provincial mediation process to revisit previous agreements where custom agreements had not been used and problems had arisen. Custom agreements are used to relate voting strength more closely to use of a service and to financial contributions rather than financing from different areas in relation only to the property tax base. Custom agreements can also create a committee or commission to govern the activity, and the agreement may provide for committee or commission members who are not directors. Examples of custom agreements within one regional district include financing based on the following:
- 50 percent assessed value and 50 percent population— for a theater and an arena
- The number of cases during the previous year— for permitting and regulation of soil deposit and removal
- One-third converted assessed value, one-sixth land area, one-sixth population, and one-third highand medium-priority discharges in the previous year—for storm water quality management
- Population—for 911 emergency service.
In another regional district, the number of members of the committee to oversee water supply is based on water consumption in the different areas the previous year. Many more examples could be cited, but all custom agreements appear to bring governance and financial contributions closer to benefits for either individual users or member municipalities.
Tax Assessment and Collection
The financial obligations of each member municipality are set out as each new activity is undertaken by the regional district.The regional district administration calculates the amounts during its annual budgeting process and sends a requisition to each municipality. Each municipality can raise the amount owed to the regional district any way it prefers, although many actually list regional district services on the property tax bills sent to their ratepayers.The regional district also informs the provincial property tax collector, who collects all property taxes in rural areas, how much is owed by each electoral area, and the collector calculates the rates needed and adds them to the property tax bill it sends out to collect school taxes, taxes levied by the provincial government itself, and for any improvement districts. Municipal and provincial tax collectors then pass the requisitioned revenues on to the regional district.
The process for allocating costs among municipalities and custom areas in electoral areas works because the British Columbia Assessment Authority has a complete database on all properties in the province with an annual updated estimate of the market value.This database makes it possible to record all service area memberships for each property, obtain total assessed values for all properties in a service area for budgeting and rate-setting processes, and calculate the taxes due for each service for each property.
There is no question that regional districts can become complex organizations. However, their organizing philosophy is rather simple: they provide a forum and institutional framework for local governments to make binding decisions jointly with their neighbors and with boundaries for a service different from their own, where governance and financing matches the benefiting area. Their voluntary adoption of functions and flexibility is reminiscent of the flexibility that special districts introduce into the local governance system in the United States.However, unlike the United States, where each service may generate its own special district with no necessary relationship to municipalities, other special districts, or a regional organization if there is one, the British Columbia approach embeds the numerous combinations of activities into a common regional district governing and financing framework.
Regional District Services
Given the existence of institutional structures to facilitate cooperation in the provision of local services, just what services have regional districts evolved to provide? Two examples follow.
Regional District of Comox-Strathcona
The Regional District of Comox-Strathcona on central Vancouver Island encompasses 7,900 square miles and has a population of approximately 36,000 in eight electoral areas and 70,000 in eight municipalities. The 1999 survey identified forty services it provided to various geographic areas (Table 1).
Only four services cover the entire region, and a significant number (twenty-four) involve unincorporated areas only. However, twelve services involve multiple municipalities, and eleven of those include service areas where parts of electoral areas surrounding the municipalities are included. The services include water supply, community planning, community parks, 911 emergency services, regional parks, exhibition grounds, fireworks regulations, aquatic center and ice arena, solid waste planning, street lighting, house numbering, fire protection, economic development, regional sewer, cemetery, animal control, sports track, grants for search and rescue, victims’ assistance, building inspection, regional library, transit, several community halls, several sewer systems, several water service areas, several refuse collection areas, and several local transfer stations and recycling centers.
Although the regional district board governs regional district services, committees oversee general activities, specific geographic areas, and activities such as fire departments in electoral areas where the local people elect a board to oversee the service, which is then ratified by the regional district directors.Very little of the actual business of running the services comes before the regional district board in other than a committee report.The actual production of most activities is contracted out, some to private firms, others to community organizations, and some to municipalities to provide a service beyond their boundaries on behalf of the regional district.
Capital Regional District
The Capital Region District (CRD) of British Columbia, on southernVancouver Island, has a population of nearly 350,000 within 925 square miles. In 1999, it included twelve municipalities ranging in population from 1,563 to 107,026 and four electoral areas. Seven of the municipalities were between 10,000 and 20,000 in population and three were smaller. One objective of the 1999 survey was to identify how activities where there may be economies of scale beyond the size of most of the municipalities (population of 10,000 to 20,000) were provided in the metropolitan area. Of the 283 activities making up twelve major functions, eighty (28 percent) were identified as having economies of scale due to the need for specialized equipment or personnel. Fourteen (3.5 percent) were identified as having economies of scale due to the need for a large capital facility, and some of these could be provided on a smaller scale as well.Table 2 summarizes the results for capital facilities.
The CRD is involved in nine of the fourteen major capital activities,but only five of the nine cover the entire regional district (each of the other four has a different boundary).There is also some kind of arrangement to provide for the other capital services on a larger scale than that of a single municipality.The summary of information here does not include all of the areas of regional district involvement, but it shows that, given a forum for systematic cooperation, municipalities have used the regional district to undertake activities jointly for mutual benefit to a reasonably high degree. The study also shows that the regional district has flexibility in setting the boundaries for services and uses that flexibility.
Observations on Regional Districts
Regional districts are a useful institutional innovation in British Columbia.Their most important attribute is that they provide a systematic authoritative framework that lowers decision-making costs to facilitate cooperation among local governments to provide activities on a variety of scales. Their staff also often takes the initiative in identifying where costs can be saved or services improved through cooperation.They can adjust boundaries to match either demands to provide a service for a group whose boundaries differ from those of existing local governments or they can adjust boundaries to achieve scale economies in production, depending on which is more beneficial for that particular service. The choice is a local one, and local people are most likely to make the right tradeoffs when there is an incompatibility.They are also designed to achieve fiscal equivalence for services whose boundaries do not fit existing governments, and this can take into account the huge number of specific activities that make up the local services in an area.
A second important characteristic is that they do not engender competition and rivalry between elected politicians at the local and regional levels.Virtually all major local government functions have activities that are both local and regional. Thus, if responsibility for the function is assigned to either level, there will always be activities more appropriately provided or produced at the other level.With regional districts, the same elected officials are responsible for the functions regardless of the level at which the activities are provided or produced. The British Columbia experience shows that local officials in different local governments can cooperate in the provision and production of local services for the benefit of their citizens.
Relevance of Regional Districts
A very important characteristic of the regional district system it that it assumes local representatives know their own situation best, and that by providing a forum for cooperation, they will undertake activities for mutual benefit. It places a great deal of faith in citizens and locally elected officials, but given the diversity in local service conditions, there does not seem to be any reasonable alternative. Regional districts offer the opportunity to achieve fiscal equivalence in local government services for a large number of services where boundaries differ—without creating a different special government for each service.The result is an organization that does not fit neatly onto an organization chart, but a framework for a process that lowers decision-making costs of cooperation among local governments and encourages fiscal equivalence, two criteria that scholars have identified as important to a well-functioning system of local governance.The net effect of regional districts should be an improvement in the performance of local government. Understanding how regional districts operate can make an important contribution to the debate over how we govern in metropolitan areas.
References
Bish, Robert L. Local Government Service Production in the Capital Region (University of Victoria Local Government Institute: 1999). www.rbish.ca and http://web.uvic.ca/padm/ cpss/lgi/publish.htm (reports section).
———. Regional District Review—1999: Issues and Inter- Jurisdictional Comparisons. Prepared for the Ministry of Municipal Affairs (University of Victoria Local Government Institute: September 1999). www.rbish.ca and http://web.uvic.ca/padm/cpss/lgi/publish.htm (reports section).
——— and Eric G. Clemens. Local Government in British Columbia (Richmond: Union of British Columbia Municipalities, 3rd edition, 1999). Other references are cited in this reference, and other studies are available at www.rbish.ca and http://web.uvic.ca/padm/cpss/lgi/ publish.htm (reports section). This reference also describes the MFA, another British Columbia innovation. Because small municipalities had difficulty undertaking debt to finance infrastructure, the provincial government passed legislation creating the MFA, which is a cooperative of local governments, to undertake joint borrowing. Since its creation, it has achieved an AAA bond rating and its rating is often higher than that of the provincial government itself, ranking only lower than the Government of Canada, and the Province of Alberta in Canada.
Ostrom, Vincent, Charles Tiebout, and Robert Warren. “The Organization of Government in Metropolitan Areas: A Theoretical Inquiry.” American Political Science Review, Vol. 55, December (1961), pp. 831–842. This articles poses the most important theoretical issue for the organization of government in metropolitan regions. It discusses designing institutions to accommodate the diversity in preferences for public services in different geographic areas and how to accommodate production arrangements to the diversity in efficient scales for different activities within different functions. Bish, Robert L., “Local Government Amalgamations” (Toronto: C.D. Howe Institute Commentary 150, March 2001), summarizes evidence on these issues.