The mayors of Canada’s large cities are no doubt looking on with a combination of frustration and envy this year as province after province announces unexpected budget surpluses.

Ontario ended its 2021-22 fiscal year with a $2.1-billion surplus after budgeting for a $13.5-billion deficit, and British Columbia was $1.3-billion to the good, after projecting a deficit of close to $10-billion. For 2022-23, Quebec predicted a deficit but could finish with a surplus, before meeting its legal obligation to pay down its debt. Saskatchewan is likewise going from red ink to black ink. Then there is Alberta, which thanks to oil prices has swung from a projected breakeven position to a whopping 2022-23 surplus of $13-billion or more.

This is happening for a number of reasons. The economy and the price of crude have come roaring back as the COVID-19 pandemic recedes, producing greater than expected government revenues. The provinces are also spending less on pandemic relief measures. And they are being helped by inflation, because higher prices and wages result in higher income and sales tax revenue.

But from the perspective of the mayor of any large Canadian city, the fundamental reason that provincial coffers are having a moment is because the provinces enjoy multiple ways of raising revenue, many of which bring in more money when the economy booms.

That’s not the case for cities, which under Canada’s constitution are, to varying degrees, vassals of provincial governments. This is perhaps especially true for the country’s biggest city, Toronto.

Toronto, like all Canadian cities other than the lucky few that have charters, has zero inherent power. Whatever powers it does possess are granted to it by the Ontario legislature. Its serfdom was never made more apparent than when, in the middle of the city’s 2018 municipal election campaign, Ontario Premier Doug Ford arbitrarily reduced the size of the council from 44 to 25 seats.

Toronto, like other cities, can only raise revenue through direct taxation, most notably a property tax – which is inelastic compared to an income or sales tax – or through direct user fees, such as for water, garbage, parking and other services, or a land-transfer tax. The city is also banned from running a deficit, and has a limited ability to raise debt.

And, like other cities, but with greater impact because of its size and its role as a destination for immigrants, Toronto has been hard hit by the downloading of services by higher levels of government – from Ottawa’s former responsibility for housing refugees, to some provincial social services and public housing. The province also no longer contributes to the operating costs of the Toronto Transit Commission.

To add insult to penury, when Toronto has tried to raise new revenues through the few mechanisms available to it, Ontario has said no. The biggest example came in 2017, when the premier of the day rejected the council’s sensible plan to toll two municipally operated highways that run into and through the city.

The result is stagnation. Like any other politician, the mayors and councillors in large cities have been reluctant to take heat for imposing higher costs on voters through the chief mechanisms at their disposal: property taxes.

Toronto has the lowest property tax rate in Ontario, which has resulted in cutbacks to services, crumbling public housing and the least-subsidized transit system in North America. Even small things are being hit: at the start of this past summer, during a heat wave, barely half the city’s public water fountains were working.

The system has actually reinforced the city’s subservience. Too often, the sole way Toronto politicians are willing to balance the city’s budget – without raising property taxes beyond inflation or making deeper service cuts – is to rely on provincial and federal handouts that are often conditional and rarely more than a one-off.

It’s an absurd situation – three out of four Canadians live in urban centres of more than 100,000 and depend on the services they provide. It is also an immutable situation, given its basis in the constitution.

Which means it is unlikely to change unless the majority of Canadians who live in cities start demanding a political fix. If they were aware of the degree to which they are essentially voiceless – voting for mayors and councillors who have little power – they might just do that.

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