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Does municipal amalgamation strengthen the financial viability of local government? A Canadian example

Author: ENID SLACK and RICHARD BIRD
Published in PFM, Vol. 13 No. 2

The rationale for the amalgamation of Toronto, Canada in 1998 was to save costs but, as this paper shows, it did not achieve its objective. An analysis of per household expenditures in constant dollars for four services (fire, garbage, libraries, and parks and recreation) from 1988 to 2008 shows that expenditures increased after amalgamation for all services but libraries. At the same time, the amalgamation seems to have resulted in reduced access and participation by residents in local decision-making. On a positive note, the amalgamation increased the financial ability of the smaller and poorer municipalities in the newly created city by increasing their access to the tax base of the amalgamated city as a whole. It also equalized local services so that all city residents receive a similar level of services.

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