Provincial-Local Fiscal Transfers in Canada: Provincial Control Trumps Local Accountability

This paper provides a case study of provincial-local transfers in Canada and evaluates the extent to which they are designed to increase local accountability or maintain provincial control. The evaluation is based, in part, on a review of trends in provincial transfers to municipalities and school boards over the last 20 years and, in part, on an assessment of the extent to which 3 grants are designed to satisfy the standard rationales for intergovernmental transfers found in the traditional fiscal federalism literature (vertical fiscal imbalance, horizontal fiscal imbalance, and externalities) or political rationales.