In the governance structure of Canada the municipality is the most local form of government.

Municipalities were originaly concieved of as a "creature of the provinces" and were mandated to provide local services such as policing, fire fighting, local transportation and sewer/water infrastructure.

The municipality was given the power to levy property taxes to pay for the services, but was kept under the controll of the province - if the local government wanted to make any changes to how it operated, it needed to ask permission of the province

Since confederation, the role of the municipality, especially the larger cities has dramatically changed to encompas a more broad range of responsibilites such as finding housing, delivering public health services, and providing transportation and other services to a population which may or may not live in the municipality or pay property tax to support the expenditures.

The result has been a hampering of urban economies to the point where businesses and individuals are hampered in thier activities by poor services and lack of maintanence to infrastructure. Some municipalities are routinely unable to pay for all of the services that they are mandated to provide by the province.

Some argue that the municipalities must become better fiscal managers to avoid unbalanced budgets, while others argue that the increasing deficits are a sign of too much downloading of responsibilities from federal and provincial governments without downloading access to revenues to match.

The later position seems to be the most accepted, and is the basis of current public discussions about redefining the role of the municipality in Canada.