The provincial government and Alberta's two biggest cities want to modernize their relationship by developing big city charters.

Edmonton's mayor joined Calgary's deputy mayor Monday in signing the agreement with the municipal affairs minister in Calgary Monday morning.

Doug Griffiths, the minister of Municipal Affairs, says modernizing the rules will allow for better use of scarce resources.

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Municipal Affairs Minister Doug Griffiths says updating the way the province interacts with Alberta's two biggest cities will allow for better use of scarce resources. (CBC)

"There is no city versus province," he said. "There's no municipality versus municipality. We all serve the same clientele. We all serve the same taxpayers. We all will find a way to use Alberta taxpayers' money in the most rational way possible to provide those services and we're gonna do it with mutual respect."

Edmonton Mayor Stephen Mandel says the talks will be first about defining "who does what" — and then figuring out where the money will come from to pay for it.

"You know our citizens have a fair amount of taxation right now," he said. "And I think we should be able to find solutions without having to impact that, but let's worry about the roles and responsibilities and see how we can define them in a more clear way and, I think if we do that, then we'll have a better understanding of our roles in how they need to be funded."

Griffiths says he wants any new arrangements in place before the next municipal elections in the fall of next year.

Some details left to be worked out

When asked about Albertans being consulted before any new taxes are imposed or raised, Griffiths said by law there should be a refereddum. 

"It seems to me if we were going to have a new type of taxation at the municipal level, the same sort of principle should stand that there should be some sort of referendum and either people in Calgary or Edmonton, where ever they've decided to have a new type of taxation, should have same courtesy afforded to them that the provincial government's afforded to the people of Alberta." 

But Mandel said he's not big on referendums.   

"I think we need to come up with solutions that don't require that kind of direction and there's a possibility to do that ... but we'll get to that point when we get to that point," he said. "If you ask somebody you're going to charge them more for a shirt, they're gonna always to say 'No'. So if you're going to charge them for a tax, they're going to always say 'No,' so maybe that's not the best way to go."

It has been said city charters will allow municipalities to better control their revenues, but details still have to be worked out. Griffiths said he hopes a draft form will be ready by spring 2013.

In the past, Calgary's Mayor Naheed Nenshi has supported the idea of adding one per cent onto the GST so Calgary can use that revenue for major infrastructure needs, like the southeast leg of the LRT, but so far the federal government has said setting the GST is still its jurisdiction.