I have been looking at CANSIM Table 385-0024. This table includes a breakdown of municipal expenditures according to different sectors (e.g. protection of persons, transportation, health, social services, education, recreation and culture, etc.).
However, this table comes from the older Financial Management System (FMS) which appears to have been discontinued in 2008 and replaced by the Canadian Government Financial Statistics (CGFS). Within the CGFS, I have found data on municipal expenditures and revenues in CANSIM Table 385-0037, but the municipal expenditures are not broken down according to sectors as it was in the previous Financial Management System. Furthermore, revenue breakdowns don't seem to include intergovernmental transfers in the same way as they used to.
I emailed STC to inquire about whether there is another data table that contains a sectoral breakdown of municipal expenditures such as existed prior to 2009 and they responded to me saying that there is no other data available to the public but that there might be other data available via the DLI.
The most current source of local govt data, with a functional classification is our COFOG series. This can be found in 385-0040. The data series goes from 08-09 to 13-14. It will be updated on March 30, adding one more year and released on a consolidated basis