Questioning municipal spending

Whatever they are smoking over at the Union of B.C. Municipalities (UBCM) offices, I hope it was at least grown in B.C.

Whatever they are smoking over at the Union of B.C. Municipalities (UBCM) offices, I hope it was at least grown in B.C.

The report they released, innocuously titled Comment on Fiscal Management in British Columbia’s Municipalities, would more accurately have been called Taxing and Spending: Trying to Defend the Indefensible.

To summarize, the report claims:

• Contrary to Canadian Federation of Independent Business (CFIB) research, municipal spending is reasonable;

• Property taxes on small business are reasonable and reducing them could only be done at the expense of residents;

• Local governments are accountable to small business taxpayers.

CFIB’s report on municipal spending came about after one too many meetings with mayors claiming ridiculously high small business property taxes could not possibly be reduced without increasing taxes on residents.

Controlling spending in order to keep taxes reasonable was, according to most municipal politicians, impossible. Spending was already as low as it could possibly be.

So we decided to do something that most mayors and councils aren’t used to — actually look at the cold, hard numbers.

The results were beyond shocking.

Population and inflation together in this province have increased by 28.7 per cent between 2000 and 2008. This is a reasonable benchmark for where, based on numerous conversations with B.C.’s mayors, I expected to find the level of growth in operating spending.

What we found instead was a giant free-for-all with taxpayer dollars.

How much higher was spending than the 28.7 per cent that would have been reasonable?

One hundred per cent? Bang on.

Municipal spending over an eight-year period was double what our benchmark suggested was reasonable.

So here is a news flash for B.C.’s mayors: You don’t have a revenue problem; you have a spending problem.

To fuel the spending addiction, councils have, for years, targeted small businesses. On average, small business pay three times more taxes than an equivalently-valued residential property while using fewer services.

Two-thirds of B.C. businesses now cite the cost of local government as one of their most serious concerns. This is up from one third a decade ago.

Residents have been protected from municipal overspending by local businesses, but hiking taxes on residents is not a policy the CFIB has ever supported.

With better control on spending, everyone’s taxes could be reasonable. If, for example, municipalities across B.C. had kept to a 29-per-cent spending increase over the past eight years, every family of four would have an additional $900 in their pockets each and every year.

The first step to fixing a problem is acknowledging you have one. The UBCM report shows that many mayors and councils aren’t ready to take that important step.

Laura Jones is the senior vice-president Research, Economics and Western Canada with the Canadian Federation of Independent Business.

 

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