Thursday, October 30, 2014

Municpal Spending Not Sustainable

Rapid rise in spending threatens fiscal sustainability of B.C. municipalities

Report shows operating costs grew 3½ times faster than population growth 2000-12

VANCOUVER, October 30, 2014 – The Canadian Federation of Independent Business (CFIB) released a new report today that reveals the vast majority of British Columbia’s municipalities have been increasing their operating spending at an unsustainable pace since 2000.

The 7th edition of the B.C. Municipal Spending Watch ranks 151 municipalities based on 2000-2012 inflation-adjusted operating spending growth and the most recent spending levels per capita in 2012.  The worst ranked municipalities show inflation-adjusted spending far outpacing that of population growth, and had higher than average operating spending per capita.

The municipality of Stewart ranked as the worst performer in this year’s report, while Lake Cowichan was best.  None of the provinces’ largest cities (population of 25,000 and over) were able to keep their spending to sustainable levels, with West Vancouver, Langford and Penticton being particularly poor performers. That being said, Penticton has recently taken steps to better control its spending. Vancouver and Victoria are ranked 86th and 105th, respectively, in this year’s report.

“Far too many municipalities have charted an unsustainable course over the past dozen years. Thankfully, some mayors and councils have tried to curb their spending habit. But the rest seem to be okay with washing their hands of it, leaving the issue for future generations of municipal leaders to deal with,” says Richard Truscott, Director of Provincial Affairs.

BC’s population grew by 15 per cent from 2000 to 2012 while total inflation adjusted municipal operating spending rose by 55 per cent, three and a half times faster. Only 8 out of 151 municipalities kept their operating spending in line with inflation and population growth.

“A B.C. family of four could have saved on average $8,356 in municipal taxes over the last 12 years if municipal councils had kept their operating spending to the rate of inflation and population growth,” adds Truscott. “Spending growth of this magnitude is simply unsustainable.”

“Those mayors and councillors who are spending within their means, including controlling the growth in salaries and wages for municipal employers, should be praised for their efforts,” says Truscott.  “When local governments keep their spending under control, both small businesses and residents reap the benefit by not getting stuck with tax hikes.”

The CFIB report makes a series of recommendations to enable municipal governments to better control growth in operating costs, including: limiting spending increases to the rate of inflation and population growth, conducting formal core service reviews, increasing fiscal transparency, and adopting sustainable wage growth policies.


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