By Laura Jones
Recently, Vancouver hosted municipal leaders from across Canada at the annual Federation of Canadian Municipalities conference.
But the proverbial elephant in the municipal living room – spending – is getting little attention.
In fact, only 45 minutes of the four-day conference was dedicated to municipal financing. Most of that conversation probably went something like this: “We have suffered terribly from the downloading of other levels of government and need more taxing powers to address revenue challenges, including the ‘infrastructure’ deficit.”
This is the wrong conversation. It does not deal with the underlying challenge that municipalities face with respect to their finances.
Let’s examine municipal spending. It has increased dramatically over the past 12 years.
Municipalities can’t run deficits, so that means their revenues have also increased dramatically.
It is reasonable to assume that municipal spending would keep pace with increases in population and with increases in prices (inflation). Across Canada, population growth between 2000 and 2011 has been 12 per cent.
Over that same time period, inflation-adjusted municipal operating spending increased by a jaw-dropping 55 per cent. In other words, the pace of municipal spending growth was over four times the growth in population and inflation.
Put another way, municipalities have increased per-person spending by over 30 per cent. Do you feel like you are getting 30 per cent more services from your municipal government?
It is tempting to blame other levels of government for municipal problems. But does that really make sense? Municipalities claim they are falling behind on one of their core responsibilities-infrastructure.
At the same time, they say they need more revenue to deal with problems not addressed adequately by other levels of government, like housing and health. This is like saying I couldn’t do my job because I was too busy doing yours. It’s dysfunctional and confusing to voters.
While the 1990s may have been tough for municipalities, as senior levels of government tried to get their spending under better control, the last decade has made up that ground. Since 2001, transfers from senior levels of government to British Columbia municipalities increased by 273 per cent,
So, where is all this new municipal revenue going? Municipal employment increased by double the rate of population growth over the past 12 years.
In addition, municipal employees make 36 per cent more in wages and benefits than equivalent jobs in the private sector. To unravel the overspending, this is where we must start.
We are having the wrong conversation about municipal financial challenges. Municipalities are not challenged by too little revenue; they are struggling to keep spending within reasonable bounds.
We need to change the conversation because when you ignore the elephant in the room for too long, it invariably makes a mess of the room, and everyone in it.
Laura Jones is executive vice-president for the Canadian Federation of Independent Business.
