The arbitration system in B.C. is broken, and part of the reason for an ongoing and unsustainable rise in municipal costs, according to the Canadian Federation of Independent Business.
Aaron Aerts, economist with the B.C. office of the CFIB, said their 2017 Municipal Spending Watch report shows local governments across B.C. continue to spend faster than their communities are growing.
A big part of what is driving that spending is wage growth, especially in protective services.
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“That is arguably outside of the city’s control when they go to arbitration and the police and fire are getting four per cent increases year over year,” said Aerts, adding that there needs to be a strong effort to make sure collective bargaining processes work and to strengthen the position of the municipality if it does go to arbitration.
“We often hear that they feel they are outgunned at the table,” said Aerts.
A 2015 arbitrated settlement brought Penticton firefighters to wage parity with 98 per cent of the firefighters in the province after five years of failed contract negotiations.
Aerts said looking at comparable municipalities in the arbitration process matters, but arbitrators also need to look at what the realities are in each community.
“Often they look at what they classify as a comparable in a different municipality when there are significant differences,” said Aerts. “There’s the ability to pay for municipalities, differences between what a firefighter does in each community.”
Related: Alarm bells ringing on City of Penticton finances
Aerts said the province should make it a little bit more clear that those elements should be focused on with greater scrutiny.
The Municipal Spending Watch looks at spending data from 2005 to 2015, the latest year for which data is available. Over that period, the report concludes inflation-adjusted municipal spending increased 46 per cent, while B.C.’s population only increased 12 per cent.
“To be abundantly clear, this means that local government spending is growing nearly four times faster than populations are,” reads the report.
According to the report, Penticton’s spending per capita has grown 36 per cent over that time period (seven per cent over 2014). The actual growth of the society the population has only grown by nine per cent.
“Property tax growth is almost exactly correlated with spending growth,” said Aerts. “When you have this spending growth we’ve been seeing, you’re going to see property tax growth that is comparable.”
Even though the latest data available is two years out of date, Aerts said the report still is relevant for city councils and administrators, showing what kind of trend the community is on compared to other municipalities, highlighting patterns and root causes of changes.
From there, he said, it would be up to the mayor and council to judge how their city’s spending has been doing in the intervening period.
