Municipal spending too high, says CFIB
Small-business group says budgets exceed inflation and population growth
Municipal spending in B.C. is pushing past inflation and population growth, resulting in property taxes and fees rising faster than our ability to pay, says a national business organization.
“It’s time to start asking some tough questions about what’s going on because it’s just not sustainable,” Laura Jones, vice-president of the Western Canada office of the Canadian Federation of Independent Business, said yesterday. The CFIB represents 105,000 members nationally, 10,000 in B.C. and 800 in Greater Victoria.
“The biggest thing we are trying to achieve is awareness.”
Spending on the operating portion of municipal budgets in B.C. rose by 36 per cent between 2000 and 2006, which is 1.8 times more than the 20 per cent increase we would have seen if spending was held to growth in population and inflation, said the CFIB in its report titled B.C. Municipal Spending Watch.
Municipal spending coming under the CFIB’s scrutiny included policing costs, collective agreements with staff, recreation, culture, social services, general government, transportation and utilities.
Nine B.C. cities with a population of 25,000 or more had spending that was more than double inflation and population growth, including Victoria at 2.19 times, the report said. The CFIB calls this the “fiscal responsibility gap.”
In dollar terms, 2006 saw overspending of $502 million across B.C., said the CFIB, which has sent its report to every B.C. mayor and council member.
Property taxes rose 33 per cent between 2000 and 2006, compared to inflation and population growth of 20 per cent, the report said, adding fees went up 83 per cent during that time and transfers from senior governments increased by 110 per cent since 2000.
Yearly property tax increases add up over the long term, Jones said from Vancouver. “Most people’s wages and salaries are not increasing faster than inflation so if you increase the taxes, that’s leaving them worse off,” she said.
Just over 64 per cent of B.C. members responding to a 2007 CFIB survey support holding spending growth to population and inflation increases. Another 23 per cent were in favour of small increases or no increases. “It is a benchmark that most reasonable people would understand,” Jones said.
Attention is closely paid to federal and provincial spending, but Jones noted that “when it comes to municipal spending, I think municipalities are getting a bit of a free pass.”
Businesses are paying three, four and five times the rate of taxes levied on residential property owners, depending on the municipality, Jones said. “We want that ratio to start to improve.”
The report said that Victoria and the Lower Mainland community of Maple Ridge have a similar population, but Victoria’s local government spends almost twice as much per capita. “Why?”
Victoria Mayor Alan Lowe panned the report. “I don’t now what the CFIB is trying to prove here,” he said. Costs have gone up dramatically everywhere. If you are trying to provide the services the public expects, you have to spend in order to make that happen.”
Victoria’s budget is transparent and goes before the public every year, Lowe said. The budget includes a 1.5 per cent property tax increase annually for a capital fund to limit the need for borrowing in the future, he said.
At the same time, the city is dealing with social issues downloaded by the province, he said. “Victoria is an urban core centre where we have social issues, drug issues, homeless issues.”
About 225,000 people are in the capital city every day, he said.
Downtown Victoria is the region’s entertainment centre, Lowe said. “Our policing costs are skyrocketing ... I’d like to see the CFIB try to tackle some of our challenges and try to meet inflation with respect to our spending,” he said.
As far as cutting the property ratio between businesses and residential use, Lowe said, “then they should run for city council.”
Greater Victoria Chamber of Commerce chief executive officer Bruce Carter said his organization agrees the economy is challenged by the disproportionate rise in property taxes. “It is certainly a problem that the chamber has been aware of for some time.”
Housing, social issues, and health are not a municipal responsibility, Carter said. “They are responsible for operating the municipality and municipal infrastructure.” But municipalities challenged by social issues are getting involved in trying to find solutions, he added. “That’s a part of what is causing grief.”
A lack of a health-care system to adequately treat mentally ill people and those with addictions results in those people living on the streets, and leads to municipal costs such as policing, cleanup and street maintenance, Carter said.
Chamber members are concerned about property taxes rising past inflation, he said, adding the chamber wants the business-residential property tax ratio lowered to about 2.5. “We need a narrowing of those ratios to something that is reasonable.”