Victoria’s spending worst in Canada: report

Victoria’s “overspending” has taken thousands of dollars out of the pockets of local householders over the past decade, says the Canadian Federation of Independent Business.

A CFIB report singles out Victoria as “the nation’s worst offender” for having inflationadjusted operating spending increase by 36 per cent — six times the rate of population growth from 2003 to 2013.

Richard Truscott, CFIB vicepresident for Alberta and B.C., said population growth is a reasonable indicator of what spending growth should be.

“As the population grows, there should be some ways for the municipal government to achieve economies of scale and use technology to keep costs down,” Truscott said.

“We see just the opposite. We see the municipal operating expenses go up. They go up faster than the population grows.”

While Canadian cities keep talking about having a revenue problem, the CFIB report says it is clear that cities should first get a handle on spending.

Victoria’s “overspending” totalled $4,683 per household between 2003 and 2013, says the report. That’s the total of the annual differences between actual operating spending and spending if it had been held to inflation and population growth.

Mayor Lisa Helps said the figures might be true for the past decade but the CFIB should focus on the next decade, especially since the city has refined its budgeting process in the past year.

“I hadn’t seen the study when we did our budget process, but I certainly heard loud and clear on the campaign trail and on a regular basis that we have to keep spending in line with what people can afford to pay,” Helps said. “Measure us again 2015 to 2025 and I think we’ll probably see some changes.”

Helps said inflation is a reasonable measure, but if population is to be considered it should take into account regional growth.

“Our population is 82,000 but on a daily basis we have at least 180,000 or more as our population using services.”

The report says “the elephant in the room” is employee compensation. In 2013, the share of operating expenses going to salaries, wages and benefits ranged from 45 per cent in Charlottetown to 64 per cent in Edmonton and Montreal. Victoria was the third- highest at 63 per cent.

The report says that the real spending on employee salaries, wages and benefits between 2006 and 2013 increased by 23 per cent in Victoria and 15 per cent in Vancouver compared with population growth rates of three per cent and nine per cent, respectively.

“Real spending increases beyond population growth may be justified if municipalities are providing additional services and/or better value for money for existing services. However, many taxpayers do not feel that public services offer good value for their tax dollars, or that value for money has increased accordingly,” says the report.

“With half or more of the overall operating budget being devoted to employee compensation, that’s obviously a main cost driver,” Truscott said.

“There can be some growth, but the level of growth we’ve seen over the past decade has caused some real problems.”