BC municipalities on fiscally unsustainable path says CFIB

Canadian Federation of Independent Business (CFIB) have released a new report

The Canadian Federation of Independent Business (CFIB) have released a new report that reveals operating spending by the vast majority of British Columbia’s municipalities have been rising at an unsustainable rate over the past 11 years.

The report titled BC Municipal Spending Watch 2013 looks at growth in real (i.e. inflation-adjusted) operational spending by each B.C. municipality between 2000 and 2011, and compares it to population growth over the same period as a benchmark to determine the level of fiscal sustainability.

The full report is posted at www.cfib.ca/bc.

“The vast majority of B.C.’s municipalities have charted an unsustainable course over the past decade.  While some city councils are working hard to get their fiscal house in order, the rest seem to be oblivious to today’s economic challenges,” says Mike Klassen, B.C. Director for CFIB.

Overall, B.C.’s population grew by 15 per cent, while real operational spending by all municipalities rose by 52 per cent, or about three and a half times faster.

In all, there were just 10 out of 153 municipalities in B.C. that kept operating spending in line with inflation and population growth in the last decade. No large municipalities (population of 25,000 and over) made the list.

“A B.C. family of four could have saved on average $5,302 in municipal taxes over the last 11 years if city councils kept their operating spending to the rate of inflation and population growth,” adds Klassen. “This is far beyond what should be considered as sustainable and fiscally responsible.”

Municipal revenue in B.C. totalled $7.9 billion in 2011. According to the B.C. Ministry of Community, Sport and Cultural Development, most of the revenue (39 per cent) came from taxation, such as property taxes, and 27 per cent was from the sale of services such as business licences.

“Those mayors and councillors who are pushing back against unsustainable tax increases to pay for things like big salary and benefit increases for staff deserve praise for their efforts,” says Klassen. “Residents and small business owners alike benefit when local governments keep their spending under control.”

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 population growth, conducting formal core service reviews, increasing fiscal transparency, and adopting sustainable wage growth policies.

As Canada’s largest association of small- and medium-sized businesses, CFIB is Powered by Entrepreneurs™. Established in 1971, CFIB takes direction from more than 109,000 members (10,000 in British Columbia) in every sector, giving independent business a strong and influential voice at all levels of government and helping to grow the economy.