Hey, big spender!

By Jeremy Deutsch - Kamloops This Week - June 08, 2008

A new report by a group representing Canadian small businesses suggests municipalities in B.C. — including Kamloops — are overspending to the detriment of the taxpayer. The Canadian Federation of Independent Business (CFIB) report looked at municipalities’ operating expenditures between 2000 and 2006 and found that, on average, municipalities were spending 1.8 times more than the growth of population and inflation. According to the report, Kamloops was spending 1.66 times more than growth and inflation. Based on what the CFIB calls a “fiscal responsibility gap”, the City of Kamloops overspent by $8.6 million in 2006 alone. Laura Jones, vice-president of CFIB Western Canada, said the findings are problematic because incomes aren’t necessarily going up faster than inflation, leaving less money in taxpayers’ pockets. But a bigger concern for taxpayers, Jones said, is whether the spending is sustainable.

She said the spending may be fine over a six-year period, but it raises serious questions if the rate of spending continues. “What plans do mayors and councils have to make sure spending increases are reasonable going forward?” Jones asked. The report also indicated if spending at the local government level had been kept to the growth of population and inflation over the last six years, taxes across the province could be 17 per cent lower. “These are hard-earned taxpayer dollars that are being spent,” Jones said. “I think there needs to be a level of accountability and scrutiny around this spending.” She pointed out small businesses already pay more in taxes, so they are hit particularly hard by overspending.

But Mayor Terry Lake scoffed at the report, calling it “unfair.” He said the CFIB forgets that creating a community that people want to live in is good for business and that city spending is directed by the wants and needs of residents. The report makes a number of recommendations, including taxation laws that would tie local government’s operating spending to the rate of population and inflation growth. Lake said it’s not realistic to use inflation as a measuring stick because the city’s spending needs — which include things like asphalt for roads or steel for construction — increase at a different rate than inflation. Lake pointed out that property tax increases in Kamloops in the past 10 years have been fairly close to the rate of inflation. “These kinds of studies tend to paint everyone with the same brush,” he said. And Lake argued that in Kamloops, the situation is positive for residents and businesses. “I would say we’re doing the right thing in terms of the way we’re managing the city,” he said. The city with the worst rating in the report is West Vancouver, which spent 3.94 times the growth in population and inflation.
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Don Quixote Note: The reaction from Penticton can be found in an article Report finds fault with municipal spending levels

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UBCM questions spending report Penticton Western June 8

The organization representing municipalities in British Columbia is defending itself against charges from a business group critical of municipal spending. The Canadian Federation of Independent Businesses said in a report last week that municipal spending in British Columbia is out of control. Property taxes would have been 17 per cent lower if municipalities had tied their spending to inflation and population growth, a charge now refuted by the Union of British Columbia Municipalities. “I don’t think it is practical to suggest that local governments in British Columbia should arbitrarily drop property taxes by 17 per cent,” said Susan Gimse, UBCM president. “Our residents expect local governments to provide infrastructure and deliver services that improve the livability, health and safety of our communities. They want high quality drinking water, adequate levels of policing and recreational facilities for our children to play in. This costs money.” Gimse also used repeated her comments that the current model of financing local governments through property taxes is outdated. “There is only one taxpayer and when you have the federal and provincial governments lowering taxes and running surpluses, what do you think will happen at the local level?” she asked. Local governments need a wider array of options for funding services at a local level, she said. “This has been a constant theme from our membership for some time now, and we will continue to make this point.”