Business group says B.C. municipal tax hikes driven by salary spending

By John Bermingham, The Province November 5, 2009

Municipal salaries and benefits are the main culprit behind rising property taxes, says a B.C. small business group. In its second annual municipal spending watch report, released Thursday, the Canadian Federation of Independent Business says that wage and benefit hikes are the main cost-driver behind growing municipal spending. There’s a complete disconnect between the salaries and benefits in the public sector and the private sector,” said CFIB vice-president Laura Jones. “It’s completely unfair to taxpayers.” Jones estimates that municipal workers earn 10 per cent more than workers in business and industry, and 35 per cent more if you factor in benefits.

And there’s also wide variations in staffing levels, per head of population, the report shows. Abbotsford has five employees per 1,000 people, while West Vancouver has 29 and Whistler 46. “We need to start asking some questions,” said Jones. “Why does one municipality need 29 employees per thousand population, while another needs five?” “There could be a lot more done to control costs at this level of government.” Maureen Bader, B.C. director of the Canadian Taxpayer’s Federation, said that in North Vancouver, 91 civil servants made more than $100,000 last year, compared to 60 in 2006. And in West Vancouver, 166 city workers made over $75,000. “We’ve seen this across the province,” said Bader. “Self-interested pols are allowing municipal salaries to spiral out of control.”

Municipalities don’t face the same cost constraints as private industry, and can let tax-funded salaries go up without much, if any, restraint.” Bader said most of the tax burden falls on business and industry, and in some municipalities the industry tax rate can be 20 times higher than the residential tax rate. The CTF has called for a cap on proprety tax rates, and to create property tax rates for residents, businesses and industry. “This will precent municipal politicians from subsidizing services to residents as a vote-buying tactic, while sending the bill to business.” Retired financial manager Garrett Poleman, who is among a dozen members of a West Vancouver ratepayer-group, said “The big driver is definitely salaray and benefits, because that is 80 per cent of operational budgets,” said Poleman. Hiring more staff brings higher salaries, and annual wage increases are steadily in the three-to-five per cent range. “There’s been no barrier, no brake,” he said. “So you end up paying more taxes.”

And in Vancouver, property taxes could rise 4.8 per cent next year, and five per cent in 2011, just to cover salary increases of $26.7 million and $28 million respectively.(more)