Monday, December 06, 2010

Municipal spending continues to raise alarms for CFIB

The Canadian Federation of Independent Business released its third annual report on municipal spending last week and much like its previous two reports of 2009 and 2008, the pace of municipal spending is giving it cause to issue warnings that British Columbia's cities and towns can't keep going on as they have in the past.

The 2010 edition of the review suggests that municipal operating expenditures continue to increase at an unsustainably high rate, 201 per cent faster than population and inflation. The net result being that  those municipalities need to fund their expenses through increases in property tax revenues and user fees.

Prince Rupert's numbers provided for a mixed picture, the CFIB could not collect enough data to provide some information on key segments of their survey, leaving us with a rather incomplete picture when it comes to where our municipal finances fit into the overall sustainability picture.

Our operational spending growth and inflation growth resulted in a 16.4 per cent decline in our Operating Expenditure growth, while we have seen a decline in population and inflation category down 3.9 percent from 2000-2008. A situation that has seen our excess spending in decline as well by some $3,819,738.  

That turn of events is probably more of an indication of our current economic climate, rather than a concentrated dedication to fiscal balance. With a declining population and less access to revenue, the city has been left with little room to work with in municipal budgets in the last few years. 

A situation that seems to have provided  for little room for the kind of excesses that seem to affect the other communities with large increases over the last number of years.

When it comes to determining the key Fiscal Sustainability Gap, Prince Rupert however becomes one of only a few special instances where the numbers can't provide an accurate picture. 

According to the CFIB, the FSG calculations could not be defined. A situation based on the fact that Prince Rupert has experienced that decline in municipal spending of 16.4 percent and the decline of population and inflation of 3.9 per cent, a result which when calculated provides for a relatively high FSG of 4.17 which the CFIB explains is not logically true.

However, one category still stands out for Prince Rupert and could raise some eyebrows. 

Despite a declining population and subsequent lower revenue possibilities from that decline, when it comes to per capita spending in 2008, the city is in second place overall when it comes to spending for communities between 10,000 and 25,000.   

According to the CFIB report, Prince Rupert's spending clocked in at 1,990 per capita which was a 1.7 per cent increase in the 2000/2008 period. 

You can review the Prince Rupert aspect of the CFIB's financials on pages eleven and sixteen of the report

With municipal elections on the horizon for 2011, the CFIB is hoping that the sustainability factor will begin to resonate with the province's municipal voters.  The organization has called for better accountability  and transparency from municipal governments as well as for the introduction of a municipal auditor to keep a check on municipal spending.

The CFIB also offered up a few other suggestions for municipalities to get a better handle on their fiscal sustainability future some of which include; controlling spending, freezing municipal wages until they are within five percent of wages for equivalent positions in the public sector, contracting out services, use zero based budgeting procedures

Prince George received the worst marks this year from the CFIB, which outlined that they have a huge fiscal sustainability gap based on their spending patterns over the last few years. The CFIB's less than flattering review of that city's spending and sustainability prospects can be found on page 8 of the report.

Needless to say, Prince George isn't particularly happy at being singled out as the most overspending community in BC, late last week the city of Prince George outlined its thoughts on the report and what it believes are the key aspects of it that don't reflect the true picture of that city's finances.

Mayor Says Spending Report Too Narrow in Scope
Mayor, Chamber president strike back after damning report

You can review all of the material from the comprehensive CFIB  review below.

BC Municipal Spending Watch 

Backgrounder Communities between 10,000 and 25,000

Backgrounder Communities between 5,000 and 10,000 

Backgrounder Communities over 25,000

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