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

A pat on the back and a slap on the wrist from the CFIB

“Despite the fact that Prince Rupert was one of the best performing municipalities when it came to controlling increases in spending over time, per capita spending levels show the local government still spent more per person compared to all other municipalities with a similar population.”—A synopsis of the findings of the Canadian Federation of Independent Business report into municipal spending.

Prince Rupert was held up as an example of two extremes in a recent report from one of Canada’s most well known business organizations.

The Canadian Federation of Independent Business compiles reports on a yearly basis on the state of many issues of Canadian finance; one of the most anticipated is its annual review of municipal spending.

It’s a report that infuriates some and confirms the worst fears of others, it also invariably is a report that usually raises the hackles of municipal officials who suggest that bean counters don’t always look at the big picture.

In the case of Prince Rupert our floating population base seems to have swung back towards the optimistic levels, as for the purposes of this accounting exercise our population was tagged as 15,281 using numbers compiled by the provincial statistics agency.

Once they finished counting the potential taxpayers it was time to crack some numbers down, with the CFIB determining that for operating spending growth we got a bouquet of sorts for out control over spending growth. We were listed at the bottom of the list of the most anxious to spend money on operations, settling at -26% growth, while Langford in the booming portion of Greater Victoria was tops in spending on their needs with a whopping 193.6% growth.

Our numbers in that category are no doubt attributed more to a lack of financial resources (an already overtaxed base of rate payers primed for a rebellion at times) than any actual dedication to holding the line on infrastructure. In fact, as the financial troubles have continued in Prince Rupert many projects have been delayed over the years, which most likely accounts for our good showing in actual expenditures.

However, the CFIB raises its eyes at our numbers when it comes to per capita operating spending, where we rocket to the top of the list of the 15000 to 25000 bracket, with per capita spending of $1,477, good enough for first place in that less than desirable category.

By comparison Pitt Meadows with 17,532 residents has only spent $705 dollars per capita, the most efficient in the eyes of the CFIB for their financial savvy.

Prince Rupert was the only municipality on the list to trend in the negative numbers in the Fiscal responsibility Gap category registering a -2.66 while the parsimonious guardians of the purse in Pitt Meadows we listed as registering a +1.6.

The findings arrive for our consumption just in time for your tax bill to arrive at your door, and as a debate rages on the local message board hackingthemainframe. On Prince Rupert’s chat board of record, the pro-Herbian forces and the anti-Herbite clans are taking on each other in the interpretation of numbers and the pursuit of municipal governance.

One participant has even taken the time to break down the numbers reported to the BC Government by the city in regards to employees on the payroll in all categories of municipal employment

His/Her findings show, that in addition to Prince Rupert’s population being lower for accounting purposes this time, (the city is listed at 12,815 in this report) the city is the home for more municipal employees than all other municipalities of a similar population in the province.

Prince Rupert is listed as having 161 Full time employees, 8 part time employees and 72 seasonal, by far holding down the top spot of the list of assembled municipalities of similar size.

Comox with about the same population gets by with 29 full time, 3 part time and 4 seasonal workers. Courtney which has about 10,000 people more than Rupert lists an employee roll of 92 full time and 20 seasonal workers.

While everyone’s favourite measuring stick in the northwest Terrace, reported 72 full time and 11 part time workers on the payroll.

Unknown in the Prince Rupert numbers is if umbrella organizations such as CityWest and Tourism Prince Rupert, et al, are included in that 161. Though the general consensus seems to be that CityWest as a stand alone business, would report separately and not be considered part of the reported numbers from Prince Rupert.

Perhaps the city’s website (or that handy little insert that came with the tax bill) could offer up some information for its citizens as to the nature of our workforce and list the amount of employees in each department and all umbrella organizations that receive civic funding, my guess is that the average citizen might be surprised at what they’ve invested in.

Regardless we’re sure it would help formulate debate in the city and give our Mayor and Council a better idea as to what the public really wants to be on the hook for on a day to day and dollar to dollar basis.

The CFIB report can be found here while the Northern View summation is posted here and provided below.

To join in and watch the grenades get lobbed or to toss a few of your own, check in on the fun at hackingthemainframe.

Prince Rupert has the lowest operational spending increase in the province
By Shaun Thomas

The Northern View

June 04, 2008
Only on the web.
Black Press

A report released by the Canadian Federation of Independent Business paints an interesting picture of the spending habits of the City of Prince Rupert.

The report, entitled “British Columbia Municipal Spending Watch”, indicates that the rate of operational spending growth far exceeds inflation and population growth between 2000 and 2006 amongst most municipalities – 35.7 per cent compared to 20.1 per cent. However, when it comes to Prince Rupert that is not the case.

In fact, Prince Rupert had the largest decrease in spending growth amongst all of the communities in the province over that period of time, with spending falling by 26.3 per cent. Based on the numbers used in the report, that puts spending growth 2.66 times below the inflation and population growth during that time period, also the lowest in the province.

The report places Prince Rupert in with communities between 15,000 and 25,000 based on numbers from B.C. Stats, and Prince Rupert had the highest per capita spending per capita within communities in that division at $1,477 per person. When compared to communities with a population between 7,500 and 15,000, Prince Rupert still sits in the top five of per capita spending.

“The example of Prince Rupert illustrates the importance of not only looking at trends in spending over time, but also at the levels in spending,” the report stated.

“Despite the fact that Prince Rupert was one of the best performing municipalities when it came to controlling increases in spending over time, per capita spending levels show the local government still spent more per person compared to all other municipalities with a similar population.”