Don’t shoot the messenger on city spending

Published originally in Vancouver Sun, June 3, 2013

In their efforts to debunk the Big City Spenders report issued by the Canadian Federation of Independent Business, local politicians and their representatives resorted to name-calling instead of engaging in a conversation.

Mayor Gregor Robertson of Vancouver called the report “bogus” with “no basis in reality” and labelled the idea that cities are overspending as “hysterical.” Vancouver Coun. Raymond Louie labelled CFIB’s findings as “lazy sensationalism,” while Burnaby Mayor Derek Corrigan blasted CFIB’s researchers as “simpletons.”

Experience shows that shooting the messenger rarely succeeds as a communications strategy. CFIB has developed a thick skin over its 40-year history of challenging our political leaders on behalf of small business.

A more effective strategy might be to use CFIB’s report as a defence from the inevitable pressure they will get from public sector unions and others demanding more services. After all, what Canadian municipality could function without the private sector employment, tax revenue, and the economic activity that small business provides, and which pays for public sector services?

For years, we have all heard the mantra from the Federation of Canadian Municipalities that our cities are underfunded, and that the municipal slice of the taxpayer revenue pie is too slender. FCM says that senior levels of government need to pour more dollars into local government. While FCM’s arguments sound compelling, their challenge is to prove them definitively.

CFIB’s research shows municipalities do not have a revenue problem, only a spending problem. None of the counter-arguments can justify inflation-adjusted public spending increasing by four to 12 times the rate of population growth. Complaints that CFIB used the wrong measure, or didn’t collect data back far enough, or didn’t factor in funding transfers by TransLink are either misleading, or have little effect on the final numbers.

Then there is the myth about downloading by senior levels of government. It is true that transfers from senior levels were cut during the 1990s to reduce the deficit. And while the provincial and municipal government had to deal with the cutbacks then, today many programs involve federal and provincial partnerships and significant funding to go with it.

From 2000 to 2010, transfers to B.C. municipalities from senior levels of government increased by 273 per cent, which more than made up for the lost revenue from the 1990s. During the same period other sources of revenue also increased; such as property taxes (by 69 per cent), revenue from parking meters, fines and business licences (by 135 per cent), and development cost charges (by a bewildering 798 per cent).

In the City of Vancouver, about $200 million was collected from developers in community amenity contributions, cost levies and a host of other fees. That is about one-fifth of the city’s annual budget. Ultimately, it is homebuyers in the city that end up footing the bill.

While many cities like to boast about keeping property tax rates at or slightly above the rate of inflation, it overlooks their significant increases in fees, development levies and utility charges imposed on taxpayers. Meanwhile, FCM continues to make the case for even more funding and taxing authority for cities.

During the four-day FCM annual convention in Vancouver attended by 2,000 representatives of Canada’s municipal governments, only one hour was set aside to discuss city finances. And even then the meeting was focused on how to increase revenue, not spend sustainably. This is why CFIB urges local government officials to change the conversation away from asking for more, and making more effective use of what they already have. CFIB will always praise fiscal discipline when we see it, but we will criticize municipalities when they should do better.

We are undaunted by name-calling. Only by pushing hard for good public policy can citizens and small businesses thrive in those communities.

Mike Klassen is CFIB director of provincial affairs, British Columbia.