UBCM Report on Fiscal Management in BC Municipalities
Comment on Fiscal Management in BC
May 16, 2011
In recent years, municipalities have been singled out in a series of reports published by the Canadian Federation of Independent Business (CFIB). These reports have raised questions about municipal spending, tax policy and accountability. These topics are worthy of public discussion, but they require broader consideration than the CFIB has been able to provide.
The intention of the attached Comment (PDF) issued by the Union of BC Municipalities (UBCM) is to bring forward information that has been neglected by the CFIB to provide greater clarity and an additional perspective for BC residents on these issues.
Key findings in the report include:
- Over the past two decades, local government spending has been driven by increases in two general areas: protective services; and parks and recreation. Over the same period, the portion of total spending related to overhead has declined.
- The share of the property tax paid by businesses has declined slightly over the past two decades. During the same period, residential owners have seen their share increase by 7 %.
- Contrary to the CFIB's claims that the business community does not have a voice at Council tables, 72% of the mayors and 59% of the councillors in BC's municipalities come from the private sector.
The report also draws attention to the impact of the CFIB's advocacy of a 2:1 cap on the ratio between business and residential tax classes. Practically speaking, the implementation of this policy would lead to either significant cuts in service levels or a tax shift to homeowners. The report calculates that the shift for the average homeowner would be nearly $230 annually. In communities with higher than average assessments, the transfer would be much higher.
One of the themes of the report is that there is a limit to what property taxpayers - whether they are commercial or residential - can bear. As local governments look at the costs meeting new standards mandated by senior levels of government or replacing aging infrastructure, it is obvious that new fiscal tools are needed.
In keeping with CFIB's reports, the Comment (PDF) focuses on municipal fiscal management, and does not examine trends in Regional Districts. Therefore, while UBCM as a rule uses the term local government in its publications, this report specifically addresses the situation in municipalities.
The Comment (PDF) was prepared under the direction of a Steering Committee drawn from UBCM, the Local Government Management Association and the Government Finance Officers Association, and was prepared by Mr. Allan Neilson-Welch.