Thursday, May 30, 2013

CFIB report provides a rebuke to Canadian cities for spendthrift ways

It's a report timed as to release as the nation's municipalities gather in Vancouver at the Federation of Canadian Municipalities convention in that city.

And when they start clicking on their laptops and such, the Mayors and City Managers not only of the Big Cities, but of the smaller ones as well, won't be overly thrilled at the perceptions that the CFIB are presenting about their spending patterns and the constant request of more revenue from the tax paying public.

The preamble to the report outlines how municipal spending has increased by 55 per cent in Canada, while the population has only grown by 12 percent. With the main increase in that spending coming by way of public sector wages and benefits, which take up between 52 and 67 per cent of operating spending the three big cities reviewed.

It's a situation that the CFIB believes has Canada's big cities heading for a financial crisis if they don't reign in their spending.

National Post-- Canadian cities headed for financial crisis if they continue to overspend: report
Vancouver Province-- Spending report slams local governments
CBC-- Cities need to reign in spending, says report

There are of course counter arguments to the CFIB findings, as seen below. Local government wages and the CFIB's municipal manipulations

However, the CFIB which has made the Municipal Spending report an annual thing (the report released yesterday is their fourth review), no doubt will stick to their figures and opinions, over what they see as unsustainable finances at the municipal level.

And while those numbers may not reflect the situation in the smaller communities, the theme that spending continues to increase, while population stagnates or declines is one that is constant in many rural Canadian communities.

The prospect of financial trouble is also not limited to Canada's major population centres.

During the recent City of Prince Rupert budget debate, there was much talk of the city's financial picture at the moment.

Among the many concerns outlined during that process, were the loss of dividends from CityWest, the continuing drain by Watson Island on the City's finances and all the other issues associated with running a city with a small population base and declining assessment base.

At one point even, the Mayor made mention of the Bankruptcy word in the context of the City's concerns over Watson Island, a declaration that even those major cities examined by the CFIB have not had to whisper yet.

To get a better understanding of what the smaller cities are up against, the recent property tax notices mailed out to the community provides a helpful guide to where your money goes.

As we outlined on the blog earlier this week, the majority of the tax revenue collected by the City of Prince Rupert is destined for basic city services such as police, fire, recreation and infrastructure concerns.

And while Prince Rupert would seem to have a few extra financial twists to keep in mind (ownership of a Communications company and the running of a transportation ferry for instance) the City is probably not alone in the growing gap between the cost of providing services and the revenues they have to put towards them.

Maybe the CFIB may wish to expand their review process and examine the municipal scene in the smaller communities as well, it seems that there's no shortage of items and concerns to examine beyond those bright Big City lights.

We have a feeling that they might find some of the solutions from Prince Rupert worth a review.

However, judging by their opinions over the ways of Big City spending, we suspect that the CFIB probably would take issue to a few of the City of Prince Rupert's thoughts on financial planning.

The CFIB report can be reviewed here.

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