Monday, October 30, 2017

CFIB Report finds Municipal spending on the increase in Northwest BC

Just in time for Halloween, a national business organization is highlighting municipal spending as timely theme for the season of scary stories.

The annual report from the Canadian Federation of Independent Business keeping watch over municipal spending in British Columbia has been released and as they have in the past, the business organization is raising concerns over some of the spending habits of BC's municipal governments.

In their review published last week, the business organization puts the focus on a number of areas of spending by British Columbia's municipal governments, with the CFIB noting that wages both for civic staff and unionized workers continue to be the driving factor behind the growth of spending at the municipal level.

From their review of the financials, the CFIB observes that when it comes to funding wage increases, municipal governments often don't expand their horizons very much,  with the local governments looking for new revenues from familiar places, with the financial burden for the most part passed on to the taxpayer.

The CFIB report notes that wages and benefits now account for roughly sixty percent of municipal operating spending, though they also highlight that the other forty percent outside of payroll requirements have also grown over the last year.

Using data from a ten year period of 2005-2015, the report provides a snapshot of municipal spending for the 2015 financial year.

For municipal governments across the province, the report provides for three key recommendations when it comes to Operating spending, with the CFIB offering up the following:

Limit increases in operating spending to no more than inflation and population growth

Introduce zero-based budgeting, conduct regular service reviews, identify core and non-core services and consider contracting out to the private sector

Have suitable contingency funds for special circumstances (such as natural disasters, special events) that require an increase in operating spending.

When it comes to hiring at the municipal level, the CFIB offers up a few thoughts as well:

Limit compensation increases until public and private sector compensation levels are aligned. Any new employees should be hired at compensation levels in line with private sector norms for similar occupations. 

Increase pension sustainability by: reducing unfunded pension liabilities (without solely relying on taxpayer bailouts), eliminating early retirement provisions (e.g. bridge benefit) and enrolling new hires in defined contribution instead of defined benefit pension plans. 

Eliminate the banking of sick days and replace with affordable short-term disability plans. 

Consider reducing the size of the civil service (primarily through attrition). 

Share municipal staff between municipalities to find cost efficiencies and to allow small municipalities access to high quality employees. 

Reform negotiation/arbitration laws and practices to strengthen the municipal governments’ negotiation position.

As for the review of data for the province, the Northwest overall isn't likely to receive a Gold Star from the CFIB, with many communities in the region found near the bottom of the list when it comes to best use of municipal spending for the business organization.

For Prince Rupert the results offer a mixed signal, with the CFIB noting that spending is on the rise, however, by comparison, Prince Rupert has fared better in the report that some of the findings for other Northwest Communities where the CFIB flags concerns over the upward trends.

The CFIB findings do make note that the City of Prince Rupert has increased its spending from the last survey period from 2014, with the latest data available now pushing Prince Rupert out of the top ten of parsimonious communities from last year's review.

This year Prince Rupert is listed at 39th overall of the 152 communities reviewed,  a move in the wrong direction of thirty spots from last year when Prince Rupert had been marked at 9th overall in the survey that rates communities from Best to Worst in their spending ways.

From this years report, the notes include:

When it comes to Real Operating Spending per Capita Growth the CFIB notes a 24 percent decline from 2005-2015,  with Operating Spending per Capita in 2015 noted as at $2,745, an increase from $2,583 recorded in last years report

The CFIB however  records a five percent change upwards in Municipal spending per capita from 2014-15, while Real Operating Spending Growth is marked by a 34 percent decline over that ten year period.

And despite the city's ongoing theme that the population has grown, the survey from the CFIB cites statistics from 2005-2015 that show a thirteen percent population decline during that period.

The data, culled as it is from a period of ten years from 2005 to the 2015 financial year, would now include the first full year of civic governance for the current City Council membership.

2015 did make for a shift in civic spending themes from the years previous, with the first item of the new approach highlighted by the decision to make the Mayor's position that of full time status and full time compensation.

As well, 2015 marked the start of  a push towards increased city hiring, with a number of additional staff and workforce members added to the payroll from the previous CFIB report year of 2014.

Those indicators would suggest that the next report, to be delivered one year from now, might provide an indication as to which direction the City of Prince Rupert may be heading when it comes to the CFIB's areas of concern and placement in the rankings for the 2018 version of their Municipal Spending Watch.

The full list of Spending watch data for Prince Rupert and the Northwest is available on page thirty of the report.

Still, if the City is looking for some positive news from the CFIB report, they can point towards the findings for other communities in the region.

Despite the significant shift in its provincial ranking , Prince Rupert still stands a little further off the CFIB radar than such communities as Terrace, Smithers and Kitimat, with Stewart the one Northwest community that the CFIB notes as the worst when it comes to spending in the Northwest and northern BC.

The CFIB Report details the organizations concerns over the state of spending in Stewart as follows:

Stewart is once again BC’s worst overall performer. The municipality had one of the highest 2015 per capita spending level at $6,237 per person. Unfortunately, despite recent efforts to reduce spending, Stewart increased its per capita expenditure growth by 27 per cent between 2014 and 2015.

Across the Northwest, the rankings from the CFIB, arranged from Worst to Best, are as follows:

29th in NW -- Stewart (152nd in the province)
27th in NW -- Hazelton (148th in the province)
24th in NW -- Port Edward (145th in the province)
19th in NW -- Kitimat (126th in the province)
14th in NW -- New Hazelton (117th in the province)
13th in NW -- Masset (113th in the province)
12th in NW -- Port Clements (110th in the province)
11th in NW -- Terrace (109th in the province)
10th in North -- Smithers (104th in the province)
6th in North -- Telkwa (40th in the province)
5th in North -- Prince Rupert (39th in the province)
4th in North -- Houston (24th in the province)
1st in NW -- Burns Lake (10th in the province)

The CFIB Municipal Spending Watch Chart for 2017
(click to enlarge)

You can examine the full findings from the CFIB report here.

For more notes related to Municipal Government in Prince Rupert see our archive page here, while our snapshots of items from the remainder of the Northwest can be reviewed here.

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