I wish to respond to the recent articles regarding the Canadian Federation of Independent Business's B.C. Municipal Spending Watch report.
Among other things, the CFIB report claims a 48 per cent jump in District of North Vancouver operating costs since 2000. This is factually incorrect and reflects an oversimplification of the very complex and challenging issues that must be considered when examining municipal financial trends.
The CFIB report suggests that capital funding is excluded, but ignores the fact that financial reporting standards changed during the 2000 to 2009 time period with more major expenditures now reclassified as operational. Almost half of CFIB's claimed increase relates to reclassifications, a factor the CFIB has chosen to ignore.
The CFIB's argument that municipal spending is out of control is predicated on the premise that municipal spending is for the most part discretionary.
Regional fee increases for Metro Vancouver have grown at a much higher rate than municipal fees and tax increases and account for about eight per cent of the 48 per cent cited by the CFIB.
Higher federal standards for water and waste treatment and less senior government funding for these large projects will result in double-digit increases for regional services becoming the norm rather than the exception for the foreseeable future. This reduces even further the limited flexibility municipalities have to finance municipal infrastructure replacement.
Another noteworthy consideration is that municipal cost drivers are very different than the Consumer Price Index.
Costs associated with fuel prices, infrastructure replacement, and labour often exceed CPI and drive spending irrespective of the rate of growth in a municipality. This is especially true with respect to labour costs where, although municipal policy states that employees should not be paid more or less than other staff in similar positions in the private and public sector, both police and fire salaries are outside of local government control.
As municipal infrastructure assets like roads, water, sewer, storm, and facilities age, maintenance and replacement costs increase at a rate higher than CPI. Deferring maintenance today to achieve a level of spending equal to CPI will result in major expenditures in capital sooner than necessary. The district strives to time expenditures - operating, maintenance and capital - over the life of assets at the lowest cost to avoid delaying maintenance and pushing deficits to the next generation.
Every year the district looks to maximize savings and to identify new revenue sources.
The district continues to lobby senior levels of government to commit to more stable annual funding that supports not just capital but operating and maintenance costs as well. The truth is that more funding options are required at the local level to maintain what we have, so that we are not forced to rely solely on our traditional revenue sources, namely property taxes and user fees.
The CFIB plays a role in raising public awareness about fiscal responsibility. In order to have a fulsome discussion about spending growth, however, the CFIB analysis must be refined to pay justice to the sophistication of municipal spending by giving recognition to changes in accounting practice over time, the impact of other governmental jurisdictions on our budget and the enormous challenge of replacing billions of dollars of assets with limited revenue-generating capabilities.
A meaningful discussion cannot occur until the CFIB stops pulling information from municipal financial statements that only tell a portion of the story and do not reveal the true complexities of municipal spending. Only after the CFIB amends this practice will the conversation about spending growth become meaningful and constructive.
Richard Walton, mayor (and chartered accountant), District of North Vancouver