Canada’s local government leaders wrapped up their annual conference on Sunday with a predictable call for long-term infrastructure funding from senior governments. But critics say municipalities first need to do a better job of managing their day-to-day spending.
Municipal leaders at Vancouver’s gathering of the Federation of Canadian Municipalities were on the defensive when challenged about spending growth in the large urban centres. But small towns, rarely in the spotlight, are also facing new scrutiny – especially in B.C. with its new spending watchdog.
In the community of Dawson Creek in B.C.’s booming northeast, the city uses most of an annual $12-million “Fair Share” grant from the province to pay for daily operations.
That kind of fiscal management needs to be put under the microscope, said Mike Klassen, B.C. director for the Canadian Federation of Independent Business. The CFIB released a study last week showing municipal spending is growing far faster than population growth and the rate of inflation.
“Our message to local government is, you have to find a way to deal with what you have,” Mr. Klassen said in an interview. “Stop saying ‘yes’ to every request.”
Mike Bernier, who recently stepped down as Dawson Creek’s mayor to assume his new post as the B.C. Liberal MLA for Peace River South, is leaving behind some tough choices for his successor.
The city of 13,000 people is only posting a balanced budget by siphoning more than 75 per cent of its Fair Share dollars to cover operating costs for services that include a “state of the art” arena, the Encana Events Centre, and a money-losing regional airport.
“There is not enough tax revenue coming in to meet operations needs, so some of the Fair Share is used to offset that,” Mr. Bernier said in an interview. “That’s the decision the people in Dawson Creek are going to need to make. If they don’t want as much Fair Share used in operations, that means taxes go up, or we start cutting services. Not too many options there.”
Earlier this year, a consultant’s report commissioned by the city under Mr. Bernier’s watch concluded that Dawson Creek is facing a fiscal crunch in the future and needs to look for capital investments that are self-sustaining. “Paying for a new sporting complex is one thing, managing it in the future from operating budgets is another,” the report warned.
Under the Fair Share agreement, the provincial government will transfer almost $40-million this year to eight communities in the Peace region, a deal that is supposed to compensate for regional economic activity that doesn’t directly benefit local government. Premier Christy Clark promised during the election campaign to extend the deal, which is set to expire in 2020.
But Lori Ackerman, mayor of neighbouring Fort St. John, said her city is reluctant to use their Fair Share funds for operations because there is no certainty that the money will keep flowing. More than 97 per cent of the money is used for capital investments in Fort St. John. “There is a sunset clause on that fund and if the province enacted that, we don’t want to be stuck for day-to-day operations which must continue,” Ms. Ackerman said.
Dawson Creek’s spending habits will be under the microscope this year – the city is one of the first communities to undergo a review by the province’s new Auditor-General for Local Government.
Basia Ruta, the municipal auditor, said her role is to help local governments improve accountability and fiscal planning. In the case of Dawson Creek, that means looking at the business case for projects like the community’s subsidized arena.
“We’ll be asking questions about, how did they come up with those needs, and then taking it over the longer term.”
Jordan Bateman, B.C. director of the Canadian Taxpayers Federation, said he wants to see the auditor move quickly to provide scrutiny of programs like Fair Share. “This is taxpayers’ money, there should be strings attached to it. We shouldn’t be encouraging wild, unaccountable spending.”