Surrey, Markham and London come out on top as the Canadian cities with the clearest and most transparent budgets – the only three to earn an "A" – according to a new report that concludes municipalities lag far behind federal and provincial governments when it comes to explaining how they spend taxpayer dollars.
The C.D. Howe Institute report examined 10 years of budgets for all Canadian municipalities with a population of more than 250,000 or a budget of at least $500-million. The report ranks cities on two main criteria: transparency and accuracy.
For the accuracy ranking, Durham, Waterloo and Niagara regions, as well as the cities of Halifax and Toronto made the top five in terms of providing budget forecasts that were closest to actual year-end spending.
The report, released Wednesday, focused on municipal budgets from 2001 to 2010.
The worst offenders when it came to missing planned budget targets were Brampton, Vaughan, Peel Region, Halton Region and Markham.
The C.D. Howe Institute says there are several reasons why citizens will have a harder time understanding municipal budgets than provincial or federal government budgets. The main reason is that most cities use two completely different accounting methods for their start-of-the-year budgets and year-end final accounting.
The report's authors say municipalities should follow other governments by using accrual accounting in both cases. Accrual accounting allows governments to budget large purchases over several years, rather than booking a big expense in a single year.
"This is not a sensible basis for budgeting," the report states in describing the mixed system used by cities. "Senor governments long moved away from it; businesses do not do it; and even households, which are often more cash-flow-constrained than governments and businesses, typically do not count the full cost of a buying a car or a house in the same budget as the grocery money."
Berry Vrbanovic, president of the Federation of Canadian Municipalities, says the C.D. Howe report "misses" the fact municipalities are closer to the people they serve than any other level of government. In an email statement, Mr. Vrbanovic said long-term funding from provincial and federal governments would make municipal budgeting easier and the FCM is working on that with Ottawa.
Rankings: For providing clear and transparent budget documents
Durham Region B
York Region B
Halton Region C
Niagara Region C
Peel Region C
Waterloo Region C
Rankings: For providing budgets that prove to be accurate when compared with year-end spending (2001-2010)
1. Durham Region
2. Waterloo Region
3. Niagara Region
15. York Region
20. Halton Region
21. Peel Region