Brief: Whoa, Nelly, Whoa ! Review of City of Victoria Preliminary Budget 2017
At first glance the proposed tax increases in 2017 – 2.91 per cent for the City of Victoria and 4.43 per cent for Victoria Police Department – appear modest until you factor in compound interest and population growth over the last decade or so.
Consider the 2016 British Columbia Municipal Spending report shows that inflation-adjusted municipal operating spending in Victoria increased by 30 per cent from 2004 to 2014, compared to population growth of 6 per cent. The real operating spending growth per capita from 2004-14 is 23 per cent, according to the Canadian Federation of Independent Business (CFIB).
CFIB concludes – and Grumpy Taxpayer$ agrees with the analysis – that tax rate increases such as those proposed by the City and VicPd are simply unsustainable.
Much of the City and region is experiencing economic growth not seen in 25 years. New assessment revenue was estimated at $1-million early in the year by BC Assessment, half of which by Council policy is earmarked for infrastructure reserves.
Grumpy Taxpayer$ believes this earlier estimate will turn out to be far more – possibly an historical windfall – that should be shared by all taxpayers and business owners and invested wisely. The money could be used to further close the gap in tax rates between residential and commercial properties. This historical windfall, along with the significant savings that are outlined in our recommendations below, suggest there’s no need for a tax rate increase at all.
We acknowledge the worthy challenge council and the City of Victoria has in preparing an annual budget in a large, complex and fragmented regional jurisdiction.
We are pleased with many of the budget improvements the City has made in recent years, and congratulate them on receiving the Distinguished Budget Presentation Award from their peers, The Government Finance Officers Association of United States and Canada.
That said, recent polls conducted by the Times Colonist on council performance and internal polling last year by the City of Victoria on proposed tax increases suggest there’s still some work to do to reach nirvana.
Most troubling, the average Canadian family now spends more on taxes than housing, food and clothing combined with 42 per cent of income going to taxes, and 38 per cent being spent on the basic necessities of life. Canadians spend more on taxes at every level including income taxes, consumer taxes, and municipal property taxes which one pays whether a property owner or indirectly as a tenant.
It’s likely even a higher percentage here in Victoria and the Lower Mainland, some of the highest cost of living areas in the country. All this is before the new municipal bills for sewage treatment and the bridge, the two largest infrastructure projects in the region’s history.
The ground has shifted. Budget documents are prepared months in advance and local, provincial, national and international economic forces can change dramatically. A 2.9 per cent tax increase may have been justified in the fall, but not now. After the American election, the economic and political climate is less certain around the world, particularly with Canada, the largest trading partner of the U.S. The B.C. government will have to hire hundreds of teachers and spend between $250 and $300-million more e-a-c-h year on education, after the dramatic win by the B.C. Teachers’ Federation. ICBC rates may increase from 16 to 42 per cent by 2020.
A very high cost of living, escalating. It’s well established this part of the country has one of the highest costs of living in Canada leaving homeowners vulnerable to escalating interest rates and declining property values. It’s even more so this past year, as housing costs have escalated dramatically driving up such fixed costs as insurance and mortgage payments. Meanwhile, income benchmarks within the City continue to lag most other regional jurisdictions.
For council’s consideration:
1. Develop compensation guidelines. Civic employees are generously compensated, far more than the private sector. It’s not only the elephant in the room, it’s the herd of elephants, and absolutely critical to moderating tax levels. We urge the municipality to press the province to develop compensation guidelines and regulations to prevent municipalities from poaching staff from one another and driving up wages.
2. Create Prosperity Through Economic Development. Grumpy$ acknowledge that quality of life for the city and taxpayers comes from moderate taxation but also from nurturing the economy and creating prosperity. We urge council to look at other similar jurisdictions and see how we stack up by comparison.
A supplementary budget request of $220,000 over five years is very welcome for the South Island Prosperity Project (SIPP), the new regional strategic and model for economic development in South Vancouver Island. Meanwhile, expenditures of $250,000 are proposed for 2017, a third less than 2016, resulting in a significant net loss for this file.
3. Make Victoria More Affordable. While this is identified as the fifth most important objective (a definition of what this means alludes us) given Victoria has the third highest residential and business tax rates in the region. Outcomes and actions on this objecitve seem to be limited to housing and related initiatives.
Out of respect to the taxpayer, consider for example an approach that limits ‘sticker shock.’ While it’s recognized fees need to increase, perhaps any large increase could be phased in over a number of years to allow the residential or business taxpayer to adjust.
4. Demonstrate Regional Leadership. While supportive of the City’s actions around studying regional governance and the possibility of amalgamation, we urge the City to broaden its actions.
An important role for example could be taken on joint buying of services and goods. For example, why the blazes aren’t the 13 jurisdictions collaborating on payroll services? Municipalities must work with the CRD to create a common procurement system to save tax dollars and improve services.
5. Easily Understandable Synopsis for Taxpayers. Preliminary budget documents in the case of the City are 1,000 plus pages and 50 pages. What’s also needed is a 3/5 page executive summary and financial statement, bottom line summation of financial position using simple numbers not pretty pictures. The average taxpayer isn’t going to wade through door-stoppers.
6. What about the debt side of the ledger? Nobody seems to talk about the debt. No where in the City budget are details about the largest project in the history of the municipality. Can we afford the bridge, how much have we paid so far, does our debt servicing become unmanageable etc. There should be a one page update to the taxpayer on this.
7. Supportive of Adding Real Estate Function. Grumpy$ is supportive of adding the new staff position for the role of land management. That person will oversee the daily operations and management of the plan to maximize returns to the City and ensure appropriate portfolio of city lands support City business requirements.
On the other hand, instead of spending $87,000 for a correspondence co-ordinator, we believe that role could be handled by the 18.6 FTEs in the well-staffed citizen engagement and strategic planning area.
8. Move to ‘Zero-Based Budgeting. Government tends to keep on growing unless councils refocus their mandates and goals in a rigorous, disciplined fashion. Instead of automatically adding a percentage increase every year in the budget, councillors need to start from zero. Every expenditure needs to be scrutinized and determined to be necessary to do a task. Perhaps start by zero base budgeting one municipal department every year.
9. Creative solution needed for Crystal Pool. The fate of the taxpayer is also at risk with news the replacement cost of the Crystal Pool and Fitness Centre may be as high as $68.4-million.
Something needs to be done about the aging Crystal Pool, that issue is not in question. The timing is problematic so can the taxpayer handle another big hit or can the project scope be moderated.
Why not strike a deal where the pool can be donated, owned and operated by the a group such as the YWCA? Will out-of-City users pay a premium for admission? How can the CRD help pay for the project through a regional assessment? Is there a more modest version of this project to consider? Is there a multi-use, private-public formula that might work?
10. Better value for taxpayers. Finally, there are powder puff statements in the budget under ‘our approach,’ specifically the four pillars of budget priorities, “Better is possible. Value customer experience. One city. Pride in all we do.'”
We’re good with that, but would ask a fifth be considered,
‘Better value for municipal taxpayers.’
2016 Total Tax Rate per $1,000 of Taxable Value for 13 Municipalities, Greater Victoria Chamber of Commerce, http://www.victoriachamber.ca/External/WCPages/WCWebContent/WebContentPage.aspx?ContentID=13444
Province must step up to the plate to improve integrity in local government, Grumpy Taxpayer$ Press Release. http://grumpytaxpayers.com/2016/11/13/province-must-step-up-to-the-plate-to-improve-integrity-in-local-government/
BC Municipal Governments on Unsustainable Fiscal Path: The 2016 British Columbia Municipal Spending Report, CFIB, http://www.cfib-fcei.ca/cfib-documents/rr3419_backgrounder.pdf
Available for Media Interviews:
Stan Bartlett, Chair, Grumpy Taxpayer$
John Treleaven, 1st Vice-chair, Grumpy Taxpayer$
250.656.7899, cell 250.588.7899
ABOUT US >>
Grumpy Taxpayer$ of Greater Victoria is a non-profit, unaffiliated, non-partisan, citizen’s advocacy group dedicated to lower taxes, less waste, and more accountable municipal government.