Friday, December 10, 2010

Kelowna's 10-year Tax Increase Record

You'd think Kelowna was in another world...
Yet they're only 45 km south of Vernon and Coldstream.

Excellent story and in-depth research by their community newspaper "The Daily Courier" (issue December 9, 2010).

Why "excellent"?
Because reporter, Ron Seymour, actually informed the public that Kelowna's proposed 2% property tax hike equates to a $30.00 increase in municipal taxes only.
He then writes something that Vernon's Morning Star does not report (and never has)...he concludes:

"This figure ($30.00) does not include other charges that appear on tax notices mailed to property owners...those levies, for such things as the school board, hospital board, and regional district, typically almost double the total tax bill."

Good reporting, good story!  Congratulations to The Daily Courier.

Could our area's residents hope for such worthwhile information in "The Morning Star"?

We can only hope...

"And Kelowna's Mayor, Sharon Shepherd, deserves kudos for her desire to keep the hike at, or below, the cost of living increase," offers Kia.

Residents here can only hope for that too...

Kudos to Kelowna, all the way around...

Monday, December 6, 2010

Coldstream Municipality Spent the least Per Capita

But don't send them a Thank You card yet.
This Mayor and Council have a long way to go before Coldstream is sustainable.

In the province of British Columbia from 2000 to 2008, municipal operating spending (excluding capital expenditures), grew by 57.7 per cent, while population and inflation grew by only 28.7 per cent.

Did anyone hear a little bell go off? 

By 2008, less than one in 10 municipalities (representing only 1.2 per cent of the provincial poopulation) had been able to keep spending growth in line with population and inflation growth for the period studied, reports the Canadian Federation of Independent Business in their B.C. Municipal Spending Watch 2010.

Not keeping spending in line must've been contagious, because Coldstream's spending has grown 60.7% since 2000.

Has population increased by 60%?  No.
Laudable is Coldstream's per capita spending in 2008 ranked lowest in B.C. municipalities for the second year of the study, amounting to $566 (vs. $501 in 2007).
Coldstream's population at 10,320 "just" squeaked into the ranks of communities with a population of 10,000+, which somewhat skews numbers.  To compare, Vernon's spending in 2008 was $995 for each of their 38,400 population.

But before you pat the backs of Coldstream's Mayor and Council, ask yourself (and them) why Coldstream's Fiscal Sustainability Gap (FSG) is so high (more than half of Coldstream's land is locked within the Agricultural Land Reserve, where few--if any--services other than water connections exist). 
  • Coldstream's FSG = 2.91.  Spending increased at nearly three times the rate warranted by population increases and inflation.
  • Vernon's FSG = 2.61.  Spending increased at just over two-and-a-half times the rate warranted by population increases and inflation. 
  • In Coldstream excess spending in 2008 amounted to $1,559,606.  If excess spending in 2008 had been eliminated, a family of four would have saved $618 on their property tax bill.
  • In Vernon, excess spending in 2008 amounted to $10,287,057.  If excess spending in 2008 had been eliminated, a family of four would have saved $1,070 on their property tax bill.
What's Coldstream Municipality spending our money on?
Yes, roads are being repaired; yes, aging infrastructure needs almost constant upgrading.

But we know where approximately half the money goes:
"At least 48 per cent of municipalities’ budgets go to salaries and benefits, with a further 15 per cent going to contracted services," continues the report.

Forty-eight per cent to wages and benefits?
The private sector could not survive with those levels, and it should be no different with public sector wages.
The only difference is municipalities simply dig deeper into our pockets at tax time.  Municipalities don't have to sell a product to make money.  When public wage increases are not prudently managed, it distorts local employment markets, reduces productivity, and increases tax levels.

Two years ago when small businesses were asked how satisfied they were with the value-for-money of municipal public services, most small businesses chose "poor" (48%) or "adequate" (37%).
Only 7% said their value for tax money from municipalities it was "good".

Why are businesses so peeved?   
Because small business pays a disproportionately larger share of property taxes relative to property value and services consumed while residents pay a disproportionately small share.

But data collection of public expenditures at the municipal level is poor, admits the study.  That, however, is where Alberta is a leader!  Alberta municipalities must report both the number of employees they have and their salary and benefit spending.  In B.C., only the number of employees is collected voluntarily by CivicInfoBC, and only one-quarter of municipalities comply!

According to a recent CFIB study, small businesses in British Columbia pay, on average, 2.94 times the property tax that residents pay based on the same assessed property value.  This is particularly unfair considering that in many municipalities businesses must pay extra for many services that are provided as part of the tax bill for residents, such as garbage collection.

One thing's for sure:  when public wage increases are not prudently managed, it distorts local employment markets, reduces productivity, and increases tax levels.
Municipal leaders are quick to point out they get only get 8 cents on every dollar of taxes raised by all governments.  However, they don't include that user fees now generate additional revenues equaling (or greater than) property tax revenues.  And since user fees are more times than not charged to existing property owners (applying for renovation permits, parking permits, etc.) this effectively increases even further the taxes portion the user pays!

It's not just business.  Can your family afford to keep paying above the "sustainable level" each and every taxation year?  Are you receiving as much "bang for your buck" as you did in services back in 2000?  In 2001 and successive years?
The answer is likely No.

Short of waiting for the next election what can be done?

Public sector wages must be frozen until they are within 5 per cent of wages for equivalent positions in the private sector.  Statistics Canada data has demonstrated that municipal employees are paid significantly
higher rates of overall compensation than their private sector counterparts.

Municipalities need to focus on core services (clarify via public forum).  And then stick to them!
Residents and businesses alike do not want to have their hard-earned tax dollars spent on cultural or wishy-washy programs.  "Culture is best disseminated by grandparents", intoned a local taxpayer recently, adding "not by some bureaucrat".  The core services issue should really hit home with all of us.  Only in the North Okanagan are levels of government virtually running into one another.  When one level of government infringes on the responsibilities of another level, unnecessary duplications and inefficiencies occur.  The wish of a Coldstream councillor comes to mind -- he wants to have the Lavington Park grass mowed more frequently (than Greater Vernon Services was doing).  Then there's the distribution and billing of water.  And water infrastructure...the list is never ending.  A year later, there are arbitrators and lawyers involved and a plan for a new Mechanic's Shop that just happens to have space for a new piece of equipment...a Coldstream municipality mower for the grass at Lavington Park.  But that's innuendo...jumping the gun, as Coldstream goes to a referendum re borrowing money for the Mechanic's Shop.

Spend, borrow.  Borrow, spend.  And just like the years-ago referendum for borrowing for a new Coldstream Municipal Hall, council has stated that even if the referendum is denied, they'll still go ahead and build the Mechanic's Shop (as they did by building the municipal hall when that referendum was denied by voters).

Begin the process of setting spending limits.  Zero-based budgeting!
Just like business does.
Read last year's CFIB study results here
When it comes right down to it, Coldstream's Mayor and Council should ensure that municipal operating budgets are on a sustainable path, and that all taxpayers receive value for money, not just residential taxpayers.

"But they haven't even adopted the recommendations in last year's report," muses Kia.
 No they haven't.