Savvy Taxpayers

They're watching Coldstream and Vernon more than ever.

And not liking what they see.

Yet another Letter to Editor, Vernon Morning Star, February 13, 2013, condensed for brevity:

"The electorate of Vernon have three mutually contradictory objectives:  low, zero or, (gasp!), even negative, changes to tax rates, no increases in user fees, and no reductions in services.

"Why is it always easier to find reasons to spend

than to not spend?"

W.Polnicky

These three goals cannot be attained simultaneously unless the overall size of the economy of Vernon grows, so that we have a larger tax base to fund the same level of services with no tax or user fee increases...
During the last civic election campaign a number of residents expressed concern about the parlous(sic...perilous) state of the local economy.

I recently attended the 'public workshop' in support of the...Core Services Review.  Most of the potential cost-savings opportunities presented, some of them in the millions of dollars per year, were summarily rejected by the public present.

Why is it always easier to find reasons to spend than to not spend?  Why is it always easier to hire more staff than to reduce staff, this at a time when the amount and proportion of the city budget dedicated to staff wages continues to grow faster than either the tax base or the population?  How can this possibly be sustainable?

Have we not learned from the Canadian experience in the 1990s, and the U.S. and European experiences right now that, while paying the piper can be postponed at a cost, sooner or later he insists on being paid?

...an obvious first step is for our political leaders to declare their vision and commitment to the world (business, investment, entrepreneurs, other governments...) -- that Vernon's exclusive focus is the economy, and that all other considerations, bar none, are of far less importance.

Ah, but I hear you muttering under your breath, what about my favourite crusade (insert personal agenda here)?  Well, if Vernon cannot afford to pay for your favoured program, it will have to be cut in the future if not today, so why don't we stop bickering over who gets a slice of a shrinking pie and instead try to make the pie larger?  

...If we continue on our current trajectory, our city will continue to slide into irrelevance, our taxes will increase, our services will diminish, and our city bureaucracy will increase until it consumes our entire budget.  We need to wake up from our Okanagan dreamland and face reality."     Wynn Polnicky.

"Preferably before we become another ghost town," offers Kia.

Ah...the North Okanagan experience.

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?
Yup.
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.

Coldstream Council doesn't get it. B.C. Assessment does.

The 2010 property assessment notice arrived this week.

For the first time in recent memory, assessments have gone down.  Highlands' assessment saw a considerable decrease.  The Morning Star reports Coldstream's assessment roll declined from $2.18 billion last year to $2.13 billion in 2010.

Kudos to the British Columbia Assessment Authority.  They get it! 

They recognize that 10 to 15 per cent increases to property values, year after year, simply can not continue in any economy, let alone the present downturn.

So we'll save one-quarter of last year's tax bill?
Nope.
Why?

Because Coldstream Council doesn't get it!

In a complete dismissal of findings contained in the B.C. Municipality Spending Watch, Mayor Garlick and Council are drafting a budget that will likely include a five per cent tax increase this Spring.

They appear hell bent for leather on surreptitiously replacing the lost taxes from the Owens-Illinois (glass plant) in Lavington, closed last year.  Rather than cutting taxes for those of us who still reside here, this Council wants us to make up the difference...as though OI hadn't left.   

But what of all the NEW money that's been flowing in from the Federal Government's Economic Action plan.  A portion went to Coldstream to build roads and bridges.  Money also comes back to Coldstream from the Gas Tax Fund, as well as the Building Canada fund that includes water and sewer upgrades (the new Duteau Creek water treatment plant will be operational this year).

Local librarians got a 4 per cent increase...and Coldstream hired a CA (yup, a chartered accountant for a community with half of its land in the Agricultural Land Reserve and a population of 10 thousand, and who--by the way--advised Council that the Commercial Recreation category has been taxed too low...ahem!).

Then there's the North Okanagan Regional District (which is also part of the tax base) added on to their offices again (the second time in five years...how often do you renovate?).

At least Paramedics got a 3 per cent raise.


Wait a minute.
Paramedics received a smaller increase than Librarians?

"Can paramedics treat idiocy?", asks Kia.











4 governments, 1 taxpayer...

Coldstream Municipality "cherry-picks" data to support 5% tax increase

"Municipal operating expenditures in British Columbia continue to increase at an unsustainably high rate. This overspending comes at the expense of families, small businesses, and other commercial ratepayers through property tax increases, user fee hikes, and higher transfer payments from senior levels of
government."

Source: B.C. Municipality Spending Watch, 2nd Edition (Heather Tilley, Policy Analyst B.C.)

So, grab an air-sickness bag and settle into the Lazyboy for the spin, which even the local media can't seem to resist.

A Morning Star article December 16, 2009 headed "Coldstream braces for tax hike" stated the chief reason for the increase is "to fund infrastructure projects and the legal fees from the ongoing water devolution disagreement with the City of Vernon."

Seems road improvements top the list. "That will pay off in the long term not only in terms of road rehabilitation, but we won't have to spend money (in the future)," Coun. Pat Cochrane is quoted as saying.

So, before taxpayers can argue the point, we'll have to wait and see if Coldstream plans to spend money on roads in a year or two, or three. Hmmm, note to self...mark the calendar "no roads spending in future!"

Arguable now, however, is Coldstream's cherry-picking of data contained in the Canadian Federation of Independent Business report published in November, 2009, that noted Coldstream was the least-taxed municipality of its size.

What the CFIB reported in its entirety should be of concern to Coldstream's 10,218 inhabitants.

While Coldstream's per capita spending of $501 is the lowest of 25 similar-sized communities, its Fiscal Sustainability Gap of 2.28 indicates spending growth increased more than two-and-a-quarter times as fast as population and inflation. Note also that the $501 does not include spending on capital infrastructure, adds the CFIB.

But roads (see above) are capital infrastructure!

Where IS that incredulity smiley??

The Spending Watch document adds: By law, municipalities cannot run a budget deficit. In order to pay for the 43% increase in
operating spending between 2000 and 2007, municipalities across British Columbia have increased revenues 62% to cover both the growth in operating and capital spending.
Property taxes are up 42%, user fees up 95%, and transfer payments from governments are up 121% between 2000 and 2007. These increases are far above what would have been necessary had municipalities held operating spending to population and inflation growth.

Naturally the CFIB didn't tell Coldstream to stop cherry-picking its report, but they did have quite a few recommendations for municipalities in B.C.:

• Introduce taxation and expenditure limitation laws to constrain the growth in government operating spending to no more than population and inflation growth.

• Introduce zero-based budgeting with meaningful performance targets.

• Focus on core municipal services.

• Restrict full-time-equivalent employment and wage growth by limiting the growth in employees to the growth in population.

• Ensure that capital projects are fully financed up front by including lifetime operating and maintenance expenses in the initial cost estimates.

And didn't the Federal government's community infrastructure fund (your taxpayer dollars again) kick money into Coldstream's coffers for roads and bridges as capital improvements?

Four levels of government, one taxpayer...

"It makes me dizzy," intones Kia.