BC Municipal Spending Continues to Climb

New findings reveal a broken bargaining system 

It’s time to get serious about spending.

The fact is, BC municipal operating spending has outpaced population growth nearly four fold between 2005 and 2015. This means that local governments are spending faster than cities are growing. To support these spending habits, BC residents are having to foot the bill.

Spending trends are a top issue for CFIB’s 10,000 members in British Columbia, as 73 per cent of small business believe in keeping inflation adjusted municipal spending increases at or under population growth[i]. Entrepreneurs are the backbone of our economy, and they are also the ones taking a harder financial hit from municipal spending increases. The reality is that current spending trends are not sustainable, and small businesses are feeling the impact.

CFIB’s 10th Annual Spending Report dives deeper into some of the issues that drive municipal spending. One of the most noteworthy findings addresses BC’s broken bargaining system. When unions (such as CUPE, Police, and Firefighters) and municipalities are unable to agree on year-over-year wage increases, negotiations go to arbitration for an independent third party to settle the contract. However, arbitrators have been known to replicate recent settlements from bigger cities, resulting in significantly large annual wage increases for unions in smaller municipalities. Aribitrators often fail to reasonably consider a municipality’s economic conditions, or even their ability to pay when settling wage contracts.

While public sector wages account for roughly 60 per cent of municipal operating spending, it is important to note that it is not the only major driver of spending. The other 40 per cent of operating spending is also growing. If local governments are serious about cutting costs, they need to develop a plan for sustainable spending.

Green = best; Red = worst. 20 = worst rank

Source: CFIB Analysis of BC Gov data published municipal spending, inflation and population data 2005-2015
The “overall rank” assigned to each municipality is an equally-weighted combination of two indicators:

(1) 2005 - 2015 real operating spending per capita growth, or percentage growth in operating spending over the past 10 years, adjusted for inflation and population growth; and (2) 2015 operating spending per capita

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[1] Source: CFIB Municipal Issues Survey, July 2017, n=1,594.

 

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