Opinion

Municipalities Need Resources, Not Auditor

BC's cities and towns face downloaded costs, infrastructure needs and shrinking rural economies.

By Charley Beresford and Darlene Marzari 29 Sep 2011 | TheTyee.ca

Darlene Marzari is a former city planner, city councilor and minister of municipal affairs. Charley Beresford is a 12-year veteran of public office, serving two terms as chair of the Greater Victoria Board of Education.

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As expenses mount, municipalities collect only eight per cent of all taxes.

Local government is on the examining table, but the prognosis depends on what questions you are asking.

Rather than asking "Are taxpayers getting value-for-money?" there may be a more fundamental question relating to municipal finances.

It's no secret that municipalities are struggling with day to day resourcing. With only eight per cent of the tax base (provincial and federal governments take in 92 per cent of tax revenue), municipalities are struggling to keep up with downloaded responsibilities and aging infrastructure. Canada's balanced budgets in the 1990s and 2000s were accomplished by offloading responsibilities and those responsibilities cascaded from federal jurisdiction to provincial and then to municipal leaders’ shoulders.

Canada's rising wealth gap -- even more pronounced in British Columbia -- brings with it questions relating to quality of life and equality. For example, arguing about just which level of government is accountable for the people are who living on our streets in all kinds of weather doesn't do anything about the reality of their presence there.

Municipal leaders throughout the province are providing innovative leadership far beyond potholes. Because they need to. Because municipal leaders are closest to quality of life issues. Because the people on the street are members of our communities.

Do we need a Municipal Auditor General?

Recently, it has been proposed that an Office of the Municipal Auditor General be created to "provide advice on financial decisions and provide a measure of accountability."

Strong financial accountability measures are already firmly in place. Municipalities must, by law, balance their budgets and submit a copy of their financial statement to the Inspector of Municipalities. The Inspector of Municipalities approves a broad range of local government bylaws, receives municipal financial statements and publishes a range of local government financial statistics. The inspector may require a local government to provide a report on any matter or, with the approval of cabinet, hold an inquiry in to any matter. It must be noted that the inspector rarely uses these powers.

To put this idea in context, it is instructive to know that a Municipal Auditor General's Office is a rare thing. Only Halifax, Toronto and cities over 100,000 in Quebec have them, although there are other jurisdictions, including B.C., where a municipality could establish such an office. In all cases, they report to the body they are charged with reviewing. No province currently has a single office for multiple municipalities and in no case does such a body report to the province or any other body besides than the one they are auditing.

Towns need more financial tools

Local governments across British Columbia are working with their citizens to build healthy and sustainable communities. They are creating parks and greenways, improving transportation options, implementing living wages, supporting urban agriculture, choosing socially responsible investing, and engaging their population in innovative ways.

The question may well not be: is the community getting value for money? But rather, are municipalities getting a wide enough range of financial tools?

The Institute for Municipal Finance credits Canadian municipalities for sound fiscal measures: producing balanced budgets, a manageable amount of borrowing for capital, adequate reserves, a reasonable rate of property tax increases and tax arrears. The institute raises the question about whether this fiscal health has been achieved at the expense of the overall health of municipalities: specifically municipal infrastructure and the quality of service delivery -- both victims of producing those balanced budgets. "Expenditure cuts are more detrimental than tax increases for overall health of the local economy."

In a separate report, the institute argues that "in any event, the property tax will never be able to do the whole job, especially for local governments that are doing more than providing property-related services and where a mix of taxes is appropriate."

Challenges facing BC's municipalities

Every year B.C. municipalities propose new ideas for meeting downloaded costs, ongoing infrastructure needs and shrinking rural economies. This year is no exception and this week's Union of BC Municipalities meeting features a long list of resolutions, including "Infrastructure funding for small communities" from Lillooet, "BCLC revenue allocation" from Enderby, "Revenue sharing from mining royalties" from the Kitimat-Stikine RD, "Development cost charges for solid waste infrastructure" from the North Okanagan RD.

The infrastructure shortfall in Canada is estimated to be in excess of $120 Billion. In a recent survey of local government leaders for the report "Local Prosperity," 52.8 per cent of respondents agreed or strongly agreed that local governments should look at their tax policies through the lens of tax fairness for lower-income people. However, findings from a recent UBCM report show that the proportion of taxes paid by business property owners has dropped over time, while the proportion of residential taxes has increased.

Local governments have hugely variable differences in the per capita property tax base of their communities. Similar rates of tax bring in more revenue in some communities than in others. British Columbia no longer has equalization revenue sharing for local governments to balance things out. Rather than spending effort establishing parameters for a Municipal Auditor General's Office when strong fiscal accountability measures are already in place, the time and effort might be more effectively spent developing broader resourcing for municipal governments.  [Tyee]

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