State of Municipal Finances in Metro Vancouver

Municipal governments provide many services that have a direct impact on the daily lives of city residents, including garbage collection, water utilities, roads, and fire protection. They also extract revenue through general taxation (including property taxes), user fees (for services such as utilities, recreation, and transportation), and development charges. Despite the potential to greatly affect the everyday lives of British Columbians, the finances of municipal governments do not receive the same scrutiny as those of more senior levels of government. This report provides key information on the state of overall municipal finances in Metro Vancouver, by far the largest regional district in the province. The goal is to foster greater accountability and encourage debate about the state of municipal government spending and revenue in Metro Vancouver.

The analysis focuses on the 10-year period from 2002 to 2012. The report’s main finding is that, in aggregate, municipal operating spending (which includes includes debt payments) in Metro Vancouver has grown dramatically over the most recent decade, outpacing reasonable benchmarks such as inflation and population growth. Municipal spending in Metro Vancouver increased from $1.9 billion in 2002 to $3.3 billion in 2012. The growth in spending (74.2%) more than doubled the combined rate of inflation and population growth (34.1%). It also grew faster than the growth rate of spending by more senior government levels such as the provincial and federal governments.

Contrary to what we often hear from local government officials, municipalities are not starved for revenue. The total revenue of Metro Vancouver municipalities has grown even faster than the dramatic growth in spending and faster than the revenue growth of both the provincial and federal governments. In the decade from 2002 to 2012, Metro Vancouver municipal revenue reached $4.6 billion, up from $2.5 billion. This 86.2% growth exceeds the growth in municipal spending (74.2%).

There is little evidence to support the claim that municipalities are experiencing a “fiscal squeeze” caused by insufficient revenue. Although revenue from general taxation (including property taxes) has been growing slowly in comparison to other revenue sources, together the other sources of revenue (including transfers from other governments) have more than picked up the slack. The real fiscal problem at the municipal level is poor control of spending.