The downloading of responsibilities from senior levels of government is driving municipal spending trends at the City of Vancouverand across Canada, according to Vancouver Coun. Raymond Louie.
“As long as I’ve been elected, which is 10 years, it’s been an ongoing issue of continuous downloading,” he said. “I think the federal government is trying to do their job, as the provincial governments are as well; I think that sometimes they don’t think of their policy changes and how they affect our cities.”
Louie was responding to a new Federation of Canadian Municipalities(FCM) report that shows municipal expenditures across Canada increasing faster than municipal revenues over the past 20 years and may still be accelerating.
The State of Canada’s Cities and Communities 2012 found that municipalities’ spending increases accelerated to an average of 3.9% annually between 2004 and 2008, up from average increases of 0.9% for the seven years prior.
The report doesn’t assess the period after 2008 because Statistics Canada has stopped releasing government financial management system (FMS) data after the 2008-09 fiscal year, as it prepares to switch from FMS to the International Monetary Fund reporting standard.
Key report findings include:
•municipal tax revenues increased faster than federal and provincial taxes up until 2008, though the increases were smaller; and
•in a search for new revenue sources, some municipalities are levying new taxes, including vehicle registration, land transfer and hotel (see sidebar).
Louie said examples of federal cuts that push costs onto the city include the planned closure of the Kitsilano coast guard station next spring and, well before that, the 1997 disbanding of the Vancouver branch of the federally run Canada Ports Police.
He added that even federal cost-cutting measures like replacing nickel-filled loonies and toonies with steel-filled versions are creating new costs for the city.
Louie said Vancouver had to invest in retrofitting city parking meter heads to accommodate the new coins.
“So the federal government saves money, but it costs us at the municipal level.”
The FCM report details new revenue-generating initiatives ranging from lottery taxes to amusement taxes that Canadian municipalities are developing to balance their books.
On that front, Louie said Vancouver has focused on finding new operational efficiencies and piloting some new revenue generators, such as a $2.5 million innovation fund in the city’s latest operating budget. The fund is aimed at leveraging money from other tiers of government, the non-profit sector, private enterprise and philanthropists.
“This fund is our attempt to find new revenues and focus them into areas that we think are important, but also [areas that are important to] those that are contributing to it.” •
New municipal cash grabs seek to squeeze extra money out of businesses and citizens
Canadian municipalities are looking beyond property taxes to raise revenue, according to a new Federation of Canadian Municipalities report.
The State of Canada’s Cities and Communities 2012 details new revenue-generating mechanisms that municipalities have initiated over the past few years.
They include:
•Vehicle registration tax: Vancouver has a commercial vehicle-licensing fee used to offset expenses related to the use of commercial vehicles on local government roads and highways
•Sign tax: Since 2010, Toronto has levied a Third-Party Sign Tax. Montreal levies an Outdoor Advertising Tax, which is a flat rate per advertising face
•Lottery revenue: Toronto collects revenue from the Ontario Lottery and Gaming Corp. and from charities and non-profit organizations looking to hold one-time events
•Land transfer taxes: Municipalities in Quebec apply a “Welcome Tax” to the sale of immovable property within their territory
•Parcel tax: B.C. municipalities levy a parcel tax on any designated area of land that does not include a highway. The taxes are used to recover the costs of providing local government services
•Development charges: All B.C. municipalities are permitted to levy development charges and many do
•Amusement taxes: Winnipeg charges a 10% tax on a movie admission of $5 or more or for entertainment facilities with 5,000 seats or more. Regina and Saskatoon also tax cinema admissions
•Parking tax: In 2006, Vancouver started levying a parking tax within a specified transit zone; the tax was suspended a year later because of its unpopularity
•Hotel tax and voluntary destination marketing fees: In B.C., an additional 1% or 2% municipal and regional district tax on lodging is collected in Chilliwack, North Vancouver, Oak Bay, Parksville, Prince Rupert, Qualicum Beach, Richmond, Rossland, Saanich, Smithers, Surrey, Vancouver, Victoria and Whistler. In Vancouver, 100% of these funds go to Tourism Vancouver
