Oct 23, 2014

What is the “right amount” for local governments to spend?


Just how much money should a local government spend? If you ask the Fraser Institute, the Canadian Taxpayers Federation (CTF) or the Canadian Federation of Independent Business (CFIB) you will always get the same answer: they should spend less.  Oddly, taxpayers sometimes disagree.

The Fraser Institute produced a report this week titled Comparing Municipal Government Finances in Metro Vancouver. It focussed on the 17 municipalities in Vancouver with populations above 5,000. It followed up on the provincial government report criticising compensation for local governments and like the provincial government report, it quoted studies by the CFIB.

The Vancouver Sun covered the Fraser Institute report by highlighting the difference between Surrey and West Vancouver, pointing out that with per capita spending of $2,118, West Vancouver doubled the spending of Surrey.

So with that much spending, West Vancouver should see rioting in the street, right? And Surrey should be a hot bed of fiscal conservative happiness.

It doesn’t work out that way.

Instead Surrey has become one of the province’s most interesting election races where crime has become a defining issue. A Vancouver Sun Poll finds that in Surrey 49% of voters say that crime is the most important issue.  More than 80% of people in Surrey say the city has done only a fair or poor job dealing with crime.  Meanwhile, in West Vancouver, 93% of respondents to a poll say they are satisfied or very satisfied with police services, a slight increase from 2010.

So people in West Vancouver are happier with the crime situation than the people in Surrey. What could explain that?  Well for one thing, Surrey spends about $90 less per capita on policing than the average for most Metro local governments.  West Vancouver spends $200 more than the average.  There are questions about whether spending more on police is the best way to deal with the situation but politicians in Surrey are all promising to spend more.  It is what their citizens want.

Parks and recreation are the same issue. Surrey spends half the average of other lower mainland local governments on parks and recreation while West Vancouver spends almost twice the average.  In West Vancouver, Parks and Recreation are values people support.

And by the way, in West Vancouver 77% of people say they are getting good value for their tax dollars.

The issue is about more than tax dollars, it is about the services those tax dollars provide. And lower taxes don’t always mean either better government or happier citizens.

And while the Fraser Institute and the media focus on the difference between the highest and lowest spending local governments, there is a more important finding here. Most of the governments in the lower mainland spend close to the average among the lower mainland local governments.  They face the same issues and they face the same spending pressures.  One of those pressures is the cost of downloading of costs from the federal and provincial governments.

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