Opinion: West Vancouver, City of Vancouver, New Westminster among Metro’s municipal government big-spenders

With Metro Vancouver municipal elections behind us, now is a good time to review trends in local government spending. Together with our colleague David Williams, we recently did a deep dive into municipal spending patterns in the Lower Mainland and across the province. A copy of our paper can be found at bcbc.com.

What did this research find? A few highlights – focusing on Metro Vancouver – are provided below.

First, across Metro Vancouver as a whole, the increase in municipal government spending – excluding that on capital projects – continued to run significantly ahead of population growth and inflation in the decade to 2019. Specifically, real (inflation-adjusted) municipal expenditures per person in Metro Vancouver increased by 16.2 per cent from 2009 to 2019.

Spending patterns are surprisingly diverse across the region’s 21 municipal governments. This is true for the growth of spending over time, as well as for the absolute levels of municipal expenditures per resident.

The data show that the five “biggest spenders” in the region are West Vancouver ($3,702 per resident as of 2019), New Westminster ($2,578), the City of Vancouver ($2,439), Richmond ($2,279) and Delta ($2,154). At the other end of the spectrum, the five lowest spending Metro Vancouver municipalities are Surrey ($1,441 per resident), Maple Ridge ($1,493), Port Coquitlam ($1,638), Langley City ($1,710) and Coquitlam ($1,764). Remember, these figures exclude capital expenditures.

West Vancouver spends roughly 2.5 times more per person than Surrey and Maple Ridge. But such comparisons should be made carefully. West Vancouver, for example, operates its own independent transit system; it is also a sprawling city with the population spread over a large area. But even allowing for this, per capita spending is still high. Similarly, New Westminster – unusually – operates a power utility, which also drives up per-person spending. Adjusting for this difference brings its spending per capita closer to the Metro Vancouver average.

Because differing service levels affect per capita spending, we enrich our review of municipal fiscal trends and rankings by also considering comparative spending growth and relative debt burdens in the region’s municipalities. Spending levels can be expected to vary somewhat across municipalities, but there is little reason for the growth of real spending per resident to differ much. But some Lower Mainland municipalities have been pushing spending up quickly. Over the pre-COVID five-year period from 2014 through 2019, real municipal spending per capita rose by the greatest amounts in Port Moody, Richmond, White Rock (around 15 per cent each), along with the District of North Vancouver and Coquitlam (eight per cent each). In contrast, more spending restraint was evident in Maple Ridge, Delta, the City of North Vancouver, New Westminster and Pitt Meadows. On average over 2014-19, real per capita spending across Metro Vancouver increased by 5.6 per cent, marking a slower rate of growth than in the previous five-year period.

Over the past decade, some local governments have done a better job than others in keeping a lid on expenditures. There may be opportunities for the most profligate municipalities to learn from their more prudent counterparts, and for some municipal services to be streamlined. Taxpayers should ask elected officials in cities with outsized and fast-rising per capita spending to account for these fiscal metrics. Perhaps more fiscally restrained cities have managed to keep payroll costs in better check and are committed to concentrating on core local government services and activities, instead of trying to address issues that are better left to senior governments.

British Columbians, including those in the Metro Vancouver, are grappling with substantial cost-of-living pressures as inflation continues to hover near seven to eight per cent. In this environment, voters and taxpayers should consider whether increases in real municipal spending per person over the past decade are justified and commensurate with improvements in local government services.

As taxpayers reflect on this important value-for-money question, they need to recall that municipal spending is mostly financed with property taxes that households and businesses pay out of after-tax incomes – a fact that further underscores the tax burden resulting from outsized municipal spending growth.

As published on October 18, 2022 in Business in Vancouver.