The Canadian Taxpayers’ Federation is ringing alarm bells that the lion’s share of municipal tax hikes are spent on labour, but critics say the figures should be interpreted with caution.
The B.C. branch of the federation released a list of the “Worst 13” tax-and-spend-on-labour municipalities, based on the proportion of new tax revenue spent on labour between 2009 and 2013. Among the offenders listed was Victoria, which spent 71 per cent of new tax revenue during that period on labour.
“A lot of people are under the impression that when they pay their taxes, it’s going to sewer lines or water lines or parks or something tangible, whereas more and more of this money is going out the door in higher managers’ salaries, executive salaries and union contracts,” said Jordan Bateman, director of the B.C. branch.
“It’s important that city officials are keeping an eye on how much they’re spending on labour.”
However, David Scoones chairman of the University of Victoria economics department, pointed out that the proportion of Victoria’s property taxes spent on labour actually decreased over the same period, using the numbers provided by the taxpayers’ federation. In 2009, 86 per cent of property-tax revenue was spent on labour, while 83 per cent was spent in 2013.
“If it’s not designed to confuse people, it certainly is prone to confusion,” Scoones said.
He also criticized a statement released by the federation that said: “If it feels like you’re paying more in property taxes but not getting much back in new services, you’re right.”
While the numbers relating to labour costs — which include municipal spending on salaries, wages and benefits — may be accurate, there’s no indication the labour isn’t related to service delivery.
It’s difficult to compare municipalities across the board using the B.C. branch’s methodology because of inconsistencies in contracting of labour and services, Scoones said. For example, some municipalities have their own police forces, while others contract the RCMP.
Despite Victoria’s inclusion in the “Worst 13,” Bateman said the city is moving in the right direction, by decreasing the proportion of its property taxes spent on labour. “That’s good news, although there’s still a long way to go,” he said.
He said the taxpayers’ federation is really concerned about municipalities like West Vancouver, which spent three times more on labour than it made in new tax revenue.
The report examined the 30 largest municipalities and also included Saanich. According to the federation, 60 per cent of new tax revenue in Saanich was spent on labour.
But Mayor Frank Leonard said the numbers presented by the federation are only one part of the bigger picture. Saanich collects revenue from a variety of sources — property taxes are only one of them. Labour costs made up 64.3 per cent of the overall budget in 2009 and 65.1 per cent of the overall budget in 2013.
“For me, that says our labour expenses are being kept in proportion to our overall expenses; they’re not increasing in proportion to other expenses,” Leonard said. “I think you’ll find in most municipalities, salaries, wages and benefits are the most significant component of everyone’s expenses. Providing services to a community takes a lot of people.”
Even without taking into account overall budgets, the proportion of Saanich property tax devoted to labour costs decreased to about 88 per cent from 94 per cent, between 2009 and 2013, according to numbers provided by the federation.
“I would suggest that’s because we’re doing a decent job of holding or being prudent about our salaries, wages and benefits, while trying to replace infrastructure in a more robust way,” Leonard said.