Municipal overspending costs Canadian households $7,800

New report shows widespread problem across the country, calls on city leaders for restraint

TORONTO, May 28, 2014 /CNW/ - As municipal leaders gather in Niagara Falls for the annual Federation of Canadian Municipalities conference (FCM), the Canadian Federation of Independent Business (CFIB) has released a report, Canada's Municipal Spending Watch, that shows overspending by cities, large and small, has cost each household in Canada more than $7,800 during the past 12 years.

The report looks closely at 14 select cities – Vancouver, Victoria, Calgary, Edmonton, Regina, Winnipeg, Toronto, Ottawa, Montreal, Quebec City, Moncton, Halifax, Charlottetown and St. John's – and finds varying degrees of overspending. Moncton, for example, had 10 per cent population growth from 2001 to 2010, while the city's inflation-adjusted spending rose by 37 per cent.

"We already knew that our largest cities were living way beyond their means," said Laura Jones, CFIB's executive vice-president. "But it turns out even smaller cities are living large. And whether it's today or tomorrow, we all pay the price through higher taxes."

The worst offenders in the report are St. John's, Halifax, Montreal and Victoria. In these cities, inflation-adjusted municipal spending grew at six times the rate of population growth for the period studied. Nationally, the rate was four times the rate of population growth. Employee wages and benefits are the main source of local spending across the country.

"This isn't chump change for small businesses and hard-working Canadians, who are already struggling to make ends meet, including saving for their retirement," said Nina Gormanns, research analyst at CFIB and author of the report. "It's time to retire the myth that cities have a revenue problem. What they have is a spending problem."

CFIB continues to call on cities to limit spending increases to inflation and population growth. Some municipalities have shown signs of improvement. Both Toronto and Ottawa, for example, have either reduced spending or limited increases over the past two years. Spending growth in all cities covered in the report, however, has exceeded what is reasonable over the period studied.

"It will take long-term commitment and discipline to reverse this trend," added Jones. "With municipal elections scheduled this year in BC, Manitoba, Ontario and PEI, voters can send a clear message that the spending party is over."

View the full report here.

CFIB is Canada's largest association of small and medium-sized businesses with 109,000 members across every sector and region.

SOURCE: Canadian Federation of Independent Business

For further information: To arrange an interview with Laura Jones or Nina Gormanns, contact Gisele Lumsden at 416-222-8022 or email public.affairs@cfib.ca.

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