Corralling Excessive Social Program Spending at the Municipal Level

Back in late September, the Huffington Post reported on some astonishing statistics. The two largest Saskatchewan cities -- Regina and Saskatoon -- have the highest municipal property taxes in the nation.

And not by small measure, either. As the story noted:

"Vancouverites typically pay $3.68 per year in taxes for every $1,000 of assessed home value. Compare that to residents of Regina, who pay $13.69 for every $1,000 of home value."

The difference isn't limited to the tax rates. Even when you take into account the variation in average house prices, Saskatchewan still has the highest property tax bills in Canada:

"Saskatoon thus has the dubious honour of having the highest average property tax among major cities in Canada -- $4,440, by our calculations. Ouch."

By comparison, Vancouver is at only $2,232. The full list: Vancouver, $2,322; Montreal, $2,704; Calgary, $2,830; Edmonton, $2,947; Winnipeg, $3,347; Halifax, $3,875; Toronto, $3,947; Ottawa, $4,057; Regina, $4,065; and Saskatoon, $4,440. Municipal tax rates in Saskatchewan continue to escalate rapidly. Just this past week, Saskatoon city council approved a 5.34 percent property tax hike, down from the 7.32 percent increase they were initially being asked for. Likewise, Regina just approved a 3.9 percent tax increase -- down from the 4.3 percent being requested -- to add on to the 5.9 percent increase last year.

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The province isn't unique. Excessive spending on parks, recreation, and cultural services is a nationwide and international problem. We are spending our local tax dollars in all the wrong places.

Part of the rationale for even greater tax increases is infrastructure spending. To some degree, infrastructure in the province has been neglected. But the infrastructure deficit has undoubtedly been vastly over-sold by government officials and politicians at all levels -- especially within municipalities, along with affected contractors and professional associations. In other words, the sales job is by those with various real and perceived vested interests that would benefit from increased infrastructure spending. Uncritical allies in the media also abound. There is generally an absence of good local journalism in Saskatchewan, but it is particularly non-existent when it comes to questioning municipal government spending. Over the last number of decades, the province has ignored upgrades and maintenance to infrastructure in favor of pursuing wasteful social program expenditures. The infrastructure base was built far in the past, and then governments took it for granted, ignored its upkeep and expansion, let it atrophy, and instead shoveled public money into the creation and operation of unnecessary social programming. Now that the infrastructure bill is coming due, local and provincial governments want to add it to the existing load of government expenditures. This is not the way forward. There are some infrastructure needs --albeit not nearly as great as the spending advocates claim -- but their costs must not come from additional spending. Instead, infrastructure funding must come by cutting spending in other areas. One such area that is in desperate need of massive municipal spending cutbacks is the recreation, parks, and culture file. Even a cursory look at city budgets around Saskatchewan highlights the spending problem in this area. Saskatoon's 2014 budget includes a useful survey on what residents believe are the most important issues facing the city. Number one issue by a landslide is roads, followed by traffic flow and congestion (a.k.a., roads) and then planning for city growth and development (another euphemism for poor quality and overcrowded roads), after which came the general concern over "infrastructure" (which to most is just another term for roads). Road, roads, and even more roads. People care about roads. Major concerns over social issues were nearly non-existent, and the environment, pollution, and recycling files barely registered on the survey responses at less than one percent. Then we see in the same budget that Saskatoon is spending almost $31 million in 2014 on recreation and culture, which is a 4.3 percent increase over 2013, and up 8.7 percent from the 2012 budget. This is only the operating funds. Another $12 million is earmarked for capital. Regina appears to be spending $18.3 million on parks and open spaces plus another $14 million on sports and recreation. Prince Albert's 2014 operating budget for "community services" is $6.5 million, almost all of which is recreation, parks, and culture -- an increase of more than 5.3 percent from the year before. Yorkton's 2014 spending in these areas is $1.6 million, up more than 8 percent from 2013. Swift Current looks to be spending about $7.1 million in operational costs on these programs during 2014, up 4 percent from the previous year. A full 23 percent of North Battleford's entire 2014 operating budget is going into parks and community services, over $7 million -- which is the same amount as the total of water, sanitary sewer, and waste management all together, or equal to all spending on police, fire, and protective services. Add in another couple million in capital expeditures for parks and community services in 2014, down from over $4 million in 2013. What are policing capital expenditures during 2014? Zero. During 2013? Zero. Fire and protective services capital spending in 2013 and 2014 combined is less than a million dollars, versus almost six million towards parks and community services. Capital spending on the water system totals only $2.6 million during these two years. The priorities are all backwards. In North Battleford, the 2013 actual operating expenses for parks and community services came in at $9.2 million versus a budgeted amount of less than $7.6 million -- more than 20 percent over budget. Policing, fire and protective services, water, waste management, and sanitary sewer expenses during 2013 all came in under budget. In Moose Jaw, parks, recreation, and culture expenditures in the 2014 budget total $8 million -- more than 20 percent of the entire city budget. The parks and recreation budget is up almost 7 percent from 2013. The parks and recreation administration budget has increased nearly 9 percent since last year. The cumulative population of these seven cities? Only about 530,000 based on the last census. Thus, we're talking real money for the population being served. As Margaret Thatcher was fond of saying, "you eventually run out of other people's money." Indeed. With Saskatchewan's over-heated economy, now isn't the time to be spending money on infrastructure anyway. Spending estimates are coming back higher than anticipated because contractors are in demand, and also because throughout much of the province there is little real competition among those who can do the work. It is always best to build out infrastructure needs in a recession when real value for money can be obtained. Some city officials are agitating for a bailout using provincial and/or federal funds. Guess where that money comes from? The people who live in the same communities. All taxes are local when it comes down to it. So whether it comes out of your local property taxes, or out of provincial and federal income and consumption taxes, it is still coming directly out of your own pocket. The province isn't unique. Excessive spending on parks, recreation, and cultural services is a nationwide and international problem. We are spending our local tax dollars in all the wrong places. Time to begin privatizing these non-essential social services and transferring the full costs of their use directly onto the users themselves, all the while refocusing the saved expenditures into infrastructure. Much of the infrastructure deficit could be remedied over the coming decade just by this spending shift, rather than raising taxes. Given Saskatchewan's anomalously high property taxes, we also need an overall spending cut at the municipal level, not just an expenditure neutral shift from parks, recreation, and culture into infrastructure. But at least this option would be a good start along the route towards fiscal responsibility.