Ruddy: Canada's big city mayors need to rein in spending

By: Amber Ruddy

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Mayors from across the country want us to believe they lack adequate funding and need more money to fix potholes, repair bridges, upgrade infrastructure and pay for social housing.

As they gather this week in Edmonton for the annual Federation of Canadian Municipalities (FCM) conference, they will surely dedicate a significant amount of time to talking about their “revenue problem.”

But research from the Canadian Federation of Independent Business (CFIB) reveals that cities don’t really have a revenue problem.

What they have is a spending problem.

More specifically, they are spending excessively on wages and benefits for city employees.

Employee compensation, by far, makes up the largest portion of municipal budgets.

A new CFIB report finds that local government workers in Canada have a 22% advantage in salaries and benefits over their private sector counterparts, with Calgary at 19% and Edmonton at 13%.

Employees in Alberta are well compensated relative to the rest of the country, so for municipal workers to make a premium on top of that speaks volumes.

Mayors that are serious about solving their financial woes should start by addressing the unfair advantage in wages and benefits for city employees.

In Canada, a municipal government employee is compensated $6.43 more per hour than a private sector employee in a comparable job.

That’s $6.43 an hour more for doing the same work. Is that fair?

Overall, local governments in Canada spend $29.5 billion a year on salaries and benefits, and their employee wage advantage is $3.4 billion annually over and above what private markets indicate as fair.

Imagine what municipalities could do with that money.

With many cities seeking additional funding to expand public transit, closing this unfair gap by finding savings within current budgets seems like a logical place to start.

City spending should more or less match population growth — to provide the same services to more citizens — and adjustments for inflation to keep up with rising prices.

But Canadian municipalities have increased their inflation-adjusted spending four times faster than what’s sustainable since 2001.

While this could potentially be justified if either additional or improved services were delivered, public opinion poll results indicate that this is not the case: two-thirds of Canadians disagree that they receive good value for money for the amount of taxes and fees they pay to government.

The FCM would have us believe that municipalities need more funding from the federal and provincial governments.

They claim that municipalities cannot shoulder these expenses on their own, without raising property taxes. Calgary has even been jockeying for “new revenue tools”.

The city of Calgary has already shortlisted 16 new taxes to fill their coffers.

At the end of the day, there is only one taxpayer, and that taxpayer doesn’t care who collects the money.

Part of the solution lies in municipalities bringing employee salaries and benefits in line with private sector norms.

Municipal officials must rein in their spending and better plan for the future, for the sake of our generation, and for generations to come.

Amber Ruddy is Alberta Director of the Canadian Federation of Independent Business.

This oped was originally published in the Calgary Sun on June 5, 2015.