EN FR

Property tax hike? Cities have alternatives

Author: Colin Craig 2018/06/01

Too often the question on the minds of municipal politicians is – “how much should we raise property taxes by this year?”

Yet in reality, large cities are typically inefficient organizations that leave plenty of room for improvement. There are lots of ways to trim spending and avoid a tax increase without reducing service delivery.

All we have to do – our organization and you the reader – is convince our city council members to roll up their sleeves and make some hard decisions to reduce spending instead of taking the easy way out and raising taxes.

To be sure, we’re not suggesting that cities like Edmonton and Calgary never trim spending. They do … here and there. But total spending increases every year – it’s as predictable as the sun rising in the east or the Maple Leafs fizzling out and not bringing home the Stanley Cup.

One way to reduce costs would be to scale back city salaries and benefits. It’s common knowledge that government compensation packages tend to be more generous than similar positions in the private sector. Thus, there’s plenty of justification for restraint.

While politicians are generally loathe to actually reduce pay for current employees, it would be less politically challenging for them to grandfather-in more reasonable compensation packages for new employees.

For example, instead of putting new hires in golden city pension plans, they could receive a more modest benefit, such as a matched contribution to their RRSPs.

Alternatively, instead of paying a new admin assistant, say, $55,000 per year, new assistants could start off at $45,000 or whatever level is offered in the private sector.

Considering salaries and benefits tend to make up over half of the city’s budget, the opportunity for savings in this area is enormous and should not be overlooked.

While reducing compensation levels is one way to cut spending, it doesn’t address situations where employees are unproductive.

Unlike in the private sector, where businesses have to stay competitive in order to survive, if a government is wasteful, it simply passes unnecessary expenses on to taxpayers.

Unfortunately, it’s not so easy for taxpayers to shop around for a different government. (Doing so requires a more onerous task – packing up and leaving.)

One way to address inefficient service delivery is to contract out more government services to the private sector – whether we’re talking about pothole repair, park maintenance or other services.

When looking at tendering out such a service, existing city employees should be encouraged to put in their own bids as they often know where the savings can be found (just as Indianapolis proved in the U.S.). This approach helps inject competitive forces, keep costs under control and drive up productivity.

Another option worth considering is an asset and services review.

Back in the mid 2000s in Winnipeg, reformists began examining city land and assets more closely and discovered the city actually owned some river front property outside of city limits. They also began urging the city to sell off some land – in the middle of a booming retail area in the city – that was being used as a snow dump.

Cities could also re-examine some of the services they’re providing. Should they really be running money-losing golf courses and fitness centres? No.

Hopefully it’s clear that there are lots of ways city governments could operate more efficiently instead of raising taxes. It’s time for taxpayers to demand politicians spend more time investigating such options.

This column was published in the June 2018 edition of Business in Calgary and Business in Edmonton magazines


A Note for our Readers:

Is Canada Off Track?

Canada has problems. You see them at gas station. You see them at the grocery store. You see them on your taxes.

Is anyone listening to you to find out where you think Canada’s off track and what you think we could do to make things better?

You can tell us what you think by filling out the survey

Join now to get the Taxpayer newsletter

Franco Terrazzano
Federal Director at
Canadian Taxpayers
Federation

Join now to get the Taxpayer newsletter

Hey, it’s Franco.

Did you know that you can get the inside scoop right from my notebook each week? I’ll share hilarious and infuriating stories the media usually misses with you every week so you can hold politicians accountable.

You can sign up for the Taxpayer Update Newsletter now

Looks good!
Please enter a valid email address

We take data security and privacy seriously. Your information will be kept safe.

<