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The Vancouver Sun
Tuesday, September 18, 2007
Page: D3
Byline: Don Cayo

Vancouver will have to stop spending so much

Vancouver homeowners swallowed an eight-per-cent property tax increase this year with surprisingly little outcry.

Two factors drove the increase. Council decided first to increase total spending by 3.98 per cent, and then to add all of the increase to residents' bills and pass none of it on to business.

The natural tendency for homeowners to squawk was suppressed, I suspect, by the solidness of the case made by the Vancouver Fair Tax Coalition. It documented how business taxpayers are egregiously overcharged in Vancouver, to the point where increasing numbers fold or flee to the suburbs.

But what do you think the odds are that council will be able to get away with continuing to pin most or all of big future increases on homeowners' bills?

I don't think I'd want to be a councillor who tries that trick very often. Nor would I want to risk the wrath of the business community by ignoring the import of what council's own tax reform commission will tell them in a report to be formally presented today. I wrote last week that the report's policy recommendations are pretty lame, but its fundamental premise -- that Vancouver businesses are seriously overtaxed -- is dead on.

So this leaves just one alternative. The city will simply have to stop spending so much.
It's not yet the time of year when councillors get into heavy-duty budget deliberations, but it's not too early to start thinking about what's in store.

Spending restraint is never easy, and two high-profile realities -- an overlong strike by the city's unionized workers, and an overwhelming desire to have the city look good for the Olympics -- are certain to create pressures to spend more, not less.

But there are other places to cut costs. Specifically, I draw attention to one of the tax commission's background documents -- even though the commission report itself doesn't mention it, even in passing.

The document is a 2006 comparison of municipal spending levels in the region done by MMK Consulting. It finds Vancouver with what looks like lots of fat to trim.

The analysis shows Vancouver with total annual expenditures of $1,277 per resident, second in the region only to the City of North Vancouver at $1,385. Vancouver was particularly free-spending in the cost of general government ($137 compared to as little as $40 in Surrey), protective services ($420 compared to a range of numbers in the upper $200s in Surrey, Burnaby and Coquitlam), and in planning and development ($108 compared with well under $50 in Surrey, Burnaby, Richmond and Coquitlam.)

MMK's draft report -- the only one that, as far as I know, has yet been made public -- doesn't delve very deeply into exactly what Vancouver spends its extra money on. But if those numbers don't suggest areas were efficiencies can be found, I can't imagine what would.

It's timely to think about these issues not only because budget sessions are looming, but also because of the unresolved issues that stand in the way of settling the strike.

A hefty pay raise for members of the three striking union locals is pretty well inevitable, but -- last we heard -- they were also looking for no-layoff provisions in their contracts. This could have the potential to hamstring management and make meaningful budget cuts much more difficult, or even impossible, to implement.

So the issues of rebalancing the tax load and settling the strike may be the ones getting the headlines these days. But I think the really big issue that underlies everything else is spending. It's what will ultimately matter most when you get your next tax bill.

dcayo@png.canwest.com



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