By Jeff Nagel/Black Press
B.C. cities have endorsed a call for the province to share some of its revenues – not now but out in the future when hoped-for boom times arrive.
That's the centrepiece of a financial reform policy paper tabled by the leadership of the Union of B.C. Municipalities that won unanimous support Wednesday.
The concept is that in years when provincial revenue from all sources is up by more than an agreed threshold – three per cent is suggested – Victoria would share a portion of the excess with municipalities.
Exactly how the money would be disbursed and where it could go would be up for much more debate, if the province even agrees to the notion.
So far Coralee Oakes, the minister responsible for local government, has promised nothing more than talks.
But Saanich Mayor Frank Leonard, one of the architects, said the money would go into an infrastructure bank, with more of the money potentially reserved for use by cities in down years when ramped-up infrastructure spending can also help revive the economy rather than hot years with higher construction costs.
Leonard said civic leaders understand that the province doesn't want to hand over more of its existing income right now and that citizens don't want to be hit with any new tax. He thinks the core concept will appeal to the government.
"Let us be a partner in growing the economy, so much so that we benefit financially with growth in the economy," Leonard said. "If we were in their shoes, we think we would like to hear this."
Asked if local governments should trust the province not to shuffle its accounts and discretionary dividends from Crown corporations to keep total revenue below any sharing threshold, Leonard doubted that will be a problem.
"I would think if they're having good years – three, four and five per cent growth in revenue – they're not going to hide it, they're going to be damn proud of it. And we want to be proud of it too."
Cities face an intensifying crunch to raise cash for major infrastructure such a water and sewer upgrades and transit expansion.
The province's Property Transfer Tax, charged for every real estate transaction, is one of the government sources that grows with the economy that cities say give the province room to share. Saanich Coun. Paul Gerrard said the PTT brings the province $800 million to $1 billion a year.
"None of that is put back into affordable housing, which I think is a disgrace," Gerrard said.
There are no permanent recurring grants guaranteed at the provincial level, unlike federal gas tax transfers that are now enshrined. Traffic fine sharing, for example, depends on provincial approval each year.
Cities feel too dependent on property taxes that don't reflect owners' ability to pay.
Premier Christy Clark has said future liquefied natural gas revenues could generate huge dividends for the province that could fund various benefits, including lower tolls on the Port Mann Bridge.
Civic leaders would prefer a systematic method for sharing any future bounty rather than one that could be sporadic or politicized.
Revelstoke Chamber of Commerce support municipal finance reform
By Aaron Orlando/Revelstoke Times Review
Revelstoke Chamber of Commerce president Steve Bailey said the organization supports UBCM's efforts to strengthen local government finances.
“We are pleased with the announcement by UBCM as these issues have been of concern to our community. [The Revelstoke Chamber of Commerce board of directors] has requested that local government look seriously at the budgeting process and expenditures to find efficiencies to minimize tax increases and reduce the business tax ratio," Bailey said.
He was referencing a centrepiece report from the UBCM convention this week titled, Strong Fiscal Futures: A Blueprint for Strengthening BC Local Governments' Finance Systems.
The authors of the report commissioned by the UBCM executive studied B.C. municipal finance issues and presented solutions to problems.
Key issues are a tax system heavily reliant on property taxes that don't grow with the economy, staggeringly expensive upgrades required by the federal and provincial governments, and inadequate federal and provincial support for municipal governments during boom times.
Bailey said the local chamber has been working with business and Revelstoke municipal government to reduce business property tax rates, get municipal costs under control and to foster economic development initiatives.
Bailey's comments echo those of the B.C. Chamber of Commerce. President and CEO John Winter said the report identified three key initiatives needed to improve local government finances: facilitating economic growth, the unsustainability of property taxes as a funding mechanism for local government and the need for more dialogue with business over property tax issues.
“This report correctly identifies the very real opportunities local governments have to facilitate and catalyze local economic growth,” Winter said. “By actively encouraging economic activity, municipalities and regional districts can strengthen their finances, create strong businesses and grow jobs in communities throughout B.C.”