The Canadian Federation of Independent Business (CFIB) has published its 2015 Municipal Spending Watch (see link above). The premise of this report is that Canadian municipalities, large and small, have a spending problem, not a revenue problem. The authors also argue that reasonable city spending growth should approximate consumer inflation and population growth.
For your consideration, I would like to make some key observations regarding the methodology of the CFIB report:
• The City did increase some services (e.g., Blue Cart, Transit, permit approval) over the period of the study (2003 – 2013) as well as contributed to the Fiscal Stability Reserve;
• The City is unable to replicate the CFIB’s numbers using internal data. Even using the rate of Alberta Consumer Price Index (CPI) to adjust for inflation, internal City calculations demonstrate that inflation adjusted spending rose 61% over the period, not 80% as shown in the CFIB analysis;
• The study criticizes the use of the Municipal Price Index (MPI) on the basis that some of the costs used in the calculation, such as wages, are within the control of The City. However, the wage component of the MPI over the period rose by approximately 45%, while the average hourly wage for Alberta rose by 53% and the average for Calgary rose 54%;
• Using MPI to adjust for inflation, spending rose approximately 50%. Given that population increased by 25%, real per capita spending rose by approximately 20%;
• City of Calgary spending rose approximately 12% in 2013, while the average for the other nine years was approximately 7% annually. This is likely partially due to the flood making 2013 an anomalous year, thereby potentially negatively influencing the overall results.
• The report does not address volume capacity, such as doubling of the water treatment plant and sanitary capacity issues such as the West Memorial Trunk.
It is very important that a report that analyzes municipal spending in Calgary is not based on generic methodology and compare apples to apples, not oranges to apples.
Ward Sutherland, Vice Chair - Priorities and Finance Committee
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