Here's what the Fraser Institute has to say about New Westminster

City officials says Fraser Institute ignores impacts of electrical utility on the data

A new report by the Fraser Institute states that the City of New Westminster spends more per person than many cities in Metro Vancouver, but city officials say the report is flawed as it doesn’t consider the “oddity” that is the city’s electrical utility.

The report, Comparing Municipal Government Finances in Metro Vancouver, 2018, compared 17 of 21 municipalities in Metro Vancouver on a number of factors, including government spending, revenue and debt.

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“The intention of this report is not to make an assessment of any particular municipality’s finances – for instance, whether taxes or spending is too high or whether municipal governments produce good value for taxpayers,” states the report. “That is beyond the scope of the report, which is a summary analysis of key financial data. The intention is, however, to inform the public about the state of municipal finances and provide some basic comparative information that is otherwise not readily available.”

The Fraser Institute found that West Vancouver had the highest level of government spending in 2016 at $2,583 per person, followed by New Westminster at $2,225 and Vancouver at $1,944, while Surrey was the lowest at $1,057.

“When it comes specifically to New Westminster, it is the second highest spender in the region, below West Vancouver, and it also collects the second most revenue so it’s a higher-revenue, high-spending municipality relative to other ones in the region,” Josef Filipowicz, a senior policy analyst with the Fraser Institute, told the Record. “In both cases, West Vancouver is the highest-revenue, highest-spending municipality in the region.”

According to Filipowicz, New Westminster spends more in all categories than the regional average, but has particularly high spending on protective services, which includes firefighting and policing. He said the city also spends considerably more per person in the “other” spending category, which he described as an “enormous” category that includes items such as housing, health, social services and community planning.

“I think it raises more questions than we find answers in this study,” he said. “I think part of the point of the study is to be a conversation starter and to really get people thinking about the state of their local government’s finances, and in particular how it compares to their local peers.”

For the study, the Fraser Institute pulled data from the Ministry of Municipal Affairs website and adjusted it to take into account inflation and to break it down to a per person level.

Coun. Patrick Johnstone voiced concern that the Fraser Institute puts “a patina of analysis” around the data but doesn’t provide any context for the data.

“Putting numbers out does not help inform,” he said. “Actually putting context with numbers is where information comes from.”

While there is value in making fair comparisons, Johnstone said that’s not the case with the Fraser Institute’s study.

“Be aware if comparisons like this are comparing apples to apples – I guess that’s the message,” he said. “It does sometimes take a little extra work to do that comparison. I am happy to talk about our numbers. I think we do stand up really well. Our budget is comparable to other cities in the region. Unfortunately, analysis of this kind of thing is difficult because municipal budgeting is a complicated and arcane thing.”

Mayor Jonathan Cote said the report makes some unfair comparisons in terms of municipal spending, as the city’s data includes its electrical department. He said New Westminster “has the oddity” of being the only municipality in the region that runs its own electrical utility.

“If we were to include B.C. Hydro’s costs in all of the other municipalities, you would see that New Westminster’s position on the graph in spending would actually be much more in the middle of the pack,” he said. “I think that’s just an oversight that the Fraser Institute was not aware of, that we have that unique situation but it really does skew the numbers quite significantly and makes New Westminster not come off well.”

Cote acknowledged there are areas, such as policing and parks and recreation, where New Westminster spends more than the average of other municipalities to provide “enhanced” services for citizens.

“Definitely having your own police force, we do know that you do pay a premium for that. But you do get a police force that is able to respond more to the local concerns and engage in the community than the communities that have an RCMP service,” he said. “We know that there is probably about a 10 per cent premium to having your own municipal police force, but in my opinion I think that’s a premium that has good value in our community, and I think we are incredibly well served.”

To be fair, Johnstone said the Fraser Institute would need to dig deeper into the data and consider anomalies, like the electrical utility, in the municipalities.

 “Including the electrical utility with our expenses and our revenues does not allow an apples-to-apples comparison,” he said. “If you take the electrical utility out of it, then that provides a more fair comparison.”

The Fraser Institute’s report, which used data from 2007 to 2016, included a summary of its analysis about New Westminster. Here’s a few of its findings:

* Operating spending per person – $2,225. New Westminster ranked second; the average in Metro Vancouver was $1,549.

* Total revenue collected per person – $2,786. New Westminster ranked second; the average in Metro Vancouver as $2,256. (This includes property taxes, the sale of services and user fees, developer fees and other revenues.)

* Developer fees (2007 to 2016) per new resident – $6,991. New Westminster ranked 16th. The Metro Vancouver average was $14,346.

* Business property tax share of total property tax – 39.3 per cent. New Westminster ranked ninth. The average in Metro Vancouver is 40.3 per cent.

Johnstone said he isn’t surprised that New Westminster ranked low in terms of fees for development, given that the report was based on data from 2007 to 2016.

“It’s no secret that a decade ago New Westminster was very low in what it did as far as collecting density bonuses and amenities from developers. I think that is an identified problem that the city had, and it’s something that we have addressed. If you look at the 2016 data, you will find we are getting better. We have made changes on that in order to improve that,” he said. “We recognize that issue. I think what we are seeing here is a bit of a record from a decade ago when we really didn’t collect, honestly, enough fees. We are working on that.”

 Charles Lammam, director of fiscal studies with the Fraser Institute and a co-author of the report, said it’s ultimately up to the residents across the region to decide if they’re getting good value for their municipal tax dollars, “but they need comparable information with other municipalities to help make that call.”

Cote said believes there’s value in knowing what’s happening in other municipalities in terms of their budgets and priorities.

“We have a lot to learn from other cities in Metro Vancouver and likewise. I think other cities can learn from some of the successes we are having in New Westminster. These kinds of comparisons can allow us to be able to have those conversations,” he said. “Unfortunately, the Fraser Institute sometimes doesn’t fully do all of the background research and pull out anomalies, like that in New Westminster, and you end up getting people very excited that don’t really understand the full story.”

 

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