It's more complex than that—comments on The Fraser Institute report on municipal per capita spending

Sep 4, 2018

The Fraser Institute has garnered some attention recently for their report “Comparing Municipal Government Finance in Metro Vancouver”. In particular, the report has highlighted West Vancouver for a high level of spending per capita, especially in comparison with Surrey.

What is the report trying to say?

The report uses revenue numbers from 2002-2012, divided by population numbers, to come up with a “spend per person (per capita)” metric, and uses this to rank various lower mainland municipalities in terms of spending. The numbers are all over the map, and the report provides little rationale as to why this should be.

The report states that its purpose is to raise awareness and encourage debate, but the information is out of date, and doesn’t really answer the question “Why do municipal costs vary among lower mainland municipalities?”

Why DO costs vary among Lower Mainland municipalities?

To understand municipal costs, you need to look at factors that actually drive the costs. The number of individuals living in the community (i.e. population) is not really a significant cost factor. The number of households is more relevant, as most municipal services are delivered on a per-household basis. Even the number of households, however, is not the major factor driving costs.

The majority of municipal costs are driven by four factors, all of which have a strong effect on costs in the District of West Vancouver:

1. Density

It is much less expensive to provide municipal services to denser forms of development (stratas and apartments) than to less dense forms (single detached dwellings). This is because most municipal costs are linear: pipes and roads, obviously, but also less obvious things like parks, police, fire, and even planning. Density makes for efficiency in service delivery. Conversely, the more spread out everything is, the more it costs to provide services. West Vancouver has some of the most spread out development (very large lot sizes) in the Lower Mainland. This is exactly what many of our residents value—but it costs a lot to service.

2. Geography

Building and maintaining a road, or a trail, or a water pipe, up the side of a mountain or down onto a beachfront is more costly per metre than building the same infrastructure out on the flat land in Surrey. West Vancouver has probably the most challenging geography in the Lower Mainland—again, that’s exactly what people in West Vancouver value about it, but it costs a lot to provide services over such terrain.

3. Age of Infrastructure

The report emphasizes the fact that costs in Surrey, per person, are much lower than elsewhere in the Lower Mainland (particularly, that they are lower than the City of Vancouver’s costs). This is likely owing to the fact that most of the infrastructure in Surrey has been built quite recently and paid for by developers, and Surrey hasn’t yet entered the period of time in which the more costly maintenance and replacement of all this infrastructure falls onto the municipality. Conversely, the older municipalities like City of Vancouver, New Westminster, and West Vancouver, have to bear all the costs of maintenance and replacement for ageing infrastructure, and our budgets and tax rates reflect that. We are all playing ‘catch up’ on asset management, but some of us have a lot more to catch up on than others. Not only is Surrey’s infrastructure mostly new, but their practice has been to rip up any neighbourhood that is old and replace it. for instance, Port Kells used to be a charming rural area, but it’s now just row-upon-row of townhouses. It's highly unlikely that the same type of development will ever happen in West Vancouver.

4. Level of services

The report acknowledges that different communities provide different levels of service, but doesn’t really acknowledge what this means for costs. West Vancouver provides a very high level of service for things like community centre and sports programs, the library, the Seawalk and Lighthouse Park. These are regional draws, comparable to or better than what much larger communities such as Richmond, Burnaby and even the City of Vancouver provide. Residents value these higher levels of service, but they do cost money. The report also fails to acknowledge the hidden cost of services such as providing a local police force and a local bus service. To support these local services, the District faces human resources, legal, communications and administration costs that are not reimbursed by TransLink (buses) or absorbed by the RCMP (police).

Out-of-date information

The report also states that the District of West Vancouver was in a position where its net liabilities exceeded its net assets. This was true at the time, but it is not true now. The District has been able to return to a positive net asset position,  which it has maintained for the last three years.

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