the election and our citys budget

For the few remaining Whitehorse residents not running for city council, I thought I would dive into the city budget and come up with a few questions to ask the candidates when they ambush you at the coffee shop or in the grocery aisle.

For the few remaining Whitehorse residents not running for city council, I thought I would dive into the city budget and come up with a few questions to ask the candidates when they ambush you at the coffee shop or in the grocery aisle.

You only get seven votes, so you need to choose wisely.

The good news is that Whitehorse’s budget is relatively boring. Plenty of other places are facing painful headlines about pension shortfalls, spending over-runs, property tax shortfalls and megaprojects gone horribly wrong.

Take Stockton, California, for example. It went bankrupt in July after a ghastly combination of spiralling spending and collapsing tax revenue. Michael Lewis included Stockton in his financial disaster tourism book Boomerang along with Greece and Iceland. Even Stockton’s city hall has been repossessed.

Less spectacular, but closer to home, are examples like Fort Nelson and Dawson Creek. The Canadian Federation of Independent Business has fingered our friends down the highway as among B.C.‘s “Freest Spending Municipalities.” According to the CFIB, a family of four in Fort Nelson would have saved $17,341 over 10 years if their city had managed to keep spending in line with inflation and population growth.

Before we get to the questions, let’s look at a few facts. Our city’s expenses in 2011 were $65 million, according to the annual report, or about $2,400 per citizen. A tidy sum, but less than the budget of a biggish Yukon government department. Expenses have been growing steadily, up from just $49 million in 2009, although recent numbers have been bumped up by things like expenses for the Canada Games Centre fire, which the city will recover.

Spending has surged across all the city’s departments, including protective services, recreation and cultural services, environment, transportation and overhead activities. A big driver has been salaries and benefits, which are up almost 30 per cent over five years despite total staff numbers actually going down.

Mayor Bev Buckway points out in her budget address that increased spending is also driven by a 14 per cent increase in population over the last five years, as well as literally hundreds of private development projects plus big projects funded by the feds and territory. Apparently the city is running a whopping 48 federally funded gas tax projects at the moment.

To pay for all of this, revenues have been surging too. Grants from the feds, the territory and other revenues are up sharply in recent years, although with tight budgets in Ottawa we can probably assume we won’t be getting so many big infrastructure cheques in the next few years.

As for your taxes, property tax revenues and user fees have been growing around seven per cent per year over the last five years. The typical rule of thumb is to compare property tax revenues to inflation plus population growth, to see if the “real” tax take of your municipal government has been going up. In Whitehorse’s case, population has been growing about three per cent per year and inflation has been averaging two per cent over the last five years.

So, yes, your city taxes have been going up. Despite the arrival of new taxpayers, the average residential property has seen its property taxes go up by $352 per year over the last five years, from $1,778 in 2008 to an estimated $2,130 in 2012. That’s about three points faster than inflation. The mill rate for businesses has also gone up, and you end up paying for that indirectly at the till.

It’s up to you to decide if it’s worthwhile to pay the city a few hundred dollars for additional services, whether that’s subsidizing the money-losing Canada Games Centre, new traffic circles and paved trails in your neighbourhood or stepped-up parking enforcement downtown.

Further good news comes from the city’s debt report, which is also boring. Lots of other cities have been hit hard by over-borrowing or pension obligations. Whitehorse’s long-term debt at the end of 2011 was $9.2 million, less than $400 per citizen. Plus the city does not have a “defined benefit” pension plan with its employees, meaning that it pays a fixed amount each year into staff retirement plans and doesn’t face the horrible pension shortfalls that many other governments do these days.

All in all, a mixed picture but not a disastrous one: taxes rising a bit faster than inflation and population growth, low debt, some increased overhead but also some increased services (I’ll leave it to you as to whether increased parking enforcement is a “service”).

So, what should we ask the candidates?

First, if they are promising new services (and most are), how would they pay for them? Increase taxes even faster, or cut what? Remind them that every million-dollar idea they have costs the average Whitehorse family of four around $150, unless the candidate has a plausible plan to get someone else to pay.

Secondly, what would they do to make Whitehorse an even better place to live and do business? Because that’s how we lure more people here to share the cost of the city’s infrastructure.

Finally, here’s a bonus question if you really want to put them on the spot: If bubbly Whitehorse house prices deflate and new development slows down, causing tax revenues to fall at the same time the feds are cutting infrastructure funding, what should the city do?

This last one is important. We need a city council that is prudent. None of Stockton’s city councillors ran for office on a “Let’s Bankrupt Our City!” platform, but their city ended up there anyway.

Keith Halliday is a Yukon economist and author of the Aurore of the Yukon series of historical children’s adventure novels.