The Association of Manitoba Municipalities recently unveiled its “Fair Share, Fair Say” election campaign to push for more and higher taxes.
Manitoba’s mayors would have you believe local governments are operating at maximum efficiency and only new revenues from the provincial government can solve their infrastructure deficit.
The reality is that municipalities are far richer than they let on, and new tax revenue will continue to fund overly generous municipal wages and benefits rather than infrastructure investment.
Municipalities continually complain that they are shortchanged by the tax system and, as a result, receive less revenue than needed to fund their services and infrastructure. To prove their point, local governments claim they collect only eight cents of every tax dollar.
However, municipalities conveniently fail to count revenues collected through user fees and grants and transfers from provincial and federal governments.
Municipalities receive nearly double what they claim — 15 cents of every tax dollar collected — when these revenue sources are included.
The real problem is that many municipal tax dollars are misspent on day-to-day operating expenses, such as wages, that do little to create long-term benefits for communities.
In fact, more than $100 million a year is diverted from infrastructure investment to fund unwarranted operating spending, according to the Canadian Federation of Independent Business.
The CFIB’s latest Manitoba Municipal Spending Watch says that inflation-adjusted operating spending in Manitoba’s 26 largest communities grew by 20 percent from 2008-13.
This growth rate is nearly three times faster than population growth, which is considered the sustainable spending growth rate by small-business owners.
Spending beyond this benchmark cost municipal residents $606 million over the six-year period. That’s enough cash to build four Waverly underpasses or pave Highway 75 nearly the entire length from Winnipeg to the U.S. border.
Far more resources would be available for infrastructure if local governments got their operating spending under control. To get there, municipalities must take a hard look at their labour expenses, which account for 57 percent of their total operating costs.
Manitoba municipal workers receive 14 percent more in wages and benefits than people doing the exact same jobs in the private sector. This advantage occurs through higher wages, shorter work weeks and gold-plated pension plans.
However, municipal leaders choose to ignore the issue. Not a single mayor has recently called for the elimination of the municipal pension bridge benefit, which provides up to $60,000 to municipal workers who retire early.
Unlike in Ontario, Manitoba’s municipal leadership is not calling for reform of provincial arbitration laws, which are one of the main causes of spiralling municipal wages.
Rather than asking the Manitoba government for another handout through a greater share of PST revenues, municipal leaders should be asking the province for a hand up by changing labour laws. A change in these laws could help municipalities bring their labour expenses back to sustainable levels and use more of their existing tax revenues to fight the infrastructure deficit.
Unfortunately, AMM’s new election campaign shows Manitoba’s mayors have once again decided to use the infrastructure deficit as an excuse to gain more tax revenue to pay for their unsustainable labour costs.
Municipalities already get their fair share. It’s time Manitoba mayors recognize this and get to work.
Elliot Sims is the Manitoba director of provincial affairs with the Canadian Federation of Independent Business.