Manitoba Municipal Spending Watch (not as boring as it sounds…ok maybe it is but you should still read it…)

Instead of reading a lot of the extreme left and right garbage flying around social media how about reading something potentially useful and informative for a few minutes – like this post on the 3rd Manitoba Municipal Spending Watch.

A report from the Canadian Federation of Independent Business (CFIB)  released this week says that Manitoba’s 26 largest municipalities “spend far more than needed on day-to-day operating spending”.

Sure that’s an awkward quote grammatically but the report’s value is in its numbers and results.

What about the Pembina Valley? Well for those of you that want the meat up front instead of wading through a self-indulgent blog post to get to the good stuff here you go.

In the cities and towns Top 10 list ranked from best to worst Morden and Winkler landed in spots two and three respectively behind Dauphin. Real operating spending growth per capita between 2008-2014 was five percent for Morden and seven percent for Winkler (Dauphin was three percent). Winnipeg, a category unto itself, was 28 percent.

Now don’t celebrate just yet – the report states that every city on the list is spending at an unsustainable rate.

In terms of excess spending the report states that for a family of four Morden’s excess spending was $1,192, Winkler’s excess spending for the same family was $1,740 while Stanley’s was $2,732.

At the bottom of the Top 10 was Flin Flon at 14 percent, which the CFIB deemed unsustainable spending.

In terms of Regional Municipalities a separate Top 15 list was presented with the RM of Stanley coming in a not so flattering 10th place with real operating spending growth per capita between 2008-2014 at a whopping 46 percent while Hanover was number one with -7 percent (a reduction).

Within the RMs the report deems that all categories of spending are growing at unsustainable levels with Transportation Services consuming the most of the pie at 35% over seven years.

While this is the largest portion of the spending pie the fastest growing portion by an enormous margin is Protective Services (Fire, Paramedics and Policing) with a growth over seven years of 73 percent. According to CFIB this is seven times the sustainable benchmark. Public Health and Welfare comes in a close second with a growth of 65 percent although to put it in perspective it accounts for only one percent of RM budgets while Protective Services accounts for 14 percent.

Like the RM’s the largest portion of Cities and Towns operating expenditure is Protective Services at 26 percent and grew by 22 percent over seven years – three times the sustainable benchmark.

Across and within all of these categories labour costs make up the largest portion of spending at 48 percent.

According to CFIB the only (or primary) way to return to sustainable spending is to address labour costs which have increased at three times the sustainable benchmark. The two aspects of labour costs that can be controlled are Cost per Worker and Number of Workers. Essentially do more with fewer, limit or reduce wages, or a combination of both.

According to CFIB municipal employees wages have a two percent advantage over non-municipal peers which increases to more than 14 percent when employer contributions to benefit plans are taken into account.

This suggests the low hanging fruit for savings and a return to sustainable growth would be in targeting generous benefit matching for reductions.

Further to this CFIB reports that public employees put in an average of 34.5 hours per week of work compared to 37.9 in the private sector.

CFIB singled out labour costs in the protective services category as an issue.

A new addition in the third edition of the Manitoba Municipal Spending Watch is the specific analysis of Protective Services Labour Costs (PSLC). It is clear that Labour Costs (LC) as a whole have grown significantly above sustainable levels, and now serve as a major contributor to the overall increase in municipal operating spending.”

Overall municipal labour costs have increased by 20 percent over the seven year period being studied while labour costs specific to protective services (inside of the over labour cost castegory) have grown by 34 percent.

Entrepreneurs understand that police, fire, and emergency services are essential to all Manitoba communities and do not advocate for their dismantling. However, increasing spending on these services at quadruple the rate of population growth is not sustainable. Indexing changes in Protective Services Labour Costs to inflation and population growth would have saved Manitoba residents an average of $280 from 2008 to 2014, or the equivalent of an extra $1,120 for a family of four.

Overall Manitoba’s 26 largest municipalities spent $848 million above the sustainable spending benchmark.

The recommendation moving forward (not for cost cutting, just for stopping the unsustainable growth) is for municipalities to limit spending growth across all categories to inflation and population growth.

The report concludes by saying that unsustainable growth in municipal spending has led to, and will continue to lead to increased taxes and decreased spending on infrastructure – both of which limit economic development. The report goes on to provide a number of cost saving recommendations for municipalities.

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