Municipal Spending Ranges by Key Categories in Northern Ontario Cities

Given the ongoing municipal election campaigns in Ontario, I have been focusing a fair amount of my blogging activity on municipal public finance issues.  In a recent post, I looked at the Net Municipal Levy Per Capita (NMLPC ) for the five major northern Ontario cities for the years 2007 and 2017. In 2007, the NMLPC was highest in Thunder Bay at $1,216 and lowest in Sudbury at $1,041.  By 2017, spending was highest in Timmins at $1,651 (with Thunder Bay second at $1,641) and lowest in Sault Ste. Marie at $1,434.  If one compares the growth rates in the per capita levy, they were actually highest in Timmins at an average of 4.6 percent annually and lowest in Thunder Bay at 3.5 percent annually.  I also compared the growth of the NMLPC to household income growth and showed that per capita municipal spending has been rising faster than average household income raising the question of sustainability.

In this post, I want to drill down a bit in the total expenditure numbers and compare spending for these five major northern Ontario cities in a number of key municipal expenditure categories.  The data is from the 2017 BMA Consulting Municipal Report and was available for key expenditure categories in terms of the levy for the category per $100,000 of municipal tax assessment.  In order to standardize comparison, I have reproduced the net levy graph (Fig 1) but per $100,000 of assessment rather than per capita as in the last post.  To this I have added graphs comparing general government (Fig 2), fire (Fig 3), police (Fig 4), paved roadway spending (Fig 5) and winter control (Fig 6).  Keep in mind that this is data for only one year and there are differences in population size and geographic spread across these five cities as well as any unique local circumstances that may affect spending.

 

 

 

Nevertheless, the results are illuminating in that there is no one size fits all pattern of spending across these five communities when it comes to these key municipal expenditure categories.  The net levy per $100,000 of assessment ranges from a high of $2,136 in Timmins to a low of $1,482 in Sudbury.  Thunder Bay spends the most on general government (i.e. administration) at $257 per $100,000 of assessment and Timmins the least at $65.  North Bay spends the most on fire services at $283 per $100,000 of assessment and Sudbury the least at $160.  In terms of policing, Thunder Bay spends the most at $503 per $100,000 of assessment and Sudbury the least at $320. 

 

 

 

When it comes to paved roadway expenditure, Sudbury spends the most at $258 per $100,000 of assessment and Sault Ste Marie the least at $101.  Finally, all five of these cities experience harsh winters and the need to plow roads and when you look at winter control spending, Timmins spends the most at $237 per $100,00 of assessment and Thunder Bay the least at $48 per $100,000 of assessment.  This last category however is the most likely to be the subject of large fluctuations from year to year given local weather conditions.  My guess is the winter of 2017 was pretty bad in Timmins. 

Overall, there are large differences in spending across these categories across these five cities.  The spending in these categories on average across these five cities in 2017 accounted for about two-thirds of the net levy – a significant proportion.  It would be interesting to know what the incidence of fires is in North Bay and Thunder Bay given the size of the expenditure in these communities compared to the others.  Given high homicide rates in Thunder Bay, it is understandable perhaps why it spends the most of police of these five cities.  Yet, given that the average proportion spent on governance in these five cities is about 8 percent of the net levy, one wonders why Thunder Bay spends 14 percent and the Sault is at 11 percent compared to say 3 percent in Timmins or 9 percent in Sudbury. 

Ratepayers in each community should be asking themselves how their community compares to the others and what may be driving the differences.  Is the best value for money being provided?

Municipal Election 2018: Spending in Northern Ontario Cities

We are about three weeks out from the municipal election and across northern Ontario, voters will be looking for information on which to base their decisions.  Inevitably, some of that decision making will be based on comparisons of how municipal ratepayers feel they fare relative to other similarly sized cities.  Taxes are often the basis of such comparisons, but municipal property taxes are a function of what municipalities spend so another basis for comparison is expenditure.

Among the many municipal statistics provided in the annual BMA Municipal Study is fairly detailed comparisons of spending on municipal services.  The aggregate number on which any comparison can begin is what is known as the net municipal levy per capita (NMLPC).  This is an estimate of what the spending need for a municipality is to provide its services – as determined by the city administration and elected council – and ultimately is what feeds into required tax revenues.

Now the BMA reports are quite explicit in qualifying what a NMLPC measure can and cannot do and what its limitations are.  Spending per capita can vary as a result of different service levels as well as type of service.  There are also demographic and socio-economic reasons why spending may vary across cities and per capita spending is simply an aggregate and not an indicator of value for money.  However, the BMA maintains that changes in per capita spending reflects changes in total spending relative to population and “Increasing per capita expenditures may indicate that the cost of providing services is outstripping the community’s ability to pay, especially if spending is increasing faster than the resident’s collective personal income.”

So, the accompanying figure 1 shows the NMLPC for the five major northern Ontario cities for the years 2007 and 2017. In 2007, the NMLPC was highest in Thunder Bay at $1,216 and lowest in Sudbury at $1,041.  By 2017, spending was highest in Timmins at $1,651 (with Thunder Bay second at $1,641) and lowest in Sault Ste. Marie at $1,434.  If one compares the growth rates in the per levy, they were actually highest in Timmins at an average of 4.6 percent annually and lowest in Thunder Bay at 3.5 percent annually.

 

However, in all of these cities, per capita spending grew faster than population suggesting that there was a deepening of per capita spending.  That could be the result of a desire to improve services or it can reflect a weakening economic base and the spreading of costs across fewer people.  Over the last ten years, population actually shrank in four out of five of these cities – the exception being Sudbury which saw its population rise 2.3 percent over the last ten years.  Yet even in Sudbury, spending rose faster than population given t per capita expenditure is growing.

 

More interesting, is figure 2 which plots the average annual growth rates of the net municipal levy per capita (from 2007 to 2017) and average household income (2010 to 2017). In all of these cities, per capita municipal spending has been rising faster than average household income.  So, it would appear that in all of these cities, municipal spending has generally risen faster than both population and income.  This suggests that recent years have seen municipal spending outstrip the resource base in these communities as measured by population and income.  Indeed, sustainability for sub-national governments has been outlined as a key concern in a recent federal PBO report.  Municipal ratepayers in all five of these cities should be asking how candidates for their ideas on how they plan to address the fiscal sustainability of their cities?