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Property Tax Hike? Cities have alternatives

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Colin Craig

Too often municipal politicians ponder the amount to raise property taxes each year.

Large cities are typically inefficient organizations with plenty of room for improvement. There are multiple ways to trim spending and avoid a tax increase without reducing service delivery.

All we have to do is convince our city council members to roll up their sleeves and make some hard decisions to reduce spending instead of taking the easy way out by raising taxes.

We’re not suggesting cities like Edmonton and Calgary never trim spending. They do … here and there. But total spending increases every year – it’s as predictable as the sun rising in the east or the Maple Leafs fizzling out and not bringing home the Stanley Cup.

One way to reduce costs would be to scale back city salaries and benefits. It’s common knowledge government compensation packages tend to be more generous than similar positions in the private sector. Thus, there’s plenty of justification for restraint.

While politicians are generally loathe to actually reduce pay for current employees, it would be less politically challenging for them to grandfather in more reasonable compensation packages for new employees

For example, instead of putting new hires in golden city pension plans, they could receive a more modest benefit, such as a matched contribution to their RRSPs.

Alternatively, instead of paying a new admin assistant, say, $55,000 per year, new hires could start at $45,000 or whatever level is offered in the private sector.

Considering salaries and benefits tend to make up over half of the city’s budget, the opportunity for savings in this area is enormous and should not be overlooked.

While reducing compensation levels is one way to cut spending, it doesn’t address situations where employees are unproductive. Unlike in the private sector, where businesses have to stay competitive in order to survive, if a government is wasteful, it simply passes unnecessary expenses on to taxpayers.

Unfortunately, it’s not so easy for taxpayers to shop around for a different government. (Doing so requires a more onerous task – packing up and leaving.)

One way to address inefficient service delivery is to contract out more government services to the private sector – pothole repair, park maintenance or other services.

When looking at tendering out such services, existing city employees should be encouraged to put in bids as they often know where the savings can be found. This approach helps inject competitive forces, keep costs under control and drive up productivity.

Another option worth considering is an asset and services review.

Back in the mid-2000s, reformists in Winnipeg began examining city land and assets and discovered the city owned river-front property outside of city limits. They also began urging the city to sell off some land – in the middle of a booming retail area in the city – that was being used as a snow dump.

Cities could also re-examine some of the services they’re providing. Should they really be running money-losing golf courses and fitness centres?

There are many ways city governments could operate more efficiently. It’s time for taxpayers to demand politicians spend more time investigating such options.

Colin Craig is the Alberta director for the Canadian Taxpayers Federation.

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