It’s long past time for a new fiscal framework for communities

Jul 24, 2020 | Blog, Governance | 4 comments

The wellbeing of our communities is threatened and solutions have been in front of provincial politicians for a long time.

We must modernize local government legislation in British Columbia and provide local elected leaders access to the fiscal tools they need to build resilient communities. This is now even more urgently required as COVID-19 has caused community leaders to empty reserves and has increased the strain on property taxes exposing financial vulnerabilities that have been lingering under the surface for many years.

Intergovernmental relationships

A decade ago I stood at the microphone at the Association of Vancouver Island and Coastal Communities (AVICC) annual convention and asked then-Premier Gordon Campbell and then-Leader of the Official Opposition Carole James about the relationship between the province and local governments.

I had only been elected to the Central Saanich Council table for a very brief time, but it was all the time I needed to understand how deeply dysfunctional the relationship is. Neither leader responded with any interest in addressing the systemic problems and unfortunately many of those issues remain today.

Like so many of our colleagues populating the government and opposition benches, both my BC Green Caucus colleague Sonia Furstenau and I started our journey in governance at the local table. The frustrating responses I received a decade ago are in large part what inspired me to step aside from the Council table to run provincially.

Importance of local government

Decisions made by local governments have a powerful impact on our social, environmental and economic well-being. Local government is the closest to the daily lives of people.

One of the most important responsibilities of local government are the zoning decisions that determine where and how the community develops. Local government also builds and maintains critical infrastructure for the water and sewer services required by a modern society, the roads and transit system that our economy rides on, recreation centres where we play, cultural venues where we express ourselves, and other civic assets that breathe life into our communities.

That’s why ensuring community governance is effective and properly resourced is so important and that responsibility is solely on the shoulders of the provincial government. While local governments make key decisions, they rely heavily on the provincial and federal government grant programs to help fund the work.

The day-to-day operations of local government are funded primarily through property taxes. On the other hand, most infrastructure projects are paid for by borrowing, savings and grants from other levels of government. This is where the system breaks down as there is often a clash of priorities that local governments usually lose. As a result they are forced to rework local priorities to match provincial/federal ones. Frankly, this does little to serve the local needs and more to serve the wishes of politicians who want to keep their job, and the partisans insatiable desire to grow their influence and power.

New fiscal framework

The Union of British Columbia Municipalities (UBCM), of which the AVICC is a regional body, have long advocated for a new fiscal framework to fund our communities. In 2013 they released a major report called Strong Fiscal Futures. The BC Liberals were in government back then and they ignored it, just as the current BC NDP government continues to overlook it.

The dysfunctional intergovernmental relationships that are legislated through the Local Government Act and the Islands Trust Act are holding us back.

No provincial government going back decades has had the political will to have an open discussion about local governance. As a result, the arbitrary lines drawn in policy (and on maps) in another era have been entrenched.

The UBCM report offered a variety of solutions to the primary challenge of every local government – limited access to revenue. It is not sustainable for them to rely only on property taxes and it’s not responsible governance to always be amending their strategic plans based on the political whims of provincial politicians.

COVID-19 exposes vulnerabilities

This situation has made our communities vulnerable and less resilient. There is a growing infrastructure deficit and the need to renew critical infrastructure dramatically outweighs the fiscal capacity challenging many leaders who know their communities cannot afford to continue borrowing from the future.

This situation has simmered in the background since well before the 2009 AVICC. However, in recent stakeholder engagement meetings with economists about the economic recovery from COVID-19, the warning for the provincial government was clear.

According to the economists local government cannot survive on property taxes alone, COVID-19 is exposing the frailty of the system as it exists and the provincial leadership must to something about it. I suspect that this comes as no surprise to every one of my colleagues in the B.C. Legislature who have any experience in local government.

Where to from here?

This is not the time to bail out local governments with short term programs that just provide more cover for the deep structural problems. There has never been a better time to dig in and show real leadership at the provincial level.

Let’s empower our community leaders with the tools and resources they need to face the challenges and opportunities of the 21st century as a key partner in an equitable green recovery for BC.

It is time for the provincial government to rise to the challenge of modernizing local governance legislation in British Columbia as a legacy of the COVID-19 recovery to:

  • Facilitate safe conversations about community and regional governance,
  • Be better partners in building resilient communities, and
  • Provide a robust fiscal toolbox for local governments to do their important work.

Image by Jerry Coli from Pixabay

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  1. Eric Diller

    Great article, however, it is not quite true that local governments have no other options other than property taxes. There are several opportunities for local governments to fund infrastructure that do not require changes to legislation by the province of BC. Here is a list:

    Special Assessment districts (SA)
    Impact fees / Negotiated exactions
    Leasing of Air rights above community assets
    transit station or stadium (etc..) naming rights
    Joint development of community assets such as city halls/ fire departments
    Parking fees
    Sharing existing DCCs with other departments
    Zoning based amenity contributions
    Sharing revenues from cash in lieu of reduced off-street parking requirements

    The last one, sharing revenues from cash in lieu of reduced off-street parking requirements, is not so great since any automobile infrastructure tends to work to spread our communities out, thereby requiring more infrastructure. Auto infrastructure is also expensive and generates relatively low returns on investment.

    A much better way of raising funds for local governments is for local governments to abolish parking minimums and institute parking maximums. Directly copied from the LGA:

    Off-street parking and loading space requirements
    525 (1) A local government may, by bylaw, do the following:

    Notice that it says “may”. this means that it is not a requirement of local government to have off street parking and loading space requirements, otherwise known as parking minimums. A local government could do something like the following:

    Keep the same numbers as with parking minimums. For example: Residential dwelling, apartment—-1.0 per unit but instead charge the following amounts for the number of parking spaces per number of units in the land use…..
    Between 0– 30% of total units, no charge
    Between 31% – 60% of total units, $1000/ parking space above 30% of max.
    Between 61% – 90% of total units, $5000/ parking space above 60% of max.
    Between 91% – 100% of total units, $10,000 / parking space above 90% of max.
    Greater than 100% of total units, $25,000 / parking space / year

    The advantage of parking maximums over minimums is that they can be ratcheted down over time, resulting in more walkable, cycle-able communities that are more conducive to public transit, contributing to fewer GHGs. This also gives developers of land the freedom to choose how many parking spaces they think they can get money for and provides the local government with much needed income.

    Additionally, in Kansas City, in the US, voters in the city in 2012 voted to approve the creation of a Transportation Development District (TDD) and were able to raise roughly $63 million out of $102 million for a street car system in their downtown. In January 2020, they voted to extend the system and expand the TDD. In addition to a local sales tax, not permitted in BC, the TDD specially assessed the following categories of properties the following amounts:

    48¢ for each $100 of assessed value for commercial property, within the TDD

    70¢ for each $100 for residential property,

    $1.04 for each $100 for property owned by the city.

    40¢ for each $100 for property exempt from property taxes, such as religious, educational, or charitable property.

    A supplemental special assessment on surface pay parking lots not garages and not free parking lots of $54.75 per space per year, within the TDD.


    • Adam Olsen

      Thank you Eric. You are correct to point out that there are a number of other revenue streams that I fail to detail in this post. However, these revenue streams in many cases are cost-recovery or close to it, are not consistent across communities. That said I certainly appreciate you raising them.

  2. Amanda Griesbach

    Underfunding of local governments and their programs, especially on the Southern Gulf Island is almost laughable, if it didn’t have such a huge negative impact. Our local trust council wants to bring forward programs to deal with climate change, but they can’t because of this systematic lack of funding. Our little islands need more money at the local level.

  3. Mark Fisher

    Good article which identifies the need to look at how residential services are funded. Two things are missing however, 2 things the RDBN continues to work on …

    1. Resource Benefit Alliance (RBA). The Province needs to provide the Northwest with a fair share agreement similar to other parts of the province. It is the local government that must deal with the waste, social and health impacts, as well as infrastructure demands of industrial projects … yet the projects do not pay property taxes for these services. This must change. Last year at UBCM Premier Horgan committed to funding the RBA… yet we have yet to sign an agreement. This must also change.

    2. Third Party Service Providers. While this article and many conversations talk about local government… RDBN is always reminding other levels of government that Regional Districts operate under different legislation than Municipalities… and about the important roll Third Party Service Providers play in rural life. Be it rural community halls providing space and programs related to arts, culture, recreation, be it informal associations providing clean water systems or emergency services to rural residents, or be non profit clubs providing social services or recreation… these people and organizations often do not qualify for financial support like they would if they were municipal owned … yet in the rural areas they are key to providing essential services, as well as building community. They must be recognized, not forced to bureaucratize, but recognized as a legitimate partner and supported in any new framework and in any funding agreements. We will continue to push for this.

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