Nanaimo is on a slippery slope when it comes to municipal operational spending, says a representative of the Canadian Federation of Independent Business.

CFIB’s Laura Jones said while Nanaimo currently has one of the best ratios between operational spending growth compared to population and inflation growth, the city is showing a disturbing trend.

“In 2006 Nanaimo had a Fiscal Sustainability Gap of 1.09,” said Jones. “By 2007, that had grown to 1.49. That means the city is spending almost 1.5 times what the residents can support.”

The statistics are part of the federation’s second edition of its B.C. Municipal Spending Watch report.

Nanaimo finished 25th out of 26 B.C. municipalities over 25,000 people despite spending $7.3 million more than it can afford in 2007.

Prince George was the worst offender, spending $17.2 million in excess for a 3.64 FSG, while New Westminster was the most responsible with a sustainability gap of 1.19. New Westminster is also on a slippery slope after its 2006 numbers suggested a 1.02 gap.

Jones said the spending refers to operational costs only, adding it is unacceptable a city of 83,000 people spends $40 million of the $70 million it collects in taxes on staff wages.

“Compared to the private sector, municipal government wages and benefits are 35 per cent higher than compared to the public sector,” said Jones. “There is not a whole lot of accountability and taxpayers are on the hook. People should be paying attention to this and talking to their council representatives.”

Currently, city council is considering a six-per cent increase for property taxes in 2010, a number Jones calls “outrageous.”

“It’s wildly out of whack,” said Jones. “How many people in Nanaimo got a six-per cent pay increase and what value are people getting for that six per cent?”

Nanaimo Mayor John Ruttan said council is working hard to reduce that figure as the 2010 budget approaches, though safety and protection requests like improved fire and police services make it difficult.

“This council in particular is making an effort to reduce costs but it’s not easy,” said Ruttan. “Perhaps in a perfect world there would be no growth, but there is and we have to find ways to pay for the services that go with it. At this point we do have options to bring spending down a little.”

Historically, B.C.’s mayors have used provincial downloading and infrastructure costs as excuses. However, infrastructure costs are capital expenses and provincial funding has been reestablished to more than 100 per cent since the 1990s.

To monitor municipal spending, CFIB has recommended that the province hire a municipal auditor general to audit municipal operational expenditures.

Because businesses are affected the most by property tax increases – business tax rates are three times that of personal property rates – the organization has also recommended businesses receive a vote in municipal elections.

“Recently, senior levels of government have been very good at reducing costs, while municipalities have been spending almost out of control,” Jones said.

reporter2@nanaimobulletin.com