A new report both praises and condemns the City of Flin Flon’s spending habits, but Mayor Cal Huntley sees a lack of context in the findings.
Manitoba Municipal Spending Watch, published by the Canadian Federation of Independent Business (CFIB), ranks municipalities according to per-capita spending and longer-term spending trends.
While Flin Flon easily meets CFIB’s definition of sustainable spending over a six-year period, the city ranks poorly overall due to the highest per-capita spending of any major Manitoba community.
“The problem that is most significant in Flin Flon is the actual level of spending,” said Elliot Sims, director of provincial affairs for CFIB and co-author of the report.
“They’ve got a good trend in operating spending. Unfortunately, though, they just spend far more overall, so that bar has got to be brought down if we want to see their rankings improve.”
CFIB defines sustainable spending as spending that rises at a rate equal to or less than inflation plus population growth. For example, if inflation is two per cent and population growth is three per cent, a municipality would be limited to a five per cent spending increase.
According to the report, Flin Flon cut inflation- and population-adjusted spending by $816 per capita between 2008 and 2013. That was by far the largest reduction of any municipality in the report.
That said, in 2013, the most recent year referenced in the report, Flin Flon’s real per-capita spending totalled $2,302. That was the most of any municipality ranked.
The report portrays Flin Flon’s per-capita spending as a major liability. Despite a six-year track record of sustainable spending, the city ranks 25th of 26 communities in terms of “Total Excess Spending Per Capita.”
The report also ranks towns and cities (Winnipeg and rural municipalities excluded) according to per-capita spending growth and actual per-capita spending. Here Flin Flon places ninth out of 10 communities.
Asked about Flin Flon’s aging infrastructure – an ongoing fiscal challenge for city hall – Sims said the report excludes both amortization and capital spending such as pipes, pavement and new fire trucks.
Mayor Huntley put little stock in the report.
“I find the report mildly interesting but don’t believe they are measuring apples to apples, don’t have their facts or context correct and are ignoring some significant differences that impact communities,” Huntley said.
When it comes to city spending, Huntley said three areas of cost escalation stand out: protective services, water and sewer services, and labour expenses.
Huntley said police services are a necessity over which the city has no cost control.
“We are told what we are paying and the increases take place regardless of increase or reduction in population unless you drop below 5,000 [people],” Huntley said, referring to the RCMP’s funding model.
As for water and sewer services, Huntley said laws require the city to meet evolving standards, which has meant “significant” upgrades to water and wastewater treatment facilities.
“The report takes out the capital and amortization costs of these infrastructure items but fails to recognize the significance of the additional operating costs associated with these facilities and the training of personnel to operate,” Huntley said.
Sims agreed upper levels of government have downloaded expenses onto municipalities, but he hasn’t seen a study examining how significant the cost burden is.
“I think that’s a discussion that has be fleshed out more,” Sims said.
In terms of labour, Huntley said costs will “obviously” be “significantly greater” in northern communities as Flin Flon, The Pas and Thompson compete with resource industries for workers.
Sims acknowledged that overall costs are higher in northern Manitoba than in southern Manitoba.
But he pointed out that even compared to other northern cities, Flin Flon spends “significantly” more. In 2013, The Pas spent $353 less per capita than did Flin Flon ($1,949) while Thompson spent $725 less ($1,577).
“So the question has to be, where is all this extra operating spending going?” Sims said.
Asked where he believes Flin Flon is spending money inappropriately, Sims cited labour costs.
“From what we can see in our analysis…labour costs are their biggest single expense category,” said Sims.
Referencing Manitoba’s municipal employees in general, Sims said they tend to earn more and work less than workers with equivalent jobs in the private sector.
CFIB encourages municipalities to enroll new hires in defined-contribution or shared-risk pension plans rather than defined-benefit plans that require no contributions from employees. Sims said defined-benefit plans are by far the norm in the private sector.
But Huntley said the city is part of a provincial plan in which such changes are not possible.
In Sims’ view, municipalities must get better at turning down unnecessary expenditures.
Huntley stands by the city’s spending record.
“Fundamentally I believe we have to operate our communities in fiscally responsible fashion and live within our means,” said the mayor.
The 26 communities ranked in Manitoba Municipal Spending Watch are those with at least 5,000 residents. To view the report, Google “Manitoba Municipal Spending Watch.”
Total Excess Spending Per Capita
Rankings 2008-13
Municipality Excess Spending* Per-Capita Spending**
Top Five
1. La Broquerie $18 $553
2. East St. Paul -$399 $694
3. Hanover $137 $508
4. St. Anne $394 $415
5. Taché $234 $528
Bottom Five
22. Gimli $1,324 $1,403
23. St. Clements $1,246 $824
24. The Pas $852 $1,949
25. Flin Flon -$816 $2,302
26. Macdonald $1,718 $1,519
* = adjusted for inflation and population changes, 2008-2013
** = actual amount, 2013
Source: Manitoba Municipal Spending Watch, Canadian Federation of Independent Business
