For three years, the Frontier Centre compiled an index of financial statements for Canada’s largest municipalities. This year, the Index evolved into an interactive online database that makes it simpler than ever to compare the finances of different municipalities.
The Index makes it easy to answer questions such as these:
· How do the tax takes of Calgary and Edmonton compare with the Alberta Average? ($3,220 vs. $2,665 vs. $3,216 per household)
· How much long-term debt does Toronto have compared with the average Ontario municipality? (195 per cent of the Ontario average)
The Index also contains a section that evaluates the quality of financial and performance reporting, answering questions such as these:
· How quickly after year-end is the financial audit completed?
· Does the municipality provide data on the results achieved?
· Do the statements contain five-year comparisons for perspective?
According to project director David Seymour, the Index was conceived as a way to put the financial dimensions of Canada’s municipalities into the context of how other municipalities perform. “With most of the things you buy, it’s possible to shop around, compare prices and compare what you get for the price. This competition gets consumers the best possible deal, but in a municipality, there is no such choice. The idea of the Index is that you start to get more of a sense of how cities compare.”
The Index does not “rank” cities explicitly. There may be good reasons for local differences. What the Index does do is set the factual basis for talking about each municipality’s finances. “For example,” says Seymour, “Montreal has exceptionally high long-term debt. Some people have put it to me that this is a result of the 1976 Olympics. I’ll leave it up to people with better local knowledge of Montreal to judge if that’s credible, but we’re at least providing a basis for the discussions.”
· Data in the Index are sourced from the audited financial statements of each municipality.
· Data are divided by the number of households in the municipality as reported by Statistics Canada in the 2006 census. This makes it possible to directly compare large cities such as Toronto with smaller cities such as London.
· Frontier Centre staff entered most of the data for 2009. However, the concept of the database resembles Wikipedia, and anybody can register to add data so long as they provide a page reference. It is hoped that more volunteer editors will contribute as the site becomes better known.
· Data are expressed as follows:
o In per household amounts. (The previous amount divided by 78,692 households means Regina collected $1,509 in user fees per household.)
o As a percentage of the provincial average. (For example, the average Saskatchewan municipality collected $1,541 in user charges, so Regina collected 98 per cent of the Saskatchewan average in this measure.)
· By measure: Rather than selecting a single city or comparing two cities, it is possible to compare all cities by a single measure: for example, value of capital assets.
Summaries and Direct Links for the 20 Largest Anglophone Municipalities (with data for 105 further cities available at www.lgpi.ca
The data suggest that the economies of scale expected from the 1998 amalgamation have not materialized. On a per household basis, Toronto’s expenditures are 132 per cent higher than the average Ontario municipality, or almost two and a half times more. Again, on a per household basis, Toronto’s taxes are 80 per cent higher than the Ontario average, and its long-term debt is almost twice the average at 95 per cent higher. One positive finding is that Torontonians receive a very high level of transparency in their annual report. With detailed reporting and commentary available, the City was judged most transparent in Ontario.
Montreal is the only city in Quebec included in the Index, which assesses only English-language statements. Unfortunately, this means it is not possible to make comparisons with other cities operating under the same provincial jurisdiction. Nevertheless, it is possible to see numerous statistics that highlight some challenges for the City. Long-term debt is among the highest in Canada at $10,176 for each household in the city. Taxes are high relative to the Ontario average (43 per cent higher), and expenditure in all areas is higher than the Ontario average. The standard of reporting as judged by the transparency section is sound but not spectacular.
The most valid comparison for Calgary is with its similar-sized sister city, Edmonton, which operates under the same provincial jurisdiction. Compared with Edmonton and adjusted for the number of households, Calgary’s financial dimensions are slightly larger on most measures. Total expenditures are six per cent larger, while net taxes per household are 21 per cent higher. Both Cities present high quality statements with detailed information and explanation.
Like Toronto, Ottawa has high revenues and expenditures compared with the Ontario average. For example, net taxes are 90 per cent higher and user charges are 95 per cent higher than the provincial average after adjusting for the number of households in the city. On the expenditure side, social services account for much of this difference, at 279 per cent of the Ontario average, or almost three times the provincial average. Staff salaries and benefits are also noticeably higher than for other Ontario cities, at 224 per cent of the average. The annual report is a sound but not exceptional disclosure document as judged by our transparency index.
The best comparison for Edmonton is with Calgary, a city of similar size in the same jurisdiction. This comparison finds that Edmonton has slightly lower revenues and expenditures than its sister city. Like Calgary, its annual report shows a high level of commitment to transparency and disclosure.
Due to its relationship with the region of Peel, which provides social services, water and sanitary services, the City of Mississauga’s balance sheet gives the impression of a very lean operation. While second-tier governments such as the Region of Peel are not included in the LGPI, it is possible to make some direct comparisons in the cost of services. Mississauga’s costs for services such as planning and development (54 per cent lower) and public safety (39 per cent lower) are lower than the Ontario average. Its zero long-term debt position exists in spite of the fact the City owns more valuable long-term assets than the average (72 per cent more). The City provides very sound financial reporting, but its financial dimensions must be understood in the context of significant services being delivered by the Region.
Winnipeg belies the common view that larger cities necessarily have more-expensive services. Despite being the nation’s seventh-largest city, it has small financial dimensions including lower taxes and expenditures on a per household basis compared with the other four major Prairie cities.
Vancouver is another large city that bucks the trend of bigger cities being bigger spenders. As the largest city in B.C., its revenues and expenditures are only five per cent higher than the average B.C. municipality. In the transparency judgments, Vancouver presents sound financial statements but lacks the level of detail and explanation found in other B.C. municipalities’ annual reports, which are generally of a high standard.
Hamilton’s financial profile is characterized by very large expenditures on social and family services (294 per cent of the Ontario average), which make the City a very high spending municipality overall. However, Hamilton’s total revenues and expenditures at 162 per cent and 175 per cent of the average, respectively, are not high purely because of this item. Most expenditures are higher than average. For example, public safety is at 160 per cent of the Ontario average. General government is an exception, being six per cent below the average. Hamilton’s financial statements are published alongside a very good presentation of its Municipal Performance Measurement Program, which shows areas of expenditure with year-on-year comparisons.
Due to very low or non-existent spending on environmental services and social services, the financial dimensions of Brampton are very small compared with the Ontario average. Getting a full picture of the municipal government faced by Brampton residents would require consideration of the second-tier government responsible for these services. Two notable features of Brampton’s financial statistics are the absence of long-term debt, which contributes to a very strong balance sheet position, and the extremely heavy reliance on developer contributions (4.16 times the Ontario average) as a revenue source. Brampton issues a sound annual report, which scored 22 points in our transparency index as compared with the Ontario average of 17.8
Surrey’s financial statistics show a fiscally prudent municipality with a sound balance sheet. The City carries no long-term debt and focuses its expenditure on areas that the Index considers to be the “core” role of local government. For example, public works expenditure is 141 per cent of the B.C. average, whereas recreation and culture expenditure sits at 82 per cent of the average. Surrey produces a very detailed and helpful annual report, including performance measures that could be improved only by showing more systematic year-on-year comparisons.
Halifax has slightly higher than average expenditures compared to other Nova Scotia municipalities (123 per cent of the average), which are mainly driven by very large expenditures on recreation and culture at $492 per household, which is 214 per cent of the Nova Scotia average. The municipality’s balance sheet is sound but only because of the substantial holding in the Halifax Regional Water Commission, most of the value of which would likely be recorded as capital assets in other municipalities. The standard of reporting was judged as very poor mainly due to the failure to report capital assets on the balance sheet. Halifax scored eight points out of a possible 36 on this measure. However, it is not unusual for a Nova Scotia (average score nine) or even an Atlantic municipality to have such a score.
London’s total expenditures are fully one-third higher than the average Ontario municipality, and its revenues are 38.5 per cent higher. These differences are primarily driven by higher than average expenditure on social services (110 per cent above the average) and environmental services (58 per cent above the average). On the revenue side, the City receives more than most Ontario municipalities, with combined grants from the governments of Canada and Ontario amounting to $1,253.49, 72 per cent above the Ontario average. London’s reporting is sound, with a particularly well presented Municipal Performance Measurement Program Report.
Markham is a low-taxing, low-spending municipality with total expenditures at 71 per cent of the Ontario average. Taxes and user charges are 69 and 67 per cent of the average, respectively. These low taxation figures are partially made up for by relatively high investment income and development charges, the latter being 132 per cent higher than the Ontario average on a per household basis. Markham has an extremely high standard of reporting, with its annual report ranked as third equal in Canada and the best in Ontario.
Vaughan is a moderately high-spending municipality, mainly due to high expenditures on environmental services (2.36 times the provincial average on a per household basis). Vaughan receives notable small grants from the governments of Ontario and Canada, with total grants from other governments being 91 per cent lower than the average Ontario municipality on a per household basis. In terms of disclosure, the City’s annual report was judged significantly higher than the Ontario average for its level of detail and explanation.
The defining characteristic of Windsor’s financial statistics is its extremely high expenditures. On a per household basis, these are 83 per cent higher than the average Ontario municipality, and they are mainly driven by high expenditures on social and family services at almost four times the average. Staff salaries and benefits are also relatively high, at 1.75 times the Ontario average. Windsor’s annual report was average for Ontario municipalities.
Kitchener is a relatively low-spending municipality with smaller revenues and expenditures on a per household basis than most Ontario municipalities. Expenditures are 15 per cent lower than the Ontario average and revenues are nine per cent lower. The City has a very strong balance sheet position, mainly due to its relatively low long-term debt and holdings in Kitchener Power Corporation. The City scores relatively poorly on the Index’s tests of detail and explanation in its annual report.
Burnaby is an average-sized municipality in terms of its financial dimensions. Total revenues and expenditures are within five per cent of the average B.C. municipality. Figures that are notable outliers include expenditures on environmental safety (1.5 times the B.C. average on a per household basis) and investment income at 3.66 times the average. Burnaby’s annual report is sound and above average for Canada but slightly below the B.C. average for detail and explanation. Of particular note is the “highlights” approach to reporting on performance, whereas some other municipalities report more systematically with quantitative year-on-year comparisons.
Saskatoon and Regina have very similar financial dimensions as might be expected given their similar culture and size and identical provincial environment. Most financial statistics are within five to 10 per cent of each other. Notable exceptions are reported expenditures on general government (Regina $637 per household, Saskatoon $325) and planning and development (Saskatoon $382, Regina $153. These latter figures are of particular interest considering the very large demand for new housing in both cities in recent years. Both Cities offer detailed and generously explained annual reports, although the level of reporting on performance measures is not as systematic and quantitative as some cities in B.C., Alberta and Ontario.
For more information and to arrange an interview with the project’s director, media (only) should contact:
Director, Saskatchewan Office,
Frontier Centre for Public Policy
Marco Navarro-Genie, Ph.D.
Frontier Centre for Public Policy
 These amounts do not represent the cash amounts paid by households, because most municipalities get revenue from businesses. However, most businesses are staffed and patronized by members of local households, so the ultimate costs are largely paid by household units.