Burnaby finances top list of Metro cities for financial health
It appears the right-leaning Fraser Institute is all for the approach to civic finances taken by left-leaning Burnaby city hall.
In a report released Tuesday, the think tank compared the debt and other liabilities at the City of Vancouver to other Metro Vancouver municipalities.
As of 2012, the latest year for comparable data, Vancouver was in the red by $268 million.
Burnaby, on the other hand, was in the strongest financial position with $676 million in net financial assets. Richmond was in second place at $469 million in the black, followed by Coquitlam with $166 million in net assets.
On the other end of the scale, Belcarra was just ahead of Vancouver with $3 million in net liabilities, followed by West Vancouver with $1 million in liabilities.
The report notes that Vancouver is unlike other Metro cities since it's the only one that can directly issue long-term debt without first getting the approval of the Municipal Finance Authority, provincial government and the regional district board.
From 2002 to 2012, Vancouver has consistently been in the red when other Metro Vancouver municipalities have collectively been in a net asset position. Its net liabilities more than quadrupled between 2006 and 2011, partly due to having to bankroll the troubled Olympic Village project as part of the 2010 Olympics.
"An important consequence of increasing liabilities is that the cost of servicing municipal government debt also increases, which means less money is available for municipal services," the report said.
• See the report here
Burnaby Mayor Derek Corrigan said his city's approach is simply to "pay off debts and put money in the bank to deal with things in the future."
While Burnaby's net assets would suggest a big pot of money just sitting there to be used, much of it is set aside for future uses, such as replacing aging equipment and buildings. Burnaby also uses it to self-finance its capital projects, such as the $42-million Edmonds Community Centre, paying itself interest to ensure the reserves continue to grow in step with inflation.
The city's financial position "increases the value of land [for its citizens] and it gives them a piece of the rock," Corrigan said. "You know in Burnaby it's a solid government where you're financed for the future."
But Corrigan declined to pass judgment on Vancouver's situation, noting that city has to fund additional infrastructure due to its role as "the centre of it all."
He is also not a fan of the Fraser Institute's work.
"Often they think by doing a very simplistic economic analysis that they are actually informing the public about anything. It's not nearly as simple as they wish it was," he said.
"They make reports … to suggest everybody is overtaxed and business is overburdened. That kind of an argument permeates everything the Fraser Institute does."
Coun. Paul McDonell, a member of Burnaby's finance committee, did suggest Vancouver takes on more than it perhaps should.
"We get criticized for some of our housing policies but we're not going to burden the taxpayers with that," McDonell said. "It's not a city role to provide social housing."
He noted that Burnaby's massive reserves generates interest income to help keep down property taxes. As for critics that suggest the reserves should be used to lower taxes further, he said, "You don't have that forever if you start spending it like that."
Burnaby's fiscally cautious approach likely stems from it having gone into receivership during the Great Depression, McDonell said.
"When it came out the people ahead of us said we don't want this to happen again. That philosophy, regardless of the stripe of the government, has carried on and it's grown."