It’s often said, Alberta doesn’t have an income problem. It has a spending problem.
Too much money spent on schools. Too much money spent on health. Too much money spent on civil servants and all the departments they look after, like roads and parks and crime and more.
Critics say this is mostly high wages paid. Teachers and school administrators. Doctors and nurses and their bureaucrats. Too much money on crime means there are too many cops. Too much money on parks means there are too many parks.
Alberta government employees are well paid compared to other provinces. But isn’t that all part of the “Alberta Advantage?”
When times are tough, the provincial government is predictable. They pull out the sharp pencils and hack away at their budgets, the budgets that grew big like overfed cats in the good times.
Meanwhile, governments closest to their “people,” like towns, municipal districts and school boards, usually raise taxes. Spending rarely flat lines or goes down. It almost always increases.
There are reasons why bottom levels of government act this way. One reason is so-called “requisitioning” bodies. School boards are the biggest of these. They set their own budgets. Municipalities must collect the tax for schools. Same with other bodies, like the ones that run senior’s homes. They say they need more money, the town, county or M.D. has to collect.
Another reason is, local governments might have union contracts that call for more money every year. Similarly, government has traditions of automatic “cost of living” increases for their staff. If the cost of living goes up, local government staff gets a raise.
Then there are “grid” increases. Another year of experience in a local government job often means a move up the grid, which comes with an automatic raise. Saving money means thinking hard about job security and perks.
Then there is “downloading” from higher levels of government. This is a favourite of the Alberta provincial government. Basically, it’s the province saying to local governments, “If you want to keep that service, pay for it yourself. We used to pay for it, but now it’s up to you.”
This is constant. In the news lately is police costs, parks and doctors. Under pressure from many rural communities hit by crime, the province agreed to add more RCMP across the province. The kicker is, the province isn’t paying for any of them. In fact, besides the cost of the new cops, rural police forces that used to be paid by the province will be gradually paid by local governments.
Some say if Alberta increased its provincial tax rates, including a sales tax, to the equivalent of other provinces, it could easily pay for its deficits and in fact, run a multi-billion dollar surplus.
Yet often, other homeowners pay half what Albertans pay in property tax. In other words, “downloading” makes local governments the bad guys.
So, is all this “spending problem – income problem” real? Or are we just shuffling deck chairs without solving anything?