Among the cities that earn the worst grades for baffling budget presentations are Edmonton, Winnipeg, Windsor, Toronto, Vaughan, and Durham Region.
November 18, 2015 – No major city in Canada offers a clear and transparent budget presentation, according to a new C.D. Howe Institute report. In “Building Better Budgets: Canada’s Cities Should Clean Up their Financial Reporting,” authors Benjamin Dachis and William B.P. Robson provide report cards to 24 major Canadian cities on the quality of their budgets.
“In nearly all Canada’s major cities, what should be a simple exercise – comparing the spending voted by city council in its annual budget with the actual spending reported at year-end – will baffle any but the most expert reader,” commented Robson. “As a result, judging whether a city over- or under-shot its budget targets is not possible for a typical councilor or taxpayer.”
Among the cities that earn the worst grades for baffling budget presentations are Edmonton, Winnipeg, Windsor, Toronto, Vaughan, and Durham Region. The top performers are Surrey, Niagara Region, Brampton, Halifax, Mississauga, Ottawa, Vancouver, and York Region, though none earns an “A”.
The common critical problem is that most cities use an antiquated form of budgeting. Most of Canada’s senior governments, when preparing budgets and end-of-year reports, use modern accounting methods that record the cost of long-lived assets such as buildings and infrastructure as those assets deliver their services. Municipal budgets, by contrast, budget capital on a cash basis, exaggerating projects’ up-front costs.
The report also shows that these cities’ end-of-year financial reports, which use accounting similar to that used by senior governments, show a cumulative surplus of $41 billion since 2008. Their total surplus was $6 billion in 2014 alone. This record suggests that cash budgeting has led cities to over-charge today’s taxpayers for long-lived capital projects.
Dachis concludes: “Both provinces and municipalities should take steps to improve the fiscal accountability of municipalities and the stewardship of municipal funds.”
Click here for the full report.
The C.D. Howe Institute is an independent not-for-profit research institute whose mission is to raise living standards by fostering economically sound public policies. It is Canada’s trusted source of essential policy intelligence. Distinguished by research that is nonpartisan, evidence-based and subject to definitive expert review, it is widely regarded as Canada’s most influential think tank.
For more information contact: Benjamin Dachis, Senior Policy Analyst, or William B.P. Robson, President and CEO, C.D. Howe Institute; 416-865-1904, or email: kmurphy@cdhowe.org.