Municipal Spending... a Runaway Train
This week, the Business Council of BC published their findings after taking a closer look at the exceptional growth in BC municipal spending. The report highlights high property tax inflation over the past decade as a prominent contributor to declining affordability in BC.
This is a direct consequence of runaway growth in municipal "operating" expenses, which are largely funded from property taxes.
The authors do not examine municipal "capital" expenditures in their analysis. Their analysis also only considered direct property taxes paid by owner occupied homeowners. They did not include the indirect impact of property tax inflation on businesses or landlords who eventually pass these increasing property tax expenses onto their customers or tenants. If these indirect impacts were considered, the inflationary effect would be even higher.
They examined a 15 year period from 2010 to 2025 and determined that property taxes on owner occupied housing in the BC consumer price index (CPI) have increased a staggering 94% . Throughout the province, collectively, BC property taxes have roughly doubled since 2010. By comparison, property taxes throughout Canada, have risen only 54% in that same period. Their analysis confirms that municipalities "operating" spending is growing faster than inflation and population growth would expect.
The report also debunks the myth that higher property taxes are tied to rising property values and increasing property assessments by fully explaining how municipal finances work and how the tax burden is divided among the various property classes.
It is municipal spending as reflected in their budgets that results in the increasing property taxes, not rising property values.
In their report, the authors examined a number of factors that contribute and drive growth in municipal spending. They determined the highest percentage increase in real spending increases over 2013-2023 was in the category of “health, social services and housing” This category includes all annual operating costs related to social services, public health and environmental health. Some of the expenditures include environmental spending, alcohol and drug programs, health support for homeless, financial support for medical practitioners, drop-in centers, and public housing operations. They also importantly note, these areas are all provincial responsibilities. The second highest increase was in development services at 73% followed by general government at 39%.
In the Qualicum Beach context, we are one of the 152 municipalities examined that are spending at a rate greater than population growth and inflation would expect. This is no surprise to me as I have been following the town's "operational" spending / budgeting process in considerable detail for the past 18 months. Staffing and use of consultants is growing rapidly along with discretionary environmentally focused initiatives.
The BC Business council report is not only enlightening but written at a general audience level to accommodate those without a finance or economics degree. I encourage readers to read the full report and a link is provided below.
The other elephant in the room is municipal "capital" spending.
The Union of BC Municipalities estimates $24 billion in core infrastructure has to be replaced within the next 10 years. This includes infrastructure like water storage and delivery, wastewater delivery and treatment, stormwater piping, transportation systems, parks and recreation buildings – services that are essential for supporting functioning communities and expected housing growth. Clearly our provincial government needs to ensure that sufficient controls are in place and that predictable sources of revenue are available to ensure that municipalities have a stable finance model to ensure an even distribution of costs without adding a further burden to home ownership.
Again in a Qualicum Beach context, we know the town is very reliant on unpredictable grant money and expects to use significant debt financing to meet our planned $70 million in capital expenses over the next five years. Exceptional discipline and prioritization of "essential only" spending, will be the critical success factors for our Council ( and probably the next council) in taming property tax inflation here in Qualicum Beach.
Marie Noel
September 20 2025
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The full BC Council of Business report
