Local Government Financial Review Working Group - August 2022 Interim Report

The UBCM Select Committee on Local Government Finance met from December 2019 to February 2020 and January 2021 to July 2021. The Select Committee delivered its report, Ensuring Local Government Financial Resiliency ~ Today’s Recovery and Tomorrow’s New Economy (the Report), to the UBCM Executive in July 2021. The Report was presented to, and subsequently endorsed by, the UBCM membership on Wednesday, September 15th as Policy Paper #1.

The Report identifies 20 Recommendations which:

1. Address three major cost drivers faced by local government – Housing, Community Safety and Climate Change – all shared priorities of local government and the Province;
2. Identify the impacts of the ‘New Economy’ on the local government financial and property tax system and the need to make it fairer, sustainable, and adaptable; and,
3. Identify the need for an effective partnership with the provincial government in order to work towards solutions.

On January 25, 2022, a Memorandum of Understanding on Local Government Financial Resiliency (MOU) was signed by the President of UBCM and the Ministers of Finance and Municipal Affairs (Appendix 1). 

Implementation of the MOU includes:

• The establishment of a Local Government Financial Review Working Group (Working Group) comprised of staff members;
• Development of a Working Group Terms of Reference;
• Development of a three-year work plan;
• Establishment of a senior staff steering committee to seek direction as necessary; and
• Working Group responsibility for keeping respective senior staff and executive/membership informed of the Working Group’s activities.

Working Group

The Working Group is comprised of five staff level members from the Province and five staff level members from UBCM; it is co-chaired by one representative from UBCM and one from the Province. The Working Group developed, approved, and is governed by a Terms of Reference (Appendix 2). The Working Group has met monthly, focused on the development of a three-year work plan. As per the MOU, the work plan is to undertake a review of the Report and local government finance in B.C., including:

• The readiness, complexity or relative priority of various topics;
• The type of further work needed on various topics (such as additional research, analysis and monitoring);
• Recommendations that have provincial alignment (current initiatives, provincial budget announcements);
• Alternative tools that may be more suitable than those proposed in the Report;
• Topic areas in which other ministries may be involved; and
• Short, medium, and long-term considerations.

At the May 11, 2022 Working Group meeting, consensus was achieved on establishing short-term (0-6 months), medium-term (7-18 months) and long-term (19-36 months) actions pursuant to the 20 Recommendations.

Under the MOU, the Ministers of Finance & Municipal Affairs and UBCM Presidents Committee must meet at least once a year, no later than June 30 of each year, to discuss the Working Group’s work program and may meet after that as mutually agreed to discuss progress. On Wednesday, June 29, 2022, Minister Selina Robinson (Finance) and Minister Nathan Cullen (Municipal Affairs) met with UBCM Presidents Committee to discuss the proposed Short-Term Work Plan. The following was endorsed:

• The Working Group’s Short-Term Work Plan (Appendix 3),
• Short-Term Work Plan Key Messages, and
• That the Ministers and UBCM Presidents Committee will meet in early 2023 to discuss/endorse the Working Group’s Medium-Term Work Plan.

From the Short-Term Work Plan Key Messages, the following has been identified for work over six months ending December 31, 2022:

• Changes to local revenue, and especially property taxation, may result from the economic shift identified as the New Economy[1], and will occur gradually. An appropriate starting point is to develop agreed upon metrics for measuring these changes. Strengthening the transit funding model is a key related area, and a meeting with TransLink and provincial officials will also be arranged to discuss work on matters specific to transit financing. (Report Recommendation #1 & #18)
• A number of key federal/provincial/local government agreements such as the Canada Community Building Fund Administrative Agreement come up for renewal within the next year. Building on a history of collaboration between the parties in these matters, the development of a joint negotiating approach that enhances both funding levels and administrative processes is a key shorter-term action. (Report Recommendation #3 & #4)
• Reforming local government development finance tools such as development cost charges and amenity agreements has the potential to support the shared local-provincial interest in improving housing affordability. However, this is closely related to on-going work on the Development Approval Process Review (DAPR), and a necessary first step is to meet with key provincial officials to discuss the relationship between the two initiatives. (Report Recommendation #5 & #7)
• Finding areas of productive joint action to address homelessness is a common interest of both parties. It is acknowledged that most of the key preventative and remedial actions are within provincial areas of responsibility. Local government involvement is primarily focused on addressing matters related to those who are currently homeless. The Government of British Columbia has a homelessness strategy, and a necessary first step is to meet with key provincial and local government officials to identify points of potential interaction. (Report Recommendation #8)
• Addressing the tragedy of mental health and addiction is an urgent priority for both parties and is closely related to the Provincial Homelessness Strategy. Work to identify appropriate roles for the provincial government and local government will begin by meeting with key provincial officials leading work in this area. (Report Recommendation #10)
• The Emergency Management Act modernization is a major provincial reform undertaking in which UBCM is already engaged. The Working Group is well positioned to contribute to a discussion of the financial components of this work but will need to first meet with those engaged in the project. (Report Recommendation #9)

The Working Group will continue to meet monthly. In addition, sub-committees will be created as necessary, and additional representatives from the Province and/or local government will be asked to participate in order to carry out the activities identified in the Work Plan.

The remaining 11 recommendations from the Report (#2, #6, #11-17, #19 & #20) will be considered as part of the medium and long-term work plans. Of the nine recommendations that are captured in the Short-Term Work Plan, it is anticipated that most, if not all, of the recommendations will continue to be addressed in the Medium and/or Long-term Work Plans. The timing of when recommendations are included in work planning does not imply importance or priority. Finally, as identified in the MOU, all recommendations will be considered.