A new report by the Fraser Institute has shed light on a trend that many Canadians may have suspected but few have deeply examined: local government revenue and spending have risen significantly over the last three decades — and not just by a little. They’ve outpaced both inflation and population growth. Yet, it’s fair to ask — have the services improved in kind?
From 1990 to 2023, per-capita municipal revenue rose by 32.7 percent, and spending grew by 30 percent. Between 2000 and 2023 alone, per-person spending increased by more than 25 percent, peaking at nearly $6,000 in 2021 before dipping slightly. These are big numbers. But has our quality of life, safety, or public service access increased at the same pace?
Senior policy analyst Austin Thompson, the report’s author, doesn’t think so. And frankly, he raises a critical point: are Canadians actually seeing better services in return for all this spending? When we consider stubborn problems like homelessness, rising crime in urban centers, and crumbling public transit in many cities, the answer isn’t obvious.
In fact, Thompson points out that inflation-adjusted revenues from 2008 to 2023 increased by about 10 percent, with expenditures jumping 12.4 percent. Over the same period, local governments’ net worth soared by 88 percent. Clearly, municipalities are bringing in more money than ever — and spending it — but to what end?
The report reveals a dramatic shift in how local governments are funded. While property taxes still make up a large chunk of revenue, their share has declined from 39.1 percent in 1990 to just under 33 percent in 2023. Grant money from other levels of government now makes up more than 50 percent of municipal revenue. That reliance on higher-level handouts raises questions about accountability. When cities are no longer primarily funded by the taxpayers they serve directly, does it erode their incentive to use funds effectively?
Another eye-opener is the sharp rise in employee compensation and operational expenses. Employee pay grew by more than 57 percent from 1990 to 2023. Spending on goods and services went up a staggering 175.6 percent. Depreciation of capital assets increased by 187.2 percent. These aren’t modest jumps — they’re signs of ballooning municipal costs, often with little transparency.
And here’s a startling contrast: Prince Edward Island, for example, had the lowest per-capita revenue and spending, at $1,635 and $1,186 respectively. Meanwhile, Ontario had the highest per-capita revenue ($4,156) and Alberta the highest per-capita spending ($3,750). But do Ontarians and Albertans feel they’re getting two or three times the value of services compared to Islanders? That’s debatable.
This report should be a wake-up call — not just to policymakers, but to the everyday taxpayer. As municipal budgets swell, residents must start demanding clearer results: safer streets, cleaner cities, better transit, more efficient services. If we’re paying more than ever before, we deserve to know how every dollar is being used — and more importantly, whether it’s making a difference in our lives.
The question isn’t just how much we’re spending. It’s whether we’re spending wisely.
