We Deserve To Benefit From Economic Development In The Northwest
For too long, economic activity taking place in the region has hurt local economies instead of benefiting them.
The sustainability of our communities has been reduced rather than enhanced because:
- Most of the industrial activity and assessment that affects communities, is not within their taxing authority, resulting in no tax revenue while imposing significant costs on these communities.
- Resources are strained due to the need to review and plan for proposed projects (whether they proceed or not) that could be used to provide residents with services and infrastructure.
- The lack of community infrastructure and services makes it difficult to attract and retain workers in the resource industries and other businesses in the Northwest, including public services such as healthcare. Without liveable communities, workers will be hard to attract.
- Northwest residents should expect the same level of service as other local governments enjoy in other parts of the province, especially when this region leads the province in provincial economic activity and revenue generation.
If we can improve the physical and social infrastructure of our communities, we can support existing businesses and new resource development to build sustainable communities – not just work camps. This will allow us to attract the workers we need to grow our service and tourism sectors and to show our potential as an ideal place for professionals and families to grow.
The Columbia Basin and Northeast regions of BC have had regional funding arrangements with the provincial government for decades, that has help the regions overcome the economic impacts caused by resource development activity. The additional revenue generated through these agreements has enabled them to successfully access cost-shared federal infrastructure funding that is twice what the Northwest has received on a per capita basis.
The provincial government has negotiated many community-specific benefits agreements related to all sorts of developments throughout the province – it’s the Northwest’s time for an agreement to move forward.
Why is a funding agreement important for the Northwest?
The RBA has identified their communities as having a lack of basic infrastructure compared to other municipalities around the province. The financial challenges and limitations of local governments in the RBA region are a result of communities generally having a small property tax base, limited borrowing capacity, and the inability to generate development finance revenues. This has led to an underinvestment in critical infrastructure throughout the region for decades.
Half of RBA municipalities have a population of less than 1,000 and only 4 have a population over 5,000 with Prince Rupert being the largest with 12,300 residents. These are smaller communities without large populations or tax bases and therefore tax increases in the region do not raise nearly as much revenue as they would in other more populous areas of the province.
The ability for these communities to borrow is also limited as borrowing capacity is determined by their annual property taxation revenues. As a result, it is very challenging for these communities to fund required infrastructure projects, where costs do not scale with population, and their ongoing operations and maintenance.
While there is demand for new housing in the RBA region, due to the lack of economies of scale and long distances between communities, additional fees on developers in the region is not practical. Consequently, developer fees constitute less than 1% (compared to provincial average of 12%) of their total overall RBA revenues.
As a result of a small property tax base, low borrowing limits and the lack of development finance revenues, the RBA region is becoming increasingly dependent on senior government grant funding to meet their community infrastructure and servicing needs (this is also an historic trend). Recent provincial funding and investments in the RBA region have been extensive. Since 2017, the Province has invested over $336 million through the Investing in Canada Infrastructure Program, Northern Capital and Planning Grant, Growing Communities Fund, and Critical Community Infrastructure program.
The inherent challenge with a dependency on senior levels of grant funding is that they are often application based, competitive and oversubscribed. These challenges are exacerbated by the limited local government staff capacity needed to apply for these grants. Block funded grant programs (generally restrict to capital and planning expenses) like the Northern Capital and Planning Grant, or the Growing Communities Fund are one-off initiatives. Further, grants are project specific and do not always align with community priorities. Neither application-based infrastructure programs nor one-off grant programs are conducive to supporting long term infrastructure planning.
While the Province is projecting significant industrial development will continue to occur in the RBA region over the next decade, RBA communities will be vital to ensuring the positive economic benefits from these future industrial investments are realized. This future industrial activity benefits not only neighboring RBA communities but also the province more generally through increased provincial taxation revenues.
The long-term prognosis of local government financial challenges in the RBA region are not projected to change. The current challenges with a small property tax base, borrowing limits (due to smaller tax bases) and lack of development finance revenues are projected to continue through the next decade. In general, the region will continue to be reliant on senior levels of government grant funding to meet current and future infrastructure needs of the region without another source of revenue to address the growing needs of an industrial developing region. Current cost estimates regarding infrastructure debt in the region are in the billions.
Local governments are responsible for providing services that are crucial for the sustainability and livability of their communities, including:
Land use planning, parks and recreation programming, police and first responders, social welfare programs, and many other important services
Development and maintenance of local infrastructure like roads, airports, public buildings, recreational and other facilities as well as sewer and water systems
Fostering the economic, social and environmental well-being of their communities
Development imposes significant costs on local governments but usually does not increase revenues or distribute them proportionately. As a result, local taxpayers face higher property taxes while levels of service and quality of infrastructure deteriorate, reducing community sustainability and livability. It’s time to reverse that.
Northwest communities need economic activity, including major projects, to be sustainable. The RBA is committed to using new funding to encourage and support economic growth in the region.
We are not seeking to impose any additional costs on business in the region, whether big or small.
The incremental revenue from new major project activity in the Northwest that goes to the provincial government is more than sufficient to allow the provincial government to support the Northwest in creating sustainable communities while still making an enormous contribution to BC government general revenue.
The province is focused on supporting development that creates good-paying jobs and sustainable communities. The RBA needs help from the province to build the necessary physical infrastructure (roads, bridges, sewer and water, etc.) to support resource development and the social infrastructure to ensure Northwest communities are places where workers and their families can thrive.