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The fiscal implications of land use decisions : an analysis of three municipal expenditure-revenue analyses… Schlagintweit, Elizabeth 1987

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THE FISCAL IMPLICATIONS OF LAND USE DECISIONS: AN ANALYSIS OF THREE MUNICIPAL  EXPENDITURE-REVENUE  ANALYSES UNDERTAKEN IN GREATER VANCOUVER By ELIZABETH SCHLAGINTWEIT B.A.  The U n i v e r s i t y  of Natal,  South A f r i c a ,  1982  A THESIS SUBMITTED IN PARTIAL FULFILLMENT OF THE  REQUIREMENTS OF MASTER OF ARTS in  THE School  FACULTY OF GRADUATE STUDIES o f Community a n d R e g i o n a l  We a c c e p t to  The  this  thesis  the required  University  as conforming standard  of British  Columbia  O c t o b e r , 1987 <S  Elizabeth  Planning  Schlagintweit  In  presenting  degree  this  at the  thesis  in  University of  freely available for reference copying  of  department publication  this or of  partial fulfilment  of  British  I agree  Columbia,  and study.  this  his  or  her  requirements that the  I further agree  thesis for scholarly purposes by  the  may be  representatives.  It  thesis for financial gain shall not  for  an  Library shall make it  that permission  for extensive  granted  head  is  by the  understood be  allowed  that without  of  my  copying  or  my written  permission.  Department of  C o , ^ ^  The University of British Columbia 1956 Main Mall Vancouver, Canada V6T 1Y3 Date  DE-6(3/81)  (S/IQK7 •  A*>Q  advanced  ftg^ltfOAl  ^LA>&VaVlS>Ct  ABSTRACT  This  thesis  incorporating planning. changes  a  explores financial  Although  have  there  municipal  planners  this  revenue  government  used of  categories. municipal criteria  for  this The  the  have  to  The  the land  of  use  the  the  basis  of  Vancouver,  of  analysts  little  formulation.  current  to  guide  understanding  the  is  analysis the  net to  these  represents to  a  a  municipal  s p e c i f i e d land  analysis such  analyzed.  cost  historical  of  expenditure-  development is  criteria,  analyzed field  practice  three  case  and  are three  undertaken  and  of  described,  analyses  studies,  use  in  evaluated and  in  key  issues  analysis.  evaluation that  are  use  information  municipal  services  evaluation  land  use  municipal  planning  quantify  and  that  land  of  decisions.  role  nature  highlight  illustrates of  their  and  practice  into  on  empirical  expenditure-revenue  area  known  in analyzing  providing  On  metropolitan to  in  little  expenditure-revenue  developed. municipal  i t i s well  of  and  perspective  expenditure-revenue  methodology  in  thesis  analysis  Municipal  order  is  consequences  In  theory  d e f i n i t e consequences  finances,  fiscal  the  of  the  despite  considerable  involved,  the  results  direct application A l l three  studies  studies e f f o r t s on of  the  in planning were  found  and to  behalf  studies policy have  i i i shortcomings validity it  which p l a c e i n q u e s t i o n the  of the  i s concluded  results.  t h a t the p r o c e s s  expenditure-revenue p r o v i d e s an  implications On  analyses  explicit  other municipal  developed  which w i l l of both  The  of t h i s  and e v a l u a t i o n  a n a l y s t s t o improve  analyses. of the  and  results  direct  i n p l a n n i n g and  are  listed  under  resources  o f the  associated with (3)  The  analyses  should  to municipal  be  expenditure-  the  expenditure  specified  and  and i n -  revenue  l a n d use c a t e g o r i e s ; '  s t u d y m e t h o d o l o g y s h o u l d combine t h e  Municipal expenditure-revenue computerized;  concluding  below:  approaches d i s c u s s e d i n Chapter (4)  of  objective circumstances;  available  analysis  will  policy  revenue s t u d i e s should a l l o w a thorough depth  the  application  r e c o m m e n d a t i o n s made i n t h e  thesis  are  of future  This, in turn,  Municipal expenditure-revenue  The  and  financial  recommendations  the process  studies' results  undertaken (2)  undertaking  c o n s i d e r the  five  help  the p o t e n t i a l  formulation.  (1 )  shortcomings,  i s valuable i n that i t  analysis  thesis  expenditure-revenue  chapter  of  and  o f l a n d use d e c i s i o n s .  in this  these  can  the b a s i s of the  reliability  these  framework i n w h i c h p l a n n e r s  officals  undertaken  increase  Despite  reliability  and  2 of t h i s  analyses  range  of  thesis;  should  be  I V  (5)  A l l a s p e c t s o f an expenditure-revenue s h o u l d be c l e a r l y  documented.  analyses  V  TABLE OF CONTENTS Page ABSTRACT  i i  TABLE OF CONTENTS LIST OF TABLES  v vii  LIST OF FIGURES CHAPTER 1 1 .1 1.2 1.3 1.4 1.5 1.6  T h e s i s Focus Research O b j e c t i v e s M u n i c i p a l Expenditure-Revenue A n a l y s i s A p p l i c a t i o n o f M u n i c i p a l Expenditure-Revenue Analysis R a t i o n a l e For U n d e r t a k i n g t h i s Study Methods U t i l i z e d i n t h i s Research  CHAPTER 2 2.1 2.2 2.3  1 1 3 4 10 12 13  THE DEVELOPMENT AND APPLICATION OF MUNICIPAL EXPENDITURE-REVENUE ANALYSIS 16  Development o f M u n i c i p a l Expenditure-Revenue Analysis The S t a t e o f the A r t Case Study Methodologies 2.3.1 The C i t y o f North Vancouver: Cost-Revenue Study 2.3.2 The C i t y o f Vancouver: E x p e n d i t u r e Revenue A n a l y s i s 2.3.3 The C i t y o f New Westminster: C o s t Revenue Study  CHAPTER 3 3.1  INTRODUCTION  viii  CRITERIA FOR THE EVALUATION OF MUNICIPAL EXPENDITURE-REVENUE ANALYSES  Methodological C r i t e r i a 3.1.1 A l l C a l c u l a t i o n s I n v o l v e d i n the Study Study Should Be A c c u r a t e 3.1.2 The Study Should Consider A l l Sources of E x p e n d i t u r e and Revenue 3.1.3 A l l M u n i c i p a l Departments Should Cooperate i n U n d e r t a k i n g a M u n i c i p a l Expenditure-Revenue A n a l y s i s 3.1.4 The D e f i n i t i o n o f the C h a r a c t e r i s t i c s of Land Use C a t e g o r i e s Should Be Narrow and S p e c i f i c  16 18 25 25 30 41  52 54 54 55 57 59  3.1.5  3.2  3.3  A s s u m p t i o n s and S h o r t - C u t Methodologies U s e d i n t h e S t u d y S h o u l d Be D e f e n s i b l e and C l e a r l y Documented 62 Contextual C r i t e r i a 65 3.2.1 The A n a l y s t I n v o l v e d i n t h e S t u d y S h o u l d Have N o t h i n g t o G a i n or L o s e From t h e R e s u l t s of the Study 66 3.2.2 The R e s u l t s o f t h e S t u d y S h o u l d Be U s e d W i t h i n the Context of the S t u d y ' s S c o p e , A s s u m p t i o n s and M e t h o d o l o g y 67 3.2.3 The L i m i t a t i o n s o f E x p e n d i t u r e - R e v e n u e A n a l y s i s , and o f t h e P a r t i c u l a r E x p e n d i t u r e - R e v e n u e S t u d y , S h o u l d Be C l e a r l y Documented and P r e s e n t e d A l o n g w i t h the R e s u l t s 71 A p p l i c a t i o n of the C r i t e r i a to the E v a l u a t i o n of Municipal Expenditure-Revenue Analyses 72  CHAPTER 4.1 4.2 4.3  5.2 5.3  EVALUATION  OF THE THREE CASE STUDIES  E v a l u a t i o n o f the C i t y of North Vancouver Cost-Revenue Study E v a l u a t i o n of the C i t y of Vancouver E x p e n d i t u r e - R e v e n u e Study E v a l u a t i o n o f t h e C i t y o f New W e s t m i n s t e r Cost-Revenue Study  CHAPTER 5.1  4  5  75 91 104  CONCLUSIONS AND RECOMMENDATIONS  The R o l e o f t h e Case S t u d i e s i n L a n d Use P l a n n i n g and P o l i c y F o r m u l a t i o n The R o l e o f E x p e n d i t u r e - R e v e n u e A n a l y s i s L a n d Use P l a n n i n g a n d P o l i c y F o r m u l a t i o n Recommendations t o A n a l y s t s U n d e r t a k i n g Municipal Expenditure-Revenue Analyses  BIBLIOGRAPHY  75  119  in  119 122 127 1 29  vi i  LIST  OF  TABLES  Page Table Table Table Table  I II  R e s u l t s : C i t y of North Cost-Revenue Study  Vancouver 30  C i t y o f Vancouver Expenditure-Revenue A n a l y s i s : D e f i n i t i o n of A l l o c a t i o n Options  I I I C i t y o f Vancouver Expenditure-Revenue A n a l y s i s A l l o c a t i o n Table IV  Table V  R e s u l t s : C i t y o f Vancouver Revenue A n a l y s i s  Expenditure-  R e s u l t s : C i t y o f New W e s t m i n s t e r Expenditure-Revenue A n a l y s i s  37 39 40 49  vi i i  L I S T OF FIGURES Page Figure  1  Schematic Diagram o f t h e C i t y o f Vancouver Methodology  35  1  CHAPTER 1  1.  INTRODUCTION  1.1  Thesis This  thesis explores  municipal Although  Focus  l a n d use i t has  the f i s c a l  decisions  consequences  on t h e m u n i c i p a l  l o n g b e e n known t h a t  s y s t e m and have  consequences  finances,  intuition  guides policymakers  implications commercial a surplus l a n d use  budget  municipal  different lack  a reflection 1961;  information  l a n d use  Burchell  1950s, their  and s i n c e  research  studies  then there  application.  There  Despite  methodology.  comprehensive  study  that  on  provide  the  i s , however,  a  analysis associated  information  i n the area  1978). were f i r s t has been this  The will  (Mace,  used i n the  a steady growth i n  attention,  field  i s not  Municipal  p r o g r e s s h a s b e e n made i n i d e n t i f y i n g acceptable  to  residential  and r e v e n u e  empirical  and L i s t o k i n ,  expenditure-revenue  considered  and  categories.  of acceptable of l i m i t e d  more t h a n  and s c i e n t i f i c  expenditure  definite  Industrial  a net d r a i n  1973).  use  fiscal  budget, w h i l e  t o be  (Muller,  of empirical  The  decisions.  i n land  very  little  as t o t h e  l a n d uses are g e n e r a l l y  i s considered  regarding with  o f l a n d use  to the m u n i c i p a l  municipal lack  on m u n i c i p a l  budget.  changes  i m p i n g e upon t h e e c o n o m i c  of  a  little  generally  awaits a  demonstrate  the  2 feasibility b a s e d on  of a r r i v i n g  a valid  This  set  a t an  o f p r e m i s e s and  t h e s i s does n o t  mentioned v o i d ;  acceptable  attempt  studies undertaken  light  of  this  three  s t u d i e s were i n d e p e n d e n t  t i m e was  l a c k o f an  appropriate provide  on  assessing  a post-hoc On  thesis will study,  and  reflected  how  the  basis the  these  i n the the  w o u l d be  useful  studies,  a set  to guide  analysts  analyses  to  the  a set  the  the  It w i l l  expenditures  and  of  future  in  of the  in  this each  are  also each  formulation.  involved  lack of  most  t h e s i s i s to  weaknesses  evaluation  was  little  weaknesses o f  of recommendations w i l l  deal with  the  in  All  Each  of c r i t e r i a ,  results  policy  undertaking  Vancouver  methodology used  and  and  issues  evaluation  a result,  of t h i s  o f the  strengths  i n l a n d use  an  developing  to which the  r e v e n u e a n a l y s i s , and  use.  as  object  of  above  each o t h e r .  and,  strengths  upon a d i s c u s s i o n o f  land  the  methodology.  studies' results.  extent  the  of  and  evaluation  explore  consider  regarding  acceptable  m e t h o d o l o g y . The  each study.  to f i l l  in metropolitan  a l i m i t e d budget  spent  assumptions.  i t i s designed to provide  of three  u n d e r t a k e n on  methodology  study Based  expenditurethree  a l s o be  case  developed  expenditure-revenue  empirical  information  revenues a s s o c i a t e d  with  3  1.2  Research  Four objective  Objectives  research questions are c e n t r a l of this  to the  thesis:  ( 1 ) What a r e t h e k e y i s s u e s expenditure-revenue  i n d e v e l o p i n g an  study  methodology;  ( 2 ) What a r e t h e common p r o b l e m s a s s o c i a t e d expenditure-revenue ( 3 ) What e f f e c t  with  studies;  can the methodology  of the study  have on t h e r e s u l t s ; a n d (4)  How  can the issues  and problems a s s o c i a t e d  expenditure-revenue in  a n a l y s i s b e s t be  d e s i g n i n g a study  Specifically,  this  thesis  with  addressed  methodology?  will:  ( 1 ) describe the nature of municipal expenditurerevenue (2) o u t l i n e  analysis; the h i s t o r i c a l  expenditure-revenue (3)  development  of municipal  analysis;  d e s c r i b e t h e methodology used i n each o f t h e three  case  - the C i t y  studies: o f North Vancouver:  Cost-Revenue  Analysis - the City  o f Vancouver: Expenditure-Revenue  Analysis - the C i t y Analysis;  o f New W e s t m i n s t e r :  Cost-Revenue  (4)  develop c r i t e r i a studies  c a n be  (5)  evaluate  (6)  discuss  through which the t h r e e  evaluated;  the three case the  studies;  implications  of  the case  and e x p e n d i t u r e - r e v e n u e a n a l y s i s local  case  l a n d use p l a n n i n g  studies,  in general,  and p o l i c y  on  formulation;  and (7)  develop  a set  analysts  of  recommendations  undertaking  future  to  guide  expenditure-revenue  studies.  1.3  Municipal Although  the  1930s  of-view  i n the  consequences  At  municipal  of  this  l a n d use  from l a n d use  date back  i n c o r p o r a t e d the m u n i c i p a l  1940s.  with  consequently,  Analysis  expenditure-revenue studies  they f i r s t  involvement  impact  Expenditure-Revenue  time almost  came a t  finances  changes.  l a n d use  pointpublic  the m u n i c i p a l r e c e i v e d the  While b e a r i n g  changes,  level;  greatest the  fiscal  municipalities  in their  through  revenue g e n e r a t i n g  measures  1979).  T h i s brought  an i n c r e a s e d a w a r e n e s s  Today,  consciousness  that  estimate  fiscal  l a n d use p l a n s ,  development.  to  about  i n the m u n i c i p a l  alternative  to respond  were  limited  interest  abilities  all  there is  it  the f i s c a l  is  accordingly  (Howell  and  implications  major  rezonings,  a growing  possible,  implications  Stamm, and  of growth  and  public  and i n d e e d of  to  land  necessary,  use  5  decisions policy  (Burchell  makers  consequences with  and L i s t o k i n ,  have begun of  economic,  l a n d use social  The f u n c t i o n a l revenue a n a l y s i s , municipal  in  (City  which r e q u i r e  step  identify  expenditure  input,  make a n e t  in reaching  which  and which  technique types or  separating  and t h e n e s t i m a t i n g  the net  revenue p r o v i d e d ,  Superficially, expenditure  may seem t o be a r e l a t i v e l y many c a s e s , example,  allocation  expenditure  by d i f f e r e n t  case  items  of  other  of  this  numerous  problem  contribution. step  is  analysis;  of  into  this similar  items  required, type.  of  l a n d use  categories  uncomplicated process.  of  are  l a n d use  expenditure  obvious.  supply  total  is  expenditure  first  specified  on t h e w a t e r  accounted for  uses  by e a c h l a n d u s e  procedures  a l l o c a t e d by t h e p e r c e n t a g e  Land  expenditure  the a l l o c a t i o n  and r e v e n u e t o  to  land uses  the net  use  contribution.  revenue this  land  a r e more  a net  expenditure-revenue  involves  imbalance  1974).  input  involve  a net  along  that  different  revenue  The t e c h n i q u e u s e d t o u n d e r t a k e termed m u n i c i p a l  in  a solution  land uses involve  is  stem f r o m an  o f New W e s t m i n s t e r ,  a net  fiscal  expenditure-  land use,  and r e v e n u e  land uses that  The f i r s t to  of  the  and  consequences.  of municipal  terms  citizens  "be c o n s i d e r e d  and p o l i t i c a l  f i n a n c e problems  categories  demand t h a t  decisions  basis  between e x p e n d i t u r e  than  to  1978);  system  water  In  For c o u l d be  consumption  categories.  In  and r e v e n u e ,  the  the  6 a l l o c a t i o n process difficult.  Central  allocating  local  government  which o f t e n pieces  service the  c a n n o t be l o g i c a l l y  This problem  i s most o b v i o u s i n expenditure;  i s e s s e n t i a l to the welfare  exclusively procedure  education  to residential  ignores  that  a literate,  allocating  expenditures  land use.  t r a i n e d labour  on e d u c a t i o n  h i g h l i g h t s one o f t h e most  conceptual  and t e c h n i c a l i s s u e s expenditure-revenue  Municipal defined  not f u n c t i o n  facing  difficult analysts  analysis.  expenditure-revenue  government  of providing  ( a d a p t e d f r o m Mace,  definition  should  a n a l y s i s c a n be  services  be f u r t h e r  outlays;  to a to a  specific  1961). Some e l e m e n t s o f t h i s defined:  Expenditure: comprises both operating capital  The p r o b l e m  among l a n d u s e  as a q u a n t i f i c a t i o n o f t h e n e t c o s t  municipal area  This a l l o c a t i o n  force.  categories  undertaking  this  expenditure-  businesses could  expenditure  while  and p r o s p e r i t y o f  ( a n d b e y o n d ) , many  assign  t o people,  charged t o s p e c i f i c  with p u b l i c education  revenue s t u d i e s  of  A large proportion of  services constitute services  w h o l e community  without  o f many o f t h e s e r v i c e s  governments.  of property.  connection  i n accurately  and revenue t o l a n d use  i s the nature  by l o c a l  and t e c h n i c a l l y  t o the d i f f i c u l t y  expenditure  categories, provided  i s conceptually  expenses and  7 Revenue: c o m p r i s e s government include  monies  the  municipal  r e c e i v e s from e x t e r n a l  local  miscellaneous Net C o s t :  all  contributions,  sources,  taxes,  charges  the d i f f e r e n c e between  with a p a r t i c u l a r  area,  come t o t h e government of  government  unit  city,  a category  single  p a r c e l of  of  the  unit,  confines  of  land use,  of  or  categories  of  c o u l d be a  consider  costs  i n c u r r e d and t h e i m m e d i a t e  salaries  or c a p i t a l  and sewer  lines  Direct  costs  p a i d to f i r e  and m a i n t e n a n c e  servicing  include,  protection costs  an a r e a .  for  Direct  revenues are comprised of p r o p e r t y  special  a s s e s s m e n t s and  (for  residents near  Indirect example,  and f i r m s )  impossibility  of  or  or  revenue  primary  transfers.  a  the  E x p e n d i t u r e and Revenue: O n l y t h e d i r e c t  example,  revenue  or  e x p e n d i t u r e and r e v e n u e :  generated are c o n s i d e r e d .  crews,  of  land.  following  for  some p a r t  a neighborhood  expenditure-revenue analyses  primary  by  area.  a study  Municipal  Direct  will  f r o m t h e a r e a or  the c h a r a c t e r i s t i c s  The g e o g r a p h i c  identified  and t h e r e v e n u e t h a t  A r e a : a whole g o v e r n m e n t a l it.  and  revenue;  e x p e n d i t u r e w h i c h may be s p e c i f i c a l l y  virtue  which  water or taxes,  intergovernmental secondary  tax  losses  are not  expenditure from  and  displaced  i n c l u d e d due t o  a c c u r a t e l y measuring  the  them,  8  and  the  potential  and  indirect  expenditure  simultaneously Public  Expenditure  the private  For  example,  when  use r e g u l a t i o n s , with  regulations  It  would be  expenditure-revenue Fiscal  impact  involves  local  place  only  action.  through  and f i s c a l  Listokin  impact  and revenue  or n o n - r e s i d e n t i a l  i n which  this  and D o l p h i n ,  analysis  comprises  a sub-set  fiscal  impact  analysis,  i n which  analysis  results  goes  generated  analysis  one s t e p  assessing  t h e impact  municipal  budget.  them  expenditure  further;  into  o f changes  of  step of and revenue  l a n d use c a t e g o r i e s .  by the s t a t i c  and p r o j e c t s  i s taking  1985).  i t involves the f i r s t  impact  growth t o  growth  analysis;  to different  analysis.  technique; i t  impact  allocated  these  between  fiscal  are  local  expenditure  and a d m i n i s t e r i n g  of expenditure  jurisdiction(s)  Expenditure-revenue  and  s t u d i e s do  the public  i s a dynamic  residential  (Burchell,  1978);  considered.  analysis  analysis  with  or consumers  to differentiate  the projection  associated  These  viewed  costs of public  developing  i s important  are  direct  considering the expenditures  on t o d e v e l o p e r s  associated  when  and L i s t o k i n ,  and Revenue:  consider  land  and revenue  (Burchell  not  passed  the  f o r double-counting  Fiscal  i t takes the  expenditure-revenue the future,  thereby,  i n l a n d u s e on t h e  Expenditure-revenue  analysis  9  a d d r e s s e s the revenue Fiscal  to  question:  expenditure  impact  change o v e r certain  what  i s the  i n s p e c i f i e d land  a n a l y s e s a s s e s s how  these  a s p e c i f i e d time p e r i o d  d e v e l o p m e n t , z o n i n g or  Expenditure-revenue  analysis  from c o s t - b e n e f i t  effectiveness  analysis.  these  i s i n terms of  studies  The  analysis  techniques.  I t compares b o t h t h e  program.  and  C o s t s and  expenditure  and  environmental  and  benefits  economic c o s t s with  the  of  as  analysis  or  of  be costbetween  the the  analysis. three  and  include  project  public  individual, and  losses.  considers  analysis  approach of  alternatives.  a particular  may  well  cost-benefit  l e a s t cost  of  tangible of  community g a i n s  Cost-effectiveness  a result  difference  broadest  benefits  r e v e n u e as  may  scope of  Cost-benefit  i n t a n g i b l e ( 1 ) costs  ratios  analysis  the  of  categories?  should also  basic  i s the  as  use  annexation  distinguished  or  existing ratio  only  and  realizing  is  a  the concerned  given  obj e c t i v e . Expenditure-revenue public  e x p e n d i t u r e s and  specific  forms of  analysis  i s a statement  deficit  land  use.  The  of net  to  studies.  Expenditure-revenue  fiscal  aspects  exclusively  r e s u l t of  the  with such  governmental  in financial  important  the  focuses  revenues a s s o c i a t e d  expressed purely emphasize  analysis  analysis  of municipal  land  surplus  terms.  l i m i t e d focus of  It  or  is  these  considers  use.  an  only  Economic,  on  10  social, use  environmental  configuration The  are  and  i s not  than  times  and  accorded  treasury ability  1.4  be,  other  safely and,  on  land  expenditure-revenue  that  types  Yet,  a t no  disregard entirely  t h e r e f o r e , on  to provide services  the  they  impacts  time  can can  impacts  local  (Muller,  A p p l i c a t i o n of Municipal  fiscal  of impacts.  at other times  a low p r i o r i t y .  community  thesis  intended to imply  a r e more i m p o r t a n t t h e y may  aspects of the  ignored.  emphasis o f t h i s  analyses  political  At be  a  on  the  local  government's 1973).  Expenditure-Revenue  Analysis Although commissioned stress(2),  expenditure-revenue  during periods of municipal  such  irrespective Assuming t h a t  of the  state  t h e methods and  as  and  Expenditure useful  reliable  specified  results,  expenditure-  the policymaker  to land  improved  a means o f  fiscal  use.  r e v e n u e s t u d i e s have b e e n f o u n d  ratio  l a n d use  structures.  budget.  c a n be  as a b a s i s f r o m w h i c h t o u n d e r s t a n d  (a) the e x i s t i n g  rate  techniques  e v a l u a t i n g the e x i s t i n g  i t relates  information  of the m u n i c i p a l  revenue a n a l y s e s would o f f e r  structure  fiscal  analyses provide important  to the p o i n t of producing  understanding  s t u d i e s a r e most o f t e n  application  ( b ) t a x and of municipal  be  evaluate  of revenue to e x p e n d i t u r e  c a t e g o r i e s ; and The  and  to  in  utility  11  expenditure-revenue  a n a l y s i s i s l i m i t e d to h e l p i n g  a n a l y s t s t o understand and e v a l u a t e the above. r e s u l t s of e x p e n d i t u r e revenue  The  a n a l y s e s s h o u l d be  r e c o g n i z e d f o r what they r e p r e s e n t : an assessment r a t i o of revenue  of the  to expenditure of s p e c i f i e d l a n d use  c a t e g o r i e s at the time the a n a l y s i s was  undertaken.  Where these r e s u l t s are to be used i n a p r e d i c t i v e c a p a c i t y the expenditure-revenue expanded i n t o a f i s c a l impact Expenditure-revenue  a n a l y s i s s h o u l d be  analysis.  a n a l y s e s became i n c r e a s i n g l y  popular i n the 1970s and 1980s ( M u l l e r , L i s t o k i n and D o l p h i n , 1985).  1973;  In the e a r l y  Burchell,  1970s the  w o r l d awoke from the dream of u n l i m i t e d growth. average  The  annual growth r a t e s of the economies of the  developed w o r l d dropped  alarmingly (Peters,  1980).  Although a l l l e v e l s of government began t o e x p e r i e n c e s t r a i n s on t h e i r budgets, s t r o n g l y at the l o c a l  the c r i s i s was  l e v e l s of government, which  f r e q u e n t l y l a c k e d the a b i l i t y to  f e l t most  ( e c o n o m i c a l l y or  i n c r e a s e taxes (Howell and Stamm, 1979).  little  As t h e r e i s  evidence to suggest t h a t i n the f o r e s e e a b l e  f u t u r e the demand f o r m u n i c i p a l s e r v i c e s w i l l (Bish, to  legally)  1984),  decrease  and t h e r e i s g r e a t r e s i s t a n c e to measures  i n c r e a s e m u n i c i p a l revenue,  municipalities will  i t is likely  that  come under g r e a t e r p r e s s u r e to  understand and r e c o g n i z e the f i s c a l consequences use  decisions.  of l a n d  1 2  1.5  R a t i o n a l e F o r Undertaking  t h i s Study  There a r e three u n d e r l y i n g reasons f o r u n d e r t a k i n g this  study.  fiscal  The f i r s t  Despite  considered,  fiscal  success  or f a i l u r e  municipal  budget  particular  being  only  consequences  p l a y a major  i s already  role  i n the  Where a  strained, i t i sof  importance that the f i s c a l  the f i s c a l  of the  one o f many f a c t o r s t o be  o f l a n d use d e c i s i o n s .  l a n d u s e d e c i s i o n s be e x a m i n e d of  to the seriousness  o f i n a p p r o p r i a t e ( 3 ) l a n d use  consequences  decisions.  relates  implications of  carefully.  Consideration  i m p l i c a t i o n s o f l a n d use d e c i s i o n s a r e ,  however, a l s o i m p o r t a n t  when m u n i c i p a l  budgets are  healthy.  t a x or u t i l i t y  structures within  a  Inappropriate  land use category  entire  the c r e d i b i l i t y  t a x or r a t e system i r r e s p e c t i v e  the m u n i c i p a l revenue  budget.  relationship  use c a t e g o r y  can help  and f i n a n c i a l l y The  decisions  to establish  a publicly  fiscal  o f the consequences  on i n c o m p l e t e  questionable  for this  of basing  and i n a c c u r a t e  study  can a r i s e  o f such a n a l y s e s  has y e t been  established.  i s the  l a n d use  when t h e  are i n t e r p r e t e d o f l a n d use  As m e n t i o n e d p r e v i o u s l y , no w i d e l y  methodology  acceptable  expenditure-  and u s e d a s a b a s i s f o r t h e f o r m u l a t i o n policy.  or a l a n d  structure.  S e r i o u s problems  results  of the state of  o f a s e r v i c e , development  appropriate  analyses.  o f the  Consideration of the expenditure-  second u n d e r l y i n g reason  seriousness  revenue  could destroy  Most  acceptable, studies are  b a s e d on a s e t be  of premises  shown t o be r e a l i s t i c ,  instances,  suggest  that  of  (1961)  (Barnes  if  for  not  cannot  all 1955).  and B u r c h e l l and L i s t o k i n have  the r a t i o n a l i z a t i o n of  action.  that  and Raymond,  expenditure-revenue studies  one more b a s i s courses  and i n m o s t ,  are misleading  B o t h Mace  and a s s u m p t i o n s  Analyses  (1978)  provided  desired  b a s e d on p o o r  assumptions  and q u e s t i o n a b l e m e t h o d o l o g i e s  have b e e n u s e d  "pseudo-scientific  promotional  devises  t o make a  a pre-determined course of  action"  (Mace,  for  These s t u d i e s "propaganda explicit  reason for this  study w i l l  1961).  studies  analysed,  the  study.  the s p e c i f i c  and more g e n e r a l l y  expenditure-revenue  was  as  provide a foundation  r e s e a r c h , b o t h i n terms o f  for  case  i n the f i e l d  of  analysis.  Methods U t i l i z e d The  this  u n d e r t a k i n g each  further  1.6  case  have u n d o u b t e d l y p r o v e d e f f e c t i v e  d e v i c e s " w h e t h e r or n o t  Finally,  as  In U n d e r t a k i n g t h i s  methods u s e d i n c a r r y i n g out  this  Research study  are  as  follows: -  l i t e r a t u r e review to analysis,  and t o  d e s c r i b e the development  a p p l i c a t i o n of t h i s -  define expenditure-revenue  analytical  in-depth d e s c r i p t i o n of in  terms  of  assumptions  used;  tool;  the three case  the methodology,  and  premises  studies, and  14  - development  of a set of c r i t e r i a  case s t u d i e s - evaluation  c a n be  case  studies;  - d i s c u s s i o n of the case s t u d i e s '  presentation undertaking  the  evaluated;  of the three  l a n d use p l a n n i n g  by w h i c h  and p o l i c y  and  implications for  formulation,  o f recommendations expenditure-revenue  to  and  analysts  studies.  FOOTNOTES  I n t a n g i b l e c o s t s a r e c o s t s w h i c h have o b v i o u s market p r i c e .  no  The m u n i c i p a l f i s c a l dilemma o f i n c r e a s i n g e x p e n d i t u r e r e s p o n s i b i l i t i e s on a s t a g n a n t or d e c r e a s i n g t a x b a s e has b e e n t e r m e d " f i s c a l stress". The c a u s e s o f f i s c a l s t r e s s a r e complex and i n v o l v e an i n t e r a c t i o n b e t w e e n s o c i a l , e c o n o m i c and s t r u c t u r a l f o r c e s . Land use d e c i s i o n s which are i n a p p r o p r i a t e with respect to the " h e a l t h " of the municipal budget.  16 CHAPTER 2 2.0  THE DEVELOPMENT AND APPLICATION OF MUNICIPAL EXPENDITURE-REVENUE ANALYSIS  2.1  Development o f Expenditure-Revenue A n a l y s i s Despite  techniques interest If  slow p r o g r e s s to  a point  i n expenditure-revenue  w o u l d be  municipal  finance  means o f u n d e r s t a n d i n g and fiscal  structure  evaluating proposals.  the  and  the  field The  p a r t i c u l a r to the  the  the  dominant  1920s.  provide  1960s.  a financial  provision  of the  a basis  for  informed  interest in alive. determine  the  t i m e , has  are  hardship response  b e e n done  were s t u d i e d  argument f o r s l u m c l e a r a n c e  of p u b l i c housing.  for  policy decisions  of f i n a n c i a l  1930s s l u m c o s t s  of  dollar-and-  C l o s e l y r e l a t e d work, i n  issue  In t h e  years  for  their  kept  a  existing  a yardstick  analysis  of municipal  these  a wide r a n g e  of methodologies to  implications  f o l l o w i n g the to  would y i e l d  waned.  managers w i t h  the  would p r o v i d e i n terms of  not  equip  a basis  T h i s p o t e n t i a l has  development  and  evaluating  of expenditure-revenue  financial not  equity  i m p l i c a t i o n s , and  d e c i s i o n making.  they would  officers  and  applicability,  p o t e n t i a l of  consequences of  Such s t u d i e s  methods  a n a l y s i s has  would p r o v i d e  fiscal  rating proposals' cents  the  far reaching;  planners,  the  o f wide p r a c t i c a l  s u b s t a n t i a l l y improved,  studies  i n improving  These s t u d i e s  were  since to and  the  17 u n d e r t a k e n by o f f i c i a l s backgrounds  with  sociology  or  who a t t e m p t e d t o  show t h a t  slum  would b e n e f i t Navin  (1934)  the m u n i c i p a l i t y claims  a c c o m p l i s h what  the  late  governments need f o r ,  basis  Most s t u d i e s  liability  to  point",  in  but  not  to  of,  social  and t h e  of  cost  of  (usually  boom,  establish  a  these  Raymond, period  p r o p e r t y tax bases  studies  lower  able  was to  "pay  v a l u e w o u l d be  The e m p h a s i s the  uses  o f most  of  uses  The  its a of  "break-even  to compensate  residential)  of  that  a b a l a n c e d l a n d use  value  As  expenditure-  of  and  so much on f i n d i n g  would i n c l u d e h i g h  1955 ) .  on  metropolitan areas.  i n these  on t h e n e e d f o r  low v a l u e  to  the proper balance  a c e r t a i n v a l u e was  that  Raymond,  large  development  was  (Barnes  identify  the m u n i c i p a l i t y .  studies  importance  the e x i s t i n g  often inherent  while  these  to  cities  above  1961).  municipal  undertaken during t h i s  r e s u l t e d from a d e s i r e  own w a y " ,  1950s  implications  1955).  development  of pleading  reorganization,  c o u l d be p r e d i c t e d ( 1 )  conclusion  were a b l e  were i n i t i a t e d i n o r d e r  from which the f i s c a l  satellite  (Mace,  were f a c e d w i t h t h e s u b u r b a n  changes  small  clearance  from a m u n i c i p a l p e r s p e c t i v e .  and government  land uses to b o l s t e r  work  achieve.  and e a r l y  such s t u d i e s  studies  studies  to r e a l i z e the  m u n i c i p a l governments  revenue  these  had f a i l e d to 1940s  began  r a p i d growth  financially  one h u n d r e d y e a r s  and m o r a l g r o u n d s In  that  social  pattern for  the  (Barnes  and  18 In largely  the  1960s,  used  Feinberg,  scope  of  1964;  studies  (Litchfield,  Chapman,  1969)  a single  with  element  Weicher, was  analysis  as  analysis  i n connection with urban  1962;  the  expenditure-revenue  1972).  At  financial  1966;  time  costs  the  cost-benefit  Litchfield  expenditures  the o v e r a l l  (Clark,  this  o f t e n broadened to  1966; Mao,  of  renewal  was  and  and  and  revenues  benefits  involved. In  the  condition  late  of  rising  responsibilities r e t u r n e d to  1970s  and t h e  municipal  despite  the focus  of  1980s,  a shrinking studies  determine the combination  necessary  to provide  (Garrison, Hamilton or  Inc.,  explicit  studies  2.2  focus  of  each of  in this  in  studies  of  the  were  land uses  1972;  Stein,  tax base,  done  an a d e q u a t e  Chambers,  1973;  analyzed  the  1976). the  1950s. undertaken  that  property Booze,  research  tax  base  Allen  This  is  was  and  the  implicit  expenditure-revenue  thesis.  The S t a t e o f the A r t Early  in  1971;  to  expenditure  Once a g a i n e x p e n d i t u r e - r e v e n u e to  i n response  expenditure-revenue  response  provincial welfare  to  the burden of welfare  and f e d e r a l g o v e r n m e n t s .  services  were a n a l y s e d  and were a s s i g n e d l a r g e l y validity  analyses  was  not  usually  to  in  were  costs  on  The c o s t s  detail  from  the slum a r e a s .  considered  undertaken  in  the  local, of records Scientific  studies,  as  1 9 the goal  was  to produce  specific  case  (Mace,  expenditure-revenue public  policy,  methodology  still  awaits  fiscal  1963).With analyses  demanded. i n the  last  a widely  Burchell, impact  of  in  figures  the  determination  studies  studies  Twenty p e r c e n t  of  the  studies, study's  expenditure-revenue  analysis  fiscal  impact  analysis,  proportion  of  incomplete  and c o n c e p t u a l l y  view of  this  pressing  assumptions Over  assessment of  used  or  fit  "pure" the  1976,  of  studies  were  wrong,  local  official  Since the f i r s t  likely  that  studies  a  are  step  large also  t e c h n i c a l l y wrong.  the f i e l d p r a c t i c e  approaches  emerged,  in combination.  in their  molded to  have  14-0  with  In  there  is  explicit  definitions.  three basic  revenue a n a l y s i s singly  is  analysed  technically  represents  or  field  1970 and  the  s t a n d a r d i z e d methods  and p r e c i s e  time  of  accuracy.  it  of  advances  the m a j o r i t y  or  expenditure-revenue  need f o r  (1985)  the p r e s i d i n g  h a d no gauge on t h e  of  of  or were c o n c e p t u a l l y  and i n h a l f  this  u n d e r t a k e n between  the  incomplete  of  methodology.  and c o n c l u d e d t h a t was p o o r .  significant  and D o l p h i n  quality  use  acceptable  century,  acceptable  Listokin  a  increasing  Although half  t o make  the  a more s c i e n t i f i c a l l y  was  have b e e n made  a set  form;  specific  to  expenditure-  w h i c h c a n be u s e d  either  These approaches  are  they are u s u a l l y  changed  study  context.  seldom and  a  20  The f i r s t  approach, which i s  commonly u s e d , individual basis  of  "budget  to  allocate  items  in municipal  area,  represents  number  by e a r l y  slum c o s t  approach  is  areas  w h i c h have finance,  of persons  a procedural  and most  e x p e n d i t u r e and revenue  across  certain factors  importance values,  is  low i n c o s t  or  l a n d u s e s on t h e  a well  s u c h as  short-cut  analysts.  or  defined  property  dwelling  units.  w h i c h was  An example  of  first  of  This used  this  p r e s e n t e d below.  M i s c e l l a n e o u s revenue i n the C i t y of North V a n c o u v e r ( $ 2 5 1 5 . 0 0 ) was a l l o c a t e d t o l a n d u s e c a t e g o r i e s on t h e b a s i s o f t o t a l a s s e s s e d l a n d and improvement v a l u e i n e a c h l a n d u s e category. The r a t i o o f r e s i d e n t i a l t o commercial t o i n d u s t r i a l a s s e s s e d l a n d and improvement v a l u e was 6 6 : 2 4 : 9 . Miscellaneous r e v e n u e was, t h e r e f o r e , a l l o c a t e d t o e a c h l a n d use c a t e g o r y u s i n g t h i s r a t i o , r e s u l t i n g i n the f o l l o w i n g d o l l a r a l l o c a t i o n : Residential Commercial Industrial This be s a f e l y actual  approach  is  assumed  that  e x p e n d i t u r e or  a service.  For  expenditure  on f i r e  value  of  of  category. to  useful  and a p p l i c a b l e where i t  the d e f i n e d r a t i o r e v e n u e breakdown  example,  if  it  to  protection is  allocate  define a ratio  it  that  associated  associated it  is  not  will  within always  with  that with  the  w o u l d be  each l a n d logical  reflect actual  can  the  t h e e x p e n d i t u r e by t h e r a t i o  l a n d and i m p r o v e m e n t s However,  reflects  c a n be assumed  a s s e s s e d l a n d and i m p r o v e m e n t s ,  acceptable value  $1685.05 $ 603.60 $ 226.35  or  of  use possible  expenditures  21 or  revenues  this  approach would not The  asking  services  expenditure  local  involved and/or  b e t w e e n l a n d use Fire  Protection  studied  on  the  sources of  on  decision. be  fire  categories.  For  of the  than  1978).  appropriate  i n making the municipality  the  jurisdiction  Chief  to  be  used,  official.  on  fire The  be  depending  Examples  experience;  of  be  categories.  judgement  how  well  or  a  of sample  of  local  term  revenues  (the  short last  v e r s u s time the  cost  (the  Planning  important  (dollar  term  to  last  year)  to  o f measurement t h a t  assessment  revenue,  e s t i m a t e s have b e e n shown  ( O f f i c e of  It i s also unit  and  informed each i n d i v i d u a l  they r e f l e c t  long  officials  goes i n t o the a l l o c a t i o n  officials'  i n that  e x p e n d i t u r e s and Research,  the  a l l o c a t i o n need not  much e f f o r t  Local  service  statistics.  depends on  inaccurate  w i t h the  which to a l l o c a t e expenditure  how  of  to a l l o c a t e  example,  s o u r c e s may  used,  each  asked to a l l o c a t e expenditure  i n using  on  month) r a t h e r  the  cases  administer  analysis  i n c l u d e : k n o w l e d g e and  a basis  who  revenue a s s o c i a t e d  a v a r i e t y of  cause of  and  i n the  time a v a i l a b l e to the  naturally is,  officials  w h i c h t o make t h e  Success as  i n these  applicable.  among s p e c i f i e d l a n d use  specified; on  be  Services  w o u l d be  protection basis  education);  second approach, which i s a l s o f r e q u e n t l y  involves the  ( f o r example,  to  department  and  clearly should  be  define used  the spends i n each  22 area).  When u s i n g t h i s  conduct  sensitivity  officials' (If  this  analyses  estimates  approach  approach  i t i s often useful  to test  how  sensitive  are to v a r y i n g sets of  i s used  but  consuming, samples o f the  d a t a s h o u l d be  t o a s s e s s whether  correspond The  with  third  frequently to  Budgetary  measure a c t u a l  associated with This  e a c h l a n d use  use  revenue  often  are u s u a l l y time  difficult service  reasonably  The  and  be  land  use  revenue service.  when c o n s i d e r i n g t i e d with  clear.  T h i s approach i s however, when  of expenditure  to l a n d use.  i n m a k i n g an  land  revenue a u d i t  In  accounting procedures  information necessary  upon  precise  of a p a r t i c u l a r  convoluted, items  less  revenue t h a t can  i n a manner t h a t a l l o w s f o r e a s y  expenditures  are c a l l e d  i s often intricately  to t i e d i r e c t l y  r e c o r d s and  c o n s u m i n g and  expenditure  accomplished  expenditure;  records.)  t o a g i v e n a r e a or  total  c o n s u m i n g and  considering  of  sample  ( f o r example, p r o p e r t y t a x ) , and  trails  up  the  time  examined i n  category.  the p r o v i s i o n  i s more e a s i l y  r e v e n u e , as  and  too  estimates  techniques  expenditure  d e l i n e a t e d from  w o u l d be  officials'  i s more t i m e  amount t h a t i s a t t r i b u t a b l e is  i t s use  e s t i m a t e s made f r o m  used.  associated with  the  approach  assumptions.  i n c a s e s where d a t a t o make  t h e b r e a k d o w n does e x i s t ,  order  to  often  addition, are  retrieval accurate  t o l a n d use c a t e g o r i e s .  are  seldom  set  of  allocation  23 In  the 1970s and 1980s s t a t i s t i c a l  theory and  computer technology were i n c o r p o r a t e d i n t o a l l t h r e e approaches.  Econometric methods(2),  fiscal  flow  a n a l y s i s ( 3 ) , c r o s s - s e c t i o n a l a n a l y s i s ( 4 ) and time  series  a n a l y s i s ( 5 ) have been used i n expenditure-revenue analysis. statistical  Computer technology and  sophisticated  t e c h n i q u e s do not, however, s o l v e the  problems a s s o c i a t e d with the assumptions u n d e r l y i n g the a n a l y s i s .  premises  Computers are u s e f u l f o r t h e i r  "number c r u n c h i n g " a b i l i t y ; in  and  their  speed and  versatility  t h i s a r e a have a l l o w e d more d e t a i l e d a n a l y s e s t o be  done at an a c c e p t a b l e c o s t . expenditure-revenue  Many problems i n  a n a l y s i s , however, remain  by r e c e n t i n n o v a t i o n s i n computer t e c h n o l o g y . utility  unsolved The  of these s o p h i s t i c a t e d t e c h n i q u e s and models i s  a l s o l i m i t e d by t h e i r need f o r d e t a i l e d data, which i s o f t e n u n a v a i l a b l e at the m u n i c i p a l l e v e l . The t h r e e case s t u d i e s a n a l y z e d i n t h i s t h e s i s make use of a l l t h r e e approaches. Westminster  The C i t y of  New  study r e l i e d t o t a l l y on the f i r s t  approach,  whereby a l l o c a t i o n of expenditure and revenue was made on the b a s i s of d e f i n e d f a c t o r s or v a r i a b l e s . of  The  Vancouver study r e l i e d on the second approach.  City City  o f f i c i a l s were asked t o estimate the breakdown of items of  e x p e n d i t u r e and revenue  among l a n d use  categories;  t h e i r e s t i m a t e s were, however, based on a summary of local records.  The C i t y of North Vancouver study made  24  use  of a l l three approaches;  budgetary  t e c h n i q u e s were u s e d  and  revenue  not  easily  an  among l a n d use available,  officials  t h e y were n o t  o f t h e breakdown; example, used  each  case  of t h i s  f o r the  study  Perhaps  t h e most  officials  assessment  i m p r o v e m e n t s ) were  breakdown.  description  o f the methodology  used  i s p r e s e n t e d i n the next s u b - s e c t i o n  influence important  available. depth  The  Raymond,  1955). scope  study w i l l  be p u t  also  i n order  s h o u l d adopt  and,  greatly  and  determine  in  comprehensive  approach  study  and  to which  the approach  to p r o v i d e the b a s i s  in  between v a r i o u s  the use  F o r example,  a different  and  therefore,  c o n c l u s i o n s (Barnes  o f the a n a l y s i s  w o u l d be most a p p l i c a b l e . initiated  differ  the r e l a t i o n s h i p  methods and v a l i d  approach.  are the time  As y e t , no  short-cut  The  factors  and b r e a d t h o f c o v e r a g e  e x i s t s which h i g h l i g h t s  analyses a  the c h o i c e o f  approaches  the r e s o u r c e s r e q u i r e d .  policy  of  chapter.  number o f f a c t o r s  their  t o make  i n these cases, d e f i n e d v a r i a b l e s ( f o r  In u n d e r t a k i n g e x p e n d i t u r e - r e v e n u e  budget  was  In the case  informed  a s s e s s e d v a l u e o f l a n d and  as a b a s i s  were a s k e d  expenditure,  a b l e t o make an  A more d e t a i l e d in  and  expenditure  Where d a t a  o f the breakdown.  a number o f i t e m s o f r e v e n u e  available,  to a l l o c a t e  categories-  local  i n f o r m e d assessment  felt  where d a t a was  the  which  a study that  is  for public from  that  of a  study of  u n d e r t a k e n out  of  a casual  e x p e n d i t u r e to revenue f o r  interest  i n the  d i f f e r e n t land  ratios  use  categories. Unfortunately, role  pre-conceived objectives also  i n the c h o i c e of approach  1973)  Some a p p r o a c h e s  d a t a and a r e , wishes  (Mace,  1961;  play  Muller,  a r e more open t o m a n i p u l a t i o n  t h e r e f o r e , a t t r a c t i v e t o an a n a l y s t  to produce r e s u l t s  that  support  a  of  who  a particular  position.  2.3  Case Study In  this  each case of  sub-section  study  each case  Methodologies  is  study  described in detail are p r e s e n t e d ( 6 ) .  strengths  and w e a k n e s s e s  effect  the methodology  be  of  the methodology  of  The C i t y In  1984,  Licencing a planning  consultant  will  Cost-Revenue  Study  and  of North Vancouver  investigate  the  hired  expenditures  and r e v e n u e s a s s o c i a t e d w i t h r e s i d e n t i a l , c o m m e r c i a l industrial study  land use.  The t e r m s  were o u t l i n e d i n t h e  the  and t h e  results  o f Development  the C i t y to  of  chapters.  the Department of  in  results  An a n a l y s i s  on e a c h s t u d i e s  of North Vancouver:  Services  and t h e  each methodology,  undertaken i n subsequent  2.3.1  employed  of  reference for  1984 P l a n n i n g  the  Program:  T h i s study w i l l i n v e s t i g a t e the p u b l i c c o s t s of v a r i o u s land uses i n the m u n i c i p a l i t y . It i s a n t i c i p a t e d t h a t t h i s assessment w i l l  and  2 6  p r o v i d e a b e t t e r understanding of the impacts o f growth on m u n i c i p a l s e r v i c e s . The study w i l l assess a number of e s t a b l i s h e d methods of f i s c a l impact a n a l y s e s i n the l i g h t of the development p a t t e r n i n North Vancouver, and attempt to determine the c o s t s a s s o c i a t e d w i t h r e s i d e n t i a l , commercial and i n d u s t r i a l development i n the C i t y , u t i l i z i n g one or a combination of methods. The most s i g n i f i c a n t c o n s t r a i n t on the study  was  the amount of time a v a i l a b l e ; approximately one month was  spent i n r e s e a r c h i n g , d e s i g n i n g and c o n d u c t i n g the  analysis.  I t i s t h i s c r i t e r i o n t h a t to a l a r g e extent  shaped the methodology of the study. time c o n s t r a i n t , i t was not attempt  As a r e s u l t  of the  d e c i d e d t h a t the study s h o u l d  to assess the impacts  e x p e n d i t u r e s and revenues.  of growth on m u n i c i p a l  P r e d i c t i o n s of e x p e n d i t u r e  and revenue must be based on a s e t of assumptions are time consuming to develop  which  (requiring extensive  a n a l y s i s and s u p p o s i t i o n ) and are d i f f i c u l t  to evaluate.  For these reasons the C i t y of North Vancouver study i s a p o i n t - i n - t i m e , or s t a t i c , a n a l y s i s which attempts  to  a s s e s s the e x p e n d i t u r e and revenue a s s o c i a t e d with major l a n d use c a t e g o r i e s i n the C i t y i n 1 9 8 3 . Three  l a n d use c a t e g o r i e s were s t u d i e d :  r e s i d e n t i a l , commercial,  and i n d u s t r i a l .  The  d e f i n i t i o n s of these c a t e g o r i e s were based on the B r i t i s h Columbia definitions.  How  Assessment A u t h o r i t y ' s (B.C.A.A.) each l a n d use category i s d e f i n e d can  have a g r e a t i n f l u e n c e on the r e s u l t s of the For example, the B.C.A.A. d e f i n e s l i g h t  analysis.  industrial  27  a c t i v i t y as a commercial,  r a t h e r than as an  industrial  l a n d use; wherever the r a t i o of e x p e n d i t u r e to is different  f o r commercial  and l i g h t  uses, the i n c l u s i o n of l i g h t the commercial commercial ratios.  industrial  land  industrial activities in  c a t e g o r y of l a n d use w i l l  and the i n d u s t r i a l  revenue  a f f e c t both the  expenditure-revenue  R e c o g n i t i o n of d i f f e r e n c e s i n the d e f i n i t i o n of  l a n d use c a t e g o r i e s are p a r t i c u l a r l y  important when  r e s u l t s of d i f f e r e n t s t u d i e s are compared. The methodology used i n t h i s case study combined all  t h r e e approaches  discussed e a r l i e r  i n t h i s chapter.  Where time allowed, and the data were a v a i l a b l e , b u d g e t i n g t e c h n i q u e s were used to measure the p r e c i s e e x p e n d i t u r e and revenue use c a t e g o r i e s .  a s s o c i a t e d w i t h the t h r e e l a n d  The C i t y ' s annual budget  p r o v i d e d the  aggregate f i g u r e s , and l o c a l r e c o r d s were used t o a l l o c a t e the aggregate f i g u r e s between l a n d use categories.  Where r e c o r d s were not a v a i l a b l e , or t h e i r  use would have been too time consuming, l o c a l were approached and revenue  officials  to assess the p r o p o r t i o n of e x p e n d i t u r e  t h a t c o u l d be a l l o c a t e d to d i f f e r e n t  use c a t e g o r i e s .  Whenever p o s s i b l e , o f f i c i a l s '  land  estimates  were e v a l u a t e d through a sample of r e c o r d s . Although both the budgetary and e s t i m a t i o n approaches  have drawbacks, i t was  felt  t h a t the mix of  q u a n t i t a t i v e and q u a l i t a t i v e a n a l y s i s was c o n s t r u c t i v e and p r a c t i c a l .  I t was  both  originally  thought  28  t h a t the a n a l y s i s would use o n l y the budgetary and e s t i m a t i o n approaches;  however, items o f expenditure and  revenue arose which c o u l d not be a c c e p t a b l y a l l o c a t e d by e i t h e r approach.  For example, no r e c o r d s e x i s t e d by  which the a l l o c a t i o n o f e n g i n e e r i n g expenditure  c o u l d be  made t o the l a n d use c a t e g o r i e s , and the C i t y  Engineer  had no b a s i s on which t o make an a l l o c a t i o n .  In t h i s  case, the t h i r d approach was used.  Engineering  e x p e n d i t u r e and revenue were a l l o c a t e d by the percentage each l a n d use c a t e g o r y r e p r e s e n t e d o f the t o t a l v a l u e o f l a n d and improvements(7).  Although  assessed  total  a s s e s s e d v a l u e o f l a n d and improvements was the most f r e q u e n t l y used a l l o c a t i o n v a r i a b l e , other were a l s o used when a p p r o p r i a t e .  For example, i n  a l l o c a t i n g development and l i c e n c i n g e x p e n d i t u r e , the percentage  variables  service  o f b u i l d i n g permit v a l u e f o r  each l a n d use c a t e g o r y ( 8 ) was used. The  f o l l o w i n g excerpt from the C i t y o f North  Vancouver's Cost-Revenue Study summarizes the a l l o c a t i o n procedure:  Rules f o r A l l o c a t i o n 1.  Is t h e r e a l o g i c a l a l l o c a t i o n o f the expenditure or revenue item? For example, expenditure on housing s t a r t s can l o g i c a l l y be a l l o c a t e d t o r e s i d e n t i a l l a n d use. I f not  29  2.  Do e a s i l y o b t a i n a b l e and usable ( i n terms o f the time a v a i l a b l e ) r e c o r d s e x i s t t h a t c o u l d f a c i l i t a t e the a l l o c a t i o n ? For example, the Treasury Department keeps r e c o r d s o f l o c a l improvements which can be a l l o c a t e d by address t o r e s i d e n t i a l , commercial or i n d u s t r i a l l a n d use. I f not  3.  Ask the l o c a l o f f i c i a l i n charge o f a p a r t i c u l a r s e r v i c e t o make an estimate o f s p e c i f i c e x p e n d i t u r e s and revenues t h a t s h o u l d be a l l o c a t e d t o each l a n d use c a t e g o r y . S t r e s s t h a t i t i s the d o l l a r v a l u e t o the m u n i c i p a l i t y t h a t i s o f i n t e r e s t , not time or the number o f v i s i t s i n v o l v e d . I f the o f f i c i a l allocation  4.  i s unable  t o make the  A l l o c a t e the expenditure or revenue on the b a s i s o f an a p p r o p r i a t e v a r i a b l e ; f o r example, percentage o f t o t a l a s s e s s e d v a l u e o f l a n d and/or improvements, or percentage o f b u i l d i n g permit v a l u e .  Once a l l expenditure and revenue items were a l l o c a t e d t o the l a n d use c a t e g o r i e s , t o t a l expenditure and revenue were c a l c u l a t e d f o r each l a n d use c a t e g o r y . expenditure  The net  or revenue per p r o p e r t y i n each l a n d use  c a t e g o r y was then c a l c u l a t e d by d i v i d i n g the net f i g u r e by the number o f p r o p e r t i e s i n each l a n d use c a t e g o r y . Finally,  the r a t i o o f revenue t o expenditure  f o r each  l a n d use c a t e g o r y was c a l c u l a t e d by d i v i d i n g revenue a s s o c i a t e d with each l a n d use c a t e g o r y by the expenditure a s s o c i a t e d w i t h the l a n d use c a t e g o r y . r e s u l t s o f the C i t y o f North Vancouver Cost-Revenue Study are p r e s e n t e d i n Table I.  The  30  E x p e n d i t u r e and revenue a s s o c i a t e d w i t h e d u c a t i o n were not i n c l u d e d i n the study.  In Canada p r o v i n c i a l  governments have r e s p o n s i b i l i t y f o r the p r o v i s i o n of education.  The m u n i c i p a l government merely  i n t e r m e d i a r y between the taxpayers and the  a c t s as an provincial  government by c o l l e c t i n g e d u c a t i o n taxes and p a s s i n g them on i n - f u l l  to the p r o v i n c i a l  government.  TABLE I RESULTS:  CITY OF NORTH VANCOUVER - COST-REVENUE STUDY  RESIDENTIAL  COMMERCIAL  INDUSTRIAL  REVENUE ($) Per P r o p e r t y ($) Percentage o f Revenue  11,789316 1344 60*  5,699709 7713 29*  2,120722 73128 1 136  EXPENDITURE ($) Per P r o p e r t y ($) Percentage o f E x p e n d i t u r e  13,908879 1586 715.  4,700602 6361 24*  1,130876 34133  999107  1,130876  1 .21  2.14  NET NET  EXPENDITURE GENERATED ($) REVENUE GENERATED ($)  REVENUE/EXPENDITURE RATIO  2,119563  0.85  (Adapted from C i t y o f North Vancouver,  2.3.2  5%  1984)  The C i t y of Vancouver: Analysis  Expenditure-Revenue  A l a c k of knowledge r e g a r d i n g the consequences of l a n d use d e c i s i o n s on the m u n i c i p a l budget  was  i d e n t i f i e d by the Finance Department of the C i t y of  31  Vancouver, i n the e a r l y 1970s. was  At t h i s time an attempt  made t o q u a n t i f y e x p e n d i t u r e s and revenues  that  c o u l d be a l l o c a t e d t o s p e c i f i e d l a n d use c a t e g o r i e s ; however, few r e s o u r c e s were d e d i c a t e d t o the study and, consequently, the f i s c a l  l i t t l e headway was made i n u n d e r s t a n d i n g  i m p l i c a t i o n s o f l a n d use d e c i s i o n s .  In 1984 the Finance Department o f the C i t y o f Vancouver a g a i n d e c i d e d t o undertake revenue a n a l y s i s .  an e x p e n d i t u r e -  Once the methodology was developed  and implemented by the Finance Department, the P l a n n i n g Department was drawn i n t o the a n a l y s i s i n order t o p r o v i d e an u n d e r s t a n d i n g o f how d i f f e r i n g p e r c e p t i o n s and backgrounds o f those i n v o l v e d i n the study may i n f l u e n c e the study's r e s u l t s .  I t was a l s o hoped t h a t a  t h i r d department, the Manager's O f f i c e , might undertake  an independent  also  a n a l y s i s ; however, t h i s d i d not  occur. The m o t i v a t i n g f o r c e s f o r u n d e r t a k i n g the a n a l y s i s d i f f e r e d f o r the departments i n v o l v e d .  The primary  o b j e c t i v e Of the study f o r the Finance Department was t o q u a n t i f y i n t u i t i o n w i t h r e s p e c t t o the e x p e n d i t u r e s and revenues  a s s o c i a t e d with d i f f e r e n t  i n a c o n s i s t e n t and e x p l i c i t was  l a n d use c a t e g o r i e s  a n a l y t i c a l framework.  It  a l s o a n t i c i p a t e d t h a t the study would p r o v i d e an  a d d i t i o n a l i n f o r m a t i o n base t o a s s i s t  i n setting  m u n i c i p a l t a x r a t e s ( H e i k k i l a and Kolk, and L e c k i e , 1986).  1973; H e i k k i l a  32  The  P l a n n i n g Department hoped t h a t  would add  a new  dimension to the  and  evaluation  of l a n d use  the  a n a l y s i s would help  f i s c a l perspective For  tax and factor  i n the  The  decisions.  The  of the  analysis  r e s u l t s of  municipal o f f i c i a l s  the Manager's O f f i c e the  utility  analysis  formulation,  to major z o n i n g and  p r o v i d e an e v a l u a t i o n  the  to add  policy  decisions.  a n a l y s i s was  to  c r e d i b i l i t y of the  r a t e s t r u c t u r e s , which i s an  smooth o p e r a t i o n  of the  city  a  existing  important system(9).  r e s o u r c e requirements of t h i s methodology  l a r g e r e l a t i v e to the  requirements of the  study methodologies.  However, t h i s i s l a r g e l y a r e s u l t  of the number of p a r t i c i p a n t s i n v o l v e d rather  than a r e s u l t of i n c r e a s e d  inefficiency. to the  other  are  i n the  complexity  case  study, or  A l a r g e number of p a r t i c i p a n t s i s c e n t r a l  q u a l i t y of a study where i n d i v i d u a l or group  judgement i s r e l i e d upon i n making the a l l o c a t i o n decisions.  By  i n c l u d i n g a l a r g e number of p a r t i c i p a n t s  i n a study, the  e f f e c t of d i f f e r i n g p e r c e p t i o n s  backgrounds on the The  r e s u l t s can be  and  analyzed.  r e s o u r c e requirements of t h i s study would have  been much g r e a t e r  r e l a t i v e to the  the methodology not As w i t h the Vancouver, no implications  a n a l y i s undertaken by  of f u t u r e The  had  been computerized.  attempt was  configuration.  other case s t u d i e s  the  C i t y of North  made to p r e d i c t the  changes i n the  fiscal  C i t y ' s land  use  study i s a s t a t i c a n a l y s i s of  the  33  r e l a t i o n s h i p between m u n i c i p a l e x p e n d i t u r e and revenue t h a t i s a s s o c i a t e d w i t h d i f f e r e n t c a t e g o r i e s o f l a n d use in  1984.  No attempt was made t o model f u t u r e  r e l a t i o n s h i p s ; however, i t was a n t i c i p a t e d t h a t the study would p r o v i d e a b a s i s from which p r e d i c t i o n s  could  be made. The methodology  used was v e r y d i f f e r e n t  from that  used i n the a n a l y s i s undertaken by the C i t y o f North Vancouver. earlier  The second o f the t h r e e approaches covered  i n t h i s chapter was used, whereby  officials  local  i n v o l v e d i n the everyday r u n n i n g o f the  m u n i c i p a l i t y were c o n s u l t e d .  The methodology  was  s l i g h t l y d i f f e r e n t from t h a t d e s c r i b e d e a r l i e r ,  i n that  o f f i c i a l s w i t h g e n e r a l i s t r a t h e r than s p e c i a l i s t backgrounds  were c o n s u l t e d ; i n s t e a d o f a s k i n g o f f i c i a l s  i n t i m a t e l y i n v o l v e d w i t h each m u n i c i p a l s e r v i c e t o f o r m u l a t e the a l l o c a t i o n d e c i s i o n , o f f i c i a l s w i t h a broad overview o f a l l m u n i c i p a l s e r v i c e s were asked t o make a l l o c a t i o n d e c i s i o n s f o r a l l m u n i c i p a l s e r v i c e s . As a r e s u l t , the o f f i c i a l s had an e x t e n s i v e knowledge o f some s e r v i c e s , but o n l y a l i m i t e d knowledge o f other municipal  services.  Two study groups were nominated,  one from the  Finance Department and one from the P l a n n i n g Department ( f o u r o f f i c i a l s from each department).  One i n d i v i d u a l  had membership i n both study groups; t h i s was by v i r t u e of h i s work experience i n both departments,  and because  34  he was p r o j e c t c o o r d i n a t o r .  H i s membership i n both  groups h e l p e d t o ensure a s i m i l a r format was f o l l o w e d by both groups, but decreased the independence o f each group's a l l o c a t i o n  decisions.  The study methodology was based on group  consensus.  F i g u r e 1 p r o v i d e s a schematic overview o f the consensus process.  Individual participants f i r s t  produced  independent a l l o c a t i o n s based on t h e i r b e s t judgement (how they went about s p e c i f y i n g t h e i r d i s t r i b u t i o n s i s outlined later  i n this sub-section).  The r e s u l t s  ( e x p r e s s e d i n both the a l l o c a t i o n s s e l e c t e d and the outcome i n terms o f revenue and e x p e n d i t u r e a s s o c i a t e d w i t h each l a n d use c a t e g o r y ) o f t h i s f i r s t g i v e n t o each member o f the group. the of  stage were  The f o c a l p o i n t f o r  consensus p r o c e s s was a meeting o f the p a r t i c i p a n t s each group, d u r i n g which a group a l l o c a t i o n was  formulated.  The i n d i v i d u a l a l l o c a t i o n s brought t o the  meeting were c a l l e d upon when h e l p f u l , but d i d not c o n s t r a i n the group i n any way. A s i n g l e p r o c e d u r a l r u l e was used i n s p e c i f y i n g group a l l o c a t i o n d e c i s i o n s : complete unanimity was r e q u i r e d b e f o r e a proposed a l l o c a t i o n d e c i s i o n c o u l d be accepted by the group.  With t h i s r u l e i n p l a c e , a  proponent f o r a g i v e n a l l o c a t i o n d e c i s i o n had t o persuade the r e s t o f the group t h a t the s u g g e s t i o n was reasonable.  Each member o f the group had veto power  over any item under c o n s i d e r a t i o n , but t h i s was tempered  35  by a d e s i r e Leckie,  t o complete the e x e r c i s e ( H e i k k i l a  and  1986).  FIGURE 1 Schematic Diagram o f the C i t y of Vancouver  Methodology  o  F  F i n a n c e Department  P  Planning  Department  i n d i v i d u a l member of study team /\ I  individual |  group  allocation  allocation  (Diagram adapted from H e i k k i l a  and L e c k i e ,  1986)  36  The value  o f t h i s group p r o c e s s hinges on the  membership o f the group. t h e i r knowledge  o f how  The members were chosen f o r  the c i t y f u n c t i o n s .  h i e r a r c h i c a l s t r u c t u r e of the group was i n the group p r o c e s s .  For example,  The  also  a junior  important employee  would be l e s s i n c l i n e d t o veto a d e c i s i o n o f a more s e n i o r employee.  A w e l l s t r u c t u r e d group would c o n s i s t  of knowledgeable and e x p e r i e n c e d m u n i c i p a l have mutual r e s p e c t  f o r each  officials  who  other.  To t e s t the s e n s i t i v i t y of the r e s u l t s t o the group membership, the f i n a n c e  and p l a n n i n g  a l l o c a t i o n s were compared. of a methodology  consensus  T h i s i s an e s s e n t i a l element  t h a t r e l i e s on the judgement  of  i n d i v i d u a l s w i t h v a r i e d backgrounds and e x p e r i e n c e . E x p e n d i t u r e and revenue were a l l o c a t e d among four categories  o f l a n d use: s i n g l e f a m i l y  residential;  m u l t i p l e f a m i l y r e s i d e n t i a l ; commercial; and  industrial.  In a d d i t i o n , expenditure and revenue a s s o c i a t e d  with  vacant and tax exempt l a n d were a l s o c o n s i d e r e d . d e f i n i t i o n o f each of these c a t e g o r i e s was  l a r g e l y based  on the B.C.A.A. d e f i n i t i o n , but was m o d i f i e d the C i t y ' s use code To h e l p  s l i g h t l y by  definition.  i n specifying a l l o c a t i o n decisions  i n d i v i d u a l s and groups were p r o v i d e d l o c a l , f i n a n c i a l and p o p u l a t i o n by l a n d use c a t e g o r i e s information  The  with a s e t of  s t a t i s t i c s broken down  (see Table I I ) . T h i s  statistical  c o u l d be used as a b a s i s f o r a l l o c a t i n g  37  expenditure  and revenue t o l a n d use c a t e g o r i e s . For  example, the break down o f improvement v a l u e , as s p e c i f i e d i n the t a b l e , c o u l d be a p p l i e d t o expenditure on f i r e p r o t e c t i o n , i n order t o i d e n t i f y the p r o p o r t i o n of the expenditure l a n d use c a t e g o r y .  item t h a t s h o u l d be a l l o c a t e d t o each The i n f o r m a t i o n p r e s e n t e d i n Table  II i s , t h e r e f o r e , used as the b a s i s on which  allocation  o p t i o n s are s p e c i f i e d .  TABLE I I  CITY OF VANCOUVER EXPENDITURE-REVENUE ANALYSIS DEFINITION OF ALLOCATION OPTIONS ALLOCATION OPTION  DATA DATE  SFR  MFR  43.8 33.6 35.3 71 .7  9.1 14.9 7.3 28.3  COM  IND  VAC  1 .42.0 4.0  1 .3 20,.4 23..2 2.3  % T o t a l P r o p e r t y Values 1984 Improvement Values 1984General Purpose Taxes 19841 981 People by Residence 1 981 People by Employment Water D i s t r i b Charges 1983 Business L i c e n c e D i s t r i b 1983  44-. 5 6.2  20.5 31 .7  24.0 26.3 51 .1  55.0 24.9 58.2  20.0 4.4 3.  -  EX  *  25..0  Note: SFR - S i n g l e Family R e s i d e n t i a l MFR - M u l t i Family R e s i d e n t i a l COM - Commercial IND - I n d u s t r i a l VAC - Vacant EX - Tax Exempt Distrib - Distribution (Adapted  from H e i k k i l a and L e c k i e , 1986)  The  a l l o c a t i o n o p t i o n s p r e s e n t e d i n Table I I can be  used s i n g l y or i n combination example, 50$ o f an expenditure  w i t h one another.  For  item c o u l d be a l l o c a t e d  by improvement v a l u e i n each l a n d use c a t e g o r y ,  while  the remaining  5®% c o u l d be a l l o c a t e d by g e n e r a l  taxes c o l l e c t e d from each l a n d use  purposes  category.  In a d d i t i o n to the a l l o c a t i o n o p t i o n s p r e s e n t e d i n Table I I , a user s p e c i f i e d o p t i o n can be used.  This  a l l o w s p a r t i c i p a n t s t o s p e c i f y a d i s t r i b u t i o n o p t i o n of their  own,  t h a t i s not based  on Table I I .  For  example,  a p a r t i c i p a n t might wish to a l l o c a t e a l l of a c e r t a i n item of expenditure or revenue to one Table I I I i l l u s t r a t e s how  l a n d use  the a l l o c a t i o n o p t i o n s  p r e s e n t e d i n Table I I , as w e l l as the user a l l o c a t i o n o p t i o n may  category.  specified  be combined i n a l l o c a t i n g  expenditure on f i r e p r o t e c t i o n to the l a n d use categories.  In t h i s example the a l l o c a t i o n as  by a combination  of g e n e r a l purposes  t a x e s , people  r e s i d e n c e and people by employment i s weighted s i n g l e f a m i l y r e s i d e n t i a l and vacant  specified by  towards  l a n d through  the  use of the user s p e c i f i e d o p t i o n . T h i s a l l o c a t i o n p r o c e s s was  repeated f o r each item  of e x p e n d i t u r e and revenue (20 items of expenditure  and  16 items of revenue i n t h i s case study) i n the m u n i c i p a l budget.  The  completed  t a b l e s (both  individual  a l l o c a t i o n s and group consensus a l l o c a t i o n s ) were f e d i n t o a Lotus Spreadsheet  Program which c a l c u l a t e d  e x p e n d i t u r e and revenue f o r each l a n d use c a t e g o r y  the on  the b a s i s o f the a l l o c a t i o n d e c i s i o n s s p e c i f i e d i n the tables.  Grand t o t a l s of expenditure and revenue f o r  each l a n d use category were computed, and from  these,  39 TABLE I I I CITY OF VANCOUVER EXPENDITURE-REVENUE ANALYSIS ALLOCATION EXPENDITURE  ITEM:  F i r e P r o t e c t i o n - $ 4-0 000  ALLOCATION OPTION  ALLOC  T o t a l P r o p e r t y Values General Purposes Taxes People by Residence People by Employment Water Charges D i s t r i b Business Licence D i s t r i b User S p e c i f i e d  Note:  SFR MFR COM IND VAC EX  -  TABLE  ! SFR  MFR  COM  IND  VAC  *  *  *  *  7.3 28.3 -  51.1  4.0  2.3  * 50* 25* 15*  ! 35.3 ! 71.7 ! -  10* 100*  99.0  55.0 20.0  -  EXT  *  25.2  1 .0  S i n g l e Family R e s i d e n t i a l M u l t i Family R e s i d e n t i a l Commercial Industrial Vacant Tax Exempt  (Adapted from H e i k k i l a and L e c k i e , 1986)  r a t i o s o f revenue t o expenditure were c a l c u l a t e d . r e s u l t s o f the f i n a n c e and p l a n n i n g  The  consensus  d i s t r i b u t i o n s are p r e s e n t e d i n Table IV. D e s p i t e d i f f e r e n c e s i n the backgrounds of the f i n a n c e and p l a n n i n g groups,  t h e r e are marked  s i m i l a r i t i e s between the two s e t s o f r e s u l t s p r e s e n t e d i n Table IV.  Both showed r e s i d e n t i a l and i n d u s t r i a l  p r o p e r t i e s a b s o r b i n g more expenditure than they i n revenue.  produce  O f f s e t t i n g r e s i d e n t i a l and i n d u s t r i a l  uses are commercial generate revenues  land  p r o p e r t i e s which are shown t o  75 t o 80 percent i n excess o f  associated expenditures. there i s a s i g n i f i c a n t  The two c a t e g o r i e s i n which  d i f f e r e n c e between the f i n a n c e  40 TABLE IV RESULTS:  EXP  CITY OF VANCOUVER EXPENDITURE-REVENUE  FINANCE CONSENSUS REV NET EXP R/E RATIO  SFR MFR COM IND VAC EXT  118.2 85.6 32.6 47.8 22.5 25.3 66.6 120.1 (53.3) 21.2 13.1 8.1 0.3 4.0 (3.8) 22.1 30.9 (8.7)  TOT  276.3 276.3  Note:  EXP REV NET R/E SFR MFR COM IND VAC EX  0  EXP  ANALYSIS  PLANNING CONSENSUS REV NET EXP R/E RATIO  0.72 0.47 1 .80 0.62 14-.76 1 .40  117.6 93.6 45.0 24.4 67.9 119-3 14.0 9.6 0.5 4.2 31.2 25.1  1 .00  276.3 276.3  24.0 20.6 (51.5) 4.4 (3.6) 6.1 0  0.80 0.54 1 .76 0.68 7.63 0.81 1 .00  - Expenditure - Revenue EXP - Net Expenditure R a t i o - Revenue - Expenditure R a t i o - S i n g l e Family R e s i d e n t i a l - M u l t i Family R e s i d e n t i a l - Commercial - Industrial - Vacant - Tax Exempt  and p l a n n i n g r e s u l t s a r e : vacant and t a x exempt l a n d . The  d i s c r e p a n c y i n vacant l a n d i s a matter  which vacant  o f degree t o  l a n d i s a net c o n t r i b u t o r ; however, w i t h  tax exempt p r o p e r t i e s f i n a n c e suggests them t o be net c o n t r i b u t o r s , w h i l e p l a n n i n g found them t o be net u s e r s . T h i s divergence may be due t o d i f f e r i n g p e r c e p t i o n s o f the composition o f exempt p r o p e r t i e s , but a l s o may reflect  the f a c t t h a t  "tax exempt" i s more an a c c o u n t i n g  d e s i g n a t i o n than a l a n d use c a t e g o r y .  41  2.3.3  The  C i t y of New  In 1974  the  Westminster: Cost-Revenue Study  Planning  Department of the C i t y of  Westminster undertook a cost-revenue study. d i f f e r s from the other  two  This  does the  multi-family,  impact a n a l y s i s ( 1 0 ) .  l a n d use  commercial and  goes on to apply alternatives.  categories industrial  For  example, the  (single-family, ( 1 1 ) ) , but i t  r a t i o s i n each l a n d use For  c o s t s on  budget.  the f i r s t  step of the C i t y of New  changes i n  expenditure-revenue u l t i m a t e l y on  Westminster case study which  e x p e n d i t u r e and  revenue were a l l o c a t e d to the  categories w i l l  be  first  described,  analyzed  represent  the  decisions.  e x p e n d i t u r e and developed by the made use  In 1962  evaluated.  i m p l i c a t i o n s of  c a t e g o r i e s had  Department.  of t h i s methodology.  use  a methodology to a l l o c a t e  revenue to l a n d use Planning  and  land  municipality's  attempt to understand the f i s c a l  l a n d use  the  the purpose of t h i s t h e s i s , o n l y  analyzed; only the methodology by  study d i d not  changes  i n homeowner's  category, and  municipal  The  the  configurations,  changes i n the tax system; and  r e s p o n s i b i l i t y f o r school  be  only  revenue  study a s s e s s e d  i n assessment r e g u l a t i o n s ; i n c r e a s e s  will  Not  the r e s u l t s to a number of p o l i c y  impact o f : a l t e r n a t i v e l a n d use  grants;  further,  study determine the expenditure and  a s s o c i a t e d w i t h four  study  case s t u d i e s covered i n t h i s  t h e s i s i n t h a t i t takes the a n a l y s i s a step i n t o the bounds of f i s c a l  New  The  1974  been  study  42  The  later  study was  i n i t i a t e d both f o r the v a l u e of  i n f o r m a t i o n i t would generate, and i n an attempt increase interest  i n expenditure-revenue  P l a n n i n g department s t a f f f e l t know more about how  analysis.  t h a t t h e r e was  l a n d use d e c i s i o n s impact  m u n i c i p a l budget; they were a l s o aware t h a t r e s e a r c h i n the s u b j e c t a r e a was  Westminster,  Initially,  i t was  a need to the  further  needed i n order to  overcome a r e l i a n c e upon u n s u b s t a n t i a t e d ( C i t y of New  to  assumptions  1974).  i n t e n d e d that the study would  cover a l a r g e time s c a l e , s t r e t c h i n g back over a decade or  more; however, as a r e s u l t of a l a c k of data, the  study was for  c o n f i n e d t o two y e a r s : 1971  these y e a r s was  used to determine  and  1972.  Data  the c o s t s and  s u r p l u s e s a s s o c i a t e d w i t h the s p e c i f i e d l a n d use categories.  Each year was  t r e a t e d as an  study; however, the same methodology and assumptions  were used i n each  independent similar  case.  When comparing the r e s o u r c e requirements methodology w i t h that of the p r e v i o u s case methodologies,  of t h i s  studies'  the time i n v o l v e d i n a p p l y i n g the p o l i c y  t e s t s s h o u l d be i g n o r e d , as t h i s covers areas t h a t were not d e a l t w i t h i n the p r e v i o u s case s t u d i e s .  I f the  time r e q u i r e d t o apply the p o l i c y t e s t s i s i g n o r e d , the r e s o u r c e requirement t h a t of the p r e v i o u s  of t h i s methodology i s l e s s methodologies.  than  4-3 Again, the methodology used i n t h i s study i s very d i f f e r e n t from those used i n the p r e v i o u s case s t u d i e s . T h i s case study makes use of the f i r s t  methodology  d i s c u s s e d i n S e c t i o n 2 . 2 of t h i s chapter, whereby a l l o c a t i o n d e c i s i o n s are made on the b a s i s of c e r t a i n v a r i a b l e s which have a w e l l - d e f i n e d importance  in  m u n i c i p a l f i n a n c e , such as p o p u l a t i o n , or a s s e s s e d value of l a n d and improvements.  T h i s methodology uses a  two  step p r o c e s s i n a l l o c a t i n g expenditure and revenue t o the l a n d use c a t e g o r i e s .  First,  items of  expenditure  and revenue were a l l o c a t e d to v a r i a b l e s , and second, v a r i a b l e s were brought use c a t e g o r i e s .  the  together f o r the s p e c i f i e d l a n d  The methodology i s d e s c r i b e d i n d e t a i l  below.  Step  1.  A l l o c a t i o n o f Budget Items t o  Identified  Variables Items of expenditure and revenue, as l i s t e d i n each y e a r ' s annual budget were a n a l y s e d i n d e t a i l ,  and on  b a s i s of a number of assumptions about the budget  item,  were a l l o c a t e d t o a p p r o p r i a t e v a r i a b l e s . The  example below i l l u s t r a t e s how  p r o t e c t i o n s e r v i c e s was  expenditure  a l l o c a t e d to d i f f e r e n t  v a r i a b l e s , and the r a t i o n a l e f o r each a l l o c a t i o n decision.  the  on  44 Expenditure on Protection Services  ($1000.00)  Sub-Component of Item  Variable  Rationale  Fire, Police, Justice ($940.00)  Assessed Value o f Improvements  Protects a l l Improvements  Protective Inspection ($20.00)  Assessed Value o f Land and Improvements  P r o t e c t s both Land and Improvements  Coroner, Ambulance, Pest & Animal Control($40.00)  Population  Direct Benefit to People  Note: The d o l l a r v a l u e s used i n t h i s t a b l e a r e f i c t i t i o u s  The components o f the budget down by the v a r i a b l e s  indicated  which r e s u l t s i n the f o l l o w i n g each  item are then broken  i n the above  table,  dollar allocations to  variable:  Expenditure on Protection  Services  Variable  $  Assessed Value o f Improvements Assessed Value o f Land and Improvements Population  All  940.00 20.00 40.00  items o f expenditure and revenue  (17 items o f  e x p e n d i t u r e and 20 items o f revenue) were a l l o c a t e d t o appropriate variables i n the example above. revenue  (13 d i f f e r e n t v a r i a b l e s ) , as shown The t o t a l e x p e n d i t u r e and t o t a l  a l l o c a t e d t o each v a r i a b l e  i s then  calculated.  The s m a l l e r o f the two t o t a l s i s s u b t r a c t e d from the larger t o t a l , per v a r i a b l e .  t o determine net e x p e n d i t u r e or revenue The net expenditure or revenue per  45 v a r i a b l e i s then d i v i d e d by the t o t a l v a r i a b l e v a l u e to produce the net expenditure or revenue per d o l l a r o f the variable. of  The example below i l l u s t r a t e s the c a l c u l a t i o n  the net revenue per d o l l a r o f a s s e s s e d v a l u e o f  improvements. A s s e s s e d v a l u e o f improvements was used i n the a l l o c a t i o n o f expenditure on p r o t e c t i o n s e r v i c e s (as shown i n the p r e v i o u s two t a b l e s ) , environmental h e a l t h and transportation services. T h i s v a r i a b l e was a l s o used i n the a l l o c a t i o n o f revenue from f i r e p r o t e c t i o n , water d i s t r i b u t i o n and electricity distribution. The d o l l a r amount a l l o c a t e d t o a s s e s s e d v a l u e o f improvements i n each case i s l i s t e d below: Assessed Value o f Improvements Expenditure: Protection Services Environmental H e a l t h Transportation Services T o t a l Expenditure A l l o c a t e d  $4-90.00 * $280.00 $120.00 $890.00  Revenue Fire Protection Water D i s t r i b u t i o n Electricity Distribution T o t a l Revenue A l l o c a t e d  $220.00 $380.00 $370.00 $970.00  • T h i s v a l u e i s taken from the p r e v i o u s t a b l e , and l i k e values i n t h i s table, i s f i c t i t i o u s .  other  Net Revenue A s s o c i a t e d w i t h Assessed Value o f Improvements = $80.00 ($970.00 minus $890.00 = $80.00) Net Revenue Per D o l l a r o f Assessed Value o f Improvements = $0,016 ($80.00 d i v i d e d by $5000.00 = $0,016 where $5000.00 r e p r e s e n t s t o t a l a s s e s s e d v a l u e )  The net revenue per d o l l a r o f a s s e s s e d v a l u e of improvements r e p r e s e n t s the f i n a l product o f t h i s step,  46  for  this particular variable.  undertaken for  A s i m i l a r process i s  f o r each item of expenditure  each v a r i a b l e .  The  f i n a l product  and revenue,  of step 1 i s ,  t h e r e f o r e , a per d o l l a r value ( e i t h e r expenditure revenue) f o r each of the 13 i d e n t i f i e d  Step 2 .  variables.  Category  t h i s s t e p , the net expenditure/revenue  d o l l a r o f each i d e n t i f i e d v a r i a b l e Step  or  C a l c u l a t i o n o f E x p e n d i t u r e or Revenue  A s s o c i a t e d w i t h each Land Use  In  and  1) i s brought  illustrate  how  (as c a l c u l a t e d i n  together f o r each l a n d use  Single-family residential  per  category.  l a n d use w i l l be used to  this i s carried  out.  The u n i t v a l u e s of v a r i a b l e s t h a t can be r e l a t e d to s i n g l e - f a m i l y r e s i d e n t i a l l a n d use are brought  together.  For example, a s s e s s e d v a l u e of improvements, a s s e s s e d v a l u e of l a n d and improvements, p o p u l a t i o n , and s c h o o l p o p u l a t i o n a l l r e l a t e to s i n g l e - f a m i l y r e s i d e n t i a l use.  land  The v a r i a b l e s t h a t do not r e l a t e t o s i n g l e f a m i l y  residential  l a n d use are not c o n s i d e r e d ; f o r example,  a s s e s s e d v a l u e of machinery.  The u n i t v a l u e s f o r  r e l e v a n t v a r i a b l e s are m u l t i p l i e d by the v a l u e of each variable in single-family residential the example a l r e a d y developed,  l a n d use.  Using  the net revenue per  d o l l a r of the a s s e s s e d v a l u e of improvements ($0,016) i s m u l t i p l i e d by the a s s e s s e d value of improvements i n  47  s i n g l e - f a m i l y r e s i d e n t i a l l a n d use ($1200.00), t o get the  revenue t h a t  residential  s h o u l d be a l l o c a t e d t o s i n g l e - f a m i l y  l a n d use ($19.20).  The u n i t v a l u e o f each  relevant  variable  i s m u l t i p l i e d by the v a l u e o f that  variable  i n s i n g l e - f a m i l y r e s i d e n t i a l l a n d use, as  appears below. Assessed v a l u e o f improvements: revenue - $0,016 per d o l l a r * A s s e s s e d v a l u e o f s i n g l e - f a m i l y r e s i d e n t i a l improvements - $1200.00 Revenue a l l o c a t e d t o s i n g l e - f a m i l y r e s i d e n t i a l l a n d use - $19.20 A s s e s s e d v a l u e o f l a n d and improvements: revenue - $0,023 per d o l l a r Assessed v a l u e o f s i n g l e - f a m i l y l a n d and improvements - $2000.00 Revenue a l l o c a t e d t o s i n g l e f a m i l y r e s i d e n t i a l l a n d use - $46.00 P o p u l a t i o n : expenditure - $0.25 per person P o p u l a t i o n i n s i n g l e - f a m i l y r e s i d e n t i a l l a n d use - 250 persons E x p e n d i t u r e a l l o c a t e d t o s i n g l e - f a m i l y r e s i d e n t i a l l a n d - $62.50 School p o p u l a t i o n : expenditure - $0.37 per school c h i l d School p o p u l a t i o n i n s i n g l e - f a m i l y r e s i d e n t i a l - 70 school c h i l d r e n E x p e n d i t u r e a l l o c a t e d t o s i n g l e - f a m i l y r e s i d e n t i a l l a n d - $25.90 * T h i s v a l u e i s taken from the p r e v i o u s page, and l i k e v a l u e s above i s f i c t i t i o u s .  The  other  revenue a l l o c a t e d t o s i n g l e - f a m i l y r e s i d e n t i a l l a n d  i s then added t o g e t h e r , as i s e x p e n d i t u r e : Revenue = $19.20 + 46.00 = 65.20 Expenditure = $62.50 + $25-90 = $80.40  The  l a r g e r amount i s s u b t r a c t e d  from the s m a l l e r  to get the net expenditure or revenue a s s o c i a t e d the  l a n d use c a t e g o r y .  The r a t i o o f revenue t o  e x p e n d i t u r e can a l s o be c a l c u l a t e d .  amount with  48  Net  e x p e n d i t u r e i n s i n g l e - f a m i l y r e s i d e n t i a l l a n d use = $15*20  ($80.40 - $65.20 = $15.20)  Rev/Exp r a t i o o f s i n g l e - f a m i l y r e s i d e n t i a l l a n d = 0.81  ($65.20 divided by $80.40 = 0.81)  The net expenditure or revenue a s s o c i a t e d w i t h l a n d c a t e g o r y , and the revenue/expenditure  each  ratio  a s s o c i a t e d w i t h each l a n d use c a t e g o r y are c a l c u l a t e d i n t h i s way.  These v a l u e s r e p r e s e n t the end product o f  both Step 2 and o f the C i t y o f New Westminster  case  study methodology. The r e s u l t s o f the C i t y o f New Westminster study are p r e s e n t e d i n Table V.  case  These r e s u l t s r e p r e s e n t  the a c t u a l r e s u l t s o f the case study, and s h o u l d not be confused w i t h the h y p o t h e t i c a l  r e s u l t s o f the example  used t o i l l u s t r a t e the methodology used i n t h i s  case  study. Now t h a t the methodologies described  o f each study have been  i n d e t a i l and the r e s u l t s o f each study have  been p r e s e n t e d , a t t e n t i o n can be t u r n e d t o the e v a l u a t i o n o f each methodology.  The purpose o f  e v a l u a t i n g the s t u d i e s ' methodologies  i s t o determine  the extent t o which the s t u d i e s ' r e s u l t s are u s e f u l as a b a s i s from which p o l i c y d e c i s i o n s can be made. In order t o e v a l u a t e the methodologies,  criteria  must f i r s t be developed through which the s t r e n g t h s and weaknesses o f each study can be a s s e s s e d .  Criteria for  the e v a l u a t i o n o f the three case s t u d i e s , as w e l l as  49  TABLE V RESULTS:  CITY OF NEW WESTMINSTER EXPENDITURE-REVENUE ANALYSIS  LAND USE CATEGORY  NET EXPENDITURE/REVENUE  Single Family R e s i d e n t i a l 1971 1972 2 Year Average M u l t i p l e Family R e s i d e n t i a l 1971 1972 2 Year Average Commercial 1 971 1972 2 Year Industrial 1 971 1 972 2 Year  ($1,4-80359) ($1,195970) ($1,338170)  ($39146) $119596 $40231  REV/EXP RATIO  0.85 0.84 0.82  0.99 1 .03 1 .01  Average  $1,167819 $1,341529 $1 .254675  2.65 2.72 2.69  Average  $820677 $965987 $906832  2.45 2.56 2.51  Note: Rev/Exp R a t i o - Revenue E x p e n d i t u r e Revenue (Adapted from C i t y o f New Westminster, 1974)  other expenditure-revenue a n a l y s e s , are developed i n the next c h a p t e r .  These c r i t e r i a are a p p l i e d t o the t h r e e  case s t u d i e s i n Chapter 4.  50  FOOTNOTES M u n i c i p a l i t i e s were j u s t b e g i n n i n g t o recover from massive debts i n c u r r e d i n the 1930s, and they were r e l u c t a n t t o take a c t i o n s t h a t might set them back f i n a n c i a l l y . 2  Econometrics uses a combination o f s t a t i s t i c a l procedures and mathematical formulas t o e s t a b l i s h the r e l a t i o n s h i p between e x p e n d i t u r e and revenue t o other community v a r i a b l e s .  3  F i s c a l f l o w a n a l y s i s compares e x p e n d i t u r e and revenue f o r d i f f e r e n t l o c a t i o n s or p o p u l a t i o n groups.  4  C r o s s - s e c t i o n a l a n a l y s i s compares the e x p e n d i t u r e and revenue from a number o f communities grouped by p o p u l a t i o n s i z e over a c e r t a i n time p e r i o d . R e g r e s s i o n a n a l y s i s can then be used t o determine i f s t a t i s t i c a l l y s i g n i f i c a n t r e l a t i o n s h i p s e x i s t between per c a p i t a o u t l a y s and the r a t e o f p o p u l a t i o n or other growth.  5  Time s e r i e s a n a l y s i s compares e x p e n d i t u r e and revenue data over s e v e r a l time p e r i o d s , and compares them t o changes i n p o p u l a t i o n or community c h a r a c t e r i s t i c s .  6  The author o f t h i s t h e s i s designed and implemented the C i t y o f North Vancouver case study, and a c t e d as a f a c i l i t a t o r o f the C i t y o f Vancouver case study. The author was not i n v o l v e d i n the C i t y o f New Westminster case study; a l l knowledge o f t h i s case study was a c q u i r e d from a m u n i c i p a l document ( C i t y o f New Westminster, 1974) d e s c r i b i n g the study's methodology and r e s u l t s .  7  In 1983, the percentage o f t o t a l a s s e s s e d v a l u e were broken down as f o l l o w s : Residential Commercial Industrial  66% 2496 9%  In 1983, the percentages o f b u i l d i n g permit v a l u e were broken down as f o l l o w s : Residential Commercial Industrial  43% 41% 1 6%  51  9  While a p o l i c y of no c r o s s s u b s i d i z a t i o n would not n e c e s s a r i l y be advocated, such s u b s i d i z a t i o n s s h o u l d be of p u b l i c knowledge.  10  F i s c a l impact a n a l y s i s and cost-revenue a n a l y s i s r e p r e s e n t two terms f o r a s i n g l e methodology. F i s c a l impact a n a l y s i s and cost-revenue a n a l y s i s s h o u l d not be confused w i t h expenditure-revenue a n a l y s i s which i n v o l v e s o n l y the f i r s t step i n f i s c a l impact a n a l y s i s or cost-revenue a n a l y s i s .  11  The d e f i n i t i o n s of these l a n d use c a t e g o r i e s were based on B.C.A.A. d e f i n i t i o n s .  52  CHAPTER 3 3.  CRITERIA FOR THE EVALUATION OF MUNICIPAL EXPENDITURE-REVENUE ANALYSES In t h i s chapter c r i t e r i a are developed  through  which the s t r e n g t h s and weaknesses o f the t h r e e case s t u d i e s , as w e l l as other expenditure-revenue can be e v a l u a t e d .  studies,  These c r i t e r i a would a l s o be u s e f u l  to a n a l y s t s who are i n the p r o c e s s o f d e s i g n i n g or u n d e r t a k i n g an expenditure-revenue  study; they p o i n t out  i s s u e s , areas o f concern and common weaknesses i n expenditure-revenue warning  flags.  analyses.  The c r i t e r i a serve as  They serve t o i d e n t i f y  dangers, but g i v e no i n s i g h t  i n t o the consequences  s h o u l d the warning not be heeded.  I t i s l e f t to  individual analysts, either evaluating expenditure-revenue  potential  existing  s t u d i e s or d e s i g n i n g new s t u d i e s , t o  c o n s i d e r how each study d e a l s w i t h each a r e a o f concern, and how the r e s u l t s o f the study w i l l  reflect  the manner  i n which the a r e a o f concern was d e a l t w i t h . Many o f the c r i t e r i a d e t a i l e d below may seem obvious and s i m p l i s t i c ; however, the a n a l y s i s o f the case s t u d i e s t h a t f o l l o w s i l l u s t r a t e s t h a t even the most obvious c r i t e r i a completeness)  ( f o r example, accuracy and  are o f t e n v i o l a t e d .  T h i s i s not e n t i r e l y  the f a u l t o f a n a l y s t s ; the c r i t e r i a r e p r e s e n t i d e a l s which i n r e a l i t y are o f t e n d i f f i c u l t achieve.  or i m p o s s i b l e t o  For example, although the c o o p e r a t i o n o f a l l  53  municipal  departments i s c r u c i a l to the q u a l i t y of an  analysis,  i t i s o f t e n not  r e v e a l the necessary  i n a department's i n t e r e s t  information.  Analysts should  aware of the i d e a l , but at the same time r e c o g n i z e and best deal with As expenditure-revenue the p o i n t of b e i n g an exact  reality. a n a l y s i s i s not  developed  strive,  always be c r i t e r i a t h a t are  met  i n an expenditure-revenue  t h e r e f o r e , important  t h a t a n a l y s t s and  should  not  study.  It i s ,  d e c i s i o n makers  e v a l u a t e the methodology and r e s u l t s of  expenditure-  revenue a n a l y s e s on the b a s i s of the c r i t e r i a below, and use  to  s c i e n c e and because the  i d e a l s towards which a n a l y s t s  adequately  be  should  c r i t e r i a represent there w i l l  to  the r e s u l t s of the study  discussed  i n a manner t h a t  c o n s i d e r s both the s t r e n g t h s and weaknesses of the particular  study.  At the o u t s e t , there are two  broad  c a t e g o r i e s of  c r i t e r i a r e l e v a n t to expenditure-revenue methodological appropriateness  analyses:  c r i t e r i a , which r e f e r to the and u s e f u l n e s s of the s t u d i e s '  methodologies; and c o n t e x t u a l c r i t e r i a , which r e f e r the context  i n which the analyses are undertaken,  the r e s u l t s are used.  I f methodological  and  criteria  i g n o r e d , the r e s u l t s of the study are thrown i n t o question.  I f c o n t e x t u a l c r i t e r i a are i g n o r e d ,  the  methodology and r e s u l t s of the study are used i n a m i s l e a d i n g way.  Both c o n t e x t u a l and  to  methodological  are  54  criteria  s h o u l d be c o n s i d e r e d when e v a l u a t i n g  expenditure-revenue revenue  a n a l y s e s ; i d e a l l y each e x p e n d i t u r e -  study s h o u l d meet both c a t e g o r i e s o f c r i t e r i a ,  thereby a l l o w i n g "good a p p l i c a t i o n o f good r e s u l t s " .  3.1  Methodological C r i t e r i a Methodological c r i t e r i a  pertain to s p e c i f i c  c h a r a c t e r i s t i c s o f a study's approach which i n f l u e n c e the a c c e p t a b i l i t y o f the study's methodology, and u l t i m a t e l y the u s e f u l n e s s o f the r e s u l t s . criteria  These  r e f e r t o the methodology o f the study  itself,  and not t o the context i n which that methodology i s undertaken, 3.1.1  or the r e s u l t s are used.  A l l C a l c u l a t i o n s I n v o l v e d i n the Study Be Accurate  Should  The c a l c u l a t i o n s i n v o l v e d i n expenditure-revenue a n a l y s i s are numerous, i r r e s p e c t i v e o f the s p e c i f i c methodology used i n a study.  Each item o f m u n i c i p a l  e x p e n d i t u r e and revenue must be a p p o r t i o n e d t o c a t e g o r i e s o f l a n d use on the b a s i s o f s p e c i f i e d allocation decisions.  Although these c a l c u l a t i o n s are  simple i n n a t u r e , they are numerous and r e p e t i t i v e . B u r c h e l l and L i s t o k i n number o f f i s c a l  (1978, 1985) observed t h a t a l a r g e  impact  s t u d i e s were i n a c c u r a t e , i n that  they i n c l u d e d e r r o r s i n c a l c u l a t i o n . likely  This i s also  t o be t r u e o f many expenditure-revenue a n a l y s e s ,  p a r t i c u l a r l y o f those that r e l y on manual c a l c u l a t i o n s .  55  E r r o r s i n c a l c u l a t i o n w i l l be r e f l e c t e d i n the study's r e s u l t s , and w i l l  a f f e c t the u s e f u l n e s s of the  i n the f o r m u l a t i o n of a p p r o p r i a t e p o l i c y  results  decisions.  The nature of the c a l c u l a t i o n s i n v o l v e d i n expenditure-revenue computerization.  a n a l y s e s makes them w e l l s u i t e d to  D e s p i t e the a v a i l a b i l i t y of computer  software which i s adaptable to m u n i c i p a l e x p e n d i t u r e revenue  a n a l y s i s ( f o r example Lotus 1 - 2 - 3 ) ,  p r o p o r t i o n of m u n i c i p a l expenditure-revenue still  performed manually.  performed manually  a large s t u d i e s are  Where c a l c u l a t i o n s are  each c a l c u l a t i o n s h o u l d be  f o r accuracy; where c a l c u l a t i o n s are performed  checked on the  b a s i s o f computerized e q u a t i o n s , o n l y the e q u a t i o n s need be checked f o r accuracy.  C o m p u t e r i z a t i o n of these  s t u d i e s o f f e r s a u s e f u l and e f f i c i e n t way  of both  p e r f o r m i n g and e v a l u a t i n g the c a l c u l a t i o n s i n v o l v e d i n expenditure-revenue a n a l y s e s .  3.1.2  The Study Should Consider A l l Sources of E x p e n d i t u r e and Revenue The scope of data drawn upon i n expenditure-revenue  a n a l y s e s d i f f e r s from study t o study. use of the m u n i c i p a l i t y ' s annual budget  Most s t u d i e s make i n order t o  s p e c i f y items of m u n i c i p a l expenditure and revenue  to be  a l l o c a t e d t o the l a n d use c a t e g o r i e s ; however, some s t u d i e s make use of o n l y a l i m i t e d number of the of m u n i c i p a l expenditure and revenue which appear annual budget,  i n s p e c i f y i n g expenditure-revenue  items i n the ratios  (Mace, 1961; B u r c h e l l and L i s t o k i n , incomplete  1978).  R e l i a n c e on  data i s g e n e r a l l y the r e s u l t o f a f a i l u r e to  c o n s i d e r a l l sources o f m u n i c i p a l revenue; some s t u d i e s c o n s i d e r o n l y revenue from p r o p e r t y t a x ( 1 ) , even where other sources o f revenue r e p r e s e n t a s i g n i f i c a n t of  m u n i c i p a l revenues ( B u r c h e l l and L i s t o k i n ,  share  1978).  An assessment o f the completeness o f the data drawn upon i n a expenditure-revenue  study i s important  e v a l u a t i o n and a p p l i c a t i o n o f the study's r e s u l t s s h o u l d be r e c o g n i z e d f o r what they e i t h e r a complete or incomplete ratio.  i n the  results.  The  represent;  expenditure-revenue  Where the data used i n the study i s incomplete,  the impact  o f the e x c l u s i o n o f s p e c i f i c  expenditure  items o f  and revenue should be c o n s i d e r e d b e f o r e the  r e s u l t s are a p p l i e d i n p o l i c y formulation. The  d e t a i l t o which m u n i c i p a l expenditure and  revenue are broken down i n t o s u b - c a t e g o r i e s a f f e c t s the a b i l i t y o f the a n a l y s t t o s p e c i f y a c c u r a t e decisions.  Where expenditure  allocation  and revenue are broken  down i n t o o n l y a few s u b - c a t e g o r i e s each o f which are composed o f a number o f f a i r l y functions, i t i s d i f f i c u l t  distinct  municipal  f o r the a n a l y s t t o s p e c i f y an  a l l o c a t i o n d e c i s i o n t h a t takes each f u n c t i o n i n t o account.  Where many s u b - c a t e g o r i e s are used, each o f  which r e f l e c t s a s i n g l e m u n i c i p a l f u n c t i o n , a c c u r a t e a l l o c a t i o n d e c i s i o n s are e a s i e r t o c o n s t r u c t . expenditure  Municipal  and revenue should t h e r e f o r e be broken down  57  to the g r e a t e s t l e v e l o f d e t a i l , g i v e n the time and records  available.  3.1.3  A l l M u n i c i p a l Departments Should Cooperate i n Undertaking a M u n i c i p a l Expenditure-Revenue Analysis When complete, m u n i c i p a l  analyses consider municipal  expenditure-revenue  expenditures  associated with a l l municipal  functions.  and revenues In order t o  make u s e f u l a l l o c a t i o n d e c i s i o n s , the a n a l y s t r e q u i r e s insight  i n t o , and a d e t a i l e d knowledge o f , a l l m u n i c i p a l  functions. possessed  T h i s i n s i g h t and knowledge i s seldom by a s i n g l e person,  or even by a c o l l e c t i o n o f  persons w i t h i n a s i n g l e department.  Municipal  functions  are u s u a l l y managed and a d m i n i s t e r e d  as f a i r l y  separate  entities;  each department's s t a f f may have a d e t a i l e d  understanding expenditures  o f t h e i r department's f u n c t i o n s and the and revenues i n v o l v e d , but they are  u n l i k e l y t o have a thorough understanding f u n c t i o n s p r o v i d e d by other m u n i c i p a l  o f the  departments.  This  i s a l s o t r u e o f knowledge r e g a r d i n g the c o l l e c t i o n and maintenance o f r e c o r d s which are u s e f u l as a b a s i s on which a l l o c a t i o n d e c i s i o n s can be made; o n l y departmental  s t a f f are l i k e l y t o have a d e t a i l e d  knowledge o f what r e c o r d s are kept w i t h i n each department, and the methodology by which r e c o r d s are collected. As the body o f i n f o r m a t i o n r e q u i r e d t o make accurate  a l l o c a t i o n d e c i s i o n s i s fragmented among  58  municipal s t a f f , knowledgeable departments analysis.  i t i s extremely important  that  and e x p e r i e n c e d s t a f f from a l l m u n i c i p a l  are i n v o l v e d i n an expenditure-revenue The degree o f involvement  i s l i k e l y to vary g r e a t l y .  of municipal s t a f f  Some s t a f f members w i l l be  i n t i m a t e l y i n v o l v e d i n the d e s i g n and implementation o f the e n t i r e study, w h i l e other s t a f f members w i l l have an extremely l i m i t e d involvement, c o n s i s t i n g o n l y o f p r o v i d i n g a d v i c e when i t i s s p e c i f i c a l l y asked f o r . A l l s t a f f members i n v o l v e d i n the study (even those  involved  to the s m a l l e s t degree) should, however, be b r i e f e d on the g o a l s , methodology and a p p l i c a t i o n o f the study. They s h o u l d a l s o be b r i e f e d on the l i m i t a t i o n s o f expenditure-revenue  a n a l y s i s , and the i s s u e s i n v o l v e d i n  making a l l o c a t i o n d e c i s i o n s .  This w i l l  ensure that a l l  s t a f f members i n v o l v e d i n making a l l o c a t i o n  decisions  w i l l be aware o f the i s s u e s and l i m i t a t i o n s i n v o l v e d i n expenditure-revenue study i n p a r t i c u l a r .  a n a l y s i s i n g e n e r a l , and i n the The l e v e l o f awareness o f  m u n i c i p a l s t a f f t o these i s s u e s and l i m i t a t i o n s  will  a f f e c t the e f f o r t and r e s o u r c e s t h a t s t a f f w i l l  expend  i n attempting t o make a c c u r a t e a l l o c a t i o n d e c i s i o n s , and will,  t h e r e f o r e , a f f e c t the q u a l i t y o f the study's  results. In summary, the c o o p e r a t i o n o f a l l m u n i c i p a l departments  has the p o t e n t i a l t o g r e a t l y improve the  q u a l i t y o f the i n f o r m a t i o n on which a l l o c a t i o n  decisions  59  can be based and, results.  Within  t h e r e f o r e , the q u a l i t y of the the bounds of r e a l i t y ,  every  effort  should be made by the a n a l y s t c o o r d i n a t i n g the g a i n the c o o p e r a t i o n  of experienced  s t a f f from a l l m u n i c i p a l 3.1.4  and  study's  study to  knowledgeable  departments.  The D e f i n i t i o n of the C h a r a c t e r i s t i c s of Land Use C a t e g o r i e s Should Be Narrow and S p e c i f i c  To be most u s e f u l i n p o l i c y f o r m u l a t i o n , of the c h a r a c t e r i s t i c s of l a n d use narrow and  specific  i n nature.  c a t e g o r i e s of major l a n d use  definition  c a t e g o r i e s should  c a t e g o r i e s which  or p r o d u c t i o n  reflect  or development, or  a c t i v i t y , the r e s u l t s and  p o l i c y based on the r e s u l t s can be more f o c u s e d specific.  Instead  a c t i v i t y has  of c o n c l u d i n g  a greater  that  and  industrial  revenue-expenditure r a t i o  than  commercial a c t i v i t y , a study t h a t uses very narrow specific  l a n d use  be  By d e f i n i n g sub-  v a r i a b l e s l i k e d e n s i t y of p o p u l a t i o n type of b u s i n e s s  the  c a t e g o r i e s would enable one  and  to  conclude t h a t commercial warehouse a c t i v i t i e s p r o v i d e m u n i c i p a l i t y with g r e a t e r net revenue than commercial retail  a c t i v i t i e s . The  decisions consider example, r e z o n i n g  majority  of m u n i c i p a l  land  narrow c a t e g o r i e s of l a n d use.  use For  d e c i s i o n s u s u a l l y i n v o l v e changes of  use w i t h i n a g e n e r a l  category  i.e. single-family  r e s i d e n t i a l to m u l t i - f a m i l y r e s i d e n t i a l , or warehouse commercial to r e t a i l  commercial.  For  expenditure-  revenue r e s u l t s to be most u s e f u l i n m u n i c i p a l  policy  a  60  determination, general  they should  l a n d use  consider  sub-categories  of  categories.  When g e n e r a l  categories  of l a n d use  are used,  the  e f f e c t of d i f f e r e n t c h a r a c t e r i s t i c s of s u b - c a t e g o r i e s that  l a n d use  c a t e g o r y . For  are averaged over the e n t i r e l a n d  may  be  residential  the r e s u l t of a predominance of  d e n s i t y developments of high v a l u e ; d e c i s i o n to a u t h o r i z e  a s u b d i v i s i o n of h i g h  r a t i o of revenue to expenditure f o r  effect  l a n d use,  on m u n i c i p a l  finances.  d e f i n i t i o n of l a n d use appropriate municipal  would not  multi-family  Narrow and  Unfortunately, e x p e n d i t u r e and  facilitates  the resources  categories dedicated  expenditure and  requires greater  of l a n d use  l a n d use  revenue to be  categories.  keep r e c o r d s  For  categories  than are  L o c a l records  c o l l e c t e d or maintained i n a manner t h a t e x p e n d i t u r e and  is  revenue to narrow  resources  to these s t u d i e s .  of  r e q u i r e d to break down  revenue among c a t e g o r i e s  applying  results  analyses.  not p r o p o r t i o n a l to the number of l a n d use involved;  desired  specific  p o l i c y d e c i s i o n s based upon the  expenditure-revenue  density positive  achieve the  categories  high  a municipality's  apartments of medium v a l u e , based upon the  residential  use  example, a p o s i t i v e r a t i o of revenue to  expenditure associated with m u l t i - f a m i l y l a n d use  of  are  generally seldom  allows  e a s i l y a l l o c a t e d to narrow  example, a m u n i c i p a l i t y  on d i f f e r e n c e s i n the expenditure  may  involved  61  i n removing garbage from commercial and s i t e s , but  industrial  i t i s u n l i k e l y to keep r e c o r d s  garbage removal expenditure  that  d i f f e r e n c e s between  commercial and warehouse commercial l a n d use specified.  The  allow retail  to  be  r u l e s by which items of expenditure  revenue should be a l l o c a t e d to broad l a n d use  and  categories  are e a s i e r to c o n s t r u c t than the r u l e s to a l l o c a t e expenditure use.  and  In order  narrow l a n d use  revenue to narrow s u b - c a t e g o r i e s to a l l o c a t e expenditure sub-categories,  and  of  land  revenue to  the a n a l y s t must  c o n s t r u c t a l l o c a t i o n r u l e s based upon a set of assumptions r e g a r d i n g  the expenditure  or revenue  breakdown a s s o c i a t e d w i t h a p a r t i c u l a r m u n i c i p a l function. and  A c c u r a t e a l l o c a t i o n r u l e s are o f t e n  time consuming to c o n s t r u c t , and  knowledge both of the l a n d use municipal  require a detailed  a c t i v i t y and  of  the  function.  Whatever the d e t a i l of the l a n d use chosen f o r a study, i t i s important t h a t c h a r a c t e r i s t i c s of each l a n d use defined.  difficult  For  categories the  category  are  clearly  example, the c h a r a c t e r i s t i c s t h a t  d i f f e r e n t i a t e a c t i v i t i e s that f a l l  i n t o one  land  category  from those a c t i v i t i e s of another l a n d  category  should be  c l e a r l y defined.  This  use  facilitates  i n t e r p r e t a t i o n of the study's r e s u l t s , and of a p p r o p r i a t e  use  and u s e f u l p o l i c y d e c i s i o n s .  formulation This also  62  f a c i l i t a t e s the comparison of d i f f e r e n t over time or d i f f e r e n t 3.1.5  studies'  jurisdictions.  Assumptions and Short-Cut Methods Used i n the Study Should Be D e f e n s i b l e and C l e a r l y Documented In  m u n i c i p a l expenditure-revenue a n a l y s i s , as i n  other methods o f s o c i a l and s c i e n t i f i c  research,  assumptions are used to e l i m i n a t e p e r i p h e r a l so  results  variables,  t h a t a t t e n t i o n can be f o c u s s e d on the i s s u e ( s ) to be  explored.  There i s , however, a f i n e l i n e between  assumptions t h a t are u s e f u l , and those which are misleading.  For assumptions to be u s e f u l , they s h o u l d  be r e a l i s t i c  and e x p l i c i t l y s t a t e d .  I f the s e t o f  assumptions used t o c o n t r o l p e r i p h e r a l v a r i a b l e s i n a study does not r e f l e c t r e a l i t y , the study becomes more than a t h e o r e t i c a l e x e r c i s e w i t h l i t t l e significance. the  little  practical  J u s t as i m p o r t a n t l y , assumptions used i n  study s h o u l d be e x p l i c i t l y s t a t e d , thereby a l l o w i n g  independent a n a l y s t s , and m u n i c i p a l o f f i c i a l s not i n v o l v e d i n the study, t o judge the extent to which the r e s u l t s o f the study r e f l e c t r e a l i t y and, t h e r e f o r e , can be used as a r e l i a b l e b a s i s on which t o f o r m u l a t e policy(2). Two  s e t s of assumptions are used i n m u n i c i p a l  expenditure-revenue a n a l y s e s .  First,  contextual  assumptions are used to s e t the stage f o r the a n a l y s i s ; for  example, the y e a r s s t u d i e d are assumed to be  f i s c a l years.  typical  The second set o f assumptions are used  w i t h i n the methodology of expenditure-revenue  studies.  M e t h o d o l o g i c a l assumptions c o n s i s t of assumptions r e g a r d i n g the nature of the m u n i c i p a l f u n c t i o n i n v o l v e d , and the l a n d use c a t e g o r i e s to which items of e x p e n d i t u r e and revenue are t o be a l l o c a t e d .  These  assumptions are used i n order to h e l p the a n a l y s t d e l i n e a t e the p r e c i s e amount of an item of  expenditure  and revenue t h a t i s a t t r i b u t a b l e t o c e r t a i n l a n d use c a t e g o r i e s , when the r e l a t i o n s h i p between the l a n d use c a t e g o r y and the item of expenditure or revenue i s i n d i r e c t or too time consuming t o be a c c u r a t e l y defined(3).  S h o r t - c u t or c o n t r i v e d methods c o n s i s t o f :  - u s i n g a sample of a v a i l a b l e and r e l e v a n t r e c o r d s to h e l p i n the e s t i m a t i o n of e x p e n d i t u r e  and  revenue to be a l l o c a t e d to each l a n d use category; - a s k i n g e x p e r i e n c e d and knowledgeable m u n i c i p a l o f f i c i a l s who  are f a m i l i a r w i t h  specific  m u n i c i p a l f u n c t i o n s t o estimate the  expenditure  and revenue a s s o c i a t e d w i t h the p a r t i c u l a r f u n c t i o n t h a t s h o u l d be a l l o c a t e d t o each l a n d use category;  and  - u s i n g assumptions to r e l a t e d e f i n e d v a r i a b l e s ( f o r example, a s s e s s e d v a l u e of improvements i n each l a n d use c a t e g o r y ) to the amount of a specific  item of expenditure or revenue ( f o r  example,  expenditure on f i r e p r o t e c t i o n )  that  s h o u l d be a l l o c a t e d t o each l a n d use c a t e g o r y . Each o f the methods l i s t e d particular  assumptions.  b a s i s f o r making  above are based on  Where r e c o r d s  are used as a  an a l l o c a t i o n d e c i s i o n , the a n a l y s t  must make assumptions r e g a r d i n g combination o f r e c o r d s  the r e c o r d s or  that w i l l  best  reflect  actual  e x p e n d i t u r e or revenue t o be a l l o c a t e d t o each l a n d use category.  Where an o f f i c i a l i s asked t o s p e c i f y the  a l l o c a t i o n d e c i s i o n , the d e c i s i o n i s then based on the official's  assumptions r e g a r d i n g  the manner i n which  e x p e n d i t u r e or revenue should be a l l o c a t e d t o l a n d use categories.  These assumptions may be based on a  d e t a i l e d knowledge  o f the item o f expenditure and  revenue; however, they w i l l personal  still  assumptions r e g a r d i n g  i n v o l v e the use o f  the manner i n which  e x p e n d i t u r e and revenue should be a l l o c a t e d .  Finally,  where a l l o c a t i o n d e c i s i o n s are made on the b a s i s o f a v a r i a b l e , the a n a l y s t assumes t h a t t h e r e  i s a direct  r e l a t i o n s h i p between the d e f i n e d v a r i a b l e and a c t u a l e x p e n d i t u r e or revenue a s s o c i a t e d w i t h the l a n d use category. The assumptions on which an a l l o c a t i o n d e c i s i o n are based may appear t o make common sense, y e t i t i s important t o keep i n mind that these assumptions are short-cuts  t o a v o i d the time and expense t h a t would be  n e c e s s a r y t o a c c u r a t e l y d e f i n e expenditure and revenue  65  t h a t s h o u l d be a l l o c a t e d t o the l a n d use c a t e g o r i e s .  It  c o u l d be s a f e l y s t a t e d t h a t two or more s e t s o f e q u a l l y " l o g i c a l " assumptions and c o s t a l l o c a t i o n methods based on these assumptions are p o s s i b l e i n every case, and t h a t the c o n c l u s i o n s reached on the b a s i s o f each s e t may w e l l p o i n t t o d i a m e t r i c a l l y o p p o s i t e c o u r s e s o f a c t i o n (Barnes and Raymond, 1955).  How much v a l i d i t y i s  needed, or indeed p o s s i b l e , i n making an assumption? There i s an obvious p o i n t beyond which f u r t h e r  analysis  i s i r r e l e v a n t , but how one knows when one has reached t h i s point i s unclear  (Barnes and Raymond, 1955).  In  e v a l u a t i n g a study or making use o f a study's r e s u l t s , it  i s important t o remember t h a t the assumptions used i n  a study o f t e n g l o s s over major i s s u e s without adequate e x p l a n a t i o n or c o n v i n c i n g l o g i c ; assumptions are a l s o sometimes c o n s t r u c t e d f o r the purpose o f m a n i p u l a t i n g the study's r e s u l t s . For the r e s u l t s o f a study t o have any r e l e v a n c e , the assumptions used i n the a n a l y s i s s h o u l d be defensible.  The assumptions s h o u l d a l s o be c l e a r l y  documented i n order t o a l l o w f u t u r e a n a l y s t s t o a s s e s s the degree t o which the assumptions are v a l i d and the r e s u l t s are u s e f u l .  3.2  Contextual C r i t e r i a C o n t e x t u a l c r i t e r i a r e f e r t o the c i r c u m s t a n c e s i n  which expenditure-revenue a n a l y s e s are undertaken, and  66 the r e s u l t s are used.  They r e f e r a l s o to the manner i n  which the methodology and r e s u l t s of an a n a l y s i s are documented and p r e s e n t e d to p o l i c y makers and r e a d e r s , as t h i s d i r e c t l y impacts the way  potential  i n which  r e a d e r s w i l l be l i k e l y to use the r e s u l t s .  These  criteria illustrate  areas of p o t e n t i a l misuse  expenditure-revenue  s t u d i e s , and t h e i r r e s u l t s .  these c o n t e x t u a l c r i t e r i a are observed and expenditure-revenue  of If  met,  a n a l y s e s , and t h e i r r e s u l t s ,  l i k e l y t o be undertaken  are  and used i n a p p r o p r i a t e  circumstances. 3.2.1  The A n a l y s t s I n v o l v e d i n the Study Should Have Nothing t o Gain or Lose From the R e s u l t s of the Study Expenditure-revenue  s t u d i e s have o f t e n been used to  make a case f o r a pre-determined course of a c t i o n (Barnes and Raymond, 1955; (4)).  Wheaton, 1955;  M u l l e r (1973) observed t h a t two  Mace,  analysts given  the same data, but u s i n g d i f f e r e n t assumptions methodologies,  may  1961  and  reach opposing c o n c l u s i o n s as to  whether a s u r p l u s or d e f i c i t  i s generated w i t h i n a  s p e c i f i c c a t e g o r y of l a n d use; M u l l e r (1973) a l s o observed that the c o n c l u s i o n s of a study are l i k e l y reflect  the a n a l y s t ' s views.  to  At i s s u e i s whether  r e s e a r c h e r s tend t o work backwards from d e s i r e d  results  to  or  d i s c o v e r the a p p r o p r i a t e s e t of assumptions,  forward from a set of reasonable assumptions unknown r e s u l t .  In a d d i t i o n , d e s p i t e no  towards a  proven  67  c o r r e l a t i o n between the d e t a i l of an a n a l y s i s and accuracy of the r e s u l t s  ( B u r c h e l l and L i s t o k i n ,  a n a l y s t s seem to assume t h a t the more d e t a i l e d  the  1978), and  p a i n s t a k i n g the a n a l y s i s , the more c o n v i n c i n g the results. The  c o n c e p t u a l b a s i s on which many items of  e x p e n d i t u r e and revenue s h o u l d be a l l o c a t e d to l a n d use c a t e g o r i e s i s not w e l l d e f i n e d .  T h i s l e a v e s much room  f o r the m a n i p u l a t i o n of a study's assumptions methodology i n order t o ensure analysis reflect  t h a t the r e s u l t s of the  a desired conclusion.  methodology of expenditure-revenue to m a n i p u l a t i o n , proponents  and  As  the  a n a l y s i s i s so open  of a p r o p o s a l s h o u l d not  asked to supply m u n i c i p a l d e c i s i o n makers w i t h a n a l y s i s of the revenue-expenditure w i t h the proposed  be  an  ratio associated  type of development as t h i s would  i n v i t e m a n i p u l a t i o n of the study's methodology  and  assumptions. The  a n a l y s t s who  are chosen t o undertake  m u n i c i p a l expenditure-revenue obvious  interest  a n a l y s i s s h o u l d have no  (monetary or otherwise)  of the a n a l y s i s .  a  i n the outcome  Yet, even where t h i s i s the case, each  a n a l y s t b r i n g s to the study an i n d i v i d u a l  set of b i a s e s  and assumptions r e g a r d i n g the r e l a t i v e r a t i o s of revenue to expenditure  i n each l a n d use c a t e g o r y .  These  i n d i v i d u a l b i a s e s and assumptions are a l s o r e f l e c t e d i n the study r e s u l t s .  A n a l y s t s u n d e r t a k i n g an  expenditure-  68  revenue a n a l y s i s s h o u l d be made aware o f the p o t e n t i a l i n f l u e n c e o f t h e i r u n d e r l y i n g impressions r e s u l t a n t revenue-expenditure  ratios.  on the  They s h o u l d be  warned t h a t a l l o c a t i o n d e c i s i o n s s h o u l d o n l y be made on the b a s i s o f o b j e c t i v e i n f o r m a t i o n a v a i l a b l e t o them, and not on the b a s i s o f p e r s o n a l p e r c e p t i o n s and impressions. As the methodologies i n v o l v e d i n m u n i c i p a l expenditure-revenue manipulation,  a n a l y s i s are so open t o  every attempt s h o u l d be made t o ensure  that: - the a n a l y s t (and o f f i c i a l s  asked  to specify  a l l o c a t i o n d e c i s i o n s ) have n o t h i n g t o l o s e or g a i n as a r e s u l t o f the study's c o n c l u s i o n ; and - the a n a l y s t (and o f f i c i a l s  specifying  d e c i s i o n s ) be warned o f the p o t e n t i a l  allocation impact  t h a t t h e i r p e r s o n a l p e r c e p t i o n s and assumptions c o u l d have on the r e s u l t s o f the a n a l y s i s , and be asked  t o make a conscious e f f o r t t o r e t a i n  o b j e c t i v i t y i n the c h o i c e o f data, v a r i a b l e s and allocation decisions. 3.2.2  The R e s u l t s o f the Study Should Be Used W i t h i n the Context o f the Study's Scope, Assumptions and Methodology There i s a danger i n expenditure-revenue  t h a t the r e s u l t s o f the a n a l y s i s w i l l be used c o n s i d e r a t i o n o f the study's danger t h a t i s p a r t i c u l a r  to  limitations.  analysis, without  T h i s i s not a  expenditure-revenue  69  a n a l y s i s ; i n every type o f study or a n a l y s i s t h e r e i s a danger t h a t the r e s u l t s w i l l be used or quoted without c o n s i d e r a t i o n o f the scope o f the study, and the assumptions and methodology  used.  Given the s t a t e - o f -  t h e - a r t o f expenditure-revenue a n a l y s i s ,  i t is  particularly  important that the r e s u l t s are c o n s i d e r e d  i n the l i g h t  o f the study's l i m i t a t i o n s .  the  study, as w e l l as the methodology  The scope o f  i n which the  a l l o c a t i o n d e c i s i o n s were made, and the assumptions  that  surround the a l l o c a t i o n d e c i s i o n s a l l i n f l u e n c e the r e s u l t s o f the study.  A study u s i n g the same data, but  a d i f f e r e n t scope, methodology produce d i f f e r e n t  and assumptions  will  results.  Where expenditure-revenue a n a l y s e s are undertaken for  the purpose o f p r o v i d i n g a f i s c a l p e r s p e c t i v e i n the  d e t e r m i n a t i o n o f p u b l i c p o l i c y , i t i s important t h a t the l i m i t a t i o n s o f the study are c a r e f u l l y examined.  An  a n a l y s i s t h a t i s l i m i t e d i n scope ( f o r example, where p r o p e r t y t a x i s used as the o n l y source o f m u n i c i p a l revenue), or r e l i e s example,  on m i s l e a d i n g assumptions ( f o r  assuming t h a t expenditure-revenue r a t i o s  will  remain c o n s t a n t over t i m e ) , or makes use o f an i n a p p r o p r i a t e methodology  ( f o r example,  a l l o c a t i o n r u l e which does not r e f l e c t  the use o f an actual  e x p e n d i t u r e on, or revenue from, the s p e c i f i e d l a n d use c a t e g o r i e s ) w i l l produce m i s l e a d i n g r e s u l t s .  The degree  to which the r e s u l t s may be m i s l e a d i n g s h o u l d be  70  a s s e s s e d by examining  the a c c e p t a b i l i t y o f the scope,  assumptions and methodology o f the study.  The r e s u l t s  of the study s h o u l d be used w i t h i n the c o n t e x t o f t h i s assessment ( i f the impact  o f a study's l i m i t a t i o n s on  the r e s u l t s cannot be c l e a r l y i d e n t i f i e d , the r e s u l t s s h o u l d not be used). expenditure-revenue  " B l i n d use" o f the r e s u l t s o f analysis i n policy formulation w i l l  produce i n a p p r o p r i a t e p o l i c y  decisions.  The s t a t i c nature o f expenditure-revenue i s an aspect o f expenditure-revenue  analysis  a n a l y s e s ' scope t h a t  i s o f t e n i g n o r e d i n the i n t e r p r e t a t i o n o f s t u d i e s ' results.  Expenditure-revenue  a n a l y s e s make use o f  averaging a l l o c a t i o n techniques i n a l l o c a t i n g e x p e n d i t u r e and revenue t o l a n d use c a t e g o r i e s ( 5 ) . Averaging t e c h n i q u e s p r o v i d e a "snapshot" p i c t u r e o f how e x p e n d i t u r e and revenue can be a l l o c a t e d t o l a n d use c a t e g o r i e s , as the techniques do not i n c o r p o r a t e a c o n s i d e r a t i o n o f excesses or d e f i c i e n c i e s i n c a p a c i t y , or o f how s e r v i c e p r o v i s i o n may change over t i m e ( 6 ) . The  i n t e r p r e t a t i o n o f the r e s u l t s o f an  expenditure-revenue  study must take the s t a t i c nature o f  the study i n t o account.  When r e s u l t s are e x t r a p o l a t e d  from one year t o another, the a n a l y s t must c o n s i d e r how excesses or d e f i c i e n c i e s i n c a p a c i t y , or changes i n s e r v i c e supply may a f f e c t the r e s u l t s o f an a n a l y s i s . R e c o g n i t i o n o f the s t a t i c nature o f the r e s u l t s o f expenditure-revenue  a n a l y s e s , and c o n s i d e r a t i o n o f how  71  the r e s u l t s may  have changed over time i s extremely  important when the r e s u l t s of an a n a l y s i s  are used i n  policy formulation. 3.2.3  The L i m i t a t i o n s of Expenditure-Revenue A n a l y s i s , and of the P a r t i c u l a r E x p e n d i t u r e Revenue Study, Should Be C l e a r l y Documented and Presented Along w i t h the R e s u l t s The f i r s t  step i n e n s u r i n g that  the r e s u l t s  study are used w i t h i n the context of the limitations  analysis  as the assumptions  study.  These l i m i t a t i o n s  documentation  and of the study i t s e l f ,  as  and methodology used i n the  w i t h the study's r e s u l t s .  who  study's  i s t o c l e a r l y document the scope o f both  expenditure-revenue well  of a  s h o u l d be p r e s e n t e d a l o n g The  d e t a i l of the  of the l i m i t a t i o n s  s h o u l d enable  have no knowledge of expenditure-revenue  persons  analysis  and/or have not been i n v o l v e d i n the study, t o assess the l i m i t a t i o n s of the study and thereby e v a l u a t e the u s e f u l n e s s of the study's r e s u l t s  in policy  determination.  should cover:  The  documentation  - the c o n c e p t u a l and f u n c t i o n a l expenditure-revenue  bases of m u n i c i p a l  analysis;  - the scope of the s p e c i f i c study; - c o n t e x t u a l and m e t h o d o l o g i c a l assumptions i n the study; - the methodology used i n the study;  and  used  72  - the s t r e n g t h s and l i m i t a t i o n s o f the study, and their  impact  on the u s e f u l n e s s o f the study's  results. V e r b a l p r e s e n t a t i o n s o f a study's r e s u l t s s h o u l d a l s o i n c l u d e a d i s c u s s i o n o f the scope and l i m i t a t i o n s of expenditure-revenue study i n p a r t i c u l a r .  a n a l y s i s i n g e n e r a l , and o f the The impact  o f the study's  l i m i t a t i o n s on the u s e f u l n e s s o f the study's  results  s h o u l d a l s o be d i s c u s s e d . 3.3  A p p l i c a t i o n of the C r i t e r i a t o the E v a l u a t i o n of M u n i c i p a l Expenditure-Revenue A n a l y s e s Many "grey" areas s t i l l  exist  methodology o f expenditure-revenue a p p l i c a t i o n o f study r e s u l t s .  i n both the s t u d i e s and the  I t i s important,  t h e r e f o r e , t h a t expenditure-revenue methodologies are designed i n a manner t h a t best addresses the p o t e n t i a l weaknesses o f expenditure-revenue  analysis.  The  c r i t e r i a developed i n t h i s chapter p r o v i d e a guide t o a n a l y s t s i n v o l v e d i n u n d e r t a k i n g an expenditure-revenue a n a l y s i s , and t o a n a l y s t s who wish t o e v a l u a t e the u s e f u l n e s s o f a p r e v i o u s study's methodology and results.  They p o i n t out areas o f major concern, both i n  the d e s i g n and e v a l u a t i o n o f expenditure-revenue analyses. As mentioned p r e v i o u s l y , many o f the c r i t e r i a d i s c u s s e d i n t h i s chapter are d i f f i c u l t achieve.  or i m p o s s i b l e to  I t i s a l s o not p o s s i b l e t o p r e s c r i b e how  73  completely results  the c r i t e r i a must be met i n order f o r the  o f the study t o be u s e f u l .  c r i t e r i a has the p o t e n t i a l  I f unmet, each  t o d e s t r o y the v a l i d i t y  r e l i a b i l i t y o f a study's methodology and r e s u l t s .  and The  extent t o which the c r i t e r i a are met, and the impact o f f a i l i n g t o meet any c r i t e r i a should be a s s e s s e d by the a n a l y s t , and the r e s u l t s and t h e i r u s e f u l n e s s i n p o l i c y f o r m u l a t i o n s h o u l d be e v a l u a t e d a c c o r d i n g l y .  74  FOOTNOTES  1  B u r c h e l l and L i s t o k i n (1978) suggest t h a t p r o p e r t y taxes are u s u a l l y c o n s i d e r e d because they are understood by a l l taxpayers and a n a l y s t s , and because they are c o n c e p t u a l l y and p r o c e d u r a l l y easy to deal w i t h .  2  The importance of documenting the assumptions, as w e l l as the scope and methodology of s t u d i e s , w i l l be f u r t h e r d i s c u s s e d i n s e c t i o n 3.2.3.  3  M e t h o d o l o g i c a l assumptions can a l s o be used to d e l i b e r a t e l y manipulate the r e s u l t s of a study (see s e c t i o n 3.2.1).  4  B u r c h e l l and L i s t o k i n (1978) conclude from a study of 140 f i s c a l impact a n a l y s e s , t h a t two t h i r d s of the analyses were used to show p o s i t i v e a f f e c t s of a proposed l a n d use a l t e r n a t i v e which the a n a l y s t supported.  5  Average a l l o c a t i o n i n v o l v e s m u l t i p l y i n g the e x p e n d i t u r e or revenue item by the p r o p o r t i o n of a v a r i a b l e t h a t can be a s s o c i a t e d w i t h a l a n d use category, i n order to i d e n t i f y the e x p e n d i t u r e and revenue a s s o c i a t e d w i t h that l a n d use c a t e g o r y .  6  Marginal expenditure or revenue would c o n s i d e r the expenditure or revenue a s s o c i a t e d w i t h an a d d i t i o n a l u n i t of an i d e n t i f i e d v a r i a b l e . Marginal c o s t i n g r e l i e s on c a r e f u l a n a l y s i s of e x i s t i n g supply and demand r e l a t i o n s h i p s f o r l o c a l s e r v i c e s , and i s r e l e v a n t where f u t u r e expenditure-revenue r e l a t i o n s h i p s are to be predicted.  75  CHAPTER 4  4.  EVALUATION OF THE In  THREE CASE STUDIES  t h i s chapter the t h r e e case s t u d i e s p r e s e n t e d i n  Chapter  2 w i l l be e v a l u a t e d on the b a s i s of the  developed  i n Chapter  3.  criteria  By a p p l y i n g the c r i t e r i a to the  case s t u d i e s , the s t r e n g t h s and weaknesses of each study w i l l be h i g h l i g h t e d . met,  the impact  case  Where c r i t e r i a have not been  on the study's r e s u l t s w i l l  be  d i s c u s s e d , and the u s e f u l n e s s of the study's r e s u l t s i n p o l i c y f o r m u l a t i o n w i l l be c o n s i d e r e d .  4.1  C i t y o f North Vancouver - Cost-Revenue  4.1.1  Study  A l l C a l c u l a t i o n s I n v o l v e d i n the Study Should Accurate The  Be  c a l c u l a t i o n s i n v o l v e d i n t h i s case study were  c a r r i e d out manually,  on a hand c a l c u l a t o r .  extremely time consuming to check every  I t would be  calculation  i n v o l v e d i n the study as the c a l c u l a t i o n s were numerous and i n v o l v e d m u l t i p l e data s o u r c e s . of  The  documentation  the study does not i n c l u d e the working  calculations  i n v o l v e d i n the study, and much of the data was from u n o f f i c i a l non-municipal  obtained  r e c o r d s which would not be a v a i l a b l e to  employees.  The  documentation  of the study  does, however, a l l o w the expenditure and revenue a s s o c i a t e d w i t h d i f f e r e n t budget items t o be a g a i n s t f i g u r e s appearing i n the 1984 statement.  checked  financial  For example, expenditure on f i r e  protection  7 6  a l l o c a t e d to the d i f f e r e n t  l a n d use c a t e g o r i e s can be  added t o g e t h e r to show t o t a l expenditure on  fire  p r o t e c t i o n c o n s i d e r e d i n the study, and t h i s can compared a g a i n s t the f i g u r e f o r t o t a l f i r e a p p e a r i n g i n the f i n a n c i a l statement. between the two  be  protection  Differences  f i g u r e s would suggest t h a t e r r o r s i n  c a l c u l a t i o n had been made.  Unfortunately, a  comparison  can not be c a r r i e d out f o r a l l items of e x p e n d i t u r e revenue,  and  as the study o f t e n used a f i n e r breakdown of a  budget item than the f i a n c i a l  statement,  d e t a i l e d records i t i s d i f f i c u l t  and  to r e c o n s t r u c t f i g u r e s  t h a t r e p r e s e n t the same items of e x p e n d i t u r e revenue.  without  and  In most cases the f i g u r e s r e c o n s t r u c t e d from  the case study equal f i g u r e s shown i n the statement;  financial  however, i n some cases the f i g u r e s are  slightly different.  For example, t o t a l e x p e n d i t u r e  on  p o l i c e p r o t e c t i o n i n the case study equals $2844632.00 w h i l e the c o r r e s p o n d i n g f i g u r e i n the statement  equals $2847497.00  p r o t e c t i o n was  financial  Expenditure of  fire  the o n l y f i g u r e which d i f f e r e d  from the f i n a n c i a l  statement  figure  greatly  ($1883853.00 i n the  case study versus $2292019.00 i n the  financial  statement).  s e t s of f i g u r e s , i t  was 1982  While comparing the two  a l s o n o t i c e d that i n the case of one revenue item a revenue f i g u r e had been used i n e r r o r of a  figure.  1983  77  The  degree  t o which these d i f f e r e n c e s w i l l  affect  the r e s u l t s o f the study i s i m p o s s i b l e t o p r e d i c t without  r e d o i n g the e n t i r e case study. The p o i n t t o be  made here i s t h a t the study does i n c l u d e s some i n a c c u r a c i e s and, t h e r e f o r e , b e f o r e the r e s u l t s can be c o n f i d e n t l y used i n any type o f p o l i c y f o r m u l a t i o n a l l c a l c u l a t i o n s i n v o l v e d i n the study s h o u l d be checked f o r accuracy. 4.1.2  The Study Should Consider A l l Sources o f M u n i c i p a l Expenditure and Revenue A l l but two sources o f revenue were i n c l u d e d i n the  case study. investments  Revenue from i n t e r e s t on d e p o s i t s and ($610282.00) and revenue from sundry  sources  ($21429.00) were e r r o n e o u s l y excluded from the study. The of  e f f e c t on the r e s u l t a n t revenue-expenditure  ratios  e x c l u d i n g these sources o f revenue i s l i k e l y t o be  s m a l l ; however, the p o i n t i s again made t h a t the r e s u l t s s h o u l d not be t r u s t e d as r e l i a b l e  i n f o r m a t i o n i n the  formulation of p o l i c y . Although revenue and expenditure a s s o c i a t e d with e d u c a t i o n was not i n c l u d e d i n the study, a number o f other items o f revenue that are c o l l e c t e d f o r other agencies and passed on i n f u l l were i n c l u d e d .  As  e q u i v a l e n t e x p e n d i t u r e s were a l s o i n c l u d e d i n the study, the e f f e c t  o f i n c l u d i n g these items was e s s e n t i a l l y  cancelled out(1).  78  The  study c o n s i d e r e d s i x t e e n items of e x p e n d i t u r e  and f o r t y - n i n e items of revenue(2).  The  discrepency  between the number o f e x p e n d i t u r e and revenue r e f l e c t s the p r e v i o u s l y d i s c u s s e d p o i n t t h a t t r a i l s are more e a s i l y a c c e s s i b l e than  items revenue  expenditure  trails. 4.1-3  A l l M u n i c i p a l Departments Should Cooperate i n U n d e r t a k i n g a M u n i c i p a l Expenditure-Revenue Analysis The C i t y of North Vancouver study was  an independant  c o n s u l t a n t who  was  undertaken  c o n t r a c t e d by  by  the  Department o f Development and L i c e n c i n g S e r v i c e s .  Only  p l a n n i n g d i v i s i o n ( a s u b - d i v i s i o n of the Department of Development and L i c e n c i n g S e r v i c e s ) s t a f f were i n v o l v e d i n the d e s i g n of the study methodology; m u n i c i p a l  staff  o u t s i d e of the p l a n n i n g d i v i s i o n were informed of the study o n l y when t h e i r h e l p was  needed i n i d e n t i f y i n g  u s e f u l r e c o r d s , or i n making a l l o c a t i o n d e c i s i o n s .  When  members of other m u n i c i p a l d i v i s i o n s or departments were asked to p a r t i c i p a t e i n the study, they were g i v e n little  or no e x p l a n a t i o n of the g o a l s , methodology or  a p p l i c a t i o n of the study. to  S t a f f members who  make a l l o c a t i o n d e c i s i o n s were g i v e n  were asked  little  i n t r o d u c t i o n to the i s s u e s i n v o l v e d i n making a l l o c a t i o n decisions. As the body of i n f o r m a t i o n necessary to i d e n t i f y u s e f u l r e c o r d s , and undertake d e c i s i o n s i s fragmented  meaningful  allocation  among m u n i c i p a l s t a f f ,  i t is  79  extremely  important t h a t m u n i c i p a l s t a f f from a l l  m u n i c i p a l departments are i n t i m a t e l y i n v o l v e d i n the d e s i g n and implementation analysis.  of an  expenditure-revenue  M u n i c i p a l s t a f f i n v o l v e d i n p r o v i d i n g and  m o n i t o r i n g each m u n i c i p a l f u n c t i o n s h o u l d have been i n c o r p o r a t e d i n t o the p l a n n i n g and implementation study.  of the  C o o p e r a t i o n between m u n i c i p a l departments s h o u l d  have been e s t a b l i s h e d at the o u t s e t of the study.  Those  o f f i c i a l s making a l l o c a t i o n d e c i s i o n s s h o u l d have a l s o been i n v o l v e d i n the e x p l o r a t i o n o f : the i s s u e s i n v o l v e d i n expenditure-revenue  a n a l y s i s ; the m e t h o d o l o g i c a l  o p t i o n s f o r the study; and the p o t e n t i a l a p p l i c a t i o n of the r e s u l t s .  Involvement  i n , and knowledge o f , these  areas would a f f e c t the l e v e l of e f f o r t m u n i c i p a l would d e d i c a t e t o t h e i r a l l o c a t i o n  decisions.  Improved c o o p e r a t i o n between m u n i c i p a l and i n c r e a s e d involvement  staff  of knowledgeable  departments, officials  i n v o l v e d i n p r o v i d i n g and m o n i t o r i n g each m u n i c i p a l f u n c t i o n , would have g r e a t l y improved  the q u a l i t y of the  i n f o r m a t i o n on which the a l l o c a t i o n d e c i s i o n s c o u l d be based and,  t h e r e f o r e , the q u a l i t y of the case  study's  results.  I d e a l l y , the primary r o l e of the c o n s u l t a n t  s h o u l d have been to i n t r o d u c e m u n i c i p a l s t a f f t o the technique and l i m i t a t i o n s of a n a l y s i s and t o f a c i l i t a t e  expenditure-revenue  the study; the d e c i s i o n s  r e g a r d i n g the a l l o c a t i o n of items of expenditure revenue t o d i f f e r e n t  and  l a n d use c a t e g o r i e s s h o u l d have  80  been l e f t  t o m u n i c i p a l o f f i c i a l s who had a d e t a i l e d  knowledge o f each m u n i c i p a l f u n c t i o n . 4-. 1 .4  The D e f i n i t i o n o f Land Use C h a r a c t e r i s t i c s Be Narrow and S p e c i f i c  Should  The C i t y o f North Vancouver study made use o f broad c a t e g o r i e s o f l a n d use.  Items o f e x p e n d i t u r e and  revenue were a l l o c a t e d o n l y among r e s i d e n t i a l , commercial  and i n d u s t r i a l  made between d i f f e r e n t  l a n d uses; no d i s t i c t i o n was  densities of r e s i d e n t i a l  development or between d i f f e r e n t types o f commercial or industrial activities.  Other  expenditure-revenue  s t u d i e s , i n c l u d i n g the other two case s t u d i e s e v a l u a t e d i n t h i s c h a p t e r , have shown t h a t  revenue-expenditure  r a t i o s v a r y w i t h d e n s i t y o f r e s i d e n t i a l development. i s a l s o l i k e l y t h a t d i f f e r e n t commercial activities  ( f o r example, r e t a i l  warehouse commercial) expenditure r a t i o s .  or i n d u s t r i a l  commercial  versus  would i n v o l v e d i f f e r e n t Inclusion of a d d i t i o n a l  c a t e g o r i e s o f r e s i d e n t i a l , commercial l a n d use would have p r o v i d e d u s e f u l ,  It  revenuesub-  and i n d u s t r i a l additional  information. The case study made use o f B.C.A.A. d e f i n i t i o n s i n d e f i n i n g l a n d use c a t e g o r i e s .  Although these  d e f i n i t i o n s are broad i n n a t u r e , they are u s e f u l as they are w e l l d e f i n e d , and w e l l understood by most m u n i c i p a l officials.  The boundaries o f each l a n d use c a t e g o r y are  c l e a r l y d e f i n e d , thereby a l l o w i n g a n a l y s t s t o determine  81  e x a c t l y which a c t i v i t i e s f a l l l a n d use.  Unfortunately,  commercial l a n d use retail  the B.C.A.A. d e f i n i t i o n  and wholesale a c t i v i t i e s ,  expenditure difficult  of  of  i s extremely broad; i t i n c l u d e s a l l  industrial activities.  as w e l l as a l l l i g h t  As a r e s u l t the  revenue  r a t i o c a l c u l a t e d f o r commercial l a n d use  to apply  i n p o l i c y formulation.  industrial activity use  i n t o which c a t e g o r i e s  category,  the  Because  i s i n c l u d e d i n the commercial  industrial  l a n d use  o n l y f o r heavy i n d u s t r i a l a c t i v i t i e s  category ( o n l y 29  is  light land  accounts properties  i n the C i t y of North Vancouver were i n c l u d e d i n t h i s category).  As a r e s u l t , t h i s category  is relatively  narrowly d e f i n e d , thereby making the r e s u l t s more u s e f u l in policy  determination.  Although two  out of the three c a t e g o r i e s of  land  use used i n the C i t y of North Vancouver study were very broadly  d e f i n e d , the d e f i n i t i o n s of these l a n d  c a t e g o r i e s were c l e a r l y documented, and  the  of u s i n g broad c a t e g o r i e s of l a n d use were The  limitations discussed.  study would have b e n e f i t t e d from the use  narrowly d e f i n e d c a t e g o r i e s of r e s i d e n t i a l commercial l a n d use; consider  l a n d use  as the r e s u l t s now  use  of more and  stand  they  c a t e g o r i e s which are too broad to  u s e f u l l y a p p l i e d to most l a n d use p o l i c y  decisions.  be  82  4.1.5  Assumptions and  Short-Cut Methods Used i n the  Study Should Be C l e a r l y Documented and The  Defensible  l i m i t e d time frame a v a i l a b l e to the C i t y of  North Vancouver study made i t i n f e a s i b l e f o r consultant in detail  the  to study each item of e x p e n d i t u r e and i n order  each item to be a r e s u l t the  revenue  to a c c u r a t e l y d e f i n e the amount of  a l l o c a t e d to each l a n d use  category.  study r e l i e d h e a v i l y on the use  assumptions i n d e f i n i n g s h o r t - c u t  As  of  or c o n t r i v e d methods  to i d e n t i f y the amount of each item of e x p e n d i t u r e or revenue t h a t should be categories. municipal  Due  a l l o c a t e d to the  to the  land  l a c k of c o o p e r a t i o n  departments i n d e f i n i n g r e c o r d s  u s e f u l i n making a l l o c a t i o n r e c o r d s ,  use between  t h a t would be  or i n making  the  a l l o c a t i o n d e c i s i o n s based on the experience of officials  i n t i m a t e l y i n v o l v e d i n each f u n c t i o n , a l a r g e  proportion  o f the  items of expenditure and  a l l o c a t e d to l a n d use  categories  revenue were  on the b a s i s  v a r i a b l e s which were assumed to r e f l e c t  of  actual  e x p e n d i t u r e or revenue a s s o c i a t e d w i t h each l a n d category.  The  v a r i a b l e s on which the a l l o c a t i o n  d e c i s i o n s were based, were d e f i n e d by an consultant,  use  who  had  "outside"  a l i m i t e d knowledge of the  specific  nature of the C i t y of North Vancouver's  municipal  f u n c t i o n s and  assumed  l a n d use  categories.  The  r e l a t i o n s h i p s between the v a r i a b l e s and e x p e n d i t u r e and  actual  revenue were, t h e r e f o r e , academic  and  83  g e n e r a l i z e d , r a t h e r than p r a c t i c a l and s p e c i f i c t o the C i t y o f North Vancouver. The  degree t o which the assumptions and the s h o r t -  cut methods based on these assumptions r e f l e c t is d i f f i c u l t  t o assess;  reality  t h e o r e t i c a l l y t h i s assessment  would r e q u i r e a step-by-step  e v a l u a t i o n o f each  assumption made throughout the study methodology. However, by p r o c e e d i n g s i g h t o f the bigger difficult  i n t h i s manner, one would l o s e  p i c t u r e ; i t would be extremely  to b r i n g i n d i v i d u a l observations  together t o  determine the o v e r a l l r e a l i t y o f the study r e s u l t s .  For  t h i s reason, the degree t o which the assumptions are d e f e n s i b l e , w i l l be assessed  i n a general  manner.  A l a r g e number o f the a l l o c a t i o n d e c i s i o n s were based on what seem t o be d e f e n s i b l e assumptions.  In  many cases the a l l o c a t i o n was obvious ( f o r example, revenue from dog l i c e n c e s and the animal pound should be a l l o c a t e d to r e s i d e n t i a l  l a n d u s e ) , or r e c o r d s  c o u l d be  used as the b a s i s on which t o make the a l l o c a t i o n d e c i s i o n s ( f o r example, rent from c i t y owned p r o p e r t i e s c o u l d be a l l o c a t e d t o l a n d use c a t e g o r i e s on the b a s i s of r e c o r d s  kept by the p u r c h a s i n g  department).  In other  and p r o p e r t y  cases l o c a l o f f i c i a l s  felt  confident  t h a t t h e i r knowledge r e g a r d i n g  question,  c o u l d be used t o a c c u r a t e l y d e f i n e a  defensible allocation decision.  services  the f u n c t i o n i n  I t was only i n cases  where the a l l o c a t i o n d e c i s i o n was not obvious, r e l e v a n t  84 r e c o r d s were too time consuming to use, o f f i c i a l s were not  confident  d e c i s i o n s t h a t the accuracy methods need be assessed. r e s t r i c t i o n s and municipal  in their  and  municipal  allocation  of assumptions and Unfortunately,  the l a c k of c o o p e r a t i o n  departments a f a i r l y  expenditure  and  due  short-cut to time  between  l a r g e number of items of  revenue were a l l o c a t e d on the b a s i s of  methods which are q u e s t i o n a b l e they are d e f e n s i b l e and  reflect  i n the extent  to which  a c t u a l expenditure  revenue a s s o c i a t e d with c a t e g o r i e s of l a n d  and  use.  Of p a r t i c u l a r concern i n t h i s case study i s the of a base l i n e v a r i a b l e ( a s s e s s e d value  of l a n d  use  and  improvements) i n making a l l o c a t i o n d e c i s i o n s which c o u l d not be made on the b a s i s of any more d e f e n s i b l e assumptions and v a r i a b l e was expenditure  a l l o c a t i o n methods.  This  allocation  a p p l i e d , i n p a r t i c u l a r to items of and  revenue that c o u l d not be  connected with the i d e n t i f i e d l a n d use base l i n e v a r i a b l e was accountability  categories.  used f o r reasons of  determined and  r e s u l t s c o u l d be a s s e s s e d ) ,  The  the e f f e c t on  consistency  r e s o r t f o r items of both expenditure  and  (used as a  study f a i l e d , however, to assess  of the f i n a l  results.  the last  revenue) and  impact of u s i n g t h i s base l i n e v a r i a b l e i n the determination  This  (the p o r t i o n of the budget a l l o c a t e d i n  t h i s manner c o u l d be  convenience.  directly  the  85  The exact e f f e c t of the assumptions and  short-cut  methods on the study r e s u l t s i s extremely d i f f i c u l t  to  assess (assessment o f the e f f e c t would i n v o l v e the use of numerous " c o n t r o l " s t u d i e s ; a l t h o u g h t h i s i s theoretically possible, i t i s practically  infeasible);  however, i t can be s a f e l y assumed t h a t the r e s u l t s of the case study do r e f l e c t methodology  the assumptions  and  used, and t h a t d i f f e r e n t assumptions  methodologies would produce d i f f e r e n t r e s u l t s .  and The  r e s u l t s o f t h i s case study are, t h e r e f o r e , not  reliable,  and s h o u l d not be used i n a manner t h a t assumes t h e i r validity.  The l a c k o f v a l i d i t y  i n the r e s u l t s o f the  study i s due t o the s t a t e - o f - t h e - a r t o f e x p e n d i t u r e revenue a n a l y s i s , to the l a c k o f time a v a i l a b l e to the study and the l a c k o f c o o p e r a t i o n between m u n i c i p a l departments. 4.1.6  The A n a l y s t s I n v o l v e d i n the Study Should Have Nothing to Gain or Lose from the R e s u l t s of the Study The C i t y of North Vancouver  Cost-Revenue  undertaken by an " o u t s i d e " c o n s u l t a n t .  The  had had no p r e v i o u s d e a l i n g s w i t h any o f the of the C i t y of North Vancouver, or w i t h any i n t e r e s t groups.  Study  was  consultant departments local  The c o n s u l t a n t had n o t h i n g to g a i n or  l o s e through the r e s u l t s of the study. concern of the c o n s u l t a n t was  The primary  to develop and implement  a  study t h a t would produce the most u s e f u l r e s u l t s g i v e n the time c o n s t r a i n t p l a c e d on the study.  The Department  86 and Development and L i c e n c i n g S e r v i c e s study out  sponsored  the  o f an i n t e r e s t i n the r a t i o of revenue to  e x p e n d i t u r e i n d i f f e r e n t l a n d use  categories;  i t was  a n t i c i p a t e d t h a t the study would make a case f o r  not  any  predetermined courses of a c t i o n . As none of the o f f i c i a l s Development and  ( o u t s i d e the Department  Licencing Services)  study were b r i e f e d on the e x p l i c i t  of  i n v o l v e d i n the rationale for  the  study, or the a p p l i c a t i o n of the r e s u l t s , i t i s u n l i k e l y t h a t any  o f these o f f i c i a l s p u r p o s e f u l l y  t h e i r a l l o c a t i o n d e c i s i o n s i n order would r e f l e c t 4.1.7  manipulated  t h a t the r e s u l t s  a d e s i r e d course of a c t i o n .  The R e s u l t s of the Study Should Be Used W i t h i n the Context of the Study's Scope, Assumptions and Methodology As y e t , the r e s u l t s of t h i s case study have not  been f o r m a l l y used i n p o l i c y f o r m u l a t i o n .  The  extent  to  which the r e s u l t s of the study have been i n f o r m a l l y used in p o l i c y formulation  i s unknown.  The  r e s u l t s of  study were p r e s e n t e d to both p o l i c y makers, and of the  Planning  have p l a y e d  Department s t a f f and,  a r o l e i n any  made s i n c e the p r e s e n t a t i o n attempt was  members  therefore,  number of l a n d use of the r e s u l t s .  the  could  decisions Every  made, however, to ensure t h a t anyone who  access to the r e s u l t s of the  study was  warned of  l i m i t a t i o n s of the study; the r e s u l t s of the p r e s e n t e d along w i t h a thorough d i s c u s s i o n of  had  the  study were the  87 l i m i t a t i o n s of* expenditure-revenue  a n a l y s i s , and of the  study i n p a r t i c u l a r . The r e s p o n s i b i l i t y t o use the r e s u l t s of the study w i t h i n the context of the study's l i m i t a t i o n s now i n the hands of the i n d i v i d u a l s who the study r e s u l t s .  Given the e f f o r t  e n s u r i n g t h a t a l l those who  lies  have had access to t h a t was  put  into  came i n c o n t a c t w i t h the  r e s u l t s were warned of t h e i r shortcomings, and the p r o c e s s of m u n i c i p a l d e c i s i o n making, i t i s u n l i k e l y t h a t the study r e s u l t s w i l l o u t s i d e of t h e i r c o n t e x t .  ever be f o r m a l l y  used  However, the p o t e n t i a l  that  the r e s u l t s w i l l be i n f o r m a l l y used o u t s i d e o f the context of the study's scope, assumptions  and  methodology, t o c o n s c i o u s l y or s u b - c o n s c i o u s l y add to a case f o r a pre-determined course of a c t i o n s t i l l  exists.  P o l i c y makers and m u n i c i p a l s t a f f s h o u l d c o n t i n u a l l y assess the r e l i a b i l i t y of the i n f o r m a t i o n on which t h e i r p e r s o n a l c o n v i c t i o n s r e g a r d i n g the r a t i o of revenue expenditure i n d i f f e r e n t 4.1.8  of  l a n d use c a t e g o r i e s i s based.  The L i m i t a t i o n s of Expenditure-Revenue A n a l y s i s , and of the P a r t i c u l a r Expenditure-Revenue Study Should Be C l e a r l y Documented and Presented Along w i t h the Study's R e s u l t s Perhaps  its  to  t h i s case study's g r e a t e s t s t r e n g t h i s i n  documentation  of the scope, s t r e n g t h s and weaknesses  expenditure-revenue  scope, assumptions The dangers  a n a l y s i s , as w e l l as of the  and methodology of the case study.  of u s i n g the study's r e s u l t s out of the  88 context o f the study's l i m i t a t i o n s were emphasized i n both w r i t t e n and v e r b a l p r e s e n t a t i o n o f the r e s u l t s . The r o l e o f the study's r e s u l t s i n p l a n n i n g and p o l i c y f o r m u l a t i o n was a l s o d i s c u s s e d t o ensure t h a t those who were i n v o l v e d i n p o l i c y f o r m u l a t i o n understood the narrow f o c u s o f expenditure-revenue t h i s c a r e f u l documentation  analysis.  Through  and d i s c u s s i o n o f the study's  l i m i t a t i o n s , the c o n s u l t a n t made sure t h a t the t a s k o f i n t e r p r e t a t i o n o f the r e s u l t s was l e f t  to individuals  who had an u n d e r s t a n d i n g o f the l i m i t a t i o n s o f expenditure-revenue  a n a l y s i s , and the study  itself.  As the r e s o u r c e s a v a i l a b l e t o the study were extremely l i m i t e d , the study methodology made e x t e n s i v e use o f s h o r t - c u t methods i n order t o i d e n t i f y the e x p e n d i t u r e and revenue different  t h a t c o u l d be a s s o c i a t e d w i t h  l a n d use c a t e g o r i e s .  methodology and assumptions  The l i m i t a t i o n s o f the  used were, however, c l e a r l y  i d e n t i f i e d and documented a l o n g with the r e s u l t s . The o n l y shortcoming i n the documentation  o f the  study was i n the f a i l u r e o f the study t o p r e s e n t d e t a i l e d working notes, from which the accuracy o f a l l the c a l c u l a t i o n s i n v o l v e d i n the study c o u l d be assessed.  As mentioned  i n S e c t i o n 4.1.1 e r r o r s i n  c a l c u l a t i o n were d e t e c t e d i n the documented m a t e r i a l ; i t would be u s e f u l t o e v a l u a t e the accuracy o f other undocumented c a l c u l a t i o n s i n v o l v e d i n t h i s  study.  89 In summary, the C i t y of North Vancouver case study d e a l t w e l l w i t h the c o n t e x t u a l o u t l i n e d i n the p r e v i o u s  c r i t e r i a t h a t were  chapter:  the  undertaken by an o b j e c t i v e a n a l y s t who  study  was  had  nothing  g a i n or l o s e through the study's r e s u l t s ; the l i m i t a t i o n s were w e l l documented and  to  study's  discussed;  and  the  r e s u l t s have not been f o r m a l l y used without c o n s i d e r a t i o n of the  study's scope, assumptions  methodology(4).  The  m e t h o d o l o g i c a l c r i t e r i a were l e s s  well dealt with:  inaccuracies  observed; and considered  two  i n the  and  study were  r e l e v a n t sources of revenue were not  i n the a n a l y s i s .  The  case study f a i l e d  also  to meet the m e t h o d o l o g i c a l c r i t e r i a t h a t are c e n t r a l to the  q u a l i t y of the a l l o c a t i o n d e c i s i o n s t h a t were  d e f i n e d and, results.  t h e r e f o r e , the  q u a l i t y of the  study's  A l l o c a t i o n d e c i s i o n s were o f t e n based on  l i m i t e d and municipal  a  academic r a t h e r than p r a c t i c a l knowledge of  functions.  d e c i s i o n s was  not  The  rationale for a l l o c a t i o n  always d e f e n s i b l e ; the c h o i c e  a l l o c a t i o n d e c i s i o n s was  of  sometimes made on the b a s i s  convenience r a t h e r than on d e f e n s i b i l i t y .  The  of  failure  to deal w e l l w i t h these m e t h o d o l o g i c a l c r i t e r i a i s only p a r t l y the f a u l t of the a n a l y s t study.  i n v o l v e d i n t h i s case  These c r i t e r i a address the areas of e x p e n d i t u r e -  revenue a n a l y s i s that are c o n c e p t u a l l y methodologically  difficult  to deal w i t h .  and These  criteria  c o u l d , however, have been more s a t i s f a c t o r i l y d e a l t with  90  i f more time had been a v a i l a b l e , and i f the study had involved a cooperative departments. has be  e f f o r t between a l l m u n i c i p a l  As the study now stands, too l i t t l e  time  been i n v e s t e d i n t o the study t o a l l o w the r e s u l t s to f o r m a l l y , or i n f o r m a l l y , u s e f u l i n p o l i c y  formulation. A f i n a l point regarding the c o n s u l t a n t  t h i s case study, i s t h a t  s u b s t i t u t e d the term  "cost-revenue  a n a l y s i s " f o r the term "expenditure-revenue a n a l y s i s . The  use o f the term "cost-revenue" t o d e s c r i b e the  general  methodology on which t h i s t h e s i s f o c u s e s i s  inconsistent. and  The word " c o s t " i m p l i e s t h a t  out-going  in-coming monies have been compared, and the  d i f f e r e n c e between the two c a l c u l a t e d ; t h i s d i f f e r e n c e would r e p r e s e n t be n e g a t i v e municipal other  the c o s t t o the m u n i c i p a l i t y  or a p o s i t i v e v a l u e ,  deficit  representing  or s u r p l u s r e s p e c t i v e l y ) .  ( i t could a On the  hand "revenue" r e f e r s t o in-coming monies, w i t h no  assessment o f how these d i f f e r from o u t - g o i n g monies. It  would be more c o n s i s t e n t t o use the term e x p e n d i t u r e -  revenue a n a l y s i s , or a l t e r n a t i v e l y "cost a n a l y s i s " when formulating  the study  title.  91  4.2  C i t y o f Vancouver - Expenditure-Revenue  4.2.1  Analysis  A l l C a l c u l a t i o n s I n v o l v e d i n the Study Should Accurate  Be  The c a l c u l a t i o n s i n v o l v e d i n the C i t y of Vancouver case study were performed by a computer. microcomputer  a l g o r i t h m ( 5 ) was  A  developed to t a b u l a t e the  d i s t r i b u t i o n o p t i o n s s p e c i f i e d by the  different  p a r t i c i p a n t s / g r o u p s and t o c a l c u l a t e the r e s u l t a n t revenue-expenditure category.  r a t i o s a s s o c i a t e d w i t h each l a n d use  The use of a computerized methodology g r e a t l y  decreases the time requirement  of an  expenditure-revenue  study, and f a c i l i t a t e s the e v a l u a t i o n of the accuracy of the c a l c u l a t i o n s i n v o l v e d i n the study. The a l g o r i t h m used i n the study was  checked f o r  accuracy and no i n a c c u r a c i e s were found i n the a l g o r i t h m or i n the r e s u l t a n t c a l c u l a t i o n of the e x p e n d i t u r e and revenue use.  a s s o c i a t e d w i t h d i f f e r e n t c a t e g o r i e s of l a n d  The  i n f o r m a t i o n f e d i n t o the LOTUS program  was  not, however, checked f o r accuracy; t h i s i s a p o t e n t i a l source of e r r o r t h a t c o u l d be r e f l e c t e d i n the study results. The use of a computerized methodology not o n l y i n c r e a s e s the speed at which the c a l c u l a t i o n s are c a r r i e d out, and s i m p l i f i e s the e v a l u a t i o n of the accuracy of those c a l c u l a t i o n s , but i t i n c r e a s e s the f l e x i b i l i t y of the study. r e s u l t s to d i f f e r e n t  The s e n s i t i v i t y o f the  d i s t r i b u t i o n o p t i o n s , or  different  92 a n a l y s t s o p i n i o n s can be e a s i l y observed and  compared.  U n f o r t u n a t e l y , the C i t y of Vancouver case study d i d not e x p l o i t the f l e x i b i l i t y potential.  of the methodology to i t s f u l l  Only the s e n s i t i v i t y of the r e s u l t s to  d i f f e r e n t group backgrounds ( f i n a n c e v e r s u s p l a n n i n g ) was  e x p l o r e d ; the s e n s i t i v i t y of the study's r e s u l t s to  different  i n d i v i d u a l s backgrounds and o p i n i o n s was  explored.  Had  such a n a l y s e s been undertaken,  have p r o v i d e d u s e f u l i n f o r m a t i o n f o r the and e v a l u a t i o n of the study's 4.2.2  not  they would  interpretation  results.  The Study Should Consider A l l Sources M u n i c i p a l Expenditure and Revenue  of  The C i t y of Vancouver case study c o n s i d e r e d a l l r e l e v a n t sources o f expenditure and revenue.  The  study  made use of a breakdown of the m u n i c i p a l budget which i n c l u d e d 20 items of expenditure and revenue(6).  16 items of  As i n the C i t y of North Vancouver  study, s c h o o l expenditure and revenue, expenditure and revenue,  case  indirect  and p r i v a t e expenditure  and  revenue a s s o c i a t e d with m u n i c i p a l f u n c t i o n s were e x c l u d e d from the a n a l y s i s ; as d i s c u s s e d b e f o r e , these e x c l u s i o n s do not r e p r e s e n t weaknesses i n the case study. 4.2.3  A l l M u n i c i p a l Departments Should Cooperate i n Undertaking a M u n i c i p a l Expenditure-Revenue Analysis Two  of  m u n i c i p a l departments were i n v o l v e d i n the  Vancouver case study.  The  two  departments were  City  93 chosen t o be i n v o l v e d because o f t h e i r w i l l i n g n e s s t o p a r t i c i p a t e , and because they have r e g u l a r c o n t a c t  with  a broad segment o f the m u n i c i p a l i t y ' s o r g a n i z a t i o n , one with a f i n a n c i a l p e r s p e c t i v e , perspective.  the other w i t h  a l a n d use  T h i s combination seemed a p p r o p r i a t e  i n q u i r y i n t o the d i s t r i b u t i o n o f expenditures  f o r an  and  revenues a c r o s s  different  1986).  department c o u l d , however, c l a i m a  Neither  l a n d use c a t e g o r i e s ( H e i k k i l a ,  d e t a i l e d e x p e r t i s e f o r each item o f expenditure revenue s u b j e c t e d  to this analysis.  an aggregate overview o f the f i s c a l  or  Each department had dimensions o f urban  l a n d use p a t t e r n s , r a t h e r than a d e t a i l e d u n d e r s t a n d i n g of m u n i c i p a l  f u n c t i o n s and the expenditure  a s s o c i a t e d with The  and revenue  them.  g e n e r a l i z e d , r a t h e r than s p e c i f i c background o f  the p a r t i c i p a n t s i s l i k e l y allocation decisions.  t o be r e f l e c t e d i n t h e i r  The p a r t i c i p a n t s d i d not have a  d e t a i l e d u n d e r s t a n d i n g o f many m u n i c i p a l thereby making i t d i f f i c u l t expenditure  functions,  t o a c c u r a t e l y a l l o c a t e the  and revenue a s s o c i a t e d with these  functions  to l a n d use c a t e g o r i e s .  A l l o c a t i o n d e c i s i o n s were based  on assumptions r e g a r d i n g  the a c t i v i t i e s t h a t  for  different  items o f expenditure  accounted  and revenue.  Some  i n f o r m a t i o n was provided, t o the p a r t i c i p a n t s i n v o l v e d i n the  study through the a l l o c a t i o n o p t i o n s  These a l l o c a t i o n o p t i o n s p r o v i d e d  (see Table I I ) .  f a c t u a l i n f o r m a t i o n on  a number o f parameters ( f o r example: p r o p e r t y  v a l u e s by  94  l a n d use category; g e n e r a l purposes taxes by l a n d use c a t e g o r y ; and employment by l a n d use c a t e g o r y ) which are u s e f u l i n b r e a k i n g down expenditure and revenue among l a n d use c a t e g o r i e s .  The p r o v i s i o n o f a d d i t i o n a l  i n f o r m a t i o n on which p a r t i c i p a n t s c o u l d base t h e i r a l l o c a t i o n d e c i s i o n s would have been u s e f u l ; i n f o r m a t i o n on the breakdown expenditure  o f components  i n c l u d e d i n each item o f  and revenue ( f o r example, the components  making up expenditure on g e n e r a l government) would have been p a r t i c u l a r l y u s e f u l t o p a r t i c i p a n t s who had o n l y a l i m i t e d understanding  o f c e r t a i n budget  items.  The extent t o which the a l l o c a t i o n d e c i s i o n s reflect  a c t u a l expenditure and revenue a s s o c i a t e d w i t h  different  l a n d use c a t e g o r i e s would have been i n c r e a s e d ,  had m u n i c i p a l s t a f f from a l l m u n i c i p a l departments been i n v o l v e d i n the study.  As the r e s u l t s o f the study now  stand, they r e p r e s e n t the views o f m u n i c i p a l w i t h a g e n e r a l and aggregate  official  knowledge o f m u n i c i p a l  f u n c t i o n s and o f expenditures and revenues a s s o c i a t e d w i t h these f u n c t i o n s .  The q u a l i t y o f the r e s u l t s would  have been improved had m u n i c i p a l o f f i c i a l s w i t h a d e t a i l e d knowledge o f each item o f expenditure and revenue (or sub-items o f expenditure and revenue) been i n c o r p o r a t e d i n t o the a n a l y s i s .  95 4.2.4  The D e f i n i t i o n of Land Use Be Narrow and S p e c i f i c The  C h a r a c t e r i s t i c s Should  C i t y of Vancouver case study c o n s i d e r e d  revenue-expenditure r a t i o a s s o c i a t e d with  the  s i x land  use  c a t e g o r i e s ; these c a t e g o r i e s c o n s i s t e d of s i n g l e f a m i l y residential,  other  r e s i d e n t i a l , commercial  industrial  l a n d use,  land.  d e f i n i t i o n of these l a n d use  The  and  as w e l l as vacant and  tax exempt  c a t e g o r i e s were  based upon B.C.A.A. d e f i n i t i o n s of each l a n d use, were m o d i f i e d The  by the C i t y ' s use  code d e f i n i t i o n .  breakdown of r e s i d e n t i a l  l a n d use  i n t o two  c a t e g o r i e s , based upon d e n s i t y of development, the p o t e n t i a l u s e f u l n e s s formulation.  The  commercial and  the u t i l i t y of these r e s u l t s .  increases  industrial defined;  The  land  this  use  decreases  C i t y of Vancouver  case study i s the only case study t h a t c o n s i d e r s and  sub-  of the study r e s u l t s i n p o l i c y  c a t e g o r i e s are, however, b r o a d l y  expenditure  but  revenue a s s o c i a t e d w i t h vacant  the  land;  t h i s adds an i n t e r e s t i n g dimension to the a n a l y s i s . Another category  t h i s study c o n s i d e r s  l a n d ; the f i n a n c e and p l a n n i n g r a t i o s f o r t h i s l a n d category suggesting perceptions  revenue-expenditure differed greatly,  t h a t the departments had o f the composition  T h i s category  i s tax exempt  differing  of tax exempt p r o p e r t i e s .  seems to be an a c c o u n t i n g  r a t h e r than a l a n d use  category,  designation  which leads H e i k k i l a  (1986) to suggest t h a t i t should be  subsumed w i t h i n  96  other the  categories  o f l a n d use i n f u t u r e a p p l i c a t i o n s o f  study. Of the t h r e e case s t u d i e s examined i n t h i s t h e s i s ,  the  l a n d use c a t e g o r i e s used i n t h i s case study are most  narrow and s p e c i f i c ; however, no c l e a r d e f i n i t i o n o f the c h a r a c t e r i s t i c s o f the d i f f e r e n t l a n d use c a t e g o r i e s was ever p r o v i d e d  t o the p a r t i c i p a n t s i n the study.  This  case study amended the B.C.A.A. d e f i n i t i o n o f l a n d use c a t e g o r i e s by the C i t y ' s own use code d e f i n i t i o n without d e s c r i b i n g the r e s u l t i n g d e f i n i t i o n s . therefore,  It i s likely,  t h a t d i f f e r e n t p a r t i c i p a n t s based t h e i r  a l l o c a t i o n d e c i s i o n s on d i f f e r i n g p e r c e p t i o n s c h a r a c t e r i s t i c s o f the l a n d use c a t e g o r i e s . particularly  l i k e l y with respect  commercial and i n d u s t r i a l whether l i g h t  o f the This i s  t o the d e f i n i t i o n o f  l a n d use;  i t i s not c l e a r  i n d u s t r i a l a c t i v i t i e s should be i n c l u d e d  i n the commercial or i n d u s t r i a l  l a n d use c a t e g o r y .  The  f a i l u r e o f the study t o make the d e f i n i t i o n s o f each l a n d use c a t e g o r y c l e a r both t o the p a r t i c i p a n t s and t o persons who have access t o the study r e s u l t s , s e v e r l y decreases the u t i l i t y o f the study's r e s u l t s . 4.2.5  Assumptions and Short-Cut Methods Used i n the Study Should Be D e f e n s i b l e  The  and C l e a r l y Documented  documentation that accompanies the d i s c u s s i o n  of t h i s case study's r e s u l t s was l i m i t e d t o a d e s c r i p t i o n o f the methodology used i n the case study. The  contextual  and m e t h o d o l o g i c a l assumptions  involved  97  i n t h i s methodology were not d e s c r i b e d The  or d i s c u s s e d .  impact o f the p a r t i c i p a n t s ' p e r s o n a l  biases  p e r c e p t i o n s and  on the r e s u l t s o f the study was a l s o not  discussed. The  methodology i n v o l v e d i n t h i s study made use o f  municipal and  officials'  estimates regarding  the expenditure  revenue a s s o c i a t e d w i t h a p a r t i c u l a r f u n c t i o n  should be a l l o c a t e d t o each l a n d use c a t e g o r y . officials'  The  e s t i m a t e s were based on e i t h e r i n d i v i d u a l or  group assumtions r e g a r d i n g and  that  the p r o p o r t i o n  the nature o f the f u n c t i o n  o f the expenditure or revenue  item  r e l a t e d t o t h a t f u n c t i o n t h a t should be a l l o c a t e d t o i d e n t i f i e d l a n d use c a t e g o r i e s .  The accuracy and  d e f e n s i b i l i t y o f these assumptions r e f l e c t  the l e v e l o f  u n d e r s t a n d i n g ( i n d i v i d u a l or group) the p a r t i c i p a n t ( s ) had  o f each m u n i c i p a l  f u n c t i o n , and the e x p e n d i t u r e and  revenue a s s o c i a t e d w i t h t h a t f u n c t i o n .  Unfortunately,  the p a r t i c i p a n t s ' l e v e l o f knowledge r e g a r d i n g f u n c t i o n s was o f t e n g e n e r a l  and vague.  municipal  Allocation  d e c i s i o n s were, t h e r e f o r e , based on assumptions t h a t were not backed by a d e t a i l e d u n d e r s t a n d i n g o f the municipal  functions.  Some o f these assumptions may have  r e f l e c t e d r e a l i t y and, t h e r e f o r e , been d e f e n s i b l e , but it  i s l i k e l y t h a t many o f the assumptions would have  been d i f f e r e n t had the p a r t i c i p a n t s had an i n t i m a t e and d e t a i l e d knowledge o f a l l m u n i c i p a l  functions.  98 Although the d i s t r i b u t i o n o p t i o n s by which each item o f e x p e n d i t u r e and revenue were a l l o c a t e d to the l a n d use c a t e g o r i e s are documented, the r a t i o n a l e f o r the d i s t r i b u t i o n o p t i o n i s not documented. it  difficult  assumptions accurate. of  T h i s makes  t o assess the extent to which the used i n the study are d e f e n s i b l e  Given the l i m i t e d background  and  and e x p e r i e n c e  the study p a r t i c i p a n t s i n many of the m u n i c i p a l  f u n c t i o n s addressed by t h i s t h e s i s , i t i s u n l i k e l y  that  the r e s u l t s are p a r t i c u l a r i l y a c c u r a t e or u s e f u l i n policy formulation.  The study would have b e n e f i t t e d  from the i n c l u s i o n of m u n i c i p a l o f f i c i a l s i n t i m a t e l y i n v o l v e d w i t h each municpal  who  were  f u n c t i o n covered  i n the study. 4.2.6  The A n a l y s t s I n v o l v e d i n the Study Should Have Nothing t o Gain or Lose From the R e s u l t s of the Study The m o t i v a t i n g f o r c e s f o r t h i s study suggest  the study was interest  undertaken  as a r e s u l t of a g e n e r a l  i n the expenditure and revenue  associated with d i f f e r e n t than f o r the purpose  that  t h a t c o u l d be  l a n d use c a t e g o r i e s ,  rather  of making a case f o r any p r e -  determined course of a c t i o n .  The methodology used i n  t h i s case study i n v o l v e d e s t a b l i s h i n g a group  consensus  i n d e f i n i n g the a l l o c a t i o n d e c i s i o n , thereby making i t difficult  f o r any p a r t i c i p a n t to c o n s i s t e n t l y  the a l l o c a t i o n d e c i s i o n .  determine  In order to i n f l u e n c e the  r e s u l t s of the a n a l y s i s , a p a r t i c i p a n t would have to  c o n s i s t e n t l y persuade other p a r t i c p a n t s t h a t h i s / h e r s u g g e s t i o n s were r e a s o n a b l e .  The  o n l y s i t u a t i o n where  t h i s i s l i k e l y to occur i s where one  of the p a r t i c i p a n t s  of the group i s dominant and the remaining are w i l l i n g t o adopt a group consensus.  participants  the dominant p a r t i c p a n t ' s views as Given the e x p e r i e n c e , h e i r a c h y  i n t e r e s t of the membership of both groups,  and  i t is  u n l i k e l y t h a t t h i s would have o c c u r r e d . The manner i n which a l l o c a t i o n d e c i s i o n s were d e f i n e d a l s o l i m i t s the extent t o which a n a l y s t s c o u l d c o n s c i o u s l y i n f l u e n c e the  individual study's  r e s u l t s ; p a r t i c i p a n t s d i d not d i r e c t l y s e l e c t a f i n a l d i s t r i b u t i o n o p t i o n f o r each item of expenditure revenue.  Instead, the p a r t i c i p a n t s  and  collectively  s e l e c t e d r u l e s upon which the a l l o c a t i o n d e c i s i o n based.  was  A microcomputer a l g o r i t h m then used the r u l e s to  t a b u l a t e the r e s u l t i n g d i s t r i b u t i o n of expenditure  and  revenue. Given the u n d e r l y i n g reasons f o r which the was  undertaken,  study  and the methodology i n which a l l o c a t i o n  d e c i s i o n s were made, i t i s u n l i k e l y t h a t r e s u l t s of the study were manipulated i n d i v i d u a l b i a s e s or 4.2.7  to r e f l e c t  participant's  objectives.  The R e s u l t s of the Study Should Be Used W i t h i n the Context of the Study's Scope, Assumptions and Methodology The  r e s u l t s of t h i s case study have not been  f o r m a l l y used i n p o l i c y f o r m u l a t i o n , i n f a c t ,  the  100 r e s u l t s of the study have not been p r e s e n t e d to m u n i c i p a l p o l i c y makers.  Only those m u n i c i p a l  officials  who  p a r t i c i p a t e d i n the study were aware t h a t the  was  b e i n g undertaken;  some of the o f f i c i a l s  study  who  p a r t i c i p a t e d i n the study were not shown the study results.  The  study r e s u l t s were not f o r m a l l y  c o n s o l i d a t e d as i t was  hoped that a t h i r d  department,  the Manager's O f f i c e , would be i n c l u d e d i n the  analysis;  however, b e f o r e the Manager's O f f i c e c o u l d p a r t i c i p a t e i n the study, the study c o o r d i n a t o r l e f t the C i t y of Vancouver, and the study was The  prematurely  concluded.  r e s u l t s of the Finance and P l a n n i n g  consensus  d i s t r i b u t i o n s were computed, and they were examined by some of the p a r t i c i p a n t s t h a t were p a r t i c u l a r i l y i n t e r e s t e d i n the r e s u l t s .  The p o t e n t i a l  does,  t h e r e f o r e , e x i s t f o r the r e s u l t s to be used o u t s i d e of t h e i r context and l i m i t a t i o n s .  This i s p a r t i c u l a r i l y  t r u e g i v e n t h a t the p a r t i c i p a n t s i n the study were g i v e n little  i n t r o d u c t i o n t o the technique of e x p e n d i t u r e -  revenue a n a l y s i s and the l i m i t a t i o n s a s s o c i a t e d w i t h t h i s technique. of  changing  assessments  The r e s u l t s c o u l d have had the  effect  or r e i n f o r c i n g these p a r t i c i p a n t s of the expenditure and revenue a s s o c i a t e d  with d i f f e r e n t  l a n d use c a t e g o r i e s .  Some of the study  p a r t i c i p a n t s are i n the p o s i t i o n to i n f l u e n c e m u n i c i p a l d e c i s i o n s (through recommendations to the m u n i c i p a l c o u n c i l ) ; the study r e s u l t s c o u l d , t h e r e f o r e , be used  as  101  an i n f o r m a l b a s i s on which recommendations are formulated. 4.2.8  The L i m i t a t i o n s of Expenditure-Revenue A n a l y s i s , and of the P a r t i c u l a r Expenditure-Revenue Study Should Be C l e a r l y Documented and Presented Along w i t h the Study's R e s u l t s Although the need f o r m e t h o d o l o g i c a l improvements  i n expenditure-revenue  a n a l y s i s i s acknowledged a l o n g  w i t h the p r e s e n t a t i o n of the r e s u l t s , t h e r e i s l i t t l e d i s c u s s i o n of the i s s u e s and problems encountered i n expenditure-revenue may  impact  a n a l y s i s and how  the study's r e s u l t s .  these problem  areas  Warnings r e g a r d i n g the  s t a t i c and o b j e c t i v e nature of the r e s u l t s were i n c l u d e d i n a b r i e f e v a l u a t i o n of the methodology; however, the impact  of these short-comings  on the u s e f u l n e s s of the  study's r e s u l t s i n p o l i c y f o r m u l a t i o n was The documentation  of the study f a i l s  r e a d e r s w i t h an u n d e r s t a n d i n g of the scope l i m i t a t i o n s of expenditure-revenue  not d i s c u s s e d . to p r o v i d e and  a n a l y s i s , and the  m a n i f e s t a t i o n of the technique's l i m i t a t i o n s i n the case study methodology and r e s u l t s ; t h i s g r e a t l y i n c r e a s e s the p o t e n t i a l t h a t the r e s u l t s w i l l the c o n s t r a i n t s of t h e i r  be used o u t s i d e of  limitations.  The g e n e r a l methodology used i n the study i s w e l l described;  however, the c o n t e x t u a l and m e t h o d o l o g i c a l  assumptions  i n v o l v e d i n t h i s methodology are not  discussed.  The  identified.  scope of the study i s a l s o not  The study documentation  fails  to a l e r t  1 02  potential  r e a d e r s t o the context i n which the  methodology and r e s u l t s s h o u l d be e v a l u a t e d . i n c r e a s e s the r i s k t h a t the r e s u l t s w i l l m i s l e a d i n g manner. decision  This  be used i n a  Given the nature of the m u n i c i p a l  making p r o c e s s and the f a c t t h a t the r e s u l t s of  the study were not p r e s e n t e d to m u n i c i p a l  officials  responsible for policy decisions, i t i s unlikely  that  the study r e s u l t s w i l l be f o r m a l l y used i n p o l i c y formulation.  However, the p o t e n t i a l  does e x i s t f o r  i n f o r m a l use of the study's r e s u l t s . The f a i l u r e to document the l i m i t a t i o n s of expenditure-revenue  analysis,  and the context i n which  the study's r e s u l t s s h o u l d be i n t e r p r e t e d  and  used,  r e p r e s e n t s a weakness i n the C i t y of Vancouver study.  I t i s l e f t up to i n d i v i d u a l s who  u n d e r s t a n d i n g of the l i m i t a t i o n s of analysis interpret useful  may  case  have no  expenditure-revenue  i n g e n e r a l , or the study i n p a r t i c u l a r , to the r e s u l t s and decide whether they would be  as a b a s i s f o r d e t e r m i n i n g l a n d use  policy  d e c i s i o n s ; t h i s i n c r e a s e s the l i k e l i h o o d t h a t r e s u l t s w i l l be used i n a m i s l e a d i n g  the  way.  In summary, the major short-comings  of the C i t y of  Vancouver case study concern i t s f a i l u r e to c o n s u l t a broad spectrum  of m u n i c i p a l o f f i c i a l s w i t h a  detailed  knowledge of s p e c i f i c m u n i c i p a l f u n c t i o n s , and to document the assumptions methodology.  The  and l i m i t a t i o n s i n v o l v e d i n t h e  study's r e l i a n c e  on m u n i c i p a l  1 03  o f f i c i a l s w i t h only a g e n e r a l municipal  functions  knowledge o f many  i n making the a l l o c a t i o n d e c i s i o n s  i n v o l v e d i n the methodology, b r i n g s usefulness  o f the study's r e s u l t s i n t o q u e s t i o n .  the o f f i c i a l ' s municipal  the r e l i a b i l i t y and  l a c k o f knowledge r e g a r d i n g  functions, i t i s l i k e l y  Due t o  many  t h a t the assumptions  on which a l l o c a t i o n d e c i s i o n s were based were not always accurate  and d e f e n s i b l e .  evaluate  the accuracy o f the a l l o c a t i o n d e c i s i o n s , and  the  I t i s , however, i m p o s s i b l e t o  assumptions on which the d e c i s i o n s were based, as  the r a t i o n a l e f o r the c h o i c e not  of a l l o c a t i o n decisions i s  documented. In a d d i t i o n t o f a i l i n g  t o document the a l l o c a t i o n  d e c i s i o n s on which items o f expenditure and revenue were assigned for  t o l a n d use c a t e g o r i e s , the a n a l y s t  the study f a i l e d  study.  responsible  t o document the l i m i t a t i o n s o f the  This increases  the l i k e l i h o o d t h a t the r e s u l t s  may at some time be used without c o n s i d e r a t i o n o f the study's l i m i t a t i o n s . The  computerization  represents only  o f the study methodology  an important s t r e n g t h  o f the case study. N o t  does the computerized methodology f a c i l i t a t e the  e v a l u a t i o n o f the accuracy o f the c a l c u l a t i o n s i n v o l v e d i n the study, but i t o f f e r s the case study a l e v e l o f flexibility The  that i s i n f e a s i b l e i n manual methodologies.  impact o f d i f f e r i n g a l l o c a t i o n d e c i s i o n s on the  r e s u l t i n g revenue-expenditure r a t i o can be e a s i l y  1 04  assessed; t h i s i n t u r n a l l o w s f o r the assessment of the d i f f e r i n g backgrounds of the o f f i c i a l s the study are r e f l e c t e d i n the study  involved in  results.  U n f o r t u n a t e l y , t h i s case study d i d not e x p l o i t flexibility Other  how  of i t s methodology to the f u l l e s t  the potential.  s t r e n g t h s of t h i s case study i n c l u d e the  completeness  of the sources of expenditure and revenue  t h a t were c o n s i d e r e d , and the use of numerous c a t e g o r i e s of l a n d use to which expenditure and revenue were a s s i g n e d (these c a t e g o r i e s were not, however, e x p l i c i t l y d e f i n e d to the o f f i c i a l s who  p a r t i c i p a t e d i n the study  or to p o t e n t i a l u s e r s of the  results).  4.3 4.3.1  C i t y o f New  Westminster - Cost-Revenue  Study  A l l C a l c u l a t i o n s I n v o l v e d i n the Study Should Accurate As the working  c a l c u l a t i o n s i n v o l v e d i n the  are not i n c l u d e d i n the m u n i c i p a l document  Be  study  describing  the study methodology and r e s u l t s i t i s i m p o s s i b l e to e v a l u a t e the accuracy of a l l the c a l c u l a t i o n s i n v o l v e d i n the a n a l y s i s .  However, from the documentation  that  i s p r o v i d e d a m e t h o d o l o g i c a l e r r o r i s suspected(7) i n the c a l c u l a t i o n of the revenue-expenditure each l a n d use c a t e g o r y .  ratio for  In order to e x p l a i n the  s u s p e c t e d source of t h i s e r r o r i t i s necessary to review the methodology i n v o l v e d i n t h i s case E x p e n d i t u r e and revenue were f i r s t  study.  a l l o c a t e d to a s e t of  1 05  v a r i a b l e s and the net expenditure/revenue  per d o l l a r of  each v a r i a b l e was c a l c u l a t e d by d i v i d i n g the t o t a l amount a l l o c a t e d t o t h a t v a r i a b l e by the t o t a l value.  E x p e n d i t u r e and revenue a s s o c i a t e d w i t h  l a n d use c a t e g o r y was then brought  variable each  together by  m u l t i p l y i n g the net expenditure/revenue  per d o l l a r o f  each v a r i a b l e by the t o t a l v a r i a b l e value i n each l a n d use c a t e g o r y .  In the case o f one v a r i a b l e ( t a x a b l e  v a l u e o f l a n d and improvements) the revenue per d o l l a r i n v o l v e d was m u l t i p l i e d by i n c o r r e c t v a l u e s ( a s s e s s e d v a l u e o f l a n d and improvements i n each l a n d use c a t e g o r y i n s t e a d o f t a x a b l e v a l u e o f l a n d and improvements i n each l a n d use c a t e g o r y ) when c a l c u l a t i n g the revenue a s s o c i a t e d w i t h each l a n d use c a t e g o r y . t h i s e r r o r on the f i n a l  The e f f e c t o f  r a t i o o f expenditure t o revenue  i s l i k e l y t o be extremely s m a l l ; however, the presence of even a s u s p e c t e d e r r o r decreases the r e l i a b i l i t y and u s e f u l n e s s o f the study's 1.3.2  results.  The Study Should Consider A l l Sources o f M u n i c i p a l Expenditure and Revenue  Making use o f the budget items i d e n t i f i e d i n the m u n i c i p a l i t y ' s 1971 and 1972 annual budgets,  this  case  study a l l o c a t e d expenditure and revenue f o r each year among 17 c a t e g o r i e s o f expenditure and 20 c a t e g o r i e s o f revenue(8).  A l l r e l e v a n t sources o f e x p e n d i t u r e and  revenue were c o n s i d e r e d i n the case  study.  1 06  The  study a l s o c o n s i d e r e d revenue c o l l e c t e d and  transferred i n f u l l  t o other government a u t h o r i t i e s ( f o r  example, revenue from and expenditure on s c h o o l s , nonm u n i c i p a l p a r k s , and h o s p i t a l s ) .  In these cases the  incoming monies equal the out-going monies, t h e r e f o r e , the impact  on the revenue-expenditure  t h e o r e t i c a l l y be c a n c e l l e d out.  ratios  should  However, i n some cases  incoming monies a s s o c i a t e d w i t h a government f u n c t i o n were a l l o c a t e d among l a n d use c a t e g o r i e s d i f f e r e n t l y from o u t - g o i n g monies a s s o c i a t e d w i t h the same f u n c t i o n . For example, c o l l e c t i o n s f o r other government a u t h o r i t i e s ( 9 ) were always a l l o c a t e d among l a n d use c a t e g o r i e s on the b a s i s o f a s s e s s e d v a l u e o f l a n d , improvements and machinery, w h i l e monies t r a n s f e r r e d t o other government a u t h o r i t i e s ( 1 0 ) were a l l o c a t e d by p o p u l a t i o n , s c h o o l p o p u l a t i o n or other v a r i a b l e s as determined  t o be a p p r o p r i a t e .  As a r e s u l t , these monies  have the c a p a c i t y t o a f f e c t the r e s u l t i n g revenuee x p e n d i t u r e r a t i o o f each l a n d use c a t e g o r y ( t h e e f f e c t w i l l be c a n c e l l e d over a l l l a n d use c a t e g o r i e s ) , even though i n r e a l i t y they have no impact  on m u n i c i p a l  expenditure and revenue a s s o c i a t e d w i t h the l a n d use categories.  Although  revenue-expenditure  the r e s u l t a n t  impact  on the  r a t i o o f each l a n d use c a t e g o r y i s  l i k e l y t o be extremely  s m a l l , i t would be p r e f e r a b l e  t h a t monies c o l l e c t e d and t r a n s f e r r e d i n f u l l  t o other  government a u t h o r i t i e s be excluded from t h i s and other  1 07  expenditure-revenue a n a l y s e s .  I f these t r a n s f e r s are  c o n s i d e r e d i n expenditure-revenue a n a l y s e s c a r e s h o u l d be taken t o ensure t h a t the in-coming and o u t - g o i n g component o f the t r a n s f e r are i d e n t i c a l l y among l a n d use 4.3-3  allocated  categories.  A l l M u n i c i p a l Departments Should Cooperate i n U n d e r t a k i n g a M u n i c i p a l Expenditure-Revenue Analysis T h i s case study was  Department  undertaken by the P l a n n i n g  o f the C i t y o f New  Westminster.  I t i s not  c l e a r from the documentation o f the study whether m u n i c i p a l departments were i n v o l v e d i n the Given t h a t no other m u n i c i p a l department were acknowledged  department of  study(11).  or  officials  i n the study documentation,  l i k e l y t h a t the p l a n n i n g department involved.  other departments  was  other  i t is  the o n l y  The degree o f i n f o r m a l involvement ( f o r example, i n p r o v i d i n g  i n f o r m a t i o n r e g a r d i n g the components o f d i f f e r e n t  budget  items) i s a l s o unknown. Without a knowledge o f the departments officials  and  i n v o l v e d i n the study i t i s d i f f i c u l t  to  assess the completeness o f the i n f o r m a t i o n and l e v e l of u n d e r s t a n d i n g on which a l l o c a t i o n d e c i s i o n s were based. Both o f these f a c t o r s impact the r e l i a b i l i t y study's  results.  of the  1 08  4.3-4  The D e f i n i t i o n o f Land Use C a t e g o r i e s Narrow and S p e c i f i c .  The  C i t y o f New Westminster case study a s s e s s e d the  revenue-expenditure r a t i o a s s o c i a t e d w i t h categories and  o f l a n d use:  industry.  four  houses; apartments; commerce;  The d e f i n i t i o n s and c h a r a c t e r i s t i c s o f  each l a n d use c a t e g o r y were not, the  Should Be  study documentation.  however, i d e n t i f i e d i n  Whether a t t a c h e d  and semi-  detached housing u n i t s were i n c l u d e d i n the houses or apartments c a t e g o r y i s u n c l e a r . documentation p r o v i d e s  S i m i l a r l y , the study  no i n s i g h t i n t o the boundry  between commercial and i n d u s t r i a l T h i s g r e a t l y decreases the value  l a n d use c a t e g o r i e s . o f the r e s u l t s and  t h e i r p o t e n t i a l i n l a n d use and t a x p o l i c y Although r e s i d e n t i a l  formulation.  l a n d use was broken down by  d e n s i t y o f development, the commercial and i n d u s t r i a l l a n d use c a t e g o r i e s  are b r o a d l y  defined;  as mentioned i n  r e l a t i o n the other  two case s t u d i e s , i t would have been  u s e f u l to consider  the expenditure and revenue  associated with sub-categories industrial 4.3.5  o f commercial and  l a n d use.  Assumptions and Short-Cut Methods Used i n the Study Should Be D e f e n s i b l e  and C l e a r l y Documented  In t h i s case study a l l o c a t i o n d e c i s i o n s were made on the b a s i s o f v a r i a b l e s which were assumed t o c l o s e l y reflect  the expenditure and revenue a s s o c i a t e d  different  l a n d use c a t e g o r i e s .  with  For example, expenditure  on f i r e , p o l i c e and j u s t i c e s e r v i c e s was assumed t o be  1 09  a s s o c i a t e d w i t h the a s s e s s e d v a l u e o f improvements i n each l a n d use c a t e g o r y .  T h i s i s a s h o r t - c u t method o f  a l l o c a t i o n which i s used when i t i s d i f f i c u l t  or too  time consuming t o assess the exact e x p e n d i t u r e and revenue a s s o c i a t e d w i t h d i f f e r e n t The  degree  study r e f l e c t  l a n d use c a t e g o r i e s .  t o which the v a r i a b l e s used i n t h i s  a c t u a l expenditure and revenue a s s o c i a t e d  w i t h the d i f f e r e n t  l a n d use c a t e g o r i e s (and a r e ,  therefore, defensible) i s d i f f i c u l t f a c t o r s are important  to evaluate.  Two  i n the s p e c i f i c a t i o n o f v a r i a b l e s  which a c c u r a t e l y r e f l e c t the break  down o f e x p e n d i t u r e  and revenue a s s o c i a t e d w i t h a m u n i c i p a l f u n c t i o n : the l e v e l o f u n d e r s t a n d i n g the o f f i c i a l  responsible for  s p e c i f y i n g the v a r i a b l e has r e g a r d i n g (a) the nature o f the m u n i c i p a l f u n c t i o n and (b) the e x p e n d i t u r e and revenue a s s o c i a t e d w i t h t h a t f u n c t i o n ; and the degree t o which items o f expenditure and revenue are broken down i n t o s u b - c a t e g o r i e s t o which a s i n g l e v a r i a b l e can be accurately applied.  As no documentation  i s p r o v i d e d on  who was r e s p o n s i b l e f o r choosing the v a r i a b l e s a s s o c i a t e d with d i f f e r e n t revenue,  items o f e x p e n d i t u r e and  i t i s i m p o s s i b l e t o d i s c u s s the l e v e l o f  u n d e r s t a n d i n g on which the d e c i s i o n s were based.  I f , as  suspected, the c h o i c e o f v a r i a b l e s was made o n l y by P l a n n i n g Department s t a f f , the l e v e l o f u n d e r s t a n d i n g r e g a r d i n g both the nature o f many m u n i c i p a l f u n c t i o n s and the expenditure and revenue a s s o c i a t e d w i t h those  11 0 functions budget  was  items  in nature.  number  addition,  o f budget  more f l e x i b i l i t y  well  budget  i n t h e manner  the reasons  given  of  to  making  for  services allocate  however,  transportation  categories decisions  is  were  variables always  were i n  the g e n e r a l  nature  of  considered,  all  nature  services  likely  of  of  The r e s u l t i n g  services  i n s t e a d of  rule.  seem  assessed  expenditure  of  between l a n d  of  on a  on  variables  breakdown  services  on  use  other  t o be d i f f e r e n t where  generalized allocation  might  i n each l a n d  are c o n s i d e r e d ,  item.  expenditure it  a r e b a s e d upon s u b - c a t e g o r i e s  on t r a n s p o r t a t i o n  budget  t h e e x p e n d i t u r e by t h e  on t r a n s p o r t a t i o n is  greater  t h e y were  The r e a s o n s  when t h e components  may be more a p p l i c a b l e . expenditure  applying  up t h e g e n e r a l  l a n d and i m p r o v e m e n t s  category;  allocation  and h a d t h e r e b e e n  in nature,  e x a m p l e , when t h e g e n e r a l  applicable  always  b u t may n o t have b e e n h a d t h e y b e e n  sub-items  transportation  The  broad  i n which v a r i a b l e s  d e f e n s i b l e when c o n s i d e r i n g  a p p l i e d to  value  item.  was  The  items.  i t e m s were g e n e r a l  items,  variable  t o be more d e f e n s i b l e h a d a  documented i n t h e s t u d y .  cases  For  budget  items been u s e d ,  a p p l i e d t o budget Although  were a p p l i e d were  a single  with a single  would appear  t o budget  t o be l i m i t e d and g e n e r a l i z e d .  to which v a r i a b l e s In  associated process  likely  use  allocation expenditure single  111  4-- 3 . 6  The A n a l y s t s I n v o l v e d i n the Study Should Have Nothing t o Gain or Lose from the R e s u l t s of the Study.  It  is difficult  Westminster  was  New-  case study a g a i n s t t h i s c r i t e r i o n as the  study documentation who  to e v a l u a t e the C i t y of  does not i n c l u d e a d e s c r i p t i o n of  i n v o l v e d i n the d e s i g n and implementation  analysis.  The documentation  of the  does, however, p r o v i d e a  reason f o r u n d e r t a k i n g the study which t o some extent r e f l e c t s on the o b j e c t i v i t y of the study. reasons f o r which the study was interest  One  undertaken was  of the to c r e a t e  i n m u n i c i p a l cost-revenue methods ( C i t y of  Westminster,  1974-).  New  T h i s reason i m p l i e s a l e v e l of  o b j e c t i v i t y i n the approach t o the study, which g i v e n the l i m i t a t i o n s of expenditure-revenue g e n e r a l , and the study i n p a r t i c u l a r ,  analysis i n i s a legitimate  reason f o r u n d e r t a k i n g a study of t h i s n a t u r e .  Despite  t h i s r a t i o n a l e f o r the study, the study f a i l e d t o i n c l u d e e i t h e r a p r a c t i c a l or t h e o r e t i c a l d i s c u s s i o n of the major i s s u e s i n v o l v e d i n expenditure-revenue analysis.  I n t e r e s t i n expenditure-revenue  analysis  was  g e n e r a t e d through the study; however, the study d i d little  to develop the technique or a p p l i c a t i o n of  expenditure-revenue 4.3.7  analysis.  The R e s u l t s of the Study Should Be Used W i t h i n the Context of the Study's Scope, Assumptions and Methodology It  is difficult  t o e v a l u a t e the extent to which the  study r e s u l t s have been used o u t s i d e of the context of  11 2  the study's scope, assumptions  and methodology w i t h i n  the t h i r t e e n y e a r s t h a t have passed s i n c e the study  was  undertaken.  hand  Such an e v a l u a t i o n would r e q u i r e f i r s t  o b s e r v a t i o n of both formal and i n f o r m a l p o l i c y f o r m u l a t i o n w i t h i n the C i t y of New  Westminster  s i n c e the  r e s u l t s were made a v a i l a b l e to d e c i s i o n makers, m u n i c i p a l s t a f f and the g e n e r a l p u b l i c .  There i s ,  however, evidence t h a t the study r e s u l t s have once, at l e a s t , p l a y e d a r o l e i n the f o r m u l a t i o n of p o l i c y . Walisser  (1978) r e f e r s t o an example where the  of t h i s study were, i n p a r t , used to propose moratorium  results  a  on the c o n s t r u c t i o n of s m a l l e r s i z e d housing,  based on the b e l i e f t h a t low p r i c e d housing was  not  s e l f - s u p p o r t i n g from a m u n i c i p a l cost-revenue perspecitve.  W a l l i s s e r suggests t h a t t h i s p r o p o s a l  was  unsupported by s u b s t a n t i v e r e s e a r c h . The documentation scope, assumptions  and d i s c u s s i o n of the study's  and methodology i s poor; t h i s  greatly  i n c r e a s e s the l i k e l i h o o d t h a t the r e s u l t s have been used o u t s i d e of the context of t h e i r  limitations.  c o n c l u s i o n of the case study suggests t h a t the  The results  of the study s h o u l d be used as a b a s i s on which to e v a l u a t e the f i n a n c i a l  i m p l i c a t i o n s of a l t e r n a t i v e  p o l i c i e s and p l a n s f o r the C i t y . s u g g e s t i o n s i n c e the documentation little  insight  T h i s i s a dangerous of the study p r o v i d e s  i n t o the l i m i t a t i o n s o f the study.  study documentation  The  does acknowledge t h a t the study i s  11 3  l i m i t e d i n scope i n that i t c o n s i d e r s o n l y a f i n a n c i a l p e r s p e c t i v e on s e r v i c e p r o v i s i o n ; t h a t the assumptions  however, the f a c t  and methodology i n v o l v e d i n the  a n a l y s i s , as w e l l as the impact  of these assumptions  methodology on the r e s u l t s , are not c l e a r l y  and  documented  along w i t h the r e s u l t s i n c r e a s e s the p o t e n t i a l t h a t  the  r e s u l t s w i l l be used ouside the context of the study's l i m i t a t i o n s i n the f o r m u l a t i o n of m i s l e a d i n g p o l i c y . 4.3.8  The L i m i t a t i o n s of Expenditure-Revenue A n a l y s i s and of the P a r t i c u l a r Expenditure-Revenue Study Should Be C l e a r l y Documented and Presented Along With the Study R e s u l t s Although the study documentation  the technique of expenditure-revenue  does mention  a n a l y s i s does have  l i m i t a t i o n s , the nature of the l i m i t a t i o n s and impact  that  their  on the u s e f u l n e s s of the technique are not  discussed.  S i m i l a r l y , the study  acknowledges t h a t the p a r t i c u l a r  documentation case study r e p r e s e n t s a  "modest b e g i n n i n g i n a complex s u b j e c t " ( C i t y of Westminster,  New  1974) but the l i m i t a t i o n s of the study were  not d i s c u s s e d .  A l t e r n a t i v e methodologies  and  their  e f f e c t s on the study r e s u l t s were a l s o not c o n s i d e r e d . The study documentation  merely a l e r t s r e a d e r s to the  p o s s i b i l i t y t h a t the study r e s u l t s may but does not g i v e any i n d i c a t i o n of how  not be  reliable,  the r e s u l t s  be a f f e c t e d by the study's l i m i t a t i o n s , or how  the  r e s u l t s s h o u l d be amended to take the l i m i t a t i o n s account.  may  into  In f a c t , d e s p i t e the presence of acknowledged  1 14  limitations  i t i s suggested that the r e s u l t s be used i n  policy formulation. The g e n e r a l methodology i n v o l v e d i n the case study i s a l s o not w e l l documented.  In order to understand  the  d e t a i l s of the methodology a reader must move step-bystep through the working m a t e r i a l p r o v i d e d i n the study documentation.  Even then the r a t i o n a l e  behind  certain  steps i s not c l e a r l y i l l u s t r a t e d or e x p l a i n e d ; i t i s left  up t o r e a d e r s t o guess why  c e r t a i n s t e p s were  taken. The case study f a i l s  to document the  limitations  i n v o l v e d g e n e r a l l y i n expenditure-revenue specifically  i n the study i t s e l f .  l e f t up t o i n d i v i d u a l s insight  who  may  i n t o the technique of  analysis,  and exposure  interpret  the study's r e s u l t s  are  useful  analysis  As a r e s u l t  have a v e r y  and  i t is  limited  expenditure-revenue  to the study methodology, t o and decide whether they  as a b a s i s f o r d e t e r m i n i n g l a n d use or  taxation policy. limitations  analysis,  The f a i l u r e t o document the  of both the technique of  expenditure-revenue  i n g e n e r a l , and the study i n p a r t i c u l a r  r e p r e s e n t s a weakness i n the C i t y of New  Westminster  case study. In summary, the C i t y of New highlights  the importance  study of t h i s n a t u r e .  Westminster  of d e t a i l e d  The poor  case study  documentation  documentation  in a  of the  study hampers both e v a l u a t i o n of the study methodology  1  and  c o n s i d e r a t i o n of the extent  to which the  study's  r e s u l t s are u s e f u l as a b a s i s f o r p o l i c y f o r m u l a t i o n . E v a l u a t i o n of the accuracy  of the c a l c u l a t i o n s i n v o l v e d  i n the study i s i m p o s s i b l e , c a l u l a t i o n s are not The  officials  were a l s o not  and  i n c l u d e d i n the study documentation  departments r e s p o n s i b l e f o r the  referenced  study  i n the study documentation,  thereby making i t d i f f i c u l t and  as a l l the working  to e v a l u a t e  the  objectivity  l e v e l of knowledge of those i n v o l v e d i n making  allocation decisions. The  f a i l u r e of the study to document  d e f i n i t i o n s of the l a n d use expenditure  and  the  c a t e g o r i e s to which  revenue were a l l o c a t e d , and  the  l i m i t a t i o n s o f both expenditure-revenue a n a l y s i s i n general,  and  the study i n p a r t i c u l a r ,  l i k e l i h o o d t h a t the r e s u l t s may formulation On  of i n a p p r o p r i a t e  increase  be used i n the  l a n d use p o l i c y .  the p o s i t i v e s i d e , t h i s study r e p r e s e n t s  concerted  e f f o r t to understand the f i s c a l  of l a n d use  the  a  implications  d e c i s i o n s , as w e l l as to generate i n t e r e s t  i n the development and  a p p l i c a t i o n of the technique of  expenditure-revenue a n a l y s i s .  1 16  FOOTNOTES  1.  The e f f e c t w i l l only be c a n c e l l e d out i f s i m i l a r assumptions were used f o r a l l o c a t i n g both expenditure and revenue a s s o c i a t e d with a m u n i c i p a l s e r v i c e t o the s p e c i f i e d l a n d use categories.  2.  The sources o f expenditure i n c l u d e d e x p e n d i t u r e s on: g e n e r a l government; p o l i c e p r o t e c t i o n ; f i r e p r o t e c t i o n ; law enforcement; p a r k i n g s e r v i c e s ; development and l i c e n c i n g s e r v i c e s ; other p r o t e c t i o n ; engineering; garbage c o l l e c t i o n and d i s p o s a l ; r e c r e a t i o n and community s e r v i c e s ; a p p r o p r i a t i o n s f o r r e s e r v e s and p r o v i s i o n s f o r allowances; t r a n s f e r s t o own r e s e r v e s ; t r a n s f e r s t o g e n e r a l c a p t i a l ; t r a n s f e r s t o j o i n t boards and committees; g r a n t s ; water supply; and sewage disposal. The sources o f revenue i n c l u d e d revenues from: p r o p e r t y tax; revenue s h a r i n g g r a n t s ; b u i l d i n g permit f e e s ; l o c a l improvement l e v i e s ; r e f u s e c o l l e c t i o n l e v i e s ; e l e c t r i c a l permit f e e s ; gas permit f e e s ; plumbing permit f e e s ; b u s i n e s s licence fees; vehicle licence fees; s t r a t a fees; b u i l d i n g inspection fees;rezoning fees; s i g n permit f e e s ; f a m i l y s u i t e f e e s ; s t r e e t occupancy f e e s ; l i q u o r tax; dog l i c e n c e f e e s ; r e n t ; m i s c e l l a n e o u s revenue; i n t e r e s t on taxes; p e n a l t i e s on taxes; t a x s a l e i n t e r e s t ; s e r v i c e charges; Canada A s s i s t a n c e Plan; revenue s h a r i n g (housing); revenue s h a r i n g ( p l a n n i n g ) ; emergency h e a l t h s e r v i c e revenue; emergency program revenue; j u s t i c e a d m i n i s t r a t i o n a d m i n i s t r a t i o n ; government e n t e r p r i s e s ; other l o c a l government revenue; storm sewage c o n n e c t i o n revenue; f i n e s and f e e s ( p r o v i n c i a l c o u r t ) ; f i n e s and f e e s (pound); f i n e s and fees ( p a r k i n g ) cemetry f e e s ; revenue from the assessment a u t h o r i t y ; revenue from the m u n i c i p a l f i n a n c e a u t h o r i t y ; revenue from the G.V.R.D.; revenue from B.C. T r a n s i t ; revenue from the U t i l i t y Company; s u r p l u s f o r r p r i o r y e a r s ; revenue from the G.V.H.D.; g r a n t s i n l i e u ; revenue from the water supply system; and revenue from the sewage system.  1 1 7  3.  The c o n s u l t a n t should a l s o be r e s p o n s i b l e f o r p r o v i d i n g m u n i c i p a l o f f i c i a l s w i t h background i n f o r m a t i o n on the i s s u e s and l i m i t a t i o n s i n v o l v e d i n expenditure-revenue a n a l y s i s .  4.  The r e s u l t s of the C i t y of North Vancouver study have not been f o r m a l l y used e i t h e r with or without c o n s i d e r a t i o n of the study's scope, assumptions and methodology.  5.  T h i s a l g o r i t h m was on an IBM PC.  6.  The sources of expenditure i n c l u d e : g e n e r a l government; f i r e p r o t e c t i o n ; other p r o t e c t i o n ; s t r e e t s ; p a r k i n g enforcement; s t r e e t l i g h t i n g ; sewers and p o l l u t i o n c o n t r o l ; scavenging and waste removal; waterworks; parks and r e c r e a t i o n - g e n e r a l ; parks and r e c r e a t i o n o p e r a t i o n s ; l i b r a r i e s ; c i v i c t h e a t r e s ; museum, p l a n e t a r i u m , a r t g a l l e r y ; other community services; health; l o c i a l services grants; s o c i a l p l a n n i n g ; l o c a l improvements debt charges; and p o l i c e .  developed u s i n g Lotus  1-2-3  The sources of revenue i n c l u d e d : g e n e r a l tax l e v y ; r e c e i p t s i n l i e u of taxes; p e n a l t i e s and i n t e r e s t ; b u s i n e s s taxes; p r o v i n c i a l government revenue s h a r i n g ; i n t e r e s t on s h o r t term investments; l i c e n c e f e e s ; r e n t a l s and taxes i n l i e u ; recreation/community s e r v i c e s ; p a r k i n g enforcement; m i s c e l l a n e o u s ; waterworks; and p r o p e r t y endowment fund, s u r p l u s r e s e r v e s and o u t s t a n d i n g commitments. 7.  The reason t h a t t h i s e r r o r i s only suspected, i s t h a t the a v a i l a b l e documentation does not a l l o w the s u s p i c i o n to be e i t h e r confirmed or disproved.  8.  The sources of expenditure i n c l u d e : g e n e r a l government; f i r e , p o l i c e and j u s t i c e ; p r o t e c t i v e i n s p e c t i o n s ; coroner, ambulance, pest and animal c o n t r o l ; t r a n s p o r t a t i o n s e r v i c e s ; sewage and r e f u s e ; comfort s t a t i o n ; p u b l i c h e a l t h and w e l f a r e ; p l a n n i n g ; market and g r a n t s ; parks and r e c r e a t i o n ; f i s c a l s e r v i c e s ; t r a n s f e r to r e s e r v e s ; f r a n s f e r to c a p t i a l and l o a n fund; t r a n s m i s s i o n of taxes to h o s p i t a l s and parks; t r a n s m i s s i o n of taxes to the GVRD and MFA; and t r a n s m i s s i o n of s c h o o l taxes.  11 8  The sources o f revenue i n c l u d e : g e n e r a l p r o p e r t y taxes; l o c a l improvement t a x e s ; b u s i n e s s taxes; g r a n t s i n l i e u o f taxes; r e f u s e c o l l e c t i o n ; f i r e p r o t e c t i o n ; sewers; h e a l t h ; a l l other s a l e s o f s e r v i c e s ; f i n e s ; r e n t a l s ; p o l e aggrements; s c h o o l d i s t r i c t s ; b u s i n e s s l i c e n c e s ; a l l other revenue from own sources; c o n d i t i o n a l t r a n s f e r s ; water distribution profit; electicity distribution p r o f i t ; a l l other t r a n s f e r s ; and c o l l e c t i o n s f o r other governments. 9.  C o l l e c t i o n s f o r other government are c o n s i d e r e d t o be revenues.  authorities  10.  T r a n s f e r s t o other government a u t h o r i t i e s are c o n s i d e r e d to be e x p e n d i t u r e s .  11 .  The Planner r e s p o n s i b l e f o r the Study has s i n c e l e f t the C i t y of New Westminster and, t h e r e f o r e , cannot be c o n t a c t e d t o p r o v i d e a d d i t i o n a l i n f o r m a t i o n on those i n v o l v e d i n the study.  11 9  CHAPTER 5  5.  CONCLUSIONS AND RECOMMENDATIONS T h i s chapter  c o n s i d e r s the r o l e o f the case  s t u d i e s , and o f m u n i c i p a l  expenditure-revenue  analysis  i n l a n d use p l a n n i n g and p o l i c y f o r m u l a t i o n .  In  a d d i t i o n , on the b a s i s o f the a n a l y s i s and e v a l u a t i o n of the t h r e e case undertaking  s t u d i e s , recommendations t o a n a l y s t s  future municipal  a n a l y s e s a r e developed. content  expenditure-revenue  T h i s chapter  i n t e r p r e t s the  and a n a l y s i s o f p r e v i o u s chapters  i n t o a form  which w i l l help p l a n n e r s , as w e l l as f i n a n c e  officers,  p o l i t i c i a n s or c i t i z e n s explore the e x p e n d i t u r e s and revenues a s s o c i a t e d with l a n d use c a t e g o r i e s i n t h e i r particular 5.1  community.  The Role o f t h e Case S t u d i e s i n Land Use P l a n n i n g and P o l i c y F o r m u l a t i o n As d i s c u s s e d i n the p r e v i o u s chapter  of  the case  the formal use  s t u d i e s ' r e s u l t s i n l a n d use p l a n n i n g and  p o l i c y f o r m u l a t i o n has been extremely  limited.  Only i n  the C i t y o f New Westminster have the r e s u l t s been f o r m a l l y used i n the f o r m u l a t i o n o f a l a n d use p o l i c y a l t e r n a t i v e ( 1 ) , and i n t h i s case the a l t e r n a t i v e was c r i t i c i z e d f o r b e i n g based upon i n s u b s t a n t i a l ( W a l i s s e r , 1978). study  research  In the case o f the C i t y o f Vancouver  the r e s u l t s were not even p r e s e n t e d  to municipal  1 20  officials  r e s p o n s i b l e f o r l a n d use p l a n n i n g and  formulation.  The  policy  r e s u l t s of the C i t y of North Vancouver  study were p r e s e n t e d  to the a p p r o p r i a t e o f f i c i a l s ,  the l i m i t a t i o n s of the study were emphasized,  thereby  e n s u r i n g t h a t the s t u d i e s ' r e s u l t s would not be without  but  used  c o n s i d e r a t i o n of the s t u d i e s ' l i m i t a t i o n s .  date, the r e s u l t s of the C i t y of North Vancouver have not been used f o r m a l l y i n p l a n n i n g or  To  study  policy  formulation. The  extent to which the s t u d i e s ' r e s u l t s have been  i n f o r m a l l y used to i n f l u e n c e l a n d use p l a n n i n g p o l i c y f o r m u l a t i o n i s more d i f f i c u l t all  three c i t i e s ,  and  to determine.  o f f i c i a l s with the a b i l i t y  In  to  i n f l u e n c e p l a n n i n g and p o l i c y f o r m u l a t i o n had access the r e s u l t s of the s t u d i e s .  The  extent  r e s u l t s were used to r e i n f o r c e or a l t e r  to  to which the l a n d use  d e c i s i o n s i s i m p o s s i b l e to determine, but  the  p o s s i b i l i t y c e r t a i n l y e x i s t s i n a l l three  jurisdictions.  The  r o l e t h a t the s t u d i e s ' r e s u l t s  (as they  now  stand) s h o u l d p l a y i n p l a n n i n g and p o l i c y f o r m u l a t i o n i s extremely  limited.  A l l three s e t s of r e s u l t s r e q u i r e  i n t e r p r e t a t i o n i n the l i g h t of t h e i r they can be e f f e c t i v e l y put to use policy formulation. Westminster case  The  limitations,  i n planning  North Vancouver and  and New  s t u d i e s should be reworked to check f o r  i n a c c u r a c i e s i n the c a l c u l a t i o n s i n v o l v e d . case  before  These  s t u d i e s should a l s o be reviewed i n order  two  to ensure  1 21 t h a t they i n c l u d e a l l r e l e v a n t sources of  expenditure  and revenue, but exclude t r a n s f e r s t o other government agencies  (or at l e a s t , use  identical allocation rules in  a l l o c a t i n g the "expenditure" and  "revenue" a s s o c i a t e d  w i t h each t r a n s f e r to l a n d use c a t e g o r i e s ) .  A l l three  case s t u d i e s s h o u l d be f u r t h e r a n a l y z e d i n terms of the effect  on the f i n a l  r e s u l t s of the background, knowledge  and p e r s o n a l b i a s e s of those i n v o l v e d i n the s t u d i e s . This i s p a r t i c u l a r l y  important where the  allocation  d e c i s i o n s i n v o l v e d i n the study were made by  officials  w i t h a l i m i t e d or g e n a r a l i z e d knowledge r e g a r d i n g the nature of m u n i c i p a l f u n c t i o n s and the expenditure revenue a s s o c i a t e d with those f u n c t i o n s .  and  The  s e n s i t i v i t y of each case study's r e s u l t s to other aspects of each study's methodology s h o u l d a l s o analyzed.  be  For example, the e f f e c t of the use of a base  v a r i a b l e on the r e s u l t s of the C i t y of North Vancouver study s h o u l d be c o n s i d e r e d . Even i f the r e s u l t s of the case s t u d i e s were e n t i r e l y d e f e n s i b l e (which c l e a r l y they are n o t ) , t h e i r r o l e i n p l a n n i n g and p o l i c y f o r m u l a t i o n would be  limited  because of t h e i r use of l a n d use c a t e g o r i e s which are broad  i n n a t u r e , and p o o r l y d e f i n e d .  In g e n e r a l ,  p l a n n i n g and p o l i c y f o r m u l a t i o n address very sub-categores  specific  of l a n d use; t h e r e f o r e , i n order to be  most u s e f u l the breakdown of l a n d use c a t e g o r i e s i n expenditure-revenue  a n a l y s e s s h o u l d be both narrow and  1 22  c l e a r l y defined. of  narrow and  However, as d i s c u s s e d b e f o r e , the  use  s p e c i f i c c a t e g o r i e s of l a n d use g r e a t l y  i n c r e a s e s the d i f f i c u l t y  of making a c c u r a t e  and  defensible allocation decisions. Before  the r e s u l t s of any  of the three case  studies  are f o r m a l l y or i n f o r m a l l y used i n l a n d use p l a n n i n g or p o l i c y f o r m u l a t i o n , each study address  should be reworked to  the weaknesses h i g h l i g h t e d i n the e v a l u a t i o n of  each case  study.  Even then the r o l e of the r e s u l t s i n  p l a n n i n g and p o l i c y f o r m u l a t i o n w i l l nature 5.2  of m u n i c i p a l  be  expenditure-revenue  l i m i t e d by  the  analysis i t s e l f .  The Role o f Expenditure-Revenue A n a l y s i s i n Land Use P l a n n i n g and P o l i c y F o r m u l a t i o n The  r o l e of expenditure-revenue  analysis i n land  use p l a n n i n g and p o l i c y f o r m u l a t i o n i s determined by nature  of the technique;  addresses  o n l y one  expenditure-revenue  analysis  component of i n f o r m a t i o n r e q u i r e d i n  l a n d use p l a n n i n g and the f o r m u l a t i o n of e f f e c t i v e use p o l i c y .  the  Land use p l a n n i n g and p o l i c y  land  formulation  s h o u l d r e l y on a range of i n f o r m a t i o n , which i n a d d i t i o n to  financial  political, art  information includes s o c i a l ,  economic and  environmental,  design r e l a t e d i n f o r m a t i o n .  The  of l a n d use p l a n n i n g and p o l i c y f o r m u l a t i o n i s to  b r i n g these  sources  of i n f o r m a t i o n together  i n order  d e f i n e a d e c i s i o n which r e p r e s e n t s an e f f e c t i v e acceptable  s o l u t i o n , g i v e n the context  d e c i s i o n i s b e i n g made.  The  to  and  i n which the  i n f o r m a t i o n generated  from  expenditure-revenue analyses  should be r e c o g n i z e d f o r  what i t r e p r e s e n t s : one component o f the i n f o r m a t i o n necessary  f o r e f f e c t i v e l a n d use p l a n n i n g and p o l i c y  formulation. The  importance o f d i f f e r e n t components o f  information w i l l jurisdictions, use  change over time, and over  depending on the context  d e c i s i o n s are b e i n g made.  revenue a n a l y s e s planning  The r o l e  i n which l a n d expenditure-  and t h e i r r e s u l t s p l a y i n l a n d use  and p o l i c y f o r m u l a t i o n w i l l  depend on the  p e r c e i v e d importance o f a f i n a n c i a l p e r s p e c t i v e to the importance o f other p e r s p e c t i v e s .  relative  At times the  f i n a n c i a l p e r s p e c t i v e may be extremely important  and  take precedence over a l l other p e r s p e c t i v e s ( 2 ) .  For  example, when a m u n i c i p a l i t y i s on the verge o f i n s o l v e n c y ( 3 ) the i n f o r m a t i o n generated from an expenditure-revenue a n a l y s i s would p l a y an  important  r o l e i n l a n d use (as w e l l as s e r v i c i n g and t a x a t i o n ) p l a n n i n g and p o l i c y f o r m u l a t i o n .  When a m u n i c i p a l i t y i s  i n a f i n a n c i a l l y secure p o s i t i o n , the r o l e o f expenditure-revenue a n a l y s e s may be accorded priority  a low  i n the f o r m u l a t i o n o f l a n d use p o l i c y . I t  would, however, never be s a f e f o r a m u n i c i p a l i t y t o d i s r e g a r d a f i n a n c i a l p e r s p e c t i v e i n l a n d use p l a n n i n g and p o l i c y f o r m u l a t i o n as u l t i m a t e l y the m u n i c i p a l i t y ' s financial functions.  s i t u a t i o n a f f e c t s i t s a b i l i t y to f u l f i l l i t s  1 24-  The a p p l i c a t i o n of expenditure-revenue  a n a l y s i s to  l a n d use p l a n n i n g and p o l i c y f o r m u l a t i o n i s l i m i t e d by the s t a t i c nature of these s t u d i e s .  Expenditure-revenue  a n a l y s e s , i n most cases, c o n s i d e r the items of e x p e n d i t u r e and revenue  from the p r e v i o u s y e a r ;  t h e r e f o r e , by the time the s t u d i e s are completed r e s u l t s are a l r e a d y outdated.  their  Land use p l a n n i n g and  p o l i c y f o r m u l a t i o n are "forward l o o k i n g " p r o c e s s e s ; a l t h o u g h they are o f t e n based upon o b s e r v a t i o n s and i n f o r m a t i o n form the past and p r e s e n t , they i n v o l v e the a p p l i c a t i o n of t h i s i n f o r m a t i o n t o the f u t u r e .  This  i m p l i e s a dynamic r a t h e r than a s t a t i c t e c h n i q u e . a p p l i c a t i o n of the r e s u l t s of an  The  expeniture-revenue  study t o the f u t u r e i n v o l v e s an e x t e n s i o n of expenditure-revenue impact  analysis.  revenue  a n a l y s i s i n t o the bounds of  Before the r e s u l t s of e x p e n d i t u r e -  a n a l y s i s can be a p p l i e d to p l a n n i n g and  f o r m u l t a t i o n they s h o u l d be reworked reflect  the time s c a l e  Another  fiscal  policy  and extended  to  involved.  example where the r e s u l t s of f i s c a l  a n a l y s e s are more a p p l i c a b l e t o p l a n n i n g and f o r m u l a t i o n than those of m u n i c i p a l  impact  policy  expenditure-revenue  a n a l y s e s r e l a t e s t o the l e v e l of g e n e r a l i t y o f the results. specific  Fiscal  impact  a n a l y s e s u s u a l l y address v e r y  l a n d use c a t e g o r i e s under v e r y  c o n d i t i o n s ( f o r example, the impact of  specific  of the development  x m u l t i - f a m i l y r e s i d e n t i a l u n i t s on a m u n i c i p a l i t y ' s  1 25  finances).  Expenditure-revenue  a n a l y s e s , on the other  hand, are u s u a l l y g e n e r a l i n nature ( f o r example, the m u n i c i p a l revenue-expenditure  r a t i o of m u l t i - f a m i l y  r e s i d e n t i a l use i n g e n e r a l ) .  As l a n d use p l a n n i n g and  p o l i c y f o r m u l a t i o n u s u a l l y c o n s i d e r narrow c a t e g o r i e s of l a n d use under f a i r l y s p e c i f i c c o n d i t i o n s , e x p e n d i t u r e revenue  analyses' r e s u l t s o f f e r only l i m i t e d  application  i n these a r e a s . The r o l e o f expenditure-revenue  analyses i n land  use p l a n n i n g and p o l i c y f o r m u l a t i o n i s a l s o l i m i t e d by the need f o r f u r t h e r r e s e a r c h i n t o the t e c h n i q u e . areas i n expenditure-revenue  Two  a n a l y s i s which, i n  p a r t i c u l a r , require further research are: - the a p p r o p r i a t e a l l o c a t i o n o f e x p e n d i t u r e and revenue  a s s o c i a t e d w i t h people among l a n d use  c a t e g o r i e s ; and - the s e n s i t i v i t y o f expenditure-revenue a n a l y s e s ' r e s u l t s t o the s p e c i f i c methodology used. The methodologies are s t i l l  o f expenditure-revenue  based upon premises and assumptions  not been demonstrated  analyses which have  t o be a c c e p t a b l e or v a l i d .  The  f a i l u r e t o develop a w i d e l y a c c e p t a b l e methodology r e f l e c t s an important c h a r a c t e r i s t i c o f e x p e n d i t u r e revenue  analyses.  manipulate  These s t u d i e s make use o f and  q u a n t i t a t i v e data, however, the manner i n  which the data i s manipulated i s s u b j e c t i v e . S u b j e c t i v i t y i s a key component o f expenditure-revenue  1 26  a n a l y s i s ; i t i s t h i s component of the methodology t h a t d e f i e s wide acceptance. l a n d use  categories  different  in allocating  categories;  t r u e i n the a l l o c a t i o n  expenditure  of  and  this is particularly  of expenditure and  a s s o c i a t e d w i t h people to l a n d use Definition  define  d i f f e r e n t l y , and w i l l make use  information  revenue to l a n d use  Different analysts w i l l  revenue  categories.  of a w i d e l y a c c e p t a b l e  expenditure-  revenue a n a l y s i s methodology w i l l p r o b a b l y never occur because of the s u b j e c t i v e nature of a l a r g e component the a n a l y s i s .  However, short of d e f i n i n g an  methodology, a n a l y s t s should extremes and  s t r i v e to  of  objective  eliminate  narrow the range of a c c e p t a b l e  premises  and  assumptions i n expenditure-revenue a n a l y s i s . Despite and  the  the  l a c k of a w i d e l y a c c e p t a b l e  s u b j e c t i v e nature of a l a r g e component of  a n a l y s i s , the  importance of t h i s technique should  underemphasized.  A w e l l thought out and  implemented study may u s e f u l to p l a n n e r s ; i s imprecise, important. explicit  the not  be  carefully  produce a bottom l i n e that i s  however, even where the bottom l i n e  the p r o c e s s i n g e t t i n g to the outcome i s  The  process requires a consistent  and  framework f o r q u a n t i f i n g expenditure  and  revenue a s s o c i a t e d w i t h d i f f e r e n t I t demands that p l a n n e r s and consider  methodology  the f i s c a l  other  l a n d use municipal  s i d e of m u n i c i p a l  a component of i n f o r m a t i o n  categories. staff  functions; this i s  that i s too o f t e n i g n o r e d  in  1 27  p l a n n i n g and p o l i c y f o r m u l a t i o n . line  Even where the bottom  i s q u e s t i o n a b l e the p r o c e s s o f g e t t i n g t o the  bottom l i n e i s l i k e l y t o a f f e c t the manner i n which f u t u r e l a n d use d e c i s i o n s are made. The  d a t a used and generated i n the p r o c e s s o f  u n d e r t a k i n g an expenditure-revenue  analysis  will  c o n t r i b u t e t o the m u n i c i p a l i t y ' s d a t a base, and may be u s e f u l f o r other purposes.  For example, d a t a used and  g e n e r a t e d i n the C i t y o f Vancouver study was incorporated into a later  study which i d e n t i f i e d  city  areas i n which d e n s i f i c a t i o n c o u l d occur a t the l e a s t c o s t t o the m u n i c i p a l i t y . 5.3  Recommendations t o A n a l y s t s U n d e r t a k i n g M u n i c i p a l Expenditure-Revenue A n a l y s e s The recommendations l i s t e d below address key i s s u e s  and common problems i n expenditure-revenue L i k e the c r i t e r i a developed i n Chapter  analysis.  3 these  recommendations r e p r e s e n t i d e a l s towards which a n a l y s t s should s t r i v e .  The d i s c u s s i o n under each  recommendation  suggests how the i s s u e s and problems s h o u l d be best d e a l t w i t h i n the design and implementation o f expenditure-revenue  a n a l y s e s , and a l s o c o n s i d e r s any  c o n s t r a i n t s t o a c h e i v i n g the recommendations.  Recommendation 1: be Undertaken  Expenditure-Revenue  Analyses Should  under O b j e c t i v e Circumstances  1 28  Expenditure-revenue a genuine revenue  a n a l y s e s s h o u l d be undertaken  and o b j e c t i v e i n t e r e s t  i n the e x p e n d i t u r e and  a s s o c i a t e d with d i f f e r e n t  As d i s c u s s e d p r e v i o u s l y , methodologies  l a n d use c a t e g o r i e s .  expenditure-revenue  and t h e i r r e s u l t s are open t o m a n i p u l a t i o n  through the premises  and assumptions  defining allocation decisions. credibility  out o f  t h a t are used i n  In order t h a t the  o f the a n a l y s i s be upheld, every  attempt  s h o u l d be made t o ensure t h a t the a n a l y s i s i s undertaken under o b j e c t i v e  (and what appears t o be o b j e c t i v e )  circumstances.  The f o l l o w i n g measures w i l l h e l p t o  e s t a b l i s h the o b j e c t i v i t y and c r e d i b i l i t y  (a) Expenditure-revenue  o f a study:  s t u d i e s s h o u l d be designed and  implemented by many o f f i c i a l s from a broad c r o s s s e c t i o n of m u n i c i p a l departments.  The g r e a t e r the number and  d i v e r s i t y o f persons and i n t e r e s t s i n v o l v e d the l e s s i t i s l i k e l y t h a t the r e s u l t s o f the study can be c o n s c i o u s l y manipulated t o p r o v i d e a r a t i o n a l i z a t i o n f o r any d e s i r e d course o f a c t i o n .  The involvement  broad c r o s s s e c t i o n o f m u n i c i p a l departments  of a  i s also  important g i v e n the f r a g m e n t a t i o n o f knowledge r e g a r d i n g the nature o f m u n i c i p a l f u n c t i o n s and the e x p e n d i t u r e and revenue  a s s o c i a t e d with those  functions.  (b) A l l o f f i c i a l s i n v o l v e d i n the study s h o u l d be i n t r o d u c e d t o the nature, s t r e n g t h s , weaknesses and  1 29  a p p l i c a t i o n o f m u n i c i p a l expenditure-revenue  analysis.  They s h o u l d a l s o be informed o f the p o t e n t i a l  impact  t h a t t h e i r p e r s o n a l p e r c e p t i o n s and assumptions c o u l d have on the r e s u l t s o f the a n a l y s i s ; o f f i c i a l s asked t o make a c o n s c i o u s e f f o r t t o r e t a i n  s h o u l d be  objectivity  i n the c h o i c e o f data, v a r i a b l e s and a l l o c a t i o n decisions.  (c)  I d e a l l y , expenditure-revenue  a n a l y s e s s h o u l d be  c o o r d i n a t e d by a c o n s u l t a n t with a d e t a i l e d knowledge o f the technique o f expenditure-revenue no p o s s i b l e i n t e r e s t  a n a l y s i s , and w i t h  i n the study's r e s u l t s . The r o l e o f  the c o n s u l t a n t s h o u l d be t o i d e n t i f y m u n i c i p a l  officials  who would be u s e f u l t o the a n a l y s i s , and i n t r o d u c e them to  the t e c h n i q u e .  The c o n s u l t a n t s h o u l d a l s o  highlight  the s t r e n g t h s and weaknesses o f the technique and c o o r d i n a t e the design o f the study methodology.  The  knowledge the m u n i c i p a l o f f i c i a l s b r i n g t o the study, r e g a r d i n g the nature o f the m u n i c i p a l f u n c t i o n and the expenditure and revenue a s s o c i a t e d w i t h these f u n c t i o n s i s a l s o important implementation  i n the design o f the methodology.  o f the a n a l y s i s s h o u l d be  s o l e l y by the m u n i c i p a l o f f i c i a l s .  undertaken  Officials  s h o u l d be  made t o defend t h e i r chosen a l l o c a t i o n d e c i s i o n s by e x p l a i n i n g the r a t i o n a l e f o r the a l l o c a t i o n t o other members o f the study group.  The  1 30  In r e a l i t y both t h i s recommendation and the steps to a c h i e v e the recommendation are d i f f i c u l t Expenditure-revenue  unclear.  fulfill.  analysis involves a subjective  component which can never be e x a c t l y how  to  "objective".  In a d d i t i o n ,  to define o b j e c t i v e circumstances i s  However, the p o i n t t o be made here i s t h a t  expenditure-revenue f o r the purpose  a n a l y s e s s h o u l d not be  undertaken  of p r o v i n g an outcome; they s h o u l d be  undertaken under "open-minded" c i r c u m s t a n c e s i n which the p r o c e s s i s v a l u e d as h i g h l y as the outcome. I n v o l v i n g a l a r g e number of m u n i c i p a l o f f i c i a l s i n the a n a l y s i s may  reduce the l i k e l i h o o d t h a t the  results  w i l l be c o n s c i o u s l y manipulated; however, t h i s i s done at the r i s k o f r e n d e r i n g the study "unworkable" and i n c r e a s i n g the c o s t of the study.  Time and money  c o n s t r a i n t s a l s o l i m i t the extent t o which the  officials  can be i n t r o d u c e d t o the n a t u r e , s t r e n g t h s , weaknesses and a p p l i c a t i o n of the study.  F i n d i n g a c o n s u l t a n t who  has both a d e t a i l e d knowledge of  expenditure-revenue  a n a l y s i s , and no v e s t e d i n t e r e s t  i n the study's  is a d i f f i c u l t , c o n s u l t a n t may may  i f not i m p o s s i b l e , t a s k . have no i n t e r e s t  have an i n t e r e s t  results  Even where a  i n the r e s u l t s he/she  i n e n s u r i n g t h a t the study  will  l e a d t o f u r t h e r work.  Recommendation 2:  The Resources  A v a i l a b l e to the  Should Allow a Thorough and In-Depth  Study  A n a l y s i s of the  131  E x p e n d i t u r e and Revenue A s s o c i a t e d with Land  Use  Categor i e s  I f an expenditure-revenue undertaken,  study i s t o be  the r e s o u r c e s d e d i c a t e d t o the study s h o u l d  be s u f f i c i e n t  to ensure t h a t the study's r e s u l t s  u s e f u l and meaningful.  are  Too o f t e n , the r e s u l t s of such  s t u d i e s have no a p p l i c a t i o n because m e t h o d o l o g i c a l s h o r t - c u t s were used which a d v e r s e l y a f f e c t a c c e p t a b i l i t y of the r e s u l t s .  the  To a c e r t a i n p o i n t , t h e r e  seems t o be a c o r r e l a t i o n between the r e s o u r c e s a v a i l a b l e t o a study and the r e l i a b i l i t y and v a l i d i t y the study r e s u l t s .  of  The p o i n t at which a d d i t i o n a l  r e s o u r c e s w i l l no longer improve the q u a l i t y of a study's r e s u l t s i s u n c l e a r ; however, i t i s l i k e l y  t o be  beyond the p o i n t t h a t any of the t h r e e case s t u d i e s reached. The  r e s o u r c e s a v a i l a b l e to the study s h o u l d make i t  possible for: - An independent  and knowledgeable(4-)  c o n s u l t a n t to  be h i r e d w i t h the r e s p o n s i b i l i t y of c o o r d i n a t i n g and f a c i l i t a t i n g - The  involvement  the study; of a broad c r o s s s e c t i o n o f  m u n i c i p a l o f f i c i a l s w i t h v a r y i n g backgrounds but e x t e n s i v e experience and knowledge r e g a r d i n g the nature of m u n i c i p a l f u n c t i o n s and the expenditure and revenue  a s s o c i a t e d with these  functions;  1 32  - An o r i e n t a t i o n p e r i o d d u r i n g which the introduces  the o f f i c i a l s  strengths,  limitations,  implementation and  consultant  to the nature,  goals,  i s s u e s , problems,  a p p l i c a t i o n of  design,  expenditure-  revenue a n a l y s i s ; - A working s e s s i o n d u r i n g which the c o n s u l t a n t officials  and  i n v o l v e d i n the study i d e n t i f y the most  appropriate  methodology g i v e n :  - the r a t i o n a l e f o r the - the c o n s u l t a n t ' s  study,  u n d e r s t a n d i n g of  expenditure-revenue a n a l y s i s , - the o f f i c i a l s '  and  u n d e r s t a n d i n g of  f u n c t i o n s , the expenditure  and  municipal revenue  a s s o c i a t e d with those f u n c t i o n s , and  land  use  w i t h i n the m u n i c i p a l i t y ; - The  agreed upon methodology to be  implemented to  the p o i n t which ensures the r e l i a b i l i t y , and u s e f u l n e s s  of the  validity  results;  - A working s e s s i o n at which each o f f i c i a l r e s p o n s i b l e f o r an item of expenditure  or revenue  must r a t i o n a l i z e the d e c i s i o n s used i n a l l o c a t i n g the  item to l a n d use  c a t e g o r i e s to the remainder of  the study team; - An o b j e c t i v e a n a l y s i s of the r o l e of the r e s u l t s i n l a n d use p l a n n i n g formulation;  and  and p o l i c y  study's  1 33  - D e t a i l e d documentation o f the the study's methodology, s t r e n g t h s , l i m i t a t i o n s and application. As mentioned p r e v i o u s l y , t h e r e i s no "magic which determines  what r e s o u r c e s are necessary  a c r e d i b l e product. expenditure-revenue  line"  t o ensure  Given the s u b j e c t i v e nature o f a n a l y s e s i n f i n i t e r e s o u r c e s c o u l d be  d e d i c a t e d t o the study, and t h e r e would s t i l l f o r q u e s t i o n i n g the r e s u l t s .  be grounds  The purpose t o which the  r e s u l t s are t o be put s h o u l d determine the extent o f r e s o u r c e s d e d i c a t e d t o the study.  Recommendation 3:  The Study Methodology Should  The Range o f Approaches O u t l i n e d i n Chapter  Combine  Two o f t h i s  Thesis  I d e a l l y , the methodology used i n an e x p e n d i t u r e revenue study s h o u l d combine the range o f approaches discussed e a r l i e r  i n this thesis.  These approaches  s h o u l d not, however, be combined haphazardly, be a p p l i e d i n a h e i r a c h i c a l manner. officials  but should  F i r s t , the  i n v o l v e d i n the a n a l y s i s s h o u l d attempt t o  l o c a t e documents on which a l l o c a t i o n d e c i s i o n s can be based.  In many cases a v a i l a b l e documents w i l l not help  i n the a l l o c a t i o n p r o c e s s ; the o f f i c i a l  s h o u l d then make  use o f the second approach, which i n v o l v e s u s i n g the experience he/she has a q u i r e d i n h i s / h e r p o s i t i o n as a  1 34  b a s i s on which to a l l o c a t e items of e x p e n d i t u r e revenue to l a n d use records  categories(5).  and  allocation decisions.  r a t i o n a l e f o r the c h o i c e be  Samples of a v a i l a b l e  can be used as a means of e v a l u a t i n g  ammending o f f i c i a l ' s  The  of a l l o c a t i o n d e c i s i o n s  c l e a r l y documented by the m u n i c i p a l  no  records  may  of the above approaches may e x i s t on which to make a  a l l o c a t i o n d e c i s i o n and  the o f f i c i a l may  and  be f e a s i b l e ;  reliable have no  on which to s p e c i f y an a l l o c a t i o n d e c i s i o n . case the  should  official.  In the case of some items of e x p e n d i t u r e revenue n e i t h e r  and  In  basis this  t h i r d approach should be used, whereby  a l l o c a t i o n d e c i s i o n s are based upon one  or more  v a r i a b l e s w i t h assumed r e l a t i o n s h i p s between e x p e n d i t u r e or revenue items and categories.  the  the s p e c i f i e d l a n d  Again, the r a t i o n a l e f o r b a s i n g  the  a l l o c a t i o n d e c i s i o n on the d e f i n e d v a r i a b l e s should clearly  be  documented.  T h i s h e i r a c h i c a l approach w i l l  ensure t h a t  a l l o c a t i o n d e c i s i o n s are based upon the most and  use  defensible  information  Recommendation 4:  The  available.  C a l c u l a t i o n s Involved  Expenditure-Revenue Analyses Should Be  As useable and  inexpensive  i s w e l l s u i t e d to the  reliable  in  Computerized  computer software, which  implementation o f e x p e n d i t u r e -  1 35  revenue  analyses, i s r e a d i l y available, a l l future  s t u d i e s s h o u l d be computerized. methodologies o f f e r two  Computerized  important advantages  over manual  methodologies: (1 )  the c a l c u l a t i o n s i n v o l v e d can be more e a s i l y checked f o r accuracy; and  (2)  the s e n s i t i v i t y o f a n a l y s e s ' r e s u l t s t o d i f f e r i n g a l l o c a t i o n d e c i s i o n s (and assumptions u n d e r l y i n g the  a l l o c a t i o n d e c i s i o n s ) can be more e a s i l y  analyzed. Checking the c a l c u l a t i o n s o f a manual methodology t h a t i s s u s p e c t e d to i n c l u d e i n a c c u r a c i e s i s a time consuming and t e d i o u s t a s k .  Suspected i n a c c u r a c i e s ( 6 )  i n a computerized methodology can be e a s i l y checked  and  ammended i f n e c e s s a r y . It  i s u n l i k e l y that the s e n s i t i v i t y o f a study's  r e s u l t s t o d i f f e r i n g s e t s o f assumptions  and  allocation  d e c i s i o n s would be a n a l y z e d i n a manual methodology; t h i s would be too time consuming to c o n s i d e r . the  However,  use o f a computerized methodology makes the  c o n s i d e r a t i o n o f the s e n s i t i v i t y o f the r e s u l t s to the a l l o c a t i o n d e c i s i o n s used an easy and expedient t a s k . S e n s i t i v i t y a n a l y s e s a l l o w the r e l i a b i l i t y of  and  validity  the study's r e s u l t s to be c o n s i d e r e d ; t h i s i s  important where the r e s u l t s o f expenditure-revenue a n a l y s e s are to be used i n l a n d use p l a n n i n g and p o l i c y formulation.  1 36  Recommendation 5:  A l l Aspects of the Study  Methodology  Should be C l e a r l y Documented  Careful  documentation  expenditure-revenue  of a l l a s p e c t s of an  analyis  i s important  i n the  a p p r o p r i a t e a p p l i c a t i o n of the study's r e s u l t s .  A  study's r e s u l t s s h o u l d be c o n s i d e r e d i n the context i n which the study was therefore,  undertaken;  documentation  should,  cover:  - the nature and scope of  expenditure-revenue  analysis; - issues  and problems i n  expenditure-revenue  analysis; - the r a t i o n a l e f o r u n d e r t a k i n g the study; - the methodology used i n u n d e r t a k i n g the study; - the names, p o s i t i o n s municipal o f f i c i a l s  and experience of a l l involved  i n the study;  - the r a t i o n a l e , and assumptions allocation  behind  each  decision;  - c l e a r d e f i n i t i o n s of each l a n d use  category;  - the s t r e n g t h s of the study's methodology  and  results; - the weaknesses of the study's methodology results,  including  the s e n s i t i v i t y of the  r e s u l t s to the p a r t i c u l a r methodology - the study r e s u l t s ;  and  used;  1 37  - the p o t e n t i a l a p p l i c a t i o n of the results;  study's  and  - areas of the study which would b e n e f i t from further  research.  Although t h i s t h e s i s has  not  s o l v e d any  i s s u e s and problems f a c i n g m u n i c i p a l h i g h l i g h e d and  stumbling b l o c k s  encountered by a n a l y s t s who  w i t h d i f f e r e n t l a n d use  provide evaluate  wish to associated  This t h e s i s  l e a r n e d through the  has  a n a l y s i s of  a guide to a n a l y s t s w i s h i n g to undertake or expenditure-revenue s t u d i e s .  s t u d i e s t h a t the  i n t e r e s t i n , and  resolved,  I t i s hoped that  a p p l i c a t i o n o f , such  i s s u e s and problems of e x p e n d i t u r e -  revenue a n a l y s i s w i l l i n order  be  formulation.  f u r t h e r a n a l y z e d , understood  that a f i s c a l perspective  confidently incorporated policy  the major  case s t u d i e s i n t o recommendations which  through c o n t i n u e d  and  revenue  categories.  also i n t e r p r e t e d lessons the t h r e e  discussed  expenditure and  the  expenditure-revenue  a n a l y s i s , i t has  quantify municipal  of  i n t o l a n d use  planning  can and  be  1 38  FOOTNOTES 1.  The study r e s u l t s were used as a b a s i s which to recommend a moratorium on the c o n s t r u c t i o n of s m a l l e r s i z e d housing.  on  2.  Where a f i n a n c i a l p e r s p e c t i v e takes precedence, other p e r s p e c t i v e s are not d i s r e g a r d e d , r a t h e r they are c o n s i d e r e d , but are awarded a low p r i o r i t y r e l a t i v e to the financial perspective.  3.  T h i s may seem u n l i k e l y today, but i n the 1930s many North American m u n i c i p a l i t i e s f a c e d insolvency.  4.  Regarding the n a t u r e , s t r e n g t h s , weaknesses, d e s i g n , implementation and a p p l i c a t i o n of expenditure-revenue a n a l y s i s .  5-  O f f i c i a l s e s t i m a t e s s h o u l d a l s o take u s e f u l data sources i n t o account.  6.  In a computerized methodology i n a c c u r a c i e s occur e i t h e r i n the data e n t e r e d i n t o the program, or i n the a l g o r i t h m s used by the program.  any can  1 39  BIBLIOGRAPHY  Amborski, D.P., Urban Growth S t r a t e g y : Phase 1 - F i s c a l Impact A n a l y s i s . C i t y o f Edmonton P l a n n i n g Department, 1981. Anderson, W.H., F i n a n c i n g Modern Government. M i f f l i n Company, Boston, 1973.  Houghton  Arthur Anderson and Company, Downtown H i g h r i s e D i s t r i c t Cost-Revenue Study Update. San F r a n c i s c o , 1981. Bahl, R.(ed), The F i s c a l Outlook f o r C i t i e s . U n i v e r s i t y Press, New York, 1978.  Syracuse  Barnes, R.M., and Raymond, G.M., The F i s c a l Approach t o Land Use P l a n n i n g . American I n s t i t u t e o f Planners J o u r n a l 21, 1955, 71 -75. Beaton, W.P., The Determinants o f P o l i c e P r o t e c t i o n . N a t i o n a l Tax J o u r n a l 27, 1974, 335 - 349. 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