When Kitchen table budgeting doesn’t work

Posted May 15, 2012

Some Guelph departments budget like my aunt Sue.  She would take her old age pension cheque and buy a new pair of shoes instead straying from her budget.

It’s called the windfall budgeting.

Let’s take Guelph Transit as an example of windfall budgeting.

Last year, the Transit system was being redesigned to interface with the new central transit terminal plus to make routes more cost effective. The plans were the result of more than a year of study that included costing the effort.

Now, one would assume that there was careful consideration before casting the revised plan in stone.

Wrong. With a budget exceeding some $12 million, Guelph Transit is now projecting a $450,000 deficit over budget projections for 2012.

The city’s March operating variance report states the cause of the transit budget over-run was higher fuel costs. Certainly there has been an increase in vehicle fuel costs since last summer. But, one would think that this basic operational cost would have been carefully vetted to provide a hedge.

Obviously such provision was not included in the Transit budget for 2012.

But all is not lost. The variance report states there is a $734,000 surplus in the city’s overall operating budget. That is aided and abetted by a $1 million dividend from the Guelph Municipal Holdings Corporation. Hence the windfall budgeting.

Another department headed by Mark Amorosi, Executive Director of Corporate and Human Resources, racked up a $500,000 deficit in the first three months of the year. Reason given is the cost of Municipal Board hearings and legal cases.

This is a key area that has been shrouded in secrecy. There are no details provided why this budget went over projections in this department. By yearend, the excess spending could be more than $2 million.

As viewers will recall, this is a chief criticism of the Farbridge Administration that it either hides or obfuscates details of spending errors and lack of control of finances.

It’s really simple. Make every department budget accurate and realistic. If an overage occurs, unless it can be proved it is caused by uncontrolled circumstances, the department is stuck with the original budget. Any surplus budget funds remaining at yearend are rolled back to the general administration fund.

This way, staff will have to budget accurately and be accountable. It’s called management folks and the taxpaying public will have a greater understanding how their interests are being served.

And Aunt Sue will forgo the shoes and pay her bills.