How Guelph can go broke not controlling public employee compensation

Posted August 16, 2012

Every year the provincial government publishes its Sunshine List naming all those municipal public servants in the province being paid more than $100,000.

The most recent figure for Guelph was 47 city employees earning more than $100,000.

Along comes the announcement that in 2009 there were 64,078 public workers earning more than $100,000 a year. Fast forward to 2011, and the number has surged to 78,910, an increase of 23 percent.

This statistic includes all municipal employees in Ontario. This is where the great divide occurs. The taxpayers pay municipal employee’s salaries, wages and benefits, including a portion of pension costs. They pay it through property taxes and user fees with a small portion in grants from senior governments.

The greatest bulk of municipal revenues come from property taxes. Under provincial law, all municipalities must balance their budget every year. The same does not apply to the provincial or federal governments who run deficits. In the case of Ontario the current deficit is $16 billion.

In the case of Guelph, there has been an exponential growth in the number of fulltime city employees, since the Karen Farbridge administration took over in 2007. This was accompanied by a growing number of senior staff that breached the Sunshine List of earning more than $100,000 a year.

Here is what’s happening:

This growth in numbers of staff and generous pay packages has thrust tremendous pressure on the city budget process. Remember it must balance every year.

Today, 89 per cent of the annual Guelph budget is dedicated to staff compensation, retired, present and future.

The growth of staff in 2006 of 1,148 fulltime equivalent (FTE) staffers earning an average of $ 82,563 in salaries and benefits to today’s estimated 1,508 earning an average of $103,054. That’s a 31.2 per cent increase in five years.

How does that match up with the growth of population of the city? The population in 2006 was 118,000. Today it is estimated to be 122,000, a 4,000 household increase or 3.38 per cent increase.

How then can the Farbridge administration justify increasing the staff by almost ten times the natural growth of the city?

Skewing all this is the influx of 22,000 University of Guelph undergraduates in the fall. The arrival brings pressure on city services including transit, water and waste facilities, traffic control, police, and fire, EMS personnel, engineering and building inspection services.

For this, in lieu of property taxes owed by the University, the city receives  $75 per student or $1,650,000 a year. That’s about what it would cost to hire 15 additional police officers and firemen. And all these additional attributable costs fall on the taxpayers’ shoulders.

It’s unfair and unreasonable, yet the Farbridge majority on Council continues to ignore the growing problems of financing a bloated staff. Plus the University smugly sits back protected by a provincial government property tax directive dated back to 1983.

Only the people can change this.

 

 

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11 Comments

Filed under Between the Lines

11 responses to “How Guelph can go broke not controlling public employee compensation

  1. Glen N. Tolhurst

    Gerry:
    Once again you hit the nail on the head:31% more employees being paid an average of 24% more. A double whammy if there ever was one! This rampant reckless growth must be reined in as the costs are unsustainable. A number of US cities have already “hit the wall” of non-affordable personnel costs of salaries, benefits, and pensions. It’s time to learn from others’ mistakes instead of blindly staggering into a fiscal tsunami.

    • Glen: Amen. And they think it cannot happen here! The Farbridge council majority are banking on increased development and assessment to keep them out of bankruptcy. Image! This bunch being in favour of residential development after screaming in 2006 about “sprawl”! It’s not an easy road for developers outside the downtown core who dare not cut down a tree or inflame the sensibilities of the heritage and green advocates in control of our city.

  2. geo

    Increased development and assessment? Is the bottom not about to drop out of the Ontario condo market just as Guelph begins to build them, subsidized by tax dollars of course, downtown?

  3. Paul

    Gerry:
    Please do some total math.
    In 2006 – 1148 staff times $82563 equals a Salary load of $94,782,325.
    In 2012 – 1506 staff times 103,054 equals 155,405,430 for a difference of over $60,623,000 – a WHOPPING 63.9% increase in salary burden.
    That is a major root of the problem as well as just what exactly are these extra staffers doing? I think an analysis of where the staff is growing is sorely needed. I bet most of these jobs are for thinkers, not doers – You know – Communications people (Like Hare), Heritage Planners that decide on the Heritage Curse.Release writers, Other planning and forecasting analysts and so on. How many of these 362 people cut grass or pave a road or put out a fire or do policing or do anything productive?
    And do not get me started on the Heads and Beds tax. The Provincisal Government has NEVER raised this tax in the more than 3 or 4 decades it has been around.
    Same thing for the portion of the expenses it covers for GRCA This amount has never been raised since its inception, leaving the Municipalities to pick up the unfair increase in costs of operation. Of course Guelph did a great job of hiding that one by recovering it through the water rates, so it is completely hidden now, never to see the light of day!!.
    McGuinty has now replaced Hepburn (of I talk to spirits fame) as the worst Premier in the history of this Province!! Ditto for the Mayor

    • Paul: My take on the root problem is a clash of ideologies. For almost six years we have had the city council focus on the environment, heritage, a variety of social engineering issues and the greatest feather of an employment nest in living memory. The thrust of this controlling group under Mayor Farbridge is to turn the city into a mini-Copenhagen where bicycles are supreme. Funding a transit system designed to move University students and spend $8 million on a so-called transit hub that has users fuming. On the other side, there are many who regard all this as too expensive and misguided. I guess there is nothing new about this, but I sure hope the voters will catch on and restore responsibility and common sense to the council table in 2014.

  4. mike

    And to think…all those people and no one ever answers the phone…..
    If we have all those people sucking up our tax dollars why does the city continually find it necessary or appropriate to hire consultants? That kind of pay package, benefits etc. makes me think there should be some professionals working on Carden. Apparently not.

    • Mike: There are no checks and balances in Guelph’s government. The Farbridge administration furiously protects the staff. This reduces accountability. As for the consultant issue, this is another staff back-stopper. By transferring the responsibility of managing projects or legal matters (even of minor cases), to outside consultants, the staff get off the hook. We taxpayers are shut out and deliberately kept in the dark — mushroom politics — so that the Farbridge dominated council has free rein to do whatever it wants. People are starting to be aware of has been going on and will react when the election is held in 2014.

  5. Jeff Burke

    A couple of macro factors scream at me: 1) The university will become an increasingly smaller employer over time… once kids figure out that BA really means ‘bugger all’, they will opt for zero tuition and study online— the internet is going to do to non-STEM programs what it has done to print media…less tax revenue for the city to fund the Freedom 55 pensions 2) Guelph relies on provincial transfers— Ontario has a deficit equal to California’s with 1/3 the people… what’s going to replace the Ontario grants to our municipality when Ontario goes Greece?

    • Jeff: I think you’ve got it! My take is the University will keep adding students and this will bring pressure on Guelph’s infrastructure. But the worst is yet to come when taxpayers discover the high cost of paying and paying off employees. The employee pension and benefit issue is the hot potato that most folks have yet to understand. The benefits can be controlled by council. one with the political will. The pension aspect is far more difficult to control.Growing numbers of people in the city are helpless to do anything while the Farbridge council majority does its ‘Nero” number and fiddles etc. Every day I hear from people who are fed up but feel nothing can be done. Yes there is a solution – work for change in 2014 and vote along with all your friends. The ballot box is our only hope.

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    • Lanny: Read the Pension Ponzi by Bill Tufts and Lee Fairbanks for a real eye-opener on this subject. Bill is the founder of the Fair Pensions for All organization. The facts are disturbing and municipal taxpayers in particular, are vulnerable. The future costs of paying three people to do one job is staggering. The average age of retirement for a member of OMERS, the municipal pension plan for some 238,000 municipal employees is 58. The result is a scenario where the taxpayers are guaranteeing pensions for two retirees while employing a third employee to do their job.

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