This train is really off the track

Posted  October 11, 2012

It is moderately amusing that Mayor Karen Farbridge persuaded electors in 2006 to support her with the slogan “putting Guelph back on track”.

Six years later, we have experienced a political train wreck like no other in the city’s history.

Engineer Farbridge has managed to create policies and spending that resemble a city going over the cliff.

Why?  The basic problem is the Mayor; members of her dominating majority in council don’t have a clue about financial management let alone basic economics.

They know how to spend your money but nary a clue about staying within a budget, controlling spending or recognizing how their spending is mortgaging the city for years to come.

One of the key problems is the high turnover of Chief Financial Officers – five in six years. The latest staffer, recently hired to do the job, has broad general civic experience but no formal education in accounting or financial management.

This turnover of financial managers has led to a crazy quilt management of city finances in which money is drawn from a specific account to pay for a shortfall in another unrelated account. It is compared to the average person skipping the telephone bill in order to pay the cable bill.

One of the most hazardous financial situations the city is facing is the number of lawsuits against it. It is understood the number exceeds 20 cases. These are potential liabilities that are not budgeted. One in particular is the $19 million suit by the contractor who built the new city hall. A mediation process failed to settle the matter so the risk to the city remains.

Another is the attempt by the city to separate itself from the Wellington –Dufferin –Guelph Public Health group. The city objected to paying its $10 million share of the cost of a new $17 million headquarters in Guelph. It sued to get out of the consortium and failed. The legal costs have never been revealed. The city now has to pay and the $10 million is unbudgeted.

Another problem is the secrecy surrounding the new composting plant’s contracts. The city, through its agent, Aim Environmental, has contracted to process 20,000 tonnes of wet Waste from Waterloo Region. The charge for this service is vague but is estimated to be in the $140 per tonne range. Trouble is after spending $34 million of taxpayers money to build the plant, the city refuses to reveal the operating costs. Informed estimates are in the $342 per tonne range. It is noted that Aim Environmental will operate the plant as well as sell the capacity to other municipalities.

Guelph taxpayers were never asked nor approved such a huge expenditure that has now escalated to more than $50 million.

Aim Environmental is a subsidiary of Maple Reinders, designer and contractor of the compost plan. It will operate the plant and seek additional tonnage to bring the plant up to full capacity of processing 60,000 tonnes annually. Guelph usage is 10,000 tonnes a year. The rest has to come from outside sources.

Why is the city building composting facilities to service other municipalities?

Why did the city agree to build a plant with taxpayer’s money that was six times the capacity of Guelph’s needs for the next 25 years?

What are the details of the Aim Environmental contract to manage and supply feedstock to the plant?

This has all the appearance of a terrible business deal where Guelph taxpayers take all the risk with little return on their investment.

The external auditor of the city’s finances does not consider any item less than $600,000. This is common practice with professional accounting and auditing firms. The cut off depends on the size of the account. In Guelph’s case, based on the 2011 budget, the number is $600,000.

This means that the accounts below the $600,000 threshold are not audited. Without responsible internal oversight and control there is a lot of leeway. This is possibly the reason that the city recently hired an internal auditor to review services and operational areas of city government.

Now we learn from the new internal auditor that city staff lacked the “expertise” to carry out the council mandate.  Council set aside $200,000 for the first phase to conduct the reviews of which $85,000 has already been spent.

Two areas, legal services and business systems operation, were reviewed with the help of outside consultants.

The council will be asked for additional funds in the 2013 budget so that the work may be completed.

So there you have it. To find out how the various staff-operated city operations function, $200,000 plus the auditor’s salary is spent with more to come. The auditor stated the extra funding is in part to obtain public input.

Do you really believe the people will be told how their taxpayer-funded operations function, good or bad?

That’s like Stephan Harper telling the public about the real costs of the new F-35 jet fighter his government wants to buy.

If you buy that, they will come.

 

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3 Comments

Filed under Between the Lines

3 responses to “This train is really off the track

  1. Glen N. Tolhurst

    It is mind boggling that there are no milestones to tie funds spent with planned project activity or post-completion audits to show actual vs. budget for all the programs money is being thrown at. Mind you, that might result in skeletons coming out of the closet and critical questions being asked.

  2. geo

    Is there a scenario available where the province could come in, tear apart the city’s books and account for every dollar spent?

    • Geo: I don’t know of one but it is only a matter of time before people start realizing the fiscal fix we’re in and organize to change it. Please let me know if you hear anything.

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