Posted December 20, 2012
It doesn’t take much to figure out how our city got itself into the cesspool of financial mismanagement.
If the elected officials fail to understand basic budgeting and their fiduciary responsibility to the taxpayers, Houston, we have a problem.
An example is the recent exchange concerning the cost of civic employees between Coun. Leanne Piper and Guelph taxpayer Milton Burns. Mr. Burns stated a factual and scary picture recently of the city’s finances when the public was invited to present its points of view.
Coun. Piper told Mr. Burns that figures from the 2013 proposed budget showed all staff costs at $119,829,529. She claimed that staff will cost 64.4 percent of the 2013 operating budget.
In fairness, Ms. Piper was not the author of these figures. Her source was the Human Resources chief, Mark Amorosi.
So being direct, if the 2011 audited city financial statement placed staff costs at $155,000,000, where did $35,170,489 difference disappear? This is a little more than just a rounding error. How is it possible, with the staff costs increasing at 11.5 per cent per year, employee costs can magically reduce to some $119 million in 2013?
Marky, you got some ‘splaining to do.
If city councillors fail to understand the finances of running the city and become dependent on the staff, who is running the show?
In his presentation Mr. Burns pointed out some startling and true facts as how the city staff has managed to increase its employee costs to taxpayers by an average of 10.9 per cent per year for the past five years.
That totals an overall increase of 68.1 per cent during that period. In 2011, 89 cents of every dollar collected on the tax levy went to pay staff costs. Compare this to 74 cents in 2006. In 2011 the staff cost totaled $155,000,000 out of a $174,000,000 budget.
Mr. Burns did not make these figures up. He obtained them from the 2011 official audited city financial report that must be submitted to the Province. In fact, he has been tracking the official financial reports for six years and there are remarkable variances in which audited figures do not match the following year. But that’s a story yet to come.
Looking at this increase in staff salaries, Mr. Burns took figures from the City’s official 2011 Human Resources Report (HRR) that reported that Guelph’s salaries were 33.7 per cent, as a percentage of total operating costs. According to the HRR this was higher than the Ontario average of 30 per cent.
What does this mean in real money? Guelph’s salaries in 2011 were 12.4 per cent too high or $10.2 million.
Looking at staff benefits, the cost to taxpayers rose by a whopping 81 per cent or 12.5 per cent annually for the past five years. Mr. Burns assumed that the mandatory benefits including dental, medical and insurance plus payments to support the Ontario Municipal Employee Retirement System (OMERS) were more or less in line.
It’s a different story with the undocumented other benefits of about $17,000,000 that are $6,000,000 more than the 35 per cent benchmark.
Maintaining this rate of staff growth in numbers and remuneration including benefits is unsustainable. Yet, council approved hiring another 23 new full-time employees in the 2013 budget.
So, you be the judge. Exploding debt and staff plus questionable real estate deals, is mounting evidence that taxpayers are being grossly misled to support their city and its services.