Putting Humpty Dumpty back together

Posted March 24,2013

There is growing evidence that former premier Dalton McGuinty allowed the provinces’ teachers and public servants to gradually grab a huge slice of the public pie in the seven years of his administration. The result is that Ontario residents are stuck with an overpaid and over-benefited group of public employees. Collectively, they will drain the treasuries of provincial departments, municipalities and school boards for years to come.

And the taxpayers of Ontario are left holding the bag having to fund it.

It is an unworthy event that has already reduced the provincial government’s ability to balance its budget currently with a $12 billion deficit. If not brought under control, the public employee costs will exacerbate the taxpayer’s ability to pay.

The intransigence on the part of the Ontario teachers unions who, despite legislation to stop them from closing down the schools, still participated in job action that impacted negatively on students and parents. It resulted in McGuinty’s exit as premier.

This problem is not unique to the provincial staff. Ontario’s municipal governments must balance their budgets annually. They are experiencing rising costs for staff including gold-plated pensions costs and liability that taxpayers must guarantee … forever. The problem lies in that public servant pension plans are defined, as a guaranteed amount on retirement, indexed to the cost of living.

An example in Guelph is the recent retirement of Police Chief Rob Davis who will enjoy a guaranteed indexed pension of $140,000 per year for the rest of his life. Enter the new chief Brian Larkin who is 57 and could retire at 65 and be eligible for pension. Now we have two former police chiefs on taxpayer-guaranteed pensions for life. A new chief replaces Chief Larkin and he will be eligible at 65 to retire. And so it goes.

The threat is that the Ontario Municipal Employees Retirement plan (OMERS) is actuarially underfunded by $10 billion for 268,000 public employees. Most of Guelph’s civic employees are members of the OMERS retirement plan.

The big problem is that we are living longer. That means that Chief Davis has a potential of living past 85. Chief Larkin now is retired and enjoys the potential of 20 years on pension. Larkin’s successor will have the same opportunity.

Don’t misunderstand. These men have earned their pensions under present rules.

The defined pension for public servants at one time was a major perk because the opinion was that it helped even the benefit field between public and private employees. That is no longer the case with Guelph civic employees enjoying a total of 24 benefits beyond the pensions including free downtown parking.

The situation in Guelph has mushroomed in the past six years as the Farbridge administration approved excessive numbers of staff. Additions that are not justified in terms of the growth of population and assessment. In fact, the city staff in 2012 consumed 89 per cent of the operating budget. That was a 61 percent increase in staff costs since 2006. More than 400 fulltime equivalent staff has been added since 2007, since Mayor Farbridge took command. Compare that to a population growth of just 5.8 per cent in the same timeframe.

The bottom line is that Guelph’s public servants are now doing much better in terms of salaries and wages and benefits than private sector comparable jobs.

Guelph taxpayers are faced with two key problems:

How to stop the growth of staff to limit future liability of employee costs. This calls for a careful, independent study of city operations.

How to slow the exponential growth of capital spending that is creating long-term debt that will take years to pay off.

These are the basic issues underlying the 2014 municipal election that voters will have to seriously consider.

It boils down to whom among us will accept the responsibility of running for council and reforming our city government? These are folks who believe that a balanced council should have members dedicated to provide public services at a reasonable cost. Not grandiose schemes that have polluted the public’s confidence or its ability to pay.

The next council with its work cut out for it, will bring good management practices to the table and open the administration to public access.

It will be like putting Humpty Dumpty back together again.

Not an easy job but a satisfying and beneficial one for all Guelph citizens.

Hand me the glue gun, please.

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5 Comments

Filed under Between the Lines

5 responses to “Putting Humpty Dumpty back together

  1. geo

    It starts by electing a Council that will at least acknowledge the problem.

  2. Glen N. Tolhurst

    Plumbing the depths of the problem may require the skills of a proctologist.

  3. Kevin Reid

    So retired police chiefs are the problem? You are proposing removing that position or replacing it with someone with less experience/younger? I am not sure that council has much/anything to do with selecting police chiefs or setting collective agreements. IMHO

    • Kevin Reid: I’m not suggesting that heading up the police department should be left to less experienced personnel. I only used that position as an example of the future liability of the taxpayers with public servants’ defined pensions. Also, regardless of how or when the police chiefs are chosen, they are still on the public payroll. You may have exposed the problem with your comment that council has not “much/anything” to do selecting police chiefs or settling collective agreements. There are two parties in bargaining, the taxpayers and members of the collective agreement. The taxpayers are represented by the council, who they elected.Their interests and trust resides with that body. The current council has abrogated some of this responsibility by using surrogates to negotiate hiring and bargaining. That’s why Guelph’s employee costs are more than 20 per cent higher that its nearby peer group.

  4. Jerry

    I feel sorry for the new mayor and council in 2014.

    Look what they are facing,having to go to tax payers and say we have to
    raise taxes because the last mayor and council of clowns had all these
    lawsuits against the city,all the white elephants that the true costs will
    finally be brought out to the light.(city hall,recycling centre)
    All the staff members we have to pay off because we cannot afford to keep
    because the slush funds(hydro,parking and others)are all depleted to keep
    the taxes at a fairly land rate.
    I just hope when the new mayor and council are elected in 2014 that the
    citizens in Guelph remember the mess this administration left behind.

    So when the taxes are raised to fund this mess and the new mayor say we
    have no money for special interest groups(green groups that popped up
    every where when farbridge came to power).The slush funds are all depleted or just too low to use and we have to pay for all the lost lawsuits.
    I do not want to hear whining from the greens in this city.
    My thinking is you can all go crawl into your holes and just go away and leave the people with common sense alone to run this city properly.

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