Posted November 15, 2013
When it comes to planning a budget, particularly the City of Guelph’s 2014-estimated $194,000,000 budget, the staff’s financial stick handling is impressive.
Chief Financial Officer Al Horsman was the designated hitter to explain why the staff arrived at a 3.36 per cent property tax increase for next year. This was because city council had little input in the process.
Coun. Karl Wettstein asked why the tax increase was not more related to the Canadian Price Index averaging 1.97 per cent for the past four years.
Mr. Horsman said such a comparison was unrealistic because the basket of goods the city must pay for is different than that of the average person. Let’s think about that for a moment.
It is true that the city must pay for third party suppliers of services such as lawyers, consultants, board members and contractors. Mr. Horsman added that the city is “hit with costs over which it has no control such as responsibilities downloaded from the province and cost increases in (unspecified) mandated programs.”
Willikers! You start to feel sorry for the city staff having to face all these budgetary issues over which the staff has no control. These costs have led to annual average property tax increases of 3.5 per cent in the past seven years.
But let’s drill down a little deeper. Many of the provincial mandated costs are offset by grants. Most notable is the annual gas tax rebate of more than $2 million. Does the province increase these mandated costs by 3.5 percent every year? Of course not.
Managing the finances of a city is no easy task. What Mr. Horsman left out of his “basket of goods” comparison was the cost of city employees. It is the biggest line item in the budget and consumes some 88 per cent of the property taxes paid to the city.
When a city councillor complains that council is left out of the budget process, look inwardly.
Further, if you don’t control your costs you cannot control your budget.
In 2012, the latest year of official financial statements, there were 1,441.76 full-time equivalent (FTE) employees on the city staff. That’s a 20 per cent increase during a period when the population grew by only 5.8 per cent.
Those so-called “provincially mandated costs” are downloaded to all 440 municipalities in the province, not just Guelph.
So what is Toronto’s secret? The largest city in Canada is predicting a 1.75 per cent property tax increase for 2014.
What has evolved in Guelph is council’s dependence on the staff and the staff has removed budget planning from the elected officials. And that friends, in letting the fox in with the chickens.
Who has more skin in the game? Is it a group of part-time elected officials making on average $30,000 a year? No, the staff, more specifically the senior staff, has control and they have a lot at stake.
This so-called budget process ignores the exponential growth of staff numbers, salaries and benefits including pension obligations. Why? Because it affects them personally. Control of this process lies principally with the executive team.
Nothing will change until hard decisions are made. These include reducing the numbers of staff under the guidance of an outside management expert. It would entail reorganization of the staff duties and responsibilities. It should also include a two-year freeze on all base salaries and a reduction of benefits, to bring employee costs in line with peer municipalities.
The next council should take steps to privatize some services to reduce costs including Guelph Transit and waste management operations.
The days of $75,000 custodians and crossing guards must end. In 2012, the average Guelph employee’s salary, and benefits including pensions, reached $113,394. The average salary of a city employee was $87,313. The total of employee costs that year was $163,400,750.
The city defends its staff costs by reporting only the base salary number in its financial statements, and not the total compensation costs. While this may be legal it remains deceptive.
And what does the staff recommend to council in the 2014 budget? Hire another 10.5 fulltime equivalent employees.
Remember Oliver! When the little guy asks: “More porridge please?”