Posted December 15, 2013
In an effort to compare Guelph’s financial situation with that of Windsor, Mayor Farbridge failed to reveal the real costs of Guelph’s staff compared to that of Windsor.
In her blog, the mayor says that home values in Windsor are declining because the population is decreasing while Guelph’s population increased by 5.9 per cent from 2006 to 2011.
The Mayor blithely ignores that Guelph council has consistently increased annual taxes on average by 3.5 per cent since her election in 2006. She also ignores the fact that in her seven years in charge, there has been no change in the ratio of residential assessment to commercial/industrial assessment of 84/16. That means that the residents of our city are carrying the vast majority of city tax revenues.
What does this mean? The ideal ratio between residential and commercial/industrial assessment is 60/40. That provides more balance to municipal revenue streams and takes the heat off the residential sector.
The Guelph ratio occurred because the Mayor and her cohorts on council have spent taxpayer’s money on projects that have been poorly planned and executed. Most of the time it has happened without serious public input. That’s the main reason our taxes increased.
The Mayor’s ego often gets in the way of pragmatism. Most citizens are not interested in investing in projects that are “world-class” or having the city branded as having great progressive leadership.
But here’s the dirty little secret that is never mentioned let alone discussed.
The exponential cost of staff is placing the city in a serious financial condition that will impact residents over the next 30 years. Something must be done to rein in these growing costs. These include progressive salary and wages increases, hiring staff at higher and higher rates; all this will create a huge liability on the taxpayers in the future.
There is evidence by outside agencies that track the zooming public employee costs across many municipalities in Canada. The Canadian Taxpayers Federation gave the city a “D” rating for its excessive executive compensation. The Fair Pensions for All organization has delivered examples of how public servant salaries and wages and total compensation is creating huge future liability to taxpayers.
We do not have to look too far to see what unbridled spending has occurred in the Ontario Power Generation Corporation. Three senior executives were fired for giving themselves huge increases in pay and bonuses. The most egregious fact was they awarded themselves a 4 to1 ratio when calculating their pensions. One of those dumped would have received a $750,000 annual pension for life.
There is already evidence of this happening in Guelph where senior managers are receiving regular increases without any oversight regarding on-the-job performance. Oh, there are performance reviews but rarely is there any denial of increases in pay or benefits for poor performance.
So you all understand, each year that passes, the liability for Guelph taxpayers increases exponentially. In partnership with municipal pension funds, the city is required to guarantee that retiring and retired workers will receive their pensions plus the Canada Price Index incremental annual adjustment.
The largest of these pension funds is the Ontario Municipal Employees Retirement (OMERS) plan that covers some 268,000 municipal employees in Ontario. The average retiring age of a public employee as a member of OMERS is 58 years. But there is more. The municipal employer guarantees, include accumulated unused sick days plus a bridge amount to cover the equivalent of the Canada Pension Plan benefit until the retiree is 65.
The problem OMERS is facing is it is underfunded by more than $10 billion, principally because of dwindling returns on investments and some bad management decisions in the past.
Some 80 per cent of Guelph’s employees are members of unions and chiefly, are members of OMERS. The city must pay the same amount that the employee must contribute. The problem is that allowing employees to retire at 58 means the municipality must guarantee their OMERS pension for the rest of their life.
A more recent example was the retirement of the Guelph Police Chief. He left the service with a guaranteed pension of $138,000, annually indexed to the CPI and received more than $40,000 in accumulated unused sick days. His life span is statistically expected to be 20 years to 85.
Meanwhile the new chief is on the job and contributing to his pension as well as we the taxpayers. He has a generous benefits package to go along with his salary.
Theoretically, taxpayers could be on the hook guaranteeing pensions for two retired police chiefs plus a third active chief drawing a substantial pay package.
With a labor force of 2,065, you do not require a doctorate in math to figure out why your taxes will increase exponentially over the next 50 years. Unless these overly generous, defined pension plans are reined in, the result could be disastrous for residents of Guelph and hundreds of other municipalities in Ontario.
It’s the mayor’s dirty little secret.