Posted March 13, 2014
When most people sit down at the kitchen table to budget their expenses and income, they make sure their income covers their expenses before spending.
Yet, the financial staff of the city of Guelph, in the last three reporting years, did exactly that.
They spent the money on various projects, operations and policies without regard to where that money was coming from.
But unlike citizens who must keep their expenses in line with their income, the city has a piggy bank that it can tap called property taxes. It is the ultimate safety net to cover their soaring, out of control costs.
In those three years, city staff underestimated its revenue by $105,955,000. That’s right, and it’s deduced from the city’s own financial statements. It represents a monumental failure to properly forecast revenues when preparing a budget.
Now imagine if your family adopted the same forecasting methodology as the city. That is, if you ran short of money on your budget, you could tap into some imaginary ATM machine to cover your added costs.
In the city’s case, it raised taxes and user fees that were irresponsibly excessive to cover its forecasted costs.
They underestimated their costs by a country mile
The city also bungled by undereestimating expenditures by $19,074,000.That means it spent that amount over its own budgets in the same three years.
Now property taxes make up an estimated 46 per cent of that $105 million of underestimated revenue. The rest comes from user fees, water and hydro revenues, increases in property assessments (on which your taxes are based), and various government grants.
Matching both underestimated revenues to expenses in the official city budgets, taxpayers overpaid their taxes by $86,881,000 in three taxation years. Based on 45,000 taxpayer accounts, that averages out to $1,930 per property tax client that exceeded the needs of the city. Wouldn’t you like to have that back?
That isn’t going to happen. It illustrates how incompetent the city is in forecasting annual budgets. In fact, there are so many adjustments made during the budget year that defy logic and responsibility. As a result, the audited final figure, closing off a given year, is changed the following year and not carried over as is the case with accepted accounting procedures.
The situation has created concern among many citizens who are experienced in running operations with sound financial planning and management.
Community leaders express their concern about taxes
Frank Hasenfratz, founder of Linamar, Guelph’s largest private sector employer, is on record as saying that Guelph’s property taxes are too high. He said that two years ago.
Similarly, Lloyd Longfield, CEO of the Guelph Chamber of Commerce, questioned the rising property tax rates that, for the past seven years, far exceeded the Canada Price Index.
The fallout from this over-taxation is affecting growth of our economy by driving up housing costs and discouraging businesses and new residents from settling in Guelph.
The city’s financial management creates doubt among businesses and property investors interested in coming to Guelph when planning and accounting is so sloppy and unpredictable.
Without asking citizens, the $33 million Organic Waste Facility was build three times the needs of the city for the next 20 years. It is being used by outside sources without an accounting of revenue or costs of operation. Citizens are openly questioning the exorbitant policies that are destroying the city’s ability to grow in an orderly and financially sound manner.
They built it and they didn’t come
Building waste management facilities that, on paper, have already cost $53 million, still fails to serve an estimated 6,400 residences. The costs of operation are a secret. So secretive has the city been that we’ll never know the millions spent to create the Dunlop Road waste management facility.
The Farbridge grandiose future agenda now includes a $34 million rebuilt downtown police headquarters; a $16 million staff estimated riverside park, east of Gordon Street, that will mean destruction of a privately owned popular strip mall and pet clinic; a proposal to build under the city centre to supply thermal heat and cooling to downtown buildings and the cost is unknown.
Throw in the $63 million proposed downtown library; the $37 million South End recreation centre, and the $33 million already spent subsidizing building downtown hi-rise condos. It is easy to understand why growing numbers of citizens are angry.
Join GrassRoots Guelph and work to change the administration
There is one organization that recognizes mismanagement of our city. GrassRootsGuelph.com welcomes any citizen who shares this view. Those who want to help elect representatives who will be fiscally responsible, and use common sense. The time has come to return the decision making power to the elected council, the true representatives of the people.