Can Guelph afford the ever-growing costs of its city employees?

Posted September 6, 2014

It may come as a surprise to learn that we are paying many of our first responders a base salary of $1,800 a week in Guelph. On top of that, citizens pay the medical, dental and life insurance; 50 per cent of pension contributions; all uniforms and equipment; disability protection; sick leave benefit that can be accumulated; and overtime.

This is not just a Guelph problem, it is occurring in most municipalities throughout Ontario. Taxpayers are being ordered to pay first responders by faceless arbitrators who never consult the municipality regarding its ability to pay awards.

What happens is the “whipsaw” effect in which city A’s first responders are awarded an increase of X per cent because city B’s first responders are being paid X. And on and on it spirals upwards.

How did this happen? The Ontario government passed a law that first responders cannot strike or be locked out. Disputes had to be resolved by binding arbitration.

It turned out to a bonanza for a legion of lawyers who became the so-called independent judges to settle first responder labour disputes. No matter how strapped a municipality is it had no choice in the process.

Now switch to other public employees most of whom belong to a traditional union. They can strike or be locked out – witness the recent three-week lockout of the Guelph Transit workers. That was settled between the two parties, the city and the union. In this case, at lesst the city has some control over details 9f the settlement.

The question arises, is it fair that one group of public employees never has to get their hands dirty in a labour dispute? However, the others have to force the issue through actions allowed by legislation, managed by the Department of Labour.

The Liberal government of Premier Kathleen Wynne supports this unfair and archaic situation. It is no secret in Ontario that the Liberals, in power for more than eight years, have allowed public servants’ pay packages, to far exceed those received in the private sector.

Since the Farbridge administration took over the city, the fire department has a new headquarters located in the main downtown fire station. And recently city council approved spending $34 million on renovating a new downtown police headquarters.

The growth of staff remuneration, benefits and work places has contributed to the decline in manufacturing jobs in the province. Private sector employers have discovered that high taxes and operating costs, (Ontario has the highest electricity costs of any jurisdiction in North America), forces them to relocate elsewhere.

Despite Ontario loaning $9 billion to help save General Motors and Chrysler, GM has slashed production at its Oshawa’s assembly complex, the largest GM plant of its type in North America. It’s because they can build vehicles cheaper elsewhere.

The overly generous pensions and benefits enjoyed by almost all municipal civil servants is rapidly becoming the highest long-term liability facing most municipalities in Ontario.

One of the contributing reasons is the retirement age enjoyed by city staff, members of the Ontario Municipal Employee Retirement System (OMERS). The average retirement age is 58 among the 268,000 OMERS members in Ontario. Retirement at that age contains the added feature of a “top-up” payment the equivalent of what the retiree would receive as a Canada Pension Plan at age 65. That’s receiving the equivalent Canada Pension benefit through OMERS for seven years.

Another benefit is the ability to accumulate unused sick leave days and receive an additional equivalent cash payment upon retirement. When former Guelph police chief Rob Davis retired, his unused sick leave accumulation payout was $42,000. That’s the same as being paid twice for work because you didn’t book off sick.

These growing pay packages and benefits have outstripped most of those paid in the private sector.

In 2013 OMERS, according to its published figures, remains underfunded by $8.6 billion. With total assets of $65.1 billion that represents a 13.2 per cent under funded liability. This underfunding has been ongoing since 2003 when OMERS management at the time, gave members a contributory holiday. The problem is exacerbated by the growth in OMERS membership.

The solution is to raise employee contributions or increase the portion paid by the municipal taxpayer. If that occurs, it could financially crush many Ontario municipalities large and small.. Plainly, Guelph is vulnerable in the future.

Productivity in the public sector is relatively lower than in the private sector of the economy. There are several reasons but in Guelph, one is the mismanagement of absenteeism and overtime. In 2013, the city’s internal auditor discovered the cost of overtime and absenteeism exceeded $5 million or double the previous year.

Another factor that applies in Guelph is the increasing growth of the number of city employees. This is not matched by the normal increase in population. One of the main causes for staff expansion lies with the supporting the policies of the Farbridge administration.
And yet, the city staff has the reputation of delaying important projects that do not fit the goals of the city administration. Two outside consulting firms have told council that Guelph is a tough place in which to do business.

Mayoralty candidate Coun. Cam Guthrie has popularized the situation. He refers to the flawed systems in City Hall as “The Guelph Factor.”

It has so stifled industrial and commercial investment that, in eight years, the ratio of Industrial assessment to residential assessment has not changed from 16 per cent to 84 per cent. Translated that means residents are carrying a huge burden to supply tax revenue to operate the city.

Another four years of a Mayor Farbridge administration will bring the city to its financial knees. The fall-out will include declining home values as costs of living in the city continue to spiral upward. Many people will be forced to move out of the city to surrounding lower taxed venues.

The current city council has already approved millions in spending that will affect future councils unless there is a halt in capital spending by the new council until the city’s financial house is put in order.

By participating you can bring about change. Follow and for news and commentary to help make up your mind on Election Day, October 27.



Filed under Between the Lines

4 responses to “Can Guelph afford the ever-growing costs of its city employees?

  1. fairpensions09

    Probably not. Just made this town bankrupt and another 10 to go in Nova Scotia. Coming to ontario soon.

    We using you post today about insolvency

    Sent on the TELUS Mobility network with BlackBerry

  2. gusb

    any government employee should be paid a percentage of the average weekly/ monthly national industrial wage as advertised in the globe and mail Teachers and cops a percentage more than the workers ( janitors and such) we cannot forget where the money comes from !

  3. Milton Burns

    The City of Guelph paid $12.3 millon last year on behalf of its employees to OMERS.This is up 12% in 2013 and up an astonishing 31% in the past two years

  4. Steve McQueen

    Getting paid $42,000 for never calling in sick (if I’m not mistaken) is a pretty sweet deal to me, wow.

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