Posted July 10, 2015
Whoever said the more things change the more they stay the same, can apply that to the present city administration.
During a recent meeting of the Corporate Services committee, Mayor Cam Guthrie attempted to persuade the committee to adopt his Consumer Price Index (CPI) formula to keep property taxes at the CPI level each year.
Unfortunately the mayor took it on the chin and lost when only he and Coun. Christine Billings supported the motion.
The five-year average of the CPI is 2.08 per cent. The staff formula then added the Municipal Property Assessment Corporation rate of another 1.82 per cent, according to Janice Sheehy, the finance department’s general manager and treasurer.
“That’s way over four per cent just as a formula,” Coun. Billings pointed out, “that’s double the rate of inflation.”
On closer examination, the current property tax increase for 2015 is 3.94 per cent, which is almost spot on based on the staff’s recommended 2016 budget formula. It seems this is the same one used in the last two budget years, except that the brakes were put on in 2014 because it was an election year. Last year, council approved a property tax increase of 2.34 per cent.
Where or where did the staff formula go in 2014? That was a 1.6 per cent reduction from the budget formula benchmark, the same one they are recommending for 2016. There was a minor deviation in the 2016 formula in which this year, the formula based the increase on the number of taxable properties. It has been changed to using the five-year average of the Ontario consumer price index.
This could be seen as pandering to the Mayor’s determination to keep the property taxes at the CPI level.
Here are some facts: Budgeting and averaging past levels of inflation is not good business. It is because inflation affects all operations, civic, business and personal, and changes monthly.
Using a five-year average of the MPAC’s market changes is a sloppy way to budget. Former Premier, Dalton McGuinty, put a four-year hold on market assessment increases in Ontario. We are now catching up, starting in 2013 when property assessments started to rise. This is the hidden assessment cost to property owners that multiplies exponentially each year. We’re now paying tax increases on previously increased taxes.
This recommendation is exactly what the vast majority of people did not support last October. It’s called manipulation of money to meet specific objectives. For eight years, that’s what the Farbridge administration indulged itself with, self-serving projects costing the taxpayers millions without a chance to complain.
Then, along came Urbacon.
This six-year saga of bad judgment, mismanagement and callous disregard for the people’s interests, has possibly cost this city an estimated $19 million. And for what? We agreed to a new city hall and renovated old city hall to cost $42 million that has ballooned to an estimated $61 million and counting.
To this day the city staff, led by Chief Administration Officer, Ann Pappert, have not revealed the real costs of this financial disaster. So far the bill is more than $14 million but there are other unreported costs including the cost of staff detached to work on the project between 2008 and today.
The people spoke. The mayor plus incumbent councillors, some who were defeated and some who just quit and left office.
It is always amusing whenever the sage of ward six speaks. Coun. Karl Wettstein made the pithy observation: “Regardless of the (budget formula) guideline, if councillors want to keep taxes low, they will either have to cut costs or cut services.”
This is the same councillor who introduced a motion to reduce replenishment of the three reserves used to pay Urbacon from $900,000 to $500,000 this year. Further to flip the five-year repayment schedule of $900,000 per year over to the staff to come up with a new plan of replenishing the reserves.
With that logic, it’s no wonder the long-term councillor failed bring a recreation centre to his ward in his past eight years on council.
But Wettstein may have inadvertently spoken the truth. Cutting costs is the key role of management. In Guelph this is not a staff imperative. Witness the ever-rising number of staff, including police, fire and EMS personnel, pay and benefits, legal and consultant costs and the manipulation of finances. None of which is in concert with the growth of population.
The only fair way to prepare a budget is zero-based. Treat each year as a starting point. No carry over of unspent money the previous year. Every department head must be responsible. It requires accurate budget estimates of the new year’s costs including staff additions.
For example, this year the council agreed to add 21 new full time staffers to an already bloated staff. The justification for this must be airtight and proven that the individual is necessary to increase staff productivity and efficiency.
Unfortunately, the more things change in Guelph, the more things remain the sam