Trying to make sense of Guelph’s Magic Kingdom financial management

Posted September 13, 2015

I was asked the other day why our taxes keep going up. It was a fair question and here’s how I would answer.

As we travel down the road of life, we must live within our means. But we all know, that there are times when an unexpected financial crisis occurs. Examples include unexpected repairs to your property, a serious illness, job loss, investment depreciation, or divorce. These are some of the events that create a financial strain at certain times during our lifetimes.

When it happenes, you are faced with a few alternatives including borrowing money to pay for the unexpected cost, thereby increasing your personal debt load. You can reduce your operating costs until the emergency spending is overcome, or use your credit card to cover your expenses.

The figures show that 50 per cent of Canadians carry a deficit on their credit cards. Translated that mean they are paying more than 21 per cent interest on the unpaid balance each month. That’s paying interest on interest in the account.

So the unexpected happens to a point in one’s life where expenses must be controlled to avoid escalating debt and financial anxiety.

Speaking of anxiety, let’s turn to the way our city is managing its finances and budget.

First, remember that the city administration, including the elected officials, must function under rules of the Ontario Municipal Act. This mandates that each calendar year, the city cannot have a deficit and the books must balance.

The city is also denied other methods of raising tax revenues outside of property taxes, service fees such as development, building permits and fines.

So it is important that when the city strikes its budget for the upcoming year, all costs and surpluses must be audited and sent to the Ministry of Municipal Affairs and Housing.

The staff in Guelph has been given the job of preparing the 2016 budget by the current council. It is presented to council for discussion and approval. During the process, the public and organizations may request funding.

Currently the city is facing a major, unexpected cost relating to the Urbacon lawsuit and other allied expenses.

Our mayor has stated: “ A small amount of people want to go back to 2008 – there’s a curiosity about it. But most people want to know how much it cost, what were the lessons learned, how to pay back the reserves and the governance issue? I feel confident that we have addressed these four issues.”

Mr. Mayor, how do you square your statement with the motion by Coun. Karl Wettstein last March 25th? During the budget debate, your council moved to lower repayment of the three reserves used to settle with Urbacon from $900,000 to $500,000 in 2015 and ordered the staff to create a new repayment plan.

It was your CAO who said that the settlement would not affect property taxes. She added that there would be five annual payments of $900,000 to replenish the reserves.

The answer was that council approved a property tax increase of 3.96 per cent for 2015.

So your administration went to its ATM machine to continue the tax and spend policies of the previous administration, by juicing up property taxes to pay for it.

Your council also not only reduced the repayment to the reserves but also allowed a motion by Coun. Mike Salisbury to take $300,000 that was not spent in the 2014 budget and add it to the 2015 budget. It was a holdover item of the previous administration to add bike lanes on Woodlawn Road. Spending $600,000 only forced up property taxes in order to pay for it.

Not even the federal government allows that. If a department has not spent its budget funding by March 31, it cannot carry it forward to the next year. The use of public money is a sacred trust between the citizens who provide the funds and those elected to manage it as if it were their own.

So Mr. Mayor, why is your administration allowing it?

How can city finances ever balance when unbridled spending relies on increasing more and more revenue from the taxpayers? Why did the administration approve hiring 21 additional fulltime staff this year when there was a loss of some $8.94 million, just to pay off Urbacon? The unmitigated statements of the CAO spinning it to make the citizen believe it won’t cost anything, betrays her utter lack of understanding finances.

It illustrates the abusive use of public money that our Mayor claims is “behind us and we must move on.”

Guelph families can’t run their finances this way so why do we allow the city to do it to us?

The mayor’s denigrating comment about a small number of people wanting answers won’t make it go away.

Hiring a qualified, independent Chief Financial Officer (CFO) would be good first step. Running a city with a value of $500 million without a CFO is tantamount to the administration ignoring its sworn fiduciary responsibility.

Right now we have a man, Mark Amorosi, in charge of the city’s financial management who was originally hired to manage human resources in 2008.

In summary, “go figure.”

 

 

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1 Comment

Filed under Between the Lines

One response to “Trying to make sense of Guelph’s Magic Kingdom financial management

  1. Glen N. Tolhurst

    It is way past time to start getting qualified professionally accredited experienced personnel into key positions in city hall. The new engineer who is going to look after waste, water, & related stuff is a start. Now let’s get an experienced professional accountant, B Comm, CA/CPA, into the CFO position and have the CFO report to council directly, NOT thru a CAO/ deputy CAO who could filter the CFO’s reporting. Wipe out a couple of the hangers-on from the previous administration and replace them with newly minted hungry CA/ CPA personnel to do both a hard nosed internal audit and train staff in the ways of Zero Based Budgeting. Set cost saving and waste elimination targets for all departments. If a few toes get stepped on or a few sacred cows end up as road kill, suck it up buttercup. Time to cut the crap and get on with running the affairs of the city properly!

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