Part One – Farbridge’s legacy leaves Guelph with 50% higher per-person costs than Kitchener and Cambridge

By Gerry Barker

 Posted October 21, 2015

As the chart below clearly demonstrates it is time for the city to support the Mayor who was elected by the people on the platform of tax increases not higher than the Consumer Price Increase (CPI) that was 2.4 per cent in 2014. The analysis below suggests that this should be attainable.

For the past eight years of the Farbridge administration, the financial management was an ongoing disaster, new comparative analysis of Guelph’s costs to similar-sized cities makes the case.

Those cities included in the analysis are: Kitchener, Cambridge, Waterloo, Waterloo Region, Milton, Oakville and Burlington, among others.

The analysis broke down two units of each budget: Capital (in millions) and Operating (in millions). The per-person costs comparison was based on the 2011 census population of each city. Comparing Guelph’s finances to other municipalities is summarized in the Variance. Parenthesis ( ) indicates lower costs for those municipalities as opposed to Guelph.

 

City Capital Operating Total $ Variance % Variance
M= Million          
Guelph – pop 121,628 $88M $382M $470M    
Cost per person $723 $3,136 $3,859    
           
Kitchener – pop 219,153 $105M $129M $234M    
Cost per person $479 $589 $1,068    
Region of Waterloo – pop 504,096 cost per person $171M $1,349M $1,520M    
Total cost

 

    $2,588 ($1,271) (49%)
Cambridge pop 123,748 $13M $112M $124M    
Cost per person $102 $903 $1,005    
Region of Waterloo – pop 504,096 cost per person $171 $1,349 $1,520    
Total cost per person in Cambridge including Region allocation $273 $2,253 $2,525 ($1,334) (53%)
           

Please note that some of the numbers in the chart may not add through due to rounding.

You have to ask yourself, why are Guelph’s per-person costs compared to Kitchener and Cambridge so much higher? The plain answer is Guelph’s costs are too high. Can it be that the value of providing services in Guelph is greater than the two cities nearby? Because Kitchener and Cambridge are part of the Region of Waterloo, we have added those costs together so that the comparison is fair and equal. It is an accurate analysis as prepared by a professional accountant from official published financial reports showing per-person costs are 50% higher in Guelph.

These are only three municipalities out of the 18 analyzed whose 2015 budget costs were lower than Guelph’s with three exceptions, Milton 4%,  Oakville 11%, and the City of Waterloo 3% costs were higher than Guelph on a per-person basis.

It is now critically apparent that Guelph’s budget is far out of line with 15 other municipalities ranging from Vancouver to Peterborough.

Just comparing Guelph’s per person costs with Vancouver, the B.C. city of 603,500 population and one of the highest costs of living in the country, had a 52% lower per person capital and operating cost for 2015.

In fact, regardless of the population, Guelph’s 2016 budget must be drastically reduced or the city will become too expensive in which to live. One of the root causes lies in the Farbridge-induced services that affect a minority of citizens such as the cost of building bicycle lanes on arterial roads.

The responsibility for this financial mismanagement rests squarely with the former Farbridge administration. And these figures fail to include the loss of millions in failed policies and projects in the past eight years.

The Farbridge gang of seven obstructs change in city management

Guelph Mayor Cam Guthrie inherited this financial mess and is fighting a majority of Farbridge councillors in order to make the city more responsible in its management. Years of excessive spending, nepotism in hiring staff, has resulted in the huge operational costs of the city, more than surrounding peer municipalities.

The mayor and his supporters recognize the need to bring about the changes that people voted for last October. But they need the help of those people who overwhelmingly voted for change.

Even in defeat, the former mayor said her policies continue due to the majority of her supports elected to Council. This group includes councillors James Gordon, Phil Allt, Cathy Downer, Mike Salisbury, Leanne Piper, Karl Wettstein and June Hofland.

Ms. Hofland was elected by a margin of only five votes, and was appointed Chairman of Finance by her Farbridge cohorts. It is unknown if Ms. Hofland has any professional designation to qualify her for such an important committee chairmanship. She is a perfect fit for the Farbridge gang of seven because she does what she’s told.

Most of the property tax revenue goes to pay city staffs

Some 85% of property tax revenue is spent on the city staff; there are more than 2,000 Full-Time Equivalent, (FTE) employees. The figure includes full-time and part-time employees whose numbers and wages are adjusted to make up full-time status. The Human Resources report for 2014 is published in the spring of each year. In 2014, there were 268 earning more than $100,000. Another 21 employees were approved in the 2015 budget including some senior personnel.

The long term effect of lifetime benefits guaranteed to the municipal employees, past, present and future, has been recognized by many jurisdictions that have taken action to contain staff costs.

Compounding the problem is the growth of salaries, wages and benefits in Guelph.

The growth of the city staff plus the generous settlements with an estimated 80% of its unionized employees, has put city finances in a rising precarious financial trajectory to failure. Council can no longer close a blind eye to this growing problem by throwing more tax money to meet the costs of Farbridge policies in the hope it will go away.

The problem lies in the lack of financial training and management skills of theFarbridge gang of seven dominating council. And the ward three electors, by a margin of five votes, chose Coun. June Hofland who returned as chair the Finance Committee of a $500 million corporation.

This year, property taxes went up 3.96%, highest among peer municipalities in the area. If the 2016 budget includes another three or four per cent increase, property values will start going down and there will be an exodus, as people can no longer afford to live here.

It will occur slowly but it will happen if costs are not contained. Council’s course of action is to suspend all capital spending in 2016 with the exception of repairing the aging infrastructure. It needs a staff reduction. Also institute a wage freeze for the next two years. This one is complicated because of the unionized staff contracts.

This is a legacy of financial mismanagement that will take years to unwind and set the stage for hardship among many citizens unless costs are reduced.

It is now time for some serious discussion and political will on the part of all members of council.

The city property taxes ATM machine is now empty.

Editor’s note: I would like to thank Pat Fung, CPA, for researching and assisting in preparing this post. As usual your questions and comments are most welcome. Gerry Barker.

 Tomorrow, Part Two – Why it’s time to put Guelph on a financial diet

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5 Comments

Filed under Between the Lines

5 responses to “Part One – Farbridge’s legacy leaves Guelph with 50% higher per-person costs than Kitchener and Cambridge

  1. Glen N. Tolhurst

    Dynamite!! The info on costs show how poorly the past council, with its Farbridge cohort, and its ideologically joined at the hip administration have wildly mismanaged the city finances. Are the other municipalities that much smarter or is Guelph just plain incompetent? Many kudos to Pat Fung for pulling together the comparisons. What is the likelihood of any such data ever emanating from the administration?
    Guelph taxpayers should inundate their respective councilors and tell them to get the finances under control.

  2. Steve

    Hi Gerry,

    Just saw this post and am curious about the details. Forgive me for not following the numbers as they don’t make a neat table on my browser’s display.
    Kitchener’s total city budget is $234M, and divided by population of 219,153 that gives $1,068 per person. So far so good….now on to Waterloo Region. The regional total budget is $1,520M, but I don’t see a per person figure. If I divide the $1,520M by the regional population of 504,096 that gives $3,015 per person. The total per person city + regional is then $4,083…5.8% higher than Guelph’s.
    Similarly, Cambridge’s numbers add up to $4,020 per person…4.2% higher than Guelph’s.
    At first glance it looks like whoever did this chart mistook the regional $1,520M total budget for $1,520 per person.
    Am I misinterpreting your figures? If so, what are the actual regional totals and per-person amounts?

    • Hi Steve: The figures were in a chart prepared from the Financial Information reports of Guelph, Cambridge and Kitchener. You can see the charts on the blog. The report was prepared by a CPA who did the research. I think when you use the total population figure for the Region that includes Kitchener and Cambridge. The chart separates the tax base of Cambridge and Kitchener because they are a two tier organization. With respect you have included the base per person cost of Cambridge and KW in your Regional population figure of 504,096. That means you have included the base tax twice in the per person calculation. I believe the chart can show you that. Thanks for your interests. Stay in touch.

  3. Steve

    Thanks for the response, Gerry, but there’s still something wrong with the numbers. You have a total cost per resident in Kitchener of $2,588. To get that total you added the city portion of $1,068 to a figure of $1,520. It’s that $1,520 number that isn’t making sense, because it’s listed as Waterloo Region’s total budget of $1,520 Million (which is pretty close to what I’ve seen on their published reports). Your CPA seems to have dropped the “M” off of the $1,520M and used it as a per-person amount. I suggest you have the work independently verified.

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