Guelph’s financial dilemma is rooted in high staff costs

By Gerry Barker

Posted November 17, 2015

It’s the dirty big secret that is driving up costs and so far, council does not want to tackle it.

It’s the untouchable cost of running a city after nine years of non-stop wages and benefits grow exponentially exceeding the Consumer Price index (CPI) by a country mile. Throw in the more than 400 new, fulltime equivalent employees added in that time, and taxpayers are being forced to ante up every year to keep up.

The truth is that 80 per cent of the property tax levies goes to pay the city staff.

So when the staff submits its estimate of the property tax increase for 2016 of 1.58 per cent to city council, it is a mythical figure that has little basis of reality. It’s the equivalent of the workers at Linamar telling the management how much they think it’s going to cost to produce car parts.

So they scare council’s Farbridge majority by saying the Guelph Transit fares are going up and weekend and holiday service will be reduced to save $1.5 million.

Compared to the 2013 Guelph Transit overtime bill of more than $5 million, that’s chicken feed.

Oh, woe is me! Says Coun. Phil Allt who again, insists Guelph has to get cars off the road and only public transit is the answer. So the left-brain cramp of some members of council, is maintaining the “war on cars” that beats on in an addled manner.

It’s all part of the senior staff game to serve and protect … their interests, not those who must pay the bills. And there are a number of senior managers that don’t even live or pay taxes in Guelph.

In the past ten years, the growth of Guelph city staff exceeded the growth of our population by 85 per cent.

And it’s not just occurring in Guelph.

A report by the Canadian Federation of Independent Business (CFIB) says in part that: “We have been hearing about cities having a revenue problem, but it’s clear it’s a spending problem they are dealing with,” said Laura Jones, CFIB executive vice president.

The CFIB report states that a municipal employee in Canada is paid 22 per cent more than an employee in the private sector doing the same job.

“When you look closely, it’s easy to see employee compensation is the root of the municipal spending problem,” said Nina Gormanns, co-author of the report.

This report comes in concert with the Fair Pensions for All organization that has been warning municipalities, for many years of the risks of increasing the size of staff and the increasing benefits paid to those workers.

In fact, the organization presented a documented report to the former Farbridge council, indicating the growing pension liabilities the city was facing. It was ignored and a number of Farbridge followers ridiculed the findings.

So the staff strategy is to use Guelph Transit as the target to reduce costs instead of recommending staff reductions. The city recently commissioned a consultant report to review city operations.

The BMA municipal consultants are not unfamiliar with the way our city is being managed, having done a similar report in 2011 that cost $480,442 to complete.

This year’s report gives the city operations a passing grade in almost all aspects except for a “cautionary red flag” on the underfunded reserves. Once in a while it is right to speak the truth.

You cannot raid three reserve funds to pay a lawsuit liability of $8.96 million without a firm plan to pay the money back. In approving the 2015 budget last March 25, Coun. Karl Wettstein, the elder statesman of the Farbridge Seven on council, made a motion to reduce the $900,000 scheduled repayment to the reserve funds to $500,000. That passed.

Councillors Wettstein, Leanne Piper and June Hofland were on the Farbridge council that witnessed the firing in September 2008 of Urbacon Buildings Group, Corp., the general contractor of the new City hall.

They have never accepted responsibility for that action that triggered a $23 million overrun of the project. For that matter, neither has the former mayor ever admitted any responsibility.

The people understood and voted the mayor out of office.

So when the 2016 budget is approved in December, don’t be surprised if it is another 3.5 per cent increase of property taxes, plus user fees and more staff.

You read it here first.

 

 

 

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4 Comments

Filed under Between the Lines

4 responses to “Guelph’s financial dilemma is rooted in high staff costs

  1. tony

    How does the Guelph holding company affect any of this? Other then giving a dividend to the city. Also you said in a post that the holding company had lost money. How is it then that they pay a dividend and occur a loss?

    • Tony: The Guelph Municipal Holdings Inc’s 2014 annual report showed a $1.5 million dividend paid to the city’s general revenues and an operational loss of $2.8 million. In four years, GMHI has sent $9 million to the city. The GMHI’s major holding is Guelph Hydro. The rest of it does not generate anywhere near $1.5 million. It is safe to assume that Guelph Hydro is being tapped to provide the so-called “dividend.” Question: Does that mean that Guelph Hydro is using revenues from citizens to subsidize city operations? That smells like a another user tax, y’a think?

      It’s another example of former mayor Farbridge’s moving the money around to cover mistakes, her personal agenda and lousy forecasting. Even the city’s own consultant says the reserve funds are all under necessary capital except one, the water department reserve. The other alarming aspect of the former administration is the neglect of the aging infrastructure of the city.

      The 2016 budget exercise will be interesting to see if the council takes the necessary steps to halt the cash drain of public money and get serious about the spending problem. Or does losing $23 million firing Urbacon not do it for them?

  2. Fred

    “Compared to the 2013 Guelph Transit overtime bill of more than $5 million, that’s chicken feed.”

    That’s pretty funny. How much of it went to driving empty buses all summer.

    • Fred: You’ve nailed part of the problem. The real problem is the management of personnel. The internal auditor pinpointed the drivers who come in to replace a colleague who has booked off and his replacement is paid overtime. Also being paid time and a half on holidays and weekends is a apparently a contractual issue. Time to send Human Resources to the showers by letting this go on.

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