How the 2016 budget public input meeting became a night at the opera

By Gerry Barker

Posted December 2, 2015

It’s easy to understand the dilemma the city staff and council face each budget year. There is a multitude of special interests ranging from the sublime to the ridiculous.

Witnessing a fiery and forceful lecture from the president of the Guelph and District Labour Council, demanding more services, more jobs paying union rates and higher taxes and user fees, became a throwback to the days of the dirty 30’s. Janice Folk-Dawson told a questioning councillor that she doesn’t mind a 5 per cent property tax increase for 2016 so long as council approved her organization’s demand to continue Labour’s vision of entitlements.

In contrast, Pat Fung, a Chartered Accountant and Chartered Public Accountant, presented a thorough and documented presentation that showed that Guelph’s capital and operating costs were 50 per cent higher than either Cambridge or Kitchener. Mr. Fung analyzed the city’s own BMA consultant’s report on operations along with the Financial Information Reports filed annually as mandated by the province.

This basis formed his detailed presentation that the city was paying too much for services and capital expenditures compared to its two neighbour municipalities. His findings are indisputable evidence that the city is facing a major financial crisis unless it reduces spending.

Here are some excerpts from his report:

Quote from the city website:

“The 2016 budget challenged the City to find additional efficiencies in an already lean organization. By critically reviewing each line item, departments were able to reduce their individual asks (requests) to support the overall 1.58 per cent increase,” says Janice Sheehy, city treasurer. “The recommended budget meets the community’s and City’s needs for 2016 while remaining affordable; however, with such a low tax increase we were not able to account for all increased demands placed on the organization from growth.”

* Mr. Fung’s reply: I do not understand how the city can say the organization is already lean when the BMA Report clearly shows our servicing costs per capita are higher than average. Indeed the 2015 operating and capital budgets on a per person basis are 50% greater than our neighbours Kitchener and Cambridge.

Pat Fung responds: I find it unacceptable that the Office of the CAO would submit a budget that shows a 1.58% tax increase by using cuts in transit service to arrive at that number when the Office of the CAO knows full well that transit services are a lightning rod and reductions here will likely not happen. Then the real increase in taxes will be somewhere more than 2.3% when expansion costs and final adjustments are added into the final property tax rate. That resulting figure will be adjusted when the revised assessment figures are added on.

* 2015 budget capital and operating per person based:

City 2015 Operating and Capital budget combined % different than Guelph
Guelph $3,859  
Kitchener $2,588 49%
Cambridge $2,525 53%

Difference from average: $1,300 X population 120,000 = $156 million.

*   There are staff recommended expansions for roads including 6 fulltime equivalent employees (FTE) and a contract costing a total of $902,000.

* Roads Cost per kilometre per BMA report:

Guelph $27,617
Average $11,847
Median $12,151

Road Cost per person per BMA report

Guelph $244
Average $99
Median $67

* There is a recommended expansion for parks including adding two Trails Technicians for $216,400 and other items costing a total of $521,000:

Parks cost per person per the BMA report:

Guelph $77
Average $59
Median $55

Difference from average: $18 X 120,000 = $2,160,000

  •  Waste management costs:

* With reference to the recent internal audit report on waste collection, there appears to be some difference between the internal audit report and the BMA report. The audit report says collection is “being conducted effectively and efficiently”.   Per the BMA report the costs per tonne and per capita are outlined below:

  Cost per tonne Cost per capita
Guelph $137 $29
Average $114 $10
Median $90 $9

Difference from average per capita: $19 X 120,000 = $2,280,000

* Fire cost per person per the BMA report:

Guelph $185
Average $165
Median $162

Difference from average: $20 X 120,000 = $2,400,000

Fire costs are yet another example of our City spending more than others. The Office of the CAO must drive spending down, not tax the citizens of Guelph for its excessive spending. When it comes to negotiating wages, people are always comparing wages to other fire departments. How about comparing fire costs to other cities to determine the budget.

  •  The Open government Action Plan:

There is a recommended expansion for the Open Government Action Plan costing $264,200 and 1 FTE. The governance costs per person are outlined below per the BMA Report:

Guelph $229
Average $104
Median $86
Cambridge $29
Kitchener $21

Difference from average: $125 X 120,000 = $15,000,000 or $24,000,000 compared with Cambridge. All proposed expansions could be funded from this area alone if it were at the Ontario average. Why is there a need for this position? What are the benefits?

Curiously, the Fung presentation was never mentioned in the Mercury report of the meeting.

The facts are there, so why doesn’t the staff do something about it?

These examples are factual and clearly demonstrate the need for restraint on the part of the administration. This does not seem forthcoming.

Just taking the cost of Guelph’s Operating and Capital costs for 2015, why does it amount to $156,000,000 more compared to either Cambridge or Kitchener? That’s the key question council and staff must consider before they tack on another inflated increase to property taxes and user fees.

When the staff budgeted is 1.58 per cent and then the recommended expansion of another 1.25 per cent we are at 2.83 per cent. This is before public and council reviews and adjusts the final figure. The gorilla in the process is the staff recommendation to increase transit fares and decrease weekend service. The betting is council will shy away from that proposal that will boost the final figure to more than 3.5 per cent.

Guelph Transit appears to be in dysfunctional distress, functioning under a system that is geared to routes with high traffic, i.e. the Gordon Street university corridor and a central hub system for all routes. When the low weekend ridership figures are considered, it makes it difficult for management to justify the cost. Chiefly because it’s bound by the labour contract with the American Transit Union including premium overtime. It’s no wonder the Transit spokespersons at the public meeting were so adamant about extending weekend service.

The large transit delegation indicated that the city staff used the threat of lowering weekend service, and increasing fares, to set up higher taxes when the transit cutback proposals will be dropped by a sympathetic majority of council.

To me, it seems that city taxpayers are already subsidizing the service by some $15 million a year, most of whom have never ridden the bus.

Perhaps renegotiating the University transit pass cost and offering incentives to the disabled and seniors may result in making the service less contentious and more accessible. Increasing the city subsidy, as an investment in better service, would indicate there is commitment to transporting those folks without vehicles, enduring poverty, who have disabilities and seniors.

When you think about it, Guelph has a seasonal transit system geared to serving the 20,000 students eight months of the year who pay a mandatory $150 for two semesters and receive an open-ended transit pass. That contributes $3 million to Guelph Transit.

Guelph’s BMA cost of roads is shocking. The only conclusion is part of the cost has to be attributed to the aggressive former council’s creation of additional bike lanes. Also, contributing is re-striping and reducing major road vehicle lanes to accommodate bike lane expansion. The program has caused increasing traffic congestion because of lane reductions on many major roads.

Driving around Kitchener and Cambridge there are few dedicated lanes for cyclists. Now the Guelph city staff is recommending that we spend $670,800 to clear bike lanes in winter. It’s time to put the brakes on the entire bicycle lane program until costs are brought into line.

Many Guelph roads and streets are in dreadful condition. Why the decision was made to widen and install bike lanes, curbs, sewers and sidewalks on Stone Road east of the entrance to the Arboretum remains a costly planning and engineering decision. The fact that the University owns the lands on either side of the new four-lane road and there is zero development of any kind makes one wonder where the priorities were.

It’s apparent that the eight years of the Farbridge administration has severely impacted on the city budgets as the Fung report details.

The numbers don’t lie so all members of council must realize the seriousness of the city’s financial structure. They, and staff senior management, must recognize why the high costs of operations and capital spending are much greater, per capita, than Cambridge or Kitchener.

When you make an omelet, you have to break a few eggs. That time has arrived.

Will you have cheese with that?

 

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7 Comments

Filed under Between the Lines

7 responses to “How the 2016 budget public input meeting became a night at the opera

  1. bostoncollie

    We need a few more Pat Fung’s on the next council. And a lot less Dippers.

    Excellent summary Mr. Barker.

  2. bostoncollie

    Many things jumped out in this article. One that really struck me was the $150 8-month University of Guelph transit pass. One of my children attends university in Ottawa and the fee for a 2 semester U-pass is $389.66. Transit passes for students at Trent University in Peterborough are $185.06 for 8-month term.

    For every $10 increase per student, it would bring in $200,000. Perhaps it’s time for the City to increase the cost for the heaviest users of transit in the city, U of G students.

    Meanwhile for my child in high school that has to use Guelph Transit we must pay $63 per month for a transit pass, $630 over 10 month school year.

  3. lurka

    Yes, Mr Fung is so correct, BUT, how do we put a stop to this right now! We almost need a citizens’ revolt as was done years ago in a small California city. The citizens crossed their arms, stood together and fast and united and told their city council they would pay no increase in taxes, but they would pay the rate they had done the previous year. Maybe we should stop being so complacent in letting our employees at city hall run over us and take a stand at their continual “thumbing” of their noses at us, their bosses. Seriously !!!

    • Lurka: The underlying problem we face in Guelph, is the powerful grip the public service unions have on the city’s agenda. The members of these unions include civic employees, public protection employees, teachers, university employees,health workers, provincial and federal government employees. This segment of our society, particularly here in Guelph, are all paid from the public purse. That includes guaranteed lifetime pensions, unused sick leave and vacation, lifetime medical and often dental coverage. And we the taxpayers guarantee those commitments.

      With the largest pension plan guaranteeing this largesse, The Ontario Municipal Employees Retirement plan covering more than 275,000 municipal employees in Ontario, finds itself $7 billion underfunded, who pays the shortfall? We note the average retirement age of members of OMERS is 56 years. Did we mention that retirees at that age also receive a CPP top-up amount that is phased out when they reach 65. This equates to a liability to civic taxpayers for up to 30 years per employee, the statistical lifetime of members.

      I don’t know about your circumstances but in a lifetime of work, including membership in a union, I was never promised nor received a deal even close to this. We are facing a crisis in not only growth of the staff today, but the long term financial liability on future generations. For the Guelph staff management to recommend adding more staff for next year, plus the annual increase in staff numbers in the past nine years, indicates complete disregard for the high operational costs this city must pay in comparison with Cambridge and Kitchener.

      Currently 80 per cent of the total property tax levy goes to staff employment costs. It’s not tough to figure out the impact of this. Every year there is a large increase in the property tax rate just to cover the growing costs of not only increases in staff numbers but contractual increases in base pay and benefits.

      The only way it can be stopped is cease hiring more staff and sharpen the pencil when it comes to union negotiations.

      There is no other choice left.

  4. The people of Guelph Better start speaking up. Not just Guelph Speaks.

  5. lurka

    Peggy You are so on the mark !!

    I am past the retirement age of 65, and am still forced to work , In the past 6 years I have received zero raise— zero— I am still working to try to keep my house and my neighbour is going to lose his in the next two years because the taxes are getting so high he and his wife cannot afford to stay. I have written to our ward reps for answers regarding certain budget expenditures- no replies-, papers, nobody wants to listen. I think it is time to start shouting and no more taking it up the backside meekly! Staff employment costs be damned. Stop hiring for one thing. Want an efficiency expert to watch and see who is redundant?? Just give me a call, I will be more that glad to help– free of course !!!

    • Lurka: It is a crisis that now only the people can correct it. I’ve been covering the city management for nine years and it’s getting worse than better. I and a number of citizens, formed GrassRoots Guelph three years ago to elect a new council with the hope that it would result in change and better management of our city.

      Our efforts paid off with the defeat of Mayor Farbridge and four of her fellow travelers who were either defeated or quit.

      We lost a vital ward three contest in which the incumbent,June Hofland, beat our candidate, Craig Chamberlain, by just five votes. The result was the Farbridge supporters retained a majority on council.

      For our effort, Farbridge friend and supporter, Susan Watson, launched a complaint about a supporter and candidate in Ward Six, Glen Tolhurst, that he received money from GrassRoots Guelph charging it was an illegal donation. Mr. Tolhurst was investigated by a neutral accountant appointed by the city as was GrassRoots Guelph. The result was an absolute absolving Tolhurst and GRG of anything illegal under the Ontario Municipal Elections Act.

      Tolhurst encountered legal costs to defend himself. Ms. Watson also had legal costs. The kicker is the people of Guelph had to pay the costs of this vengeful excursion costing $11,400. Watson has never apologized to Tolhurst or GrassRoots Guelph or, more importantly, to the people of Guelph for her personal vendetta that was dismissed.

      It is time for people to become engaged and let their councillors know that the spending has to stop and hold the line until we pay for the millions that have already been wasted on lawsuits and capital projects.

      GrassRoots Guelph is in hiatus and new leadership is needed to revive the citizen’s activist group. We need to support our minority of councillors by engaging in dialogue to get our house in order. What do you think?

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