She promised to put Guelph back on track instead we got a financial train wreck

by Gerry Barker

July 24, 2016

Most people thought the 2006 Karen Farbridge election slogan of “Let’s put Guelph back on track,” was catchy and promised great expectations.

It is apparent that the critical mass of over-spending by the Farbridge eight years of financial mismanagement, is rapidly reaching a disastrous climax starting right after Labour Day.

Financial Climax? What climax?

Let’s check it out. First, the reserves have been tapped out, in order to balance the books for every year since 2010. Why? It’s because the budgets were consistently overspent and the books had to be balanced. If the administration cannot stick to its own budget, it reflects financial mismanagement.

Then the new nine-year capital budget, starting this budget year has already been overspent, according to staff, by $170 million. Throw in the Urbacon city hall breach-of-contract lawsuit and unplanned overages totaling $23 million, and the $37.1 million spent on the Community Energy Initiative, and it’s no wonder the city is in financial trouble.

Toss in the annual subsidies spent on Guelph Transit – $15 million; the Sleeman Center – $249,361; the RiverRun Theatre – $531,440; a city staff numbering more than 2,100 full time equivalent employees (FTE’s) being funded by tax-funded revenue, representing 80 per cent of the total property taxes paid in the city.

What most people don’t understand is the long-term public liability to which taxpayers are responsible forever. Along with a matching contribution, most unionized workers contribute to a defined pension plan that guarantees a pension based on salary, wages, benefits and length of service. Most city workers belong to the Ontario Municipal Employees Retirement System (OMERS). The organization represents more than 270,000 Ontario public employees. The average retirement age for these folks is 55.

The math would indicate this liability, that the municipality must guarantee each employee’s pension. The exponential growth of the Guelph civic staff and remuneration has steadily increased that liability and the costs of carrying it.

The spending doesn’t stop with property taxes

Now add the city’s non-tax funded service increases including city water, Guelph Hydro, parking, use of city-owned facilities including the civic museum, libraries, the Farmer’s Market, donations to 10 Carden Street ($110,000), the Wellbeing operation ($150,000) and a multitude of user fees.

Next comes the annual $300,000 support to build bicycle lanes on major roads. Typical of the Farbridge-inspired financial management, in 2015, Coun. Mike Salisbury moved to spend $600,000 because the bike lane allotment wasn’t spent in the 2014 budget. Thanks to the Bloc of Seven (BOS), it passed.

In August 2014, then mayor Farbridge, persuaded council to finance a $34.1 million renovation of police headquarters. Here’s how it was financed: Tax funded debt – $16.3 million; tax funded police capital reserve – $3 million; Future development fees – $14.8 million. So, let’s get this straight, the police project was approved betting on that future development fees collected from OTHER projects would cough up $14.8 million!

Think about that. As a future developer you pay development fees that you believe will pay for infrastructure-connection to city services, parks, recreation, equipment and, oh yes, a library. Sorry that money has been pledged by a former council to finance a police building. Citizens are now saddled with some Farbridge fancy financial footwork to pay for this public safety Taj Mahal.

This has created a capital financial shortfall that cancels out the downtown library and South End recreation centre. Forget redevelopment of the Baker Street parking lot, mixing private funding with public money. What private developer would want to engage with the city with its track record of bungled civic projects? The former Building Inspector was fired by the city that is currently being sued because it failed to issue building permits for more than 50 city-operated projects. Bruce Poole, a veteran of 30 years working for the city, is seeking $1 million for wrongful dismissal.

That’s what we do know. The problem is there is a lot that we don’t know because of the closed-door meetings of council in which the members face discipline by the Integrity Commissioner for breaking the code of conduct. Councillors are forbidden to reveal the discussions, accusations, and opinions to the public.

As an aside, why wasn’t Coun. Mike Salisbury not investigated by the Integrity Commissioner when he blabbed that he tipped off friendly blogger Adam Donaldson. It was about the decision by five members of the BOS to walk out of a closed session meeting.

Do we have a council of 13 members or only the BOS who support the policies of the previous administration? That’s the situation why city council is dysfunctional, dominated by obstructionism that makes council unproductive.

The city administration takes an August siesta

With August looming, this administration has turned the city operation into a version of what happens every August in France. In that case, the country shuts down. There are no council meetings scheduled and activity slows to a crawl. Even the staff is give a half hour less per day, during August, to perform their jobs. That’s two and a half fewer hours per week.

Complicating this up-coming snore-fest is the realignment of senior management. Derrick Thomson was appointed Chief Administrative Officer (CAO recently) and Colleen Clack, Deputy Administrative Officer (DCAO) in charge of city operations and Guelph Transit. Mr. Thomson previously performed this job.

There is a learning curve to be taken and the political pressure is relentless being exercised by the Bloc of Seven (BOS) even when the city shifts into hiatus for more than a month, the BOS continues to dominate the administration.

But the rubber will hit the road, starting September 6, as the process of creating a 2017 budget begins. Already the staff is signaling that there are special levies in the planning stage. During a recent capital-spending workshop, DCAO Mark Amorosi, the man in charge of city finances for the past 19 months, denounced such measures as increased assessment-producing revenue and diverting the Guelph Hydro dividend of $1.5 million as “robbing Peter to pay Paul.”

Instead, Mr. Amorosi said, the way to go was some form of a special levy that other municipalities are using. Fasten your seat belts folks; the BOS is ready to support a two per cent, ten-year property tax levy starting next year. It will raise more than $230 million.

This is a serious situation but will the administration do something about it?

Their selling point to us will be that it will create funding for needed infrastructure renovation. Even the Associated Municipalities of Ontario (AMO) have labeled Guelph’s infrastructure shortfall at more than $220 million.

Not so fast, Tonto. This requires a reality check. The city is faced with excessive operating costs, high debt, and mismanagement of operations, terrible budget forecasting, and a political atmosphere that is bringing the finances of the city to its knees.

Most voters are starting to realize how self-serving members of council, plus senior members of the staff, have abused them and their personal finances. This group’s political agenda has to be halted and replaced by a plan of common sense recovery.

There is no easy fix but a resolute and responsible administration will start the process of repair to a shattered financial and political agenda.

One thing is certain; there will be a tax revolt if council approves a tax levy of two-per cent over ten years on top of another three -plus per cent increases of normal costs of owning property.

The road of recovery lies only with cutting operational costs. The fact that two neighbouring cities, Kitchener and Cambridge whise operating and capital costs are 50 per cent lower that Guelph’s, points to the need for reduction of those costs

That includes, reduction of staff and realignment of responsibilities; chopping funding of special interest projects and lobbyists; capping salary and wages and benefits for two years; kill the CEI and District Energy project; reduce operating subsidies to Guelph Transit, the Sleeman Centre and RiverRun theatre; cease the bicycle lane expansion allocation; resolve to change the unfair University of Guelph’s property tax deal that pays $75 per student per year. It even fails to reflect the effect of inflation since inauguration in 1987.

It is time to take our city government out of the shadows and return competent financial management to city operations.

This includes hiring an independent Chief Financial Officer to put the train back on track.

It’s time.

If you feel the way that I do, drop me a line at gerrybarker76@gmao.com. Collectively, we can bring about refortm and change.

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13 Comments

Filed under Between the Lines

13 responses to “She promised to put Guelph back on track instead we got a financial train wreck

  1. Joe Black

    And they talk about Quebec/Mintreal being corrupt .

  2. Glen

    Gerry: The Farbridge mantra that you quote in your opening line has resulted in a financial train wreck for Guelph. The Karenistas lodged in the administration continue to put forward agenda items for council that pour gas on a financial bonfire. The council meeting on 18 Jul 16 had 2 agenda items relating to the Community Energy Initiative (CEI)and its bastard offspring, District Energy (DE). The agenda items were to continue “as is” AND “consideration of a city wide District Energy business development”. Both entail the continued flushing of tax dollars down the crapper. The council vote on the “as is” was 13-0 while the vote for “consideration” was 8-5 with Bell crossing to the dark side by voting with the Orange Flush bloc of 7. The only members of council who voted against the bloc of 7 + Bell were Guthrie, Billings, Gibson, MacKinnon, and VanHellemond.Council should have rejected receiving the report put forward by the self preserving administration and all the related agenda items put forward. Instead there should have been: a motion to shutdown the Farbridge inspired District Energy boondoggle, sell the downtown node to Tricar 2 for 1 dollar, and privatize both the tax payer subsidized Sleeman Centre & River Run Centre.
    This way the District Energy equipment would no longer be a drain on city budgets and the users of the heating and cooling from the downtown District Energy node would be responsible for its use and maintenance. That the administration (with its recently named replacement CAO & DCAO) continue to push a Karenista style tax & spend agenda in light of the items Gerry enumerated above likely totaling more than $100 million while the infrastructure funding faces a $200 million shortfall is completely beyond belief.
    It is ludicrous for anyone to consider a special 2% tax levy when current taxes are being wasted. It is time for over taxed Guelph citizens to go after their councillors to tell them in no uncertain terms that they no will longer be ATM’s for costly mismanaged city projects & “LA LA Land” socialist visions that become drains on the city finances.

  3. Marc

    It seems Mayor Guthrie has continued where Farbridge left off. He just reduced city revenues previously collected from the Guelph Storm by $500,000 annually for the next ten years and there doesn’t appear to be any cost/benefit analysis on how this impacts the city’s finances. Is the city planning on laying off $500,000 work of salaries to make up this difference or increase our property taxes to balance this out? And what criteria did they use to decide the Guelph Storm is worth a bigger investment than the city already subsidizes it for versus some other project/initiative? Are people and businesses moving and buying up land in Guelph because of the Storm thus increasing the property taxes the city gets with this investment? If the Storm left town tomorrow, are there going to be a mass exodus with all their fans putting for sale signs on their lawns? The city can sell the Sleeman Centre, and probably pay off a good portion of the debt from district energy, Urbacon, and the Dunlop waste facility. Its beyond me, why Mayor Guthrie would even considered this with his recent tirade against Farbridge not having a business plan completed for the district energy initiative. He did the exact same thing with the new Storm conttract and over 10 years, will impact the city by $5 million.

    • Marc: Just to clear is this $500,000 a reduction of what the Storm organization was previously paying? If so, what are they now paying to use the Sleeman Centre? Did council approve this and what was the vote breakdown? Thanks for bringing it up.

    • Marc

      HI Gerry – all I’m going by is the articles in the online Trib and GuelphToday. The announcement was just made last Friday. From what the online comments to the article suggest, there was no business case or cost benefit analysis done and everyone is asking for the impact to the city finances and people seemed to be looking on the city’s website and not finding anything. Perhaps this was voted on this in the back room? It can’t be a surprise to city council, it says Derrick Thompson and Colleen Clack have been working on it for a while. Not sure why the Mayor would have done this within a few weeks of him saying never, never, never again after the fallout from district energy’s lack of business case. Their might be more to the story still to come, but between yard waste fees being introduced August 1, talk of a special tax, the reduction in transit services during the summer to save the city money, and all the other financial mess the city is in, not sure what analysis was done on the impact, nor what benefits this provides, and if those benefits were outweighed versus other stuff. Nor why Guthrie would allow it to happen like this – causes one to questions who side he is fight for. If I hear anything else, I will definitely share it.

    • CD

      You would be quick to dismiss this as anything other than an excellent deal for Guelph.
      The Storm would have had many cities interested in taking them, and this deal might look bad to those not well versed in sports deals.
      The profit the city stands to gain from the money the team makes, especially for a playoff run, and the business it provides to the downtown and surrounding area on game nights is huge.
      The Storm are a big draw, especially for those with young children, and it is a boon for the community in events outside of the arena and ones in.

  4. Louis

    I know sooner or later people are going to revolt once they see this levy , and will say ‘enough is enough’ I keep pointing out the 84/16 tax ratio as well.

    I also wonder if there is infighting in the gang of seven, as sooner or later something is going to happen and they will start blaming each other once they find out there is no money left.

  5. Capricorn

    Have to ask whether or not the 37 million police building would have passed if Gloria Kovach had still been on the board. Is that why she seemed to be unfairly tossed aside before her term was up?

  6. wendy

    The 2% that the powers-that-be have been greasing up everyone to expect should not be called a “special levy”. It should be called a “special tax”. Special in that every ratepayer, already paying more than most in Ontario, is now expected to pay for the mismanagement, secret spending sprees, excessive hot air, inability to handle contracts and negotiations, lack of concern over public money, lack of attention to necessities, and rampant partisan politicking ruling City Council and City Hall.
    Not everyone can just wave a magic wand and have more money to spend than they have budgeted for. Does Guelph City Hall care about any of this? Do they care about meeting budgets? About being careful with the money they collect? About living within their means, as everyone else has to? About being accountable and honest?
    Why would they, when they can just stick the public with the bill for their incompetence and know they are going to get away with it, with their own paycheques, pension, and benefits intact.

    • Brent

      Now Wendy……..in the words of James Gordon….Where’s your community spirit?????

    • wendy

      Oh yes, I forgot the community spirit of enjoying paying high taxes manifesto written by Uber-Citizen James Gordon. Only rich people are allowed to live in Gordon’s Guelph. Or those who know how to lobby relentlessly for tax exemptions, like 10 Carden. Where was their great leader Citizen Gordon, telling them to love paying up?

  7. Tony

    http://m.guelphmercury.com/opinion-story/4802464-key-details-missing-on-energy-announcement

    Money was no objective! As long as what the money was spent on; was spent to further a DESIRED result.

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