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