By Gerry Barker
August 17, 2017
This week the city sent a press release about “navigating the shared economy.”
It was long on jargon and these was a pathetic explanation by Mayor Cam Guthrie.
“I’m proud of the leading role Guelph has played in creating a tool that will help local councils and communities analyze the impact of various sharing economy services on their own residents and businesses so they can make decisions based on local needs.”
Some clarity please, Mr. Mayor. What kind of tool are you talking about? How will it help the cost of services to the citizens specifically, what are you talking about?
Perhaps Chief Administrative Officer Derrick Thomson can explain it: “Sharing economy initiatives are being shaped by zoning codes, hotel and taxi licensing regulations, transit and all manner of distinctly local policy. The Shared Economy guide is designed to help municipalities understand this new economy, what it means on a local level and how to respond appropriately.”
Does this Shared Economy include include tighter financial control of operating overhead and capital budgets? Particularly, in view of the huge losses incurred by the city management such as the $163 million wasted on the failed Guelph Municipal Holdings Inc? Part of that has been parked on the Guelph Hydro financial statement as a $94 million debt. The balance of the loss is the shareholder’s (all citizens) equity of some $67 million spent on a variety of projects, most of which were authorized and executed in closed-session meetings between 2011 and 2015.
Was this a shared economy issue?
This week the Association of Municipalities of Ontario (AMO) is meeting in Ottawa. The Guelph delegation composed of some councillors, led by Mayor Guthrie, has joined in support of a recommendation to the provincial government to raise the Ontario portion of the sales tax by one per cent taking the HST to 14 per cent.
The Ontario government rejected the proposal a few hours after the presentation. What were the municipal representatives thinking? Did they believe that the Wynne Liberals would approve increasing the HST before a provincial election June 7, 2018?
First, the provincial government funds the AMO. That gives it power to accept or reject proposals.
Second, excessive spending of the public’s money are the problems facing the 445 Ontario municipalities. Chiefly, in most cases it is repairing and replacing neglected infrastructure. A Guelph staff report pegs the cost of infrastructure in the city at more that $400 million.
In many cases it’s about cash management particularly, revenue from property taxes and user fees. In Guelph, there has been endemic abuse of boosting revenues from those sources to pay for misadventures in environmental projects with no return.
In most homes and businesses, revenues must balance spending. The use of credit to invest in necessary lifestyle issues such as emergencies, operating costs and capital projects, is practised in more than 90 per cent of property owners and businesses.
The corporation of the city of Guelph is no different. It is obligated by the province to supply a Financial Information Report (FIR) annually with no deficit.
What has occurred over the past ten years is that the budget forecasts have been exceeded because of overspending. It is an annual occurrence. The city does have a safety net called reserves. In 2009, Coun. Leanne Piper was quoted as stating that the city had $77 million in reserves. In 2014, an outside management consultant, BMA, said those city reserves had been depleted and used to balance the city books. Their report raised a “red flag” over the reserves’ depletion.
In 2012, a citizen’s activist group, GrassRoots Guelph, presented a petition to the Minister of Municipal Affairs and Housing. The documented petition, using the city’s financial statements, presented data that showed the discrepancies in the annual FIR’s. The petition requested an audit of the city’s finances. The Minister said the two parties should get together to resolve their differences. It never happened. The former CAO, Ann Pappert, claimed it was a waste of time.
This was a fight between two pit bulls in which there was no loser except the citizen’s of Guelph.
Guelph has become the poster city for failing to control spending on projects initiated by elected officials and staff of public servants with little public input.
For the past 10 city budgets, starting in 2007 until 2017, property taxes have increased annually by an average of 3.6 per cent. This has resulted in an exponential increase of some 45 per cent.. Now we are about to begin the 2018 budget negotiations spurred by staff recommendations.
Keep in mind this is an election-year budget so there will be debate about revenue and expenses. The council will end up approving budgets designed to please the electorate and lull us into believing all is well.
Instead, citizens are being fed another new management plan called the “Sharing Economy.”
Here is a capsule of the city press release’s explanation:
“The Guide provides a brief introduction to the sharing economy and then identifies the following six decisions to guide municipalities that are anticipating or reacting to a shared economy platform in their jurisdiction.
Ulp! Why is Guelph the instigator of this?
- What type of approach is most appropriate?
- Answer: Control spending and control of revenues is limited. That well has drained. Change the composition of city council. Reduce the number of councillors to nine from 13. Elect a single full-time councillor in each ward. Elect at large the Mayor, Deputy Mayor and an executive councillor with the key responsibility of overseeing city finances.
- What are the primary public policy goals?
- Answer: Fix the assets that are broken or are redundant. Stop buying the people with their own money such as the Well-Being handouts and miscellaneous city supported community projects.
- What type(s) of sharing will be included?
- Answer: Managing a city is not rocket science. We elect people presumed to be aware and competent and professional staff to manage the city.
- What kinds of policy actions or tools are needed?
- Answer: Control spending on consultants. Reduce staff and overhead costs. Work on developing growth in the manufacturing area to increase assessment and reduce the dependence on residential assessed properties. This will also provide jobs outside of the public sector.
- Design considerations
- Answer: The city council must enact considerations based on facts supplied by the professional staff. There must be a clear division between elected and professional officials to provide a system of checks and balances. In Guelph, there has been a serious lack of financial management and policies.
- Implementation and evaluation
- Answer: Most people in the city feel that there has been too much money spent on failed mismanaged projects. This is one program that should have full public input.
The Guide was commissioned by the Large Urban Mayors’ Caucus of Ontario, financially supported by the Province of Ontario and developed in collaboration with the Guelph Lab—a partnership between the City of Guelph and the University of Guelph.
A variety of other partners including the Guelph Chamber of Commerce and the municipalities of London and Mississauga contributed to the Guide.
We should be wary of this proposal, as we have just experienced a similar collaprative venture known as the Community Energy Initiative. It is important that we solve the immediate problems facing the city before launching into an academic exercise that may distract us from what’s needed today.
Too much money has already been wasted; it’s time to stop the bleeding.