Let’s talk taxes, spending and accountability as the 2018 budget process starts this month

By Gerry Barker

September 5, 2017

In the fall of 2015, Guelph resident Pat Fung CA, CPA presented council with a financial analysis that compared the operating and capital spending costs of Guelph, Cambridge and Kitchener.

His information came from two sources: The official audited financial statements of the three cities and a report prepared for the city of Guelph from consultants BMA.

For his trouble he was mocked behind his back after leaving the chamber. Now you can deduce two things. Either the councillors did not understand the presentation or they didn’t want to.

This council dominated by a majority of seven supporters of the former Farbridge administration has proved to be the least responsible and effective in the ten years I’ve been covering city politics.

Recently I was sent a report about the City of Santa Monica in California. The cost of employees in this upscale community was astronomic with the assistant librarian receiving a total of $220,000 in a pay and benefits package. City bus drivers earn $109,000 in total compensation.

These two examples reflect the operation of a city council that rarely discusses spending issues in public shutting the door to debate by the stakeholders. Even as affluent as Santa Monica, there is a limit of letting city costs soar.

Does any of this sound familiar? Guelph is also an affluent community due to the high compensation packages enjoyed by an estimated 6,500 public service workers. Add to that the penchant for council to conduct their public business behind closed doors echoes the Santa Monica experience.

But when a city official claims that the per capita costs of operating the city are not relevant, you know our spending and operating costs are going nowhere but up. The last ten city budgets have growth compounding property taxes and user fees to make Guelph one of the highest taxed communities in the country.

The truth is the per capita operational costs to Guelph citizens in 2015 was $3,213. That was a 56.2 per cent increase in just seven years. It is a statistic that is relevant.

The root of this is the high cost of overhead, the cost of running the city in which 80 per cent of employees are unionized. That percentage is even higher than Santa Monica’s civic workforce.

It is a problem that city council ignores and to its peril.

Here’s a personal real life story from a pensioner.

The elephant in the finance department is the silent liability of guaranteeing payment to hundreds of former employees if the pension management of the various plans fails to meet their obligation to support retirees for life. Council cannot take away defined pensions. Because this situation has been building for years, today there are growing numbers of retired employees, many of whom retired in their mid 50’s. This has lengthened the time they can draw their pensions that in most cases are indexed.

Here is an example that our family has experienced. My wife, the widow of a deceased Metro police officer, is a member of the Metropolitan Toronto Police Benefit Fund (MTPBF). It is a closed fund for the officers who contributed to the plan and their spouses. It is closed because the City of Toronto converted its various municipal pension plans to the Ontario Municipal Employees Retirement Services (OMERS) for its police officers some 30 years ago. The MTPBF members were exempted from the OMERS merger.

The City of Toronto is sponsor of the MTBPF and is responsible to ensure solvency and payment of benefits to pensioners under the provisions of the Ontario Pension Benefits Law.

And the city has had to fund the amount of capital needed to accomplish this. More than $14 million has been added since 2014. Keep in mind there is a diminishing number of beneficiaries due to death. Eventually, as the numbers decrease, the costs of benefits reduce as well. In 1998, there were 2,430 members of the MTPBF. December 2015, there were 1,828 members, a reduction of 594 or 24.44 per cent.

It appears that the obligation of the City of Toronto to pay the MTPBF members is diminishing to the point where it will no longer have to guarantee the fund benefits. Because eventually there will be no pensioners alive to pay.

The problem is that only city council can approve any increase in the payout to MTPBF pensioners. As a result the amount paid to pensioners remained fixed for some eight years with no cost of living increase allowed.

So what has this to do with Guelph?

With a municipal staff of 2,200 of which 80 per cent are unionized and members of OMERS, there is another group of non-union employees representing a variety of managers and members of other associations.

It is this group, many of whom are senior managers working under tailored personal contracts who are eligible to have their pension payments guaranteed by the City of Guelph.

An example is the retirement of Police Chief Rob Davis. When he stepped down, he received a sick/vacation benefit of some $40,000. His indexed pension was some $130,000 upon retirement. To be fair the former chief used the rules to end his days on active duty.

This example portrays the point that the citizens are obligated to guarantee his benefits in retirement if his underlying pension system ever becomes insolvent.

Here are some suggestions to return our city to the people

* Reduce spending by staff in all areas. This would exclude police, fire and EMS. Freeze all hiring across the board including part-time and occasional staff. Specifically, demand all departments to reduce staff in two stages: Three per cent in the first six months of 2018 and four per cent in the last six months of the year. Total reduction is a 147 Fulltime Equivalent Employees out of a total of 2,200.

* Instruct legal staff to negotiate outstanding legal issues including labour negotiations to bring them to reach a settlement.

* Freeze hiring consultants for 12 months. Any exception would have to be justified by the Chief Administration Officer and approved by council. Close out current contracts.

* Instruct all departments to reduce non-staff expenses by 3 per cent in 2018. Have a staff report regarding the status of all mandated projects including infrastructure requirements and the affect on future cash flow.

* Cut city advertising and public affairs budgets, including a communications staff reduction by 25 per cent in 2018.

* Require River Run Centre and Sleeman Centre to be self-sustaining within one calendar year. These two public operations are being subsidized by the city of an estimated $783,000 annually.

* Review and suspend all public financial support of community groups until January 2019.

* Consult with the provincial government to increase the property tax deal enjoyed for 29 years by the University of Guelph to help meet the city’s 2019 financial needs. The amount is $75 per student has not been adjusted since 1987 when it was enacted.

* Suspend the Well-being funding program for one year or until a public review of where the money is being spent is completed and approved by an independent board.

* Pass a by-law to reduce the number of ward councillors to six in 2018 and make the job a fulltime position with appropriate remuneration and support. Following the Milton example of having a nine-member council, the Mayor and two councillors would be elected at large.

* Abolish the Deputy Chief Administrative Officer rank. Return to a two level system eliminating the costly DCAO designation. Replace it with department managers reporting directly to the CAO.

* Report quarterly, informing the public of the cost of all travel and associated expenses by staff and elected officials. Report all details of staff credit cards including all communications using city-supplied equipment.

* Publish an easy to understand financial summary every quarter detailing spending, new projects, budget deviations, current financial status.

* Appoint a citizen’s committee under the leadership of a qualified and respected library expert to study and recommend a public private partnership for a new downtown library.

* Form a task force composed of citizens and staff to study a public and private partnership to build the south-end recreation centre.

* Get aggressive to collect taxes in arrears and uncollected traffic fines.

* Take the necessary action to open a large grocery store in the east end of the city.

* Hold a conference with property developers and builders to explore ways and means to increase assessment through careful planning.

* Speed up the approval process for developers and new businesses.

* Provide budget support and incentives to the staff’s commercial and industrial development team to seek business and encourage candidates to settle in Guelph.

* Renegotiate the deal with Maple Reinders re operation of the organic wet-waste plant.

* Invoke a sunshine bylaw that opens all council meetings to the public. Cancel all in-camera council meetings held before the public council meeting. Exceptions would be negotiations regarding city-owned real estate, all employee contract negotiations and problems associated with employees. Council, in advance, would have to explain to the public why such an in camera meeting was necessary.

* Have the Mayor give a monthly status report on the city with an overview of finances and status of major projects. It should be real news oriented and not propaganda.

* A customer service team should be trained to answer public questions and complaints. This group would follow-up to ensure the affected department handled the query promptly.

* Abolish the present security system at city hall so that any person can enter and access council and staff at any time. This is a public building owned by the people.

* Amalgamate the response teams for police, fire and EMS to a singular administration and call centre.

* Review the operations of the fire department to reduce operations that are often duplicated by other public safety services.

* Review all bylaws with the city’s legal team to reduce the obfuscation and redundancy of current business practices.