By Gerry Barker
November 23, 2017
Last night, Guelph resident Pat Fung, CPA, CA, was a delegate presenting commentary on the 2018 city-operating budget. He was one of 21 delegates registered to address council.
But a funny thing happened on the way to the forum.
The day before the meeting, Tara Baker, General Manager of Finance and Treasurer, told the local weekly about a change in the staff budget request resulting in an additional $890,000 that createda lower costing of the staff’s original budget recommendations.
You will recall the first property tax increase presented by staff was 4.84 per cent for 2018. The tax-based changes provided by the Municipal Property Assessment Corporation (MPAC) will reduce that to 4.4 per cent. It seems odd that the MPAC revision was revealed last night just prior to the public budget meeting. .
Instead, Mr. Fung was given five minutes to present a detailed analysis comparing the high per capita costs of Guelph’s operational overhead to the provincial averages. His figures were extracted from the city’s management consultant’s (BMA) 2016 report. The per capita compares the cost of services per person. The results are as follows based on a population of 130,000:
Service Guelph Ontario difference Percent Dollar cost
Fire $195 $164 $31 19% $4,030,000
Waste Collection $51 $13 $38 292% $4.940.000
Waste disposal $37 $11 $26 236% $3,380,000
Waste diversion $70 $24 $46 192% $5,980,000
Library $65 $49 $16 33% $2,080,000
Parks $64 $44 $20 45% $2,600,000
General Government $144 $14 $30 26% $3,900,000
Transit $130 $99 $31 31% $4,030,000
POA $22 $11 $11 100% $1,430.000
Total $778 $529 $249 47% $32,370,000
This is another example of Pat Fung’s expert analysis of the facts. Two years ago he presented a detailed cost analysis using figures from the 214 BMA consultants’ report and the city’s published financial data. The conclusions then were similar comparing the overhead costs of Kitchener and Cambridge to those of Guelph. Then Guelph’s aggregate overhead costs two years ago were slightly more than 52 per cent greater than the two neighbouring cities.
The 2016 total cost of these services is more than $32,370,000 for the 130,000 residents of Guelph. That’s $249 for 130,000 Guelph residents more that the Ontario average.
What’s wrong with this picture?
It appears that his findings were ignored, so last night he presented two comparison charts. The one above compares operating costs to the Ontario average. The second chart compares the overhead costs of the City of Guelph with the City of Barrie.
The troubling aspect of the city budget process emphasizes growth regardless of the impact on every citizen and especially the taxpayers. They have faced property tax increases exceeding 3 per cent for the past 10 years, except in“2014 when the increase was 2.60 per cent.
Let’s look at the straight up comparison between Guelph and Barrie.
Object Barrie Guelph Difference % Increase
Total Expenses 2016 $365,939,939 $396,478,178 $30,538,231 8%
Population (2016) 141,434 131,794 (9,640)
Year the city was founded 1833 1827
Area square kilometers 99.04 82.20 (11.84)
Cost per citizen $2,587 $3,008 $421 16%
Cost per square kilometre $3,694,870 $4,456,768 $851,898 23%
Taxes revenue $207,649,647 $217,753,530 $10,112,883 5%
Salaries & Benefits $154,346,450 $199.963,070 $45,616,620 30%
Labour costs of revenue 79.33 % 89.18 % 9.89%
Salaries, benefits per citizen $1,091 $1,517 $426 39%
Taxes per citizen $1,468 $1,652 $184 13%
Guelph has a lower population and area than Barrie yet in every category, Guelph’s costs are considerably higher. The area of Salaries and Benefits reflects the view of many citizens and analysts that either the city staff is overpaid or underutilized.
Just the additional $45,616,620 that Guelph pays its staff compared to Barrie reveals total mismanagement of Human Resources, Finance and senior staff. Council was either too careless about the data surrounding this huge discrepancy or they lacked the skills needed for critical analysis of operating the city. Council cannot ignore that citizens each paid $426 in 2016 or 39 per cent more than citizens of Barrie.
Instead, on the previous three budgets, staff has recommended staff additions of 42 individuals. For 2018, staff is recommending 16 additional employees some of who will start at more than $100,000, plus benefits.
How does this square with the $396,478,178 that council approved in the 2016 budget compared to the City of Barrie’s expense budget of $365, 939,947? Guelph spent $30,538,231 more than Barrie that has a larger population and service area. Guelph also received $10,112,883 more in tax revenues than Barrie.
But the real budget crusher is the $45,616,620, that Guelph paid its employees more than Barrie.
Where financial management went off the track
During her 2006 election campaign, Ms. Farbridge’s slogan was: “We’re going to put Guelph back on track.” It soon became a joke as the claim foundered on a series of management blunders started in early 2007. The top senior managers were dismissed including Chief Administrative Officer (CAO), Larry Kotseff and CFO Douglas Kennedy. In 2009, Hans Loewig earned some $201,000 and was the only senior manager earning more than $200,000. In 2016, CAO Ann Pappert was paid $263,000 for five months work, resigning May 26, 2016.
Guelph has been overly generous with staff, particularly on the high end of management. Is it any wonder that our salaries and benefits are more than $45 million higher than that of Barrie?
A Farbridge legacy was to keep staff costs under the hood. Most negotiations were mostly conducted in closed-sessions without any report to the public its outcomes. Without public accountability, there is no check of costs or rationale for increases.
Today we are paying the price.
The most glaring example of overpaying staff is with the Fire Department. Guelph is paying its firemen 19 per cent more than the Ontario average. The facts are that the occurrences when the fire Department attends a fire are diminishing while salaries increase.
In my opinion, the evidence is there that this constant demand for staff increases and unknown project spending has exponentially boosted costs compared to other Ontario municipalities. Hopefully the financial management will lead the way in expediting changes and reduce costs.
The finance department faces a five-year lack of accurate forecasting and fiscal discipline. The city needs to demand council to engage an independent staff rationalization examination organization to reorganizes the operational systems to use fewer resources to increase efficiency. Council turned the proposal down last year when the city budgets were being prepared.
The argument was that the cost of such a project, an estimated $500,000, was too high. Yet in 2013, council approved spending some $600,000 to establish a transparency and open government plan. In 2015, a manager of the program was hired on a contract basis to execute the plan. His salary was $93,000 and he is still employed by the city. He is believed to be on sick leave but his employment status is unknown.
The only way this unbridled spending can be changed next year is to elect a majority of council who will reform the way the city is being run and who brings experience, common sense and determination to undo the damage done to the city in the previous ten years. Only a strong council, who doesn’t bring partisan baggage to the table can create the changes people who (voted in 2014) expected but their hopes did not materialize.
The lousy deal will give Guelph Hydro away for a small piece of a corporate pie
The current council consideration to merge Guelph Hydro with Alectra Utilities of Mississauga is an example of secret and sloppy work on the part of the Strategic Options Committee, formed by council. Its mandate was to investigate and negotiate either a sale of Guelph Hydro or a merger with a larger electric distribution network. The “sale” option was removed from the mandate last February with the committee concentrating on a merger.
Simply, it’s a bad deal with the owners of Guelph Hydro left in the dark. What we do know is that we turn over Guelph Hydro with installed wires, poles substations and headquarters, building for an unknown share of Alectra, either the utilities portion or the incorporated body.
Then we are informed that council has already signed an agreement to merge and will vote December 13 to allegedly finalize it. There is a petition circulating that is opposed to the merger. It’s an opportunity to coerce members of council to say no until there is further research and effort to examine all the options.
If interested in signing the petition email your intent to firstname.lastname@example.org to be added to the growing list. Thank you for participating.