Tag Archives: 2016 Guelph budget

Truth and consequences: No one won casting this year’s city budget

By Gerry Barker

Posted December 11, 2015

My palms get damp when I hear Deputy Chief Administration Officer (DCAO) Mark Amorosi alleging that the city staff costs have been dropping for the past five years. Amorosi is the man in charge of all city finances, so one would assume that he knows what he is talking about, right?

Well, here are the staff’s cost numbers as taken from the city’s own audit reports for seven years from 2008 to 2014, and rounded:

Year            Total salaries and benefits            Prior year increase

2008                        $124,900,000

2009                        $139,400,000                        11.6 per cent

2010                        $143,600,000                        3.0 per cent

2011                        $155,200,000                          8.1 per cent

2012                        $163,600,000                        5.4 per cent

2013                        $174,500,000                        6.7 per cent

2014                        $190,500,000                        9.2 per cent

Mr. Amorosi’s statement seems awkward and incorrect when the city staff employment costs have increased by 52.5 per cent or $65,600,000 in just seven years.

Those are the years beginning with his hiring in 2008 as head of human resources for the city. His rise through the ranks is remarkable considering he has an HR background not the financial experience required of a Chief Financial Officer. But Guelph does not have a CFO. What we have is an HR guy running the financial department of a $500,000,000 Corporation.

Amorosi reports to CAO Ann Pappert who spoke glowingly Thursday night on how hard the staff worked to prepare the budget and how lean the organization is today with each department cutting expenses.

Here is what the city’s audited statements state in the same seven-year period starting in 2008:

Total expenses in 2008 = $281,000,000. Total expenses in 2014 = $374,800,000

That’s an increase of $93,800,000 or an average of $13,400,000 per year.

The critical part of this exercise is that total expenses increased by 52.5 per cent over the seven-year period while salaries, wages and benefits grew by 33.4 per cent.

That increase of 33.4 per cent occurred during that same period the Consumer Price Index increased by 9.7 per cent. That is a 23.7 per cent difference between the actual costs to citizens living in Guelph. Do you still wonder why Guelph is one of the most expensive cities in which to live in Canada?

Consider the increase in population of the city during that same period. All these data are based on the 2011 census of 121,888. At that time, Guelph’s population had grown by 5.1 per cent in the previous four years. As next year is a census year, we will have a clearer picture of our population numbers.

Ms. Pappert is at the top of the city staff organization chart, earning a salary of $230,000. Yet neither of these two key executives dared to explain the current negative 2015 budget variance of $1,300,000. They admitted that in each of the past three years the city budgets had been overspent.

This would indicate a faulty forecasting of expenses, fixed and variable. It becomes apparent when Coun. Mike Salisbury said that budgeted funds not used in the current budget might be used in the following budget. “It’s a no-brainer,” he exclaimed. Funds not spent in the calendar year disappear, not to be transferred for projects the following year. Otherwise, why bother to create a budget at all? That friends is voodoo financial advice and has been going on for a long time in Guelph.

Neither Ms. Pappert nor Mr. Amorosi said a word about replenishing the raided reserves used to pay the $8.96 million to settle the Urbacon Buildings Group Corp lawsuit last year. The BMA Management consultants, hired by the city, reported that the reserve funds are seriously underfunded. The expression they used was: “Cautionary Red Flag.”

If you distort the zooming cost of staff and operations and ignore the warnings of your own consultants hired to oversee operations, then it strains one’s credulity in believing the city is being managed responsibly.

In fact it isn’t and the data contained in the city’s books demonstrates this.

When Guelph resident and Chartered Accountant, Pat Fung, presented a detailed comparison of operational costs between Guelph, Cambridge and Kitchener during the public meeting on the 2016 budget, there was no response from the council or staff.

In response, Amorosi said the per capita costs in the analysis “ were irrelevant.”

That comparison showed the operational costs in Kitchener were 50 per cent less than Guelph and Cambridge was 49 per cent lower. The analysis was derived from the audited statements of all three cities.

When the council majority rejected the 3.42 per cent property tax levy increase on Wednesday night, they participated in an exercise to reduce the increase on Thursday night to 2.99 per cent.

They left little on the table to reduce the increase but voted to add items that had already been rejected the previous night. They used their 7-6 majority to dump the Guelph Transit fare increases proposed by staff and added jobs that were previously scrapped.

This majority group, who most often vote as a bloc, seemed not to care about Guelph’s high operating costs and the impact on property taxes.

If the city administration continues to increase spending, staff, taxes and user fees it will reach a critical mass of financial collapse. If they don’t pay attention to the rate of growth of the numbers, then the city will have to make major cuts in staff and services that this majority group keeps feeding to favoured groups and political allies.

An example that was recommended by staff, included paying a supporter of the previous mayor some $264,000 to extend a one-year assignment into three years. His assignment is to manage the Open Government Action Plan. This was a contract job that now could become a staff job with all the perks and privileges.

It survived the budget process and is an example of favouritism that doesn’t belong in any workplace. If it had been dropped, the increase in the property tax levy would have been reduced across the board.

We’re talking about thousands of taxpayer dollars here but the senior staff is deaf when it  comes  to reducing costs.

 

 

 

 

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Your GuelphSpeaks Weekender

By Gerry Barker

Posted December 6, 2015

This week:

* Some 2016 budget questions that need action and answers

With only three days left, the council will decide the final 2016 city budget Wednesday night. Here are some questions and issues that will be discussed.

ITEM: The proposed staff cuts to Guelph Transit services and increase in fares

 To an outsider, that’s most of us, there is a serious management and union staff problem. The union is adamantly against any cuts or increased fares. Their spokesman, American Transit Union’s (ATU) president, spoke at length about how the system should be changed.

The Questions: Has he exchanged the union’s point of view with management?

Has the management/labour partnership crumbled as the union attempts to run the system for its own self-serving reasons?

Has the absence of common sense dialogue evaporated at the expense of the users? Why did the city senior staff not consult with both sides before proposing the cuts and fare increases in the staff recommendation to council?

This strategy has backfired big time and the result is an ever-widening gap between the union and management.

The responsibility lies with senior city management

The outcome? Bet the transit cuts and fare increases will not be approved for the 2016. This will boost the property tax rate on this one line item.

ITEM: How does the staff propose to replenish the $8.96 million Urbacon settlement charges it took from three unrelated reserve funds?

This is an important consideration that any management would maintain as a priority, before announcing it wants to hire an additional 12 full-time equivalent employees in 2016

When the General Manager of finance and city Treasurer attests that the city system is running lean as possible, it implies that she hasn’t been around long enough to understand the unparalleled growth of staff in the past eight years. Of all people, she should be alarmed at the cost of staff that is 80 per cent of the property tax levy and is the largest single source of city revenues.

The staff prepared two proposals to council. The first estimated an increase of 1.58 per cent in property taxes. The second, titled appropriately “expansions” included some of the following:

Corporate services, $450,000 for service rationalization; Information and Access coordinator, $86,800; GIS program manager, $127,600; Gasoline Tax realignment, $500,000; Manager of Corporate Assets, $157,400; Analyst Asset Management, $120,000.

Why do we need more staff?

Senior staff has offered no public explanation why these staff increases and projects are needed. It remains a continuation of the Farbridge administration’s ability to do what and when they wanted and without public input. Although council did get an earful from the protesting Transit workers at the recent public budget meeting.

Both the BMA report commissioned by council and the financial analysis done by Guelph citizen, Mr. Pat Fung, CA, CPA, chiefly agree that Guelph’s operating costs are 50 per cent greater than either Cambridge or Kitchener.

Why doesn’t the staff recognize this? With the base proposal of 1.58 per cent, plus the killing of the transit proposal with an impact of .72 per cent, it boosts the tax increase to 2.3 per cent. Then add in the expansion proposals costing 1.25 per cent and the property tax increase is, Tah Dah! 3.55 per cent. Does that have a familiar ring to it? That’s the same rate increase, as 2015.

Adding the two budgets approved this year, council’s first year in office, is it possible that the new council will vote to approve a total property tax increase of 7.10 per cent?

The FMA report specifically spelled out that the reserves were seriously underfunded describing the situation as a “cautionary red flag.” Does the senior staff not listen to what its own consultant is saying?

This serious financial problem does not need further explanation. Staff and Council need to put this city budget on a strict diet to equalize operation and capital costs in line with Cambridge and Kitchener. The days of complaining that those two cities are part of a regional government and therefore have lower operating costs, are over. It’s a two-tier system in which taxpayers pay city operating costs plus their share of regional costs. Mr. Fung incorporated the two tax levels in his analysis.

In Guelph’s case, the time has arrived to start the financial cleanup of the grandfathered high costs created by the previous administration.Start by cutting operating costs with this budget.

 

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Your GuelphSpeaks Weekender

By Gerry Barker

Posted November 29, 2015

Here’s this week’s line-up:

* Sell a bit of Hydro One and spend it on the deficit

*   Did we elect a Prime Minister or envoy to the world?

* Countdown to the 2016 city budget

* Lose your car, rely on public and cycle transportation

 

Ontario Liberals to sell assets to balance the books by 2017

When Charles Sousa, Ontario’s Minister of Finance, produced his fall financial update Thursday, he proudly claimed the deficit had been reduced by a billion dollars. For the uninformed, this is a shell game. Sousa in his budget presentation announced the provincial deficit would be $8.5 billion. Voila! He now says it will be $7.5 billion.

This is the ninth successive years that the Ontario Liberals have budgeted a deficit. First it was the McGuinty government that spent money it didn’t have during a financially volatile period when plants were closing and revenues nose-dived.

Gas plants notwith standing, Kathleen Wynne is still sticking to the fiscal program of the McGuinty period to spend more than general revenues supply.

The net of these accumulated deficits is a gigantic increase in the provincial debt. As it grows it feeds on the government’s deficits, driving up the debt servicing costs. These servicing costs must be paid, on time and without recource.

The result is the hole keeps getting deeper and more difficult to get out. There is no way the current policies of thr Wynne government are going to balance ther budget before the next elelction. Except if they sell off public assets to cover their overspending.

Does that make sense to you?

The problem is not lack of revenue but excessive spending.

Living in Guelph, most folks are aware of the current administration’s penchant to boost spending every budget cycle. Our problem is that we have a number of councillors who do not understand financial management and/or they rely on staff to make the right decisions. This has been the practice in city operations for the past nine years.

The end result is the staff has control of the process and the majority of council support their decisions.

Here’s a small prediction: Guelph Hydro, one of 74 municipally owned distribution networks in Ontario, could be bought by Hydro One before the next election. This was the plan of former mayor Farbridge when she formed Guelph Municipal Holdings Inc, of which Guelph Hydro is part. The proceeds would provide sufficient capital to carry out her plan to provide geothermal heating and cooling to major downtown Guelph buildings plus the Hanlon Business Park.

Stay tuned.

*            *            *            *

What the world needs now is Justin Trudeau?

Our spanking new Prime Minister has spent more time on the road than in Parliament since his election five weeks ago.

Hey! It isn’t easy doing the job domestically but overseas is a different matter. There have been some gaffes such as maintaining his election promise to bring our RCAF troops home right after the Paris terror attacks. In show biz that’s called blowing the line.

Then he maintained the party’s stance that it would bring in 25,000 displaced Syrian refugees by December 31. Whoa there cowboy! The logistical problems exceeded the promise. To the P.M.’s credit, he called the provincial first ministers together to discuss how they can assist accepting the refugees and provide the necessary life fundamentals for them to become assimilated in our society.

It had to be a historical meeting because the Harper government didn’t bother meeting the premiers in more than four years.

I can remember Justin’s father holding the confederation conferences in the former central train station, in Ottawa, that had been converted into a convention centre. Some were televised and gave Canadians an insight to the thinking of their leaders from across the country.

The early morning line is that the young master will do just fine and will improve and mellow with age. Bon Chance! M. Justin Trudeau.

*            *            *            *

2016 City budget to be decided in the next 11 days

This is written before the important budget meeting, Monday night, in which each citizen can present their input into the city’s 2016 budget.

For the first time in many such sessions, there will be some pertinent and thought-provoking addresses by delegates. There will be the usual special interest groups requesting funding for their projects and activities.

At this point in time, council has received from its staff, recommendations that will increase the property tax levy by 2.83 per cent. We are entering the critical budget zone now as there is not much wiggle room left to keep the increase below the 2015 budget increase

Evidence revelations now show about .72 per cent remaining if last year’s 3.55 per cent increase is the benchmark.

Council’s job is to balance the demands and special interest requests. There is considerable fat in the staff’s two basic recommendations. What else is new?

Adding some 12 new fulltime staff is not vital to maintaining the city.

For example can we not get by without two trails technicians costing $216,400? Or an Asset Manager Mobility Speciaist for $79,300? How about a Zoning Inspector for125,000? Or Winter cycling Lane Maintenance for $670,800? Then there is an Arborist, $107,400 and an Arborist Inspector, $130,700? Or buying a new fuel truck for $229,500?

There are many more employee add ons plus projects. Nowhere is there any explanation why these staff increases and projects are substantiated as being necessary.

This may be the Christmas season but it’s not Christmas at budget time.

There are smart, experienced indiviuals in town that have the background and professional hands-on management skills to arrest spending, reduce staff, improve organization and productivity. Why can’t the city management do that?

Try and make the Monday meeting as see your city administration at work.

*            *            *            *

The two per cent solution to global warming

This week the Liberal government announced it would give $2.5 billion to developing countries to reduce carbon emissions and the effect on climate change. And they did it without discussion or approval of Parliament.

Canada’s contribution to global warming is two per cent of global emissions. That includes the oil sands production of the dreaded carbon dioxide gases that pollute the atmosphere.

In Guelph we have a number of environmentalists pushing to get cars off the road and force citizens to rely on non-fossil fueled vehicles, bicycles and shank’s mare.

Coun. Phil Allt says that cars have to get off our roads. He echoes former Coun. Maggie Laidlaw who predicted eight years ago there would be no cars on Guelph’s streets within 20 years. Maggie you’ve got 12 years to go on that prediction.

Premier Kathleen Wynne is predicting the apocalyptic end of the plant unless we act. That’s over the top and needlessly threatening.

Seriously, there has to be middle ground to rebalance the earth’s atmosphere without threats, bags of money from governments and special interests. It is ludicrous to suggest the end of fossil fueled vehicles, cars, trains, buses, trucks,and trains. Electric-powered vehicles won’t cut it because engineering of electric vehicles is light years from being able to move a train or a large truck or a bus.

Imagine if you will, that everyone who drives a fossil-fueled car will toss their keys into a garbage bin and give up using their car. Depending on your age, your mobility will be reduced to walking, cycling or public transit.

How would that work for residents of Guelph? Routine chores to buy groceries, delivering children to and from school, heating your home with oil or gas, going to the movies or concerts, visiting relatives in places where there is no public transportation, getting to a hospital or doctor’s office, and the list of personal inconvenience would throw our society back to life lived 160 years ago.

Then we would have to deal with the horse manure problem as a health hazard.

And the impact of this to Canada? Perhaps, the elimination of our two per cent greenhouse gases contribution to the planet.

One volcanic eruption in the world discharges more carbon dioxide into the atmosphere than that of fossil-fueled vehicles in all of North America in a year. There are 274 active volcanoes in the world.

The good news is that engineers are gradually developing more efficient and non-fossil-fueled vehicles that will alleviate some of the problem. But if the large countries of the world such as the U.S, China, India, Indonesia and Russia fail to reduce carbon emissions, it is all for naught.

Let’s agree that fossil fuels are not the sole reason for global warming. Natural emissions play a major role in climate change and man cannot control that.

In Guelph, the environmentalist lobby should turn their attention on accommodating natural, responsible growth of our community without trying to ram a series of policies that restrict, inconvenience and divide the city.

That starts with the silly thesis that cars have to get off the road.

 

 

 

 

 

 

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