Hey City Staff, You Forgot $36 Million: BENN

A staff report to be tabled at next week’s finance committee is in high-speed-spin mode.

Staff prefers that councillors think of the forecast annual operating deficit as only $1.3 million. Plus the as-yet-funded $36-million place-holder from the original budget.  For those who mastered Grade-2 arithmetic, that adds up to a forecast $37.3 million shortfall.

As is invariably the case for what accountants refer to as variance analysis, there is a laundry list of accounts where the city has outperformed the budget, and accounts where more was spent than budgeted.  An almost $7-million surplus on social services, mostly due to changes in funding from the province. Almost $28-million more than budget was spent on snow removal. Toss in about $7 million more in operating losses for transit services. That is comprised of a combination of about $4 million less from fare revenue and a basket of better and worse labour related costs.

The details, as is often the case in budget to actual reviews, can mask the big picture. Competent senior managers and directors are capable of identifying patterns. Of not getting caught up in the weeds. Of seeing the forest, not the trees.  The operative term being competent.

So, half a year in, neither council nor staff have found a source of funds from a senior level of government to cover the $36 million hole that was in the middle of the unbalanced budget. Furthermore, staff have made it clear, notwithstanding the aforementioned spin-cycle, at least to those who choose to wipe the muddy spray off their goggles, that there is no hope in identifying a source of funds and receiving same before the end of the year. Staff have effectively admitted that the $36-million plug was, is and will remain a fiction.

What more can one say? Staff produced an unbalanced budget at the instruction of the mayor and council. And then council approved it. A direct and obvious contravention of the statutory obligation that all municipalities in Ontario have a balanced operating budget.

On a related note, Mayor Mark Sutcliffe is seeking council support to increase the property tax rate by 3.75 per cent … an increase that is lower than that used to produce last year’s piece of fiction. Add to the public spin-cycle comments from a variety of councillors that we need to increase the non-fare funding for public transit.

It should make for an interesting budget-cycle this autumn. Will staff produce another work of fiction? Will the province turn a second blind eye to a city council flouting its statutory obligations?

Or will the city finally do what it should have done a long time ago. Fund mandatory services such as public transit properly, while cutting back on the nice-to-have programs. Will council finally recognize that today’s capital budget projects that are funded with debt (cough Lansdowne cough) become operating-budget expenditures … for many, many years?

One last thing for councillors to think about. The next municipal election is but 14 months away.

Ron Benn, a finance executive, has been a member of the Centrepointe Community Association for the better part of three decades.

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