How the City can Save $4.2 million in 2024

For those who read my report on Owen Sound services, you are well aware that Owen Sound does not compare well to similar municipalities in that Owen Sound spends $11.9 million more than the average of the municipalities in my study group who are delivering very similar services. Council has the ability to significantly reduce the size of that disparity in the 2024 budget by sending the draft budget back to staff with direction to re-develop it following Zero-Based Budgeting principles.

"Zero-based budgeting (ZBB) is a method of budgeting in which all expenses must be justified for each new period. The process of zero-based budgeting starts from a 'zero base,' and every function within an organization is analyzed for its needs and costs. The budgets are then built around what is needed for the upcoming period, regardless of whether each budget is higher or lower than the previous one"

I first made Council aware of the benefits of Zero-Based Budgeting 18 months ago in my correspondence to members of council which I followed up with my article on the Road to Recovery at owensoundhub.org in October 2022. Unfortunately, as was the case of with my recent Services Review Report, my advice was never acknowledged let alone considered. Regardless of the past, I feel it is critically important for the city to change the budget process, so I am once again suggesting the adoption Zero-Based Budgeting in the hope that this time Council will give it serious consideration.

I firmly believe that if Council only makes one change this year, by adopting Zero-Based Budgeting, it will reduce 2024 expenses by $4.2 million. According to Deloitte.com criteria Owen Sound is the perfect candidate for this budget process change given its current financial challenges and the obvious need a more structured approach to cost management.

The implementation of Zero-Based Budgeting will identify unnecessary spending and eliminate the budget-padding. According to a Globe and Mail article when Tim Horton’s adopted Zero-Based Budgeting their general and administrative expenses fell 32%. Given the short timeframe Owen Sound should expect at a minimum a 12% or $4.2 million reduction in expenses in 2024 and significantly more in future years.

There is no need for the city to hire a consultant to help staff with the transition. The city has a finance department with well credentialed staff to take this on and there are plenty of on-line courses to bring budget managers quickly up to speed. As well if staff wants to take a short cut Deloitte actually has a “Zero-Based Budgeting in a Box” application which enables fast implementation.