Defining the Problem
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All of the data and graphs above, including the established
trends and projections can be easily reproduced and verified from the city’s
audited financial statements. They present a factual historical record of how
past Councils allowed expenses to grow over the years and how Council’s
decisions resulted in a pattern of steadily increasing taxes. While the
previous section of this paper presented the facts, this section will offer some
analysis and suggestions which will include opinions of the author. The ideas
and suggestions offered are not intended to represent the only way ahead, but
rather are designed to stimulate community discussion aimed at developing
solutions that are inclusive of the vast diversity of opinions within our
community.
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Often when people are presented with constructive criticism
of their work, aimed at promoting growth and development, they have a tendency
to “shoot the messenger”. In this case I fully expect some attempt to
discredit the author. In my defence, I do have some budgeting and financial
management experience. Prior to retirement I held the position of Vice President
of Finance and Administration of a college and was responsible for an 85 million
dollar budget. I also focused my graduate project for my MBA thesis on
examining inefficiencies in municipal governments. A short summary of my
background is attached at the end of this discussion paper.
One Dimension of Problem
A municipality is a business with a sole mandate of
delivering the type and level of services defined by its residents. With the
exception of grants from higher levels of government, the community covers the
full cost of all municipal services through taxes and fees. Therefore, the
city, through Council, must be responsive to both the Community’s needs and the
Taxpayer’s willingness to cover the cost. This can be extremely challenging for
Council since the Community is not a homogenous body. We are made up of people
with a diversity of backgrounds and economic means. What one group may see as
essential support, others may view as frivolous spending. Normally municipal
councils deal with these situations by creating policy which can be referred to
when considering new requests for support. If executed correctly the policy
reflects the desires of the community and spending is somewhat controlled.
How the Data Defines the Historical Problem
Based on the data, the problem is
Not that higher levels of
governments are shrinking their financial support to our municipality. Although
this is true, its overall impact is not the main driving force. The real source
of the problem is that over the last ten years Expenses have been allowed to
grow at a rate that was well beyond CPI as shown in the charts above. Overall
the total growth of all expenses during the past ten years suggests that
Council's
financial oversight has not been effective.
The fact that most expenses
have been allowed to grow at an unsustainable rate, raises a number of questions
that deserve serious consideration by all members of Council. For example:
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Does the city have effective Cost control measures in place to
ensure that all expenditures are essential for maintaining the Service in
question and at the level directed by Council?
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Does Council systematically review services to ensure that they
both remain relevant to the community and that the level usage by residents
warrants their continued financial support?
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Is the city accurately measuring service demand and accurately
calculating the real cost-per-user by including all secondary costs such as
staff services, HR, Finance etc.?
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