Your taxes are likely to be lower-how much? Could be zero, but not more than 2.5%

By Pepper Parr

BURLINGTON, ON February 22, 2011  –  It is going to be a very different budget process for Burlington this time out.   Several things have happened to bring about this change.  First of course there is a new council which has a number of people very comfortable with numbers – something that makes staff kind of uncomfortable. 

Then there is a whole new level of data available to the Council members. These are the  result of a Staff Direction Council members Taylor and Dennison put forward in the previous administration.  “It has been some time in coming” commented Dennison. “It means we can now look at specific programs and determine if we are getting value for money spent and if the public is making the kind of use of a program to make it worth while.”

The Kilbride community centre is an example of a facility that has a very low usage rate – should it be kept or de-commissioned?   With the data council can now make decisions based on facts and not community emotions.

Every member who made a comment was very positive about the new level of data staff had presented and Rick Craven (Ward 1) spoke on behalf of John Taylor who was away, saying “John would be absolutely giddy over this kind of data”.

Dennison, who along with Taylor had been asking for this kind of data for years and with Sharman’s huge command of accounting, especially cost accounting, this Council looks as if it is going to be able to make decisions that are based on facts.  How delightful.

Staff has come up with numbers and proposals that meet the  proposed 2.5% tax increase for year 1 and Dennison said that while he likes the number, he “isn’t exactly thrilled with it”.  Paul Sharman (Ward 5) – sometimes known as Mr. 0 – which is the budget number he wants, didn’t make any comment.

The Mayor seems happy with 2.5% .  Other council members made no comment on the level of increase – suggesting that this Council would not be uncomfortable with an increase of 2.5% when it became obvious that there is a significant surplus from last year that could be applied to 2011 spending.  And there are some very significant savings possible as well.  Sharman let is be known that he wants to see that 2010 surplus – which he felt got created as part of a mugs game staff plays with their HR budgets, made available for inclusion in the 2011 budget and thereby reducing what the taxpayer has to put up.

 It was not an easy session for several staff members.  They’ve not had to answer focused questions from someone who knows the inside, outside and everything in between in a financial statement.  When Sharman asked the staff member who had prepared much of the data what the “volume variable denominators” were, there was a long pause before Chris Glen, ‘chief lifeguard’ who runs the Parks and Recreation department jumped in and muttered a number of words which then brought City Manager Roman Martiuk – no stranger to numbers and the verbiage that goes with them – into the ring and he sort of danced around the phrase pointing out that municipalities were not for profit organizations and didn’t do normal commercial accounting.  But, the question asked – never did get answered – what were the volume variable denominators?  Based on the looks on the faces of the other council member’s faces – it didn’t look as if they had a clue.

What Sharman is saying to staff` is that he knows numbers as well, if not better than they do, and they had better not try playing a numbers game with him.

What it all appears to be coming down to is that struggle between Council and staff as to who is going to make the decisions.  Sharman, who did much of the talking and certainly pummeled staff on a number of occasions, wants the data Council needs to make decisions.  Whereas Blair Lancaster, (Ward 6) thinks staff should be left to manage.  Sharman seems to be saying staff isn’t managing all that well and Dennison went along with him with several trenchant remarks directed at Roman Martiuk.

Staff appears to want to hold very significant reserves and also have what is called “staff gapping” savings sort of tucked away.  This is a neat one.  When a hire is made, staff budgets for that person as if they were on staff for the full year.  If a person comes in half way through the fiscal year, staff have half a year salary that goes into the surplus.

The City Manager, perhaps rightfully so, is quite risk adverse.  He doesn’t want to get caught short so he ensures that there are reserves all over the place that can be fallen back on.  Those reserves get created out of surpluses from any one year.

Because the budget is usually decided upon by early April and the books for the city don’t close until early March – Council really has no idea how much of a surplus could be carried forward.  And thus they don’t have access to those funds as part of their planning for the year we are going into. 

The question as to the reliability of the data the Council now has, as well as the assumptions under which it was gathered, concerned Sharman and City Manager Martiuk allowed that this was a learning experience for staff.

What the data tells is things like the city recovers an average of 68% 0f the cost of running an arena – but they recover 75% if there are twin ice pads and just 60% if there is just one ice pad.  Pretty simple to figure that one out – two is cheaper than one.  However, if the demand is not sufficient for two pads – then why undertake the capital cost of building two pads?  All mundane and boring but essential if your taxes are to be kept at a level you can live with.

If the Kilbride Community Centre is de-commissioned because it isn’t being effectively used – one would want to go back and ask:  Why did we build the thing in the first place?

We have a brand new fire Station ready to open on Ironside (Appleby and Upper Middle Road) but we may not have the money to pay for the 40 firefighters needed to man the place.  Why did we build it?  Federal Stimulus Funds were available.

Discovery Landing is getting a closer look.  Marianne Meed Ward asked if the location was ever intended to break even – it certainly isn’t doing that today.  They recover 57% of their costs. The location is going to show a loss of %1.32 million.

The Burlington Performing Arts Centre was budgeted to get $480,700., an understandable number given that they will not have any revenue other than what they might bring in the last two months of the year.   The Centre, said to be on time and on budget, is scheduled to open in the fall.  All will be revealed about the budget and the business plan for the BPAC at a meeting early in March.  But there was then a request for an additional $262,800 – more than half again of the original requirement.  The cost of a web site is included in this supplementary one time request.  One would have thought a web site would have been included in the original budget.

That’s the world of municipal finance – surprises!

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