The 2011 Nanaimo Budget: A Fudgit Budget?
Ron Bolin: Nov. 24, 2010
The city of Nanaimo’s assertion that if it wasn’t for spending on the Quarterway Bridge and Bowen Road and hiring more police and fire officers, we wouldn’t need a tax increase is a lot like me saying that if I weren’t going to get a new car and hire another servant next year, I could live within my means. To date I haven’t seen any operations information that indicates that these new expenses are required at this time. Such data may exist, but if so, it seems to be held close to Council’s chest and taken for granted.
Over and above that we are going to raise water rates by 5% again, remembering that these ongoing raises are subject to the magic of compound interest. Why? One gathers that we are getting ready for the hordes of new citizens who may descend upon us and for whom we must be ready. But what are Development Cost Charges (DCCs) for? And why are they not adequate to meet the challenge? How much more should current citizens pay to bring newcomers? Why? Should we establish a fund and simply pay people to move here?
We are living in a time when food bank and meal program lineups are long and getting longer. We live in a city with one of the worst child poverty rates in the province. Yet City Hall persists in acting as if we were living in fat city. Such delusions of grandeur cannot go on forever and each year that we over-reach leads us closer to a bad end. The Conference Centre alone eats up about 4-5% of our annual property taxes and would be enough, had we not built it, to cover all our tax increases and then some. I include here not only the annual operating costs of the Centre but the foregone interest on the reserve funds which we invested here (about $30 million), but the interest on the loan which we took out (about another $30 million).
There seem to be a number of methods by which we can adjust our finances to our means. We have started toward a first step with the introduction of the Core Review study which should be done in time for the 2012 budget review. Other ideas which could be examined for 2011 include:
- In acquiring the services of personnel primarily needed to perform a systems review, for example of energy, water use, transportation networks, etc., we can use contract services. Tasks which have finite goals are better served by bringing in outside experts who do their thing and then leave. Such system review tasks have a defined end and the implementation of a system is often best left to those of a different skill set.
- We can use Local Improvement fees for more local improvement issues, e.g. sidewalks, storm sewers and other facility provision or improvements which primarily benefit a local area. Local Improvement charges were previously in wider use than in more recent times. Council recently voted for the use of Local Improvement charges in Cilaire where residents want a higher standard of replacement street lighting than is normally provided by the city.
- We can stop providing the capital assets for supposedly free market businesses. Next year we are building a concession stand at Maffeo Sutton Park which will replace the independent vendors which have been serving us well there for many years.
I am sure that there are many ways in which we could reduce our tax footprint without reducing our quality of life in Nanaimo. Your ideas on how this could be done are required by our Council. They need our help.
Posts and Comments on Nanaimo Governance 
I agree with your assessment of the logic behind staffs explanation for the increase. On my blog I speculated that this was just a form of ‘spin’, basically saying that it was only infrastructure and safety issues that were causing taxes to go up. I could just as easily say that if they did not give the Port Theatre $500,000, the funding for Chase River firehall staff, would have no effect on the budget.
One item is the 2.5 million it will take to basically re-do Cilaire subdivision, which they say is in need of replacement as it was built in the 60’s.
The street I live on in Townsite, was built a long time before that, it has barely seen a repair, at least not in the last 20 years.
What’s up with Cilaire, and how about the $400,000 to replace all their street lights?
Do these expenses in Cilaire HAVE to be done now, or could they be postponed? It did not seem that anyone on council was asking any questions, which is a surprise given the size of the expense.
Regards
Jim Taylor
Looking at the “budget Forum” it is noted that the City has 12 employees in the fleet section with a budget of almost $2.5 million,and who knows if this includes everything.In any event,this expenditure is outrageous and the service provided is most certainly not a core component of the City’s mandate.There are numerous private vehicle maintenance facilities that would love this work and whom could likely do it at 50-75% of the cost.If the core review ever gets under way this is one cost centre that must receive close scrutiny.
I most certainly agree that the way in which the City budget is constructed,and the manner in which the information is processed to the public,is a shell game.
Over the past few years Council has made decisions to increase the mil rates paid by residents and to reduce or hold those for commercial or industrial properties. To the best of my knowledge there has never been an examination done or report to the public presented which justifies these changes. Rather, Staff and Council have, in their wisdom (remember the Conference Centre) decided on these actions on the vague and unproven theory (remember the Conference Centre) that these actions are good for community. Perhaps they are. But shouldn’t there have to be some presentation of data to show that this is correct? That the tax rates in various classes match the expenditures associated with them? Shouldn’t there have to be some means of measuring whether these modifications are working as advertised? The long lines at food banks and feeding programs indicate that our residents are also in need.
Students of the budget -or simply those who would like to ensure fair and reasonable use of their property tax dollars- are reminded that the city runs a BUDGET FORUM at which they may pose questions about the budget, i.e. about city finances and not city politics though these can sometimes be difficult to untangle, at:
http://www.nanaimo.ca/budget_forum/index.aspx
Some questions have already been posed and answered.
This is a question I submitted to the forum about one week ago. To date it has not been answered. I am sure some of the sound minds here can clear it up tho’.
During the presentation at council, one of the slides shows 2010 Property Taxes and Utilities Representative House 27 Municipalities Surveyed.
On the chart it shows Kelowna with Asses. 454,442 Total 3500 Rank 19.
Nanaimo Asses. 319,994, Total 3249 Rank 21.
Can someone tell me what these figures mean? Since the Asses figure is not the same, how can the Total comparison be meaningful?
I am sure I am missing something here. But wouldn’t it be more useful to know what the taxes in Nanaimo would be on 454,442, if we are going to compare with Kelowna?
Cheers
Jim Taylor
http://www.NanaimoBlog.com
Ron,we should not be concerned about the long lines at food banks and feeding programs.Have you not heard of trickle down economics?If we continue to pay our City employees these overly generous salaries and benefits,think of how our hungry citizens,including school children,will ultimately be the beneficiaries.Imagine how they benefited from the $600K we gave Jerry Berry.How fortunate they are thanks to our Mayor and Council.
Jim: Comparisons are misleading without knowing the whole story which includes mil rates. Assessments are set by the province and, as far as a province wide comparison goes, should be comparable, i.e. if you sell an average price house in Nanaimo for $319,994 and then buy an average price house in Kelowna, it will cost you $454,442. (I use the figures you have given.) This indicates the “superior” property market in Kelowna which is dependant on a whole lot of things, but which the assessment process has supposedly reduced to comparable dollars at least for for each municipality. The average house in Kelowna may be bigger, newer or distinguished from the average house in Nanaimo in any number of ways, including simply being seen from a market point of view as superior to an average house in Nanaimo. In fact I believe that if the population of BC or of Canada were to be asked to rank the prestige of various towns, then Kelowna would be ahead of Nanaimo and Victoria would be ahead of Kelowna, whether these rankings by perception have any basis in fact or not.
If we look at the property tax paid for each of these average houses, then we must also examine the mil rates which are imposed upon them by the respective City Councils to get to the amount of taxes to be paid. This can vary considerably depending on the ability of Council’s to cope with the publics’ demand for services and their acumen in meeting those requirements in a financially prudent manner.
Property cost inflation affects assessments. As prices rise, so do assessments. But unless the citizens desires or municipal employee or other basic costs increase then taxes do not need to increase at all. If assessments double and costs remain the same, then all a Council has to do is cut the mil rate in half and taxes will remain exactly the same.
Such comparisons must therefore, as you suggest, be examined in detail and with care. It is easy to mislead with statistics. Hope this answers your question.
This in from Vancouver where property taxes are set to be up by 2% following a review of city departments. Bet you thought that they would be way up there, eh?
http://www.theprovince.com/Vancouver+forecasting+hike/3886682/story.html
That’s a very interesting development for Vancouver.Concerning Nanaimo,I suspect with a little common sense and truth-in-budgeting,the 2011 budget could come in at 0%to-2%.
If we are going to get a 0% budget, it will take a council with far more spine and stronger understanding skills than this one has demonstrated in the past two years.
I get the feeling that almost no one on council has any idea how to get a handle on tax increases.
Jim,your 2 short sentences sum up the last 2 years perfectly.
I have posted an article dealing with what seems to be gross mis-management on the part of council and staff. With the exception of Mr. Pattje it seems that Mr. Kenning and council are once again content with whistling past the graveyard. It refers to the ‘looming’ shortfall in financing for water and sewer infrastructure.
The article can be seen at:
http://www.nanaimo-info-blog.com/2010/11/42-tax-increase-is-not-enough.html
Cheers
Jim
Council still lives in oblivion to the real world.
By that I mean that they,like many others, seem to think that when the bailouts have done their trick & stimulus monies have made their mark, we will be , once again, on track for more expansion,urban sprawl,spend your grandchildren’s earnings etc etc.
No doubt they still hope that the tooth fairy (a poorly disguised Roger McKinnon) & his friends will expand this city to 500,000 persons within 10 years & all will again, be well..
Anyone with their head above water will ,I hope by now,realise that what was ; will never be again..
If this City/ Council/Province/ wish to really plan for the future they had better start with a new original plan that does not feed from the failures of the past.
I should have added.
Water supply( & it’s financing) is to become a huge issue in Canadian life as it is worldwide.
Whilst we may think it plentiful ; it is not.
We are , in my opinion, becoming dangerously close to privatising local water supplies.
Report released this week by the Canadian Federation of Independent Business extends the analysis of municipal financial data from 2000 to 2008:
“BC Municipal Spending Watch – 3rd Edition, December 2010”
Click to access rr3222.pdf
Some interesting excerpts at pages 19 and 20:
“EXPENDITURES: CORE SERVICES vs. “NICE TO DO” SERVICES
What are core municipal services? Although this seems to be a very simple question, the definition of core municipal services is open to interpretation. The UBCM/ provincial government publication, Local Government in British Columbia—4th edition explains that there are functions mandated by the province and voluntary functions. Mandated functions can also include instructions from the province on how to organize these functions.”
“SALARIES AND BENEFITS OF EMPLOYEES
Public wages are the largest municipal operating budget expenditure. CFIB research comparing public and private sector wages and benefits shows that, on average in BC, municipal workers earn 10.4 per cent more than their private sector counterparts in the same job (see Figure 5.2). When you add in benefits, this premium soars to a shocking 34.9 per cent.”
SEE ALSO – SECTION 6: FEEDBACK
The CFIB makes a number of recommendations for provincial and municipal governments to try to rein in spending, including:
-limiting operational spending increases to population and inflation growth;
-freezing municipal wages until they are within five per cent of wages for equivalent positions in the private sector;
-using zero-based budgeting instead of the traditional budgeting process, which treats existing levels of spending as a given; and
-creating an independent municipal auditor general to oversee local government budgets and spending.
This is quite a report and confirms what has been suspected,indeed known,for some years.Janet,thank you for posting it.The shocking difference in benefits is so clear and obvious when looking at the overly generous ‘time off’provisions such as the schedule of paid vacations,statutory holidays,sick time etc.The ‘sick’time benefit is truly an insult to the taxpayers.City employees are credited with 18 days per year which can be accumulated to a maximum of 60 days and paid out in cash at retirement.
This in theory is supposed to make the employee want to show up for work on a regular basis.But it doesn’t work because once the 60 days are accumulated (possibly in less than 4 years)the absenteeism for ‘sickness’ averages over 10 days per year per employee in the City of Nanaimo,as confirmed in the city’s disclosures.This is a disgrace.
It would be interesting to know what the city’s Human Resources department is doing to track and analyze the statistics.Probably nothing because they certainly would not want to upset their employee/partners,now would they.
I happen to be aware of an absenteeism study that was done several years ago at an island pulp mill.They found that the workers were ‘sick’from work more often on fridays and days before and after statutory holidays.Those employees were identified and notified of the obvious pattern of behavior.Guess what? Absenteeism dropped dramatically.
In summary,I would politely say thay the city’s ‘sick’time policy is total bull droppings,perpetuated and condoned by gutless and spineless elected councils past and present who are more interested in keeping their employees over-paid and under-worked, rather than looking after the best interests of the taxpayers.As the policy now stands,employees are paid very well to show up for work AND also paid very well for NOT showing up to work.And the city management of course loves the policy because they are entitled to the identical benefit (see Jerry Berry).And or course the H.R. department has in their files studies by birdbrain PHD psychologists who tell us what a benefit it is to society to pay people not to work.But don’t blame the unions or staff.They only take the easy pickings that the elected generously offer or accede to.Why wouldn’t they?
What this town needs is a Mayor and Council who have the brainpower to understand that the overspending on non-core projects has to stop and the incessant increases in wages & benefits has to be controlled.This most certainly has to include reductions in employee numbers,both exempt staff and union employees.A 5% reduction would result in a more efficiently run city operation and provide a savings of at least $3M.
Does anyone believe Mayor Ruttan and Council have the courage to accomplish this? We shall see over the next few months as the city budget is finalized and union contracts are re-negotiated.But whatever you do,do not hold your breath as it will very likely be very bad for your health.