The opening salvo of City Hall’s 2014 budget process
Ron Bolin: Oct. 9, 2013
This morning at 8am in the SARK building (the new City Hall Annex) Board Room, Council began their new budgeting process with an examination of the “Arena” portion of the Parks, Recreation and Culture budget proposal for 2014. The City is experimenting with a new format for examining budgets which resembles a loose “Core Review” of the City’s activities and begins with Parks, an area which, while not absolutely necessary for meeting the purely mechanical infrastructure requirements of a city, is essential to enable and enhance the physical and mental health of its inhabitants, thus opening the door to the exposure of philosophic controversy about the nature of expenditures in discretionary areas. The PR&C Department at $26,702,519 represents about 22% of the expenditures listed for Nanaimo in 2013 in the 2013-2017 Financial Plan, and is second among departments only to the Community Safety and Development Department (RCMP, FIRE, Planning and Development) with $49,558,244 or 40% of the budget.
Before continuing, perhaps we should spend some time considering the concept of a “core” review of municipal services. This process was undertaking in the City of Penticton in 2010 and a valuable document describing the process and its results can be found at:
You may wish to download a copy of this document or to keep the above address handy as the application of the concepts there may be of interest in comparing them with those of Nanaimo.
The foundation of Penticton’s Core Review rested on three designations for spending:
Mandated Services: These services are explicitly mentioned as a required service in the Community
Charter and/or the Local Government Act;
Foundational Services:These services are not explicitly mentioned, but are considered bare necessity services for the city’s residents and for internal city operations; and
Discretionary Services: These services are not mandatory and the city has significant discretion in determining whether the service is even offered by Penticton.
The document goes on to categorize some 41 services offered by Penticton into those three service levels: 8 mandated; 19 Foundational and 14 Discretionary plus a couple of others not found in Nanaimo. The list (page 8) is interesting as it misses several categories which we would find “needed” such as Planning; and has others like the Electric Utility (which we do not have) . Nevertheless this list of services provides a background against which further examination could take place. When I spoke of a “loose” rendition of a core review, I was speaking of the absence of this background in our new budget process.
In fact, the 2014 Nanaimo process will deal only with the budget for the Parks, Recreation and Culture Department. In the Penticton Study the activities of the PR&C Department all fell under the classification of Discretionary Services. This morning the presentation by Richard Harding and his Staff concentrated on the activities which take place in the four ice arenas, i.e. Nanaimo Ice Centres 1 and 2 and the Beban Arenas; Frank Crane and Cliff McNabb. These facilities are supported by 21 User Groups: 12 are Hockey related, 7 are Lacrosse related and 2 represent Roller Derby. These arenas provide some 169 rink weeks of ice time and 33 floor weeks of Dry Floor time (for Lacrosse and Roller Derby groups) per year. Together the arenas are available for roughly 1400 arena days per year allowing for one or more brief shutdowns, for 18 hours per day during the “winter” months of Jan-Mar and Sept-Dec and 16 hours per day for the “summer” months of Apr-Aug.
Given approximately 6,180 staffed hours per facility per year and 4 facilities, this leads to about 24,720 manned hours in these facilities each year. Of these hours about 80% represent ice time and 20% dry floor time. The relative cost of ice time vs dry floor time has not been indicated but it is expected ice time costs are significantly greater due to the costs of refrigeration and specialized ice care.
Using this information from the 2013 budget as a basis the Staffing costs of each hour of operation amounts to $59.48 per hour ($1,470,381/24,720) but this may be distributed over varying numbers of Staff at different times during operational hours. Similarly, net overhead costs come to $27.43 ($678,043/24,720) per operating hour, giving a total operating cost of $86.91 per hour for the arenas. Revenues for the arenas come to $1,343,216 or $54.34 per hour leaving a deficit of $32.57 per hour or (32.57*24720) = $805,130 or about $10 for each man, woman and child in Nanaimo or about $25.00 per household.
Council was unprepared for the presentation as the budget materials were only handed out at the meeting. Still, the nature of the discussion concerning services, budget priorities, subsidies and alternatives did come into play and though tentative, I believe that the exercise was useful as an introduction. Staff promised that the materials for the next presentations would be out a few days prior to the next presentation. The materials handed out at the meeting can be found here.
Forgetting capital and asset management costs then, to reach a break-even point in operating our arenas we need to either cut the operating hours, increase revenues through new participants and/or higher fees and or a combination of all of the above. The shortfall of $32.57 appears to represent either a misallocation of resources or a decision to purposely over-subsidize this function to the detriment of other City functions. A description of the income of these resources by month, day and year from receipts should give a good guide to how difficult, or easy, it might be to reallocate these resources with small impacts. This material was not present and thus the issues involved were left more to ideology than to evidence. A closer examination of related data is required.
we do need to have some understanding of how much we are spending on what and whether the game is worth the candle… there are many games and many candles. but first the big picture: community building, civil co-esistence, aesthetics in built environment and public shared space and I accept — this one’s tricky — some wise participation in the economy: leveraging public capital projects for best spin-off benefits, investment in education infrastructure, etc. The question here is how do we assess these factors and to what extent is government responsible for them? We could take the totalitarian stance of either fascism or communism, or we could take the tack that governments role is to set parameters, but not the paths themselves. How are we to discuss the real world remembering that “We should be careful of how we define the world. It IS that way.”
Another way to look at the budget is through attendance: In 2012 there were 40,443 admissions to public skating sessions. Undoubtedly many of these are representative of a smaller group of citizens who attended multiple times. There were 4,611 registrations in arena programs which probably also overlaps. Participation in the 21 groups who rented the arenas is unknown. If we added up the admission and the registrations we would have 45,054 “users” for a cost of over $47 per user. Is this reasonable? The question is, how many are being subsidized by how many? In Nanaimo with a median family income of about $37,000, i.e. where most of these make less than $37k and many much less, and consequently can’t afford to use these facilities. I don’t pretend to know the answer, but I do know that by accepting the situation without question we are answering it irresponsibly.
Last Monday morning was for one area in one department. The budgeted total for operations in the Parks, Recreation and Culture Department for 2013 was $26,702,519 and only about 8.4% of that budget was allocated to arenas. In the coming weeks the other major service delivery areas of the PR&C Department will be presented to Council. Now is the time to pay attention. The budget is by far the most important document which any municipality prepares and, for better or for worse, it sets the agenda, not only to the next year but for the years to come.
What say you?
The next part of this new process dealing with the pools will take place on Wednesday, Oct. 16, in the SARC building Board Room at 9am. This time the agenda was published previously and can be found at: