Sunday, April 29, 2012

What I Hope We've Learned from This Year's Budget Process

Well, the budget is now done for another year, after the budget bylaw was passed at a special council meeting last Monday.  That it passed wasn't a surprise for anyone involved, despite its defeat through a tie vote at an executive meeting two weeks earlier - we all know that votes at executive aren't the final word, and some council members are known for changing their minds when things come to council, for whatever reason.

But now that the process is over for another year, I hope that all involved, both council and administration, have learned from the experience, and will try to do better next year (or at least, those who are still around after this fall's election).  I have a few specific suggestions where we could build on some of the things that happened, both good and bad, in this year's process.

First, having more information helps in making decisions.  The financial information that we were given by administration before the budget process even started was quite enlightening, and was more detail than has been provided in the past few years.  Of course, once that information is available, it should be used more than it was.  I was disappointed that, even though we were given numbers related to the amount that needed to be in the budget to maintain roads, for example, the numbers in the final budget didn't seem to take that into account.

Second, don't make changes at the last minute, without a map showing how the change being proposed will affect the rest of the budget.  The way that numbers were being juggled over the last month reminded me of a shell game, as we pulled money from various projects or unspecified maintenance activities, to satisfy the wants of a few special interest groups and make up for unexpected shortfalls.  If we decide to make those changes, fine, but we should be able to say exactly what is being sacrificed, and why we feel that other uses, heard from late in the process, should take priority over previously identified needs.

Third, any facility that is supported by taxpayer dollars should have to provide full financial records and budgets to both council and the general public.  This year was the first time in six years that council was shown financial records (for 2010) for the Rawlinson Centre, after years of inquiries and requests.  However, that information was  provided in camera, rather than openly to the public, for reasons that still aren't clear to me.  Hopefully we'll see their financial records for 2011 soon, and a budget for the upcoming year, such as is provided by the library, should also be required. All facilities should have to follow the same rules before they get a share of tax revenues - that's fair to the facilities, and it's only fair that the public can see where their money is being spent.

And finally, no-one involved should count chickens before they're hatched. This year, revenue assumptions were made based on population numbers that were not confirmed by the census. As a result, we ended up about $300,000 short, and had to scramble to produce a budget that balanced. It's kind of like when we go ahead with a project assuming that federal funding will be available, then find out that we've been turned down, so have to find the money elsewhere.  Far better to make decisions based on a worst-case scenario, then be pleasantly surprised when revenues are higher than planned, or funding comes through.

As I've said before, preparing a budget for the city is like preparing your own household budget, although at a much larger scale.  But the same principles apply, and one of those principles is figuring out how to do it better the next time.

"Human beings, who are almost unique in having the ability to learn from the experience of others, are also remarkable for their apparent disinclination to do so." - Douglas Adams

Sunday, April 15, 2012

Popular Misconceptions

One of the difficulties of being on council is trying to refute the misconceptions that seem to pop up everywhere. Sometimes they're the result of a rumour being repeated and exaggerated for effect, sometimes they're put out there by some members of council to defend council decisions, or they may be put forth pseudonymously on electronic news sites by those who try to appear that they're just wondering about stuff, but they're really trying to confuse the issue.

So, since there was no council or executive meeting this past week because of Easter Monday, I thought that I'd use today's blog to talk about a few of these misconceptions, and give my perspective.

First, a few times during and immediately following the boil water order, it was suggested that the defeat of a proposal to increase water rates last summer was part of the reason why the boil water order was put in place, and an editorial in the local paper implied that those of us who voted against the increase (including me) were somehow to blame. Not so. In fact, if you review any of the explanatory material that was provided during the boil water order, lack of funding was not mentioned. It was an unfortunate set of circumstances, complicated by the ongoing upgrading, and an investigation of how it happened would probably be worthwhile, in order to avoid such circumstances in the future, but that's it.

I was open about my reasons for not agreeing with an increase last summer - in the previous five years, water rates had increased four times, including an ongoing 7% increase, compounding annually for the next several years, that this increase will be over and above. I wanted administration to look at decreasing unnecessary expenditures to make up any shortfalls, rather than hitting up the taxpayer yet again. And I specifically disagreed with charging city residents a higher rate for the same volume of water than rural users. To me, this means that city residents are once again subsidizing other users of our services, just like we do with the soccer centre, the golf course, and other facilities that are largely supported through your taxes, and I'd prefer to level the playing field a bit.

Another misconception that floats out, particularly during budget times, is that this council is hampered by decisions of previous councils to not increase taxes. Well, it's only happened once in my time on council, which started in 2000. The only year that any council passed a budget that had a 0% increase was in the year of the last election. I voted against that budget because I felt that it was an extremely short-sighted election goody, but four members of the current council were part of the majority that supported this move.

And finally, probably the most damaging misconception is one held by some members of council, and some members of public - that council decisions are best made without debate and discussion, but instead with all members of council voting in unison, to give the illusion of solidarity. It's unfortunate that, over the last six years, the discussion seems to start with the preferred answer being brought forth from a vacuum, and any questioning of that preferred answer, even asking to see how it was developed, is treated as being somewhat akin to treason. It's as though some members of council are quite happy to be treated as a group rubber stamp, rather than making their own decisions, and providing good reasons for those decisions.

I have been part of councils that believed in setting goals and priorities before the budget was developed, that weren't afraid to send administration back to do further work because their first shot missed the mark, and that didn't mind spending more than the minimal amount of time reviewing the budget before passing it, to ensure that we were making the best decision possible, collectively. I think that some members of council might be surprised at how satisfying the job can be, when the whole process is approached collaboratively.

But how much easier it is to spread rumour and misconception, in an attempt to fool the public, and possibly even ourselves.

"Get your facts first, then you can distort them as you please." - Mark Twain

Sunday, April 8, 2012

And the Budget Process Gets Even More Confusing (if possible)

At last week's Executive Meeting, a bylaw setting the mill rate for this year's tax rate was put forward. This is the bylaw that gives council the authority to tax property, the largest by far funding source for city activities. The vote on the bylaw was tied, as one councillor was absent, and a tie vote is considered to be a defeated vote.

The proposed tax rate increase would still the same one that the mayor floated by council members in an email, asking if we could live with it - 3.96%. I've yet to see any justification beyond that for the number, or any explanation of the difference between that number and the 5.5% increase that we were told was the minimum required to maintain the status quo, let alone catch up on past neglect.

Now, this process may be confusing to those who are aware that the budget was presented at a council meeting in February, as a recommendation from the budget committee (which consists of all council members),and was voted on as a motion of council, although two members of council were missing. The assumption would be that, at the next council meeting, which wasn't until mid-March, the budget would be given the necessary third reading, and passed. But that didn't happen; in fact, nothing about the still unfinished budget process was mentioned over the last six weeks.

That's because, once again, process has been changed, for no apparent reason. In the past, the budget has been presented, along with the bylaw (that's the part that sets the actual mill rate, and makes it legal). This time, there was no mill rate bylaw attached to the budget (or explanation for its absence). I think that the expectation of most members of council was that, as has been the case in the past, a special council meeting would be called, where the whole thing, including the mill rate bylaw, would be voted on. That didn't happen.

So at last week's executive meeting, all that was brought forward was the bylaw to set the mill rate, without any budget attached. It's fair to say that this change in process, without any explanation, is a bit confusing, particularly when one remembers the February vote. However, when the end is used to justify the means, one shouldn't be surprised.

Of course, we've had a couple of unpleasant financial surprises in the time between when the budget was developed and now, and that has only added to my list of reasons for why I can't support this budget.

The first, and most obvious, is the additional costs incurred with the boil water advisory. Things like staff overtime, additional water testing, cleaning all the reservoirs, contracting outside expertise to help through the process - all the costs haven't been accounted for, but initial estimates put it at $300,000 plus.

Another concern that received very little publicity, more or less lost in all of the water crisis excitement, is the effect that the census results will have on the budget. The budget was developed with the assumption that Prince Albert's population would increase considerably after the new census, resulting in additional grant money from the province, which is based on per capita population. The new census number did not increase as expected, and as a result, our budget will be short another $300,000. The result, I suppose, of counting chickens before they're hatched. In hindsight, I'm sure that city administration is regretting not taking some of the additional steps to improve census participation that were suggested by some who were trying to be helpful.

Add those to my original, still valid reasons, for being unable to support this budget (purported savings from delaying maintenance activities that haven't been identified, no attempt to decrease spending on non-essentials like floral decorations and paid radio advertising, a 40% increase in funding to the Rawlinson Centre without adequate financial information being's a long list, but that's a start), and, to nobody's surprise, I still can't support the budget bylaw.

To me, it doesn't matter that it's late in the day. I've been raising these concerns for months, and they're still valid. Passing a budget that we know will be inadequate is wrong. Other members of council may conform to whatever arguments or pressures are brought to bear, but to me, going along with the majority is not a compelling argument for not doing the right thing.

"The one thing that doesn't abide by majority rule is a person's conscience." - Harper Lee

Sunday, April 1, 2012

Well, It's a Start

I've spent a fair amount of time over the past few years asking for financial information about the various facilities that the city taxpayer supports. To use an old expression - it's been like pulling teeth. However, some of those teeth appear to be getting loose. At last week's council meeting, we were given some information about two of the larger facilities - the Art Hauser Centre and the EA Rawlinson Centre. It's a start, and I'm sure it was an eye-opener for many city residents.

But it's not enough. We need to have complete financial information for all city facilities. By complete, I mean that we need to see operating budgets for each facility, including projected deficits. We need to see the total costs for each facility, so that the true user cost can be determined. We need to see an audited financial statement at the end of each operating year, before the budget for the next year is approved.

Right now, even with the limited information that we've been given, any comparisons are of the apples to oranges variety, since not all facilities are treated the same. For example, some pay for water and sanitation (the library, the Girl Guide hall are two examples), while some don't (the golf course, the Rawlinson Centre, another two examples).

We should also be told about the revenue generated by each facility, for those that do. Again, there are some inequities here - the Rawlinson has something called "community event days", where the cost charged for the event is much less than the actual cost of using the facility. I don't believe that other facilities have this option, but until we see the actual information for all facilities, I can't be sure. It would also be useful to see where the revenues, if any, are directed, and what restrictions there may be on their use. I'm a firm believer in facilities setting aside a portion of their revenues for infrastructure maintenance; I'm not a believer in facilities dipping into such reserves to top up operating shortfalls, then expecting the taxpayer to pay for maintenance that was supposed to be covered by reserves.

What I'd like to see is a template showing all operating costs (including those currently paid for by the city) and revenues for each city-owned facility. Such a template should also include some measure of usage, for figuring out a cost per use for comparitive purposes. Once we're able to see the complete information for all facilities, side by side, we could then develop some policies on funding that would be more transparent and equitable than the current situation.

I've said before that Prince Albert has great facilities, and I realize that having such facilities provides intangible benefits to a community. But there are also very real and tangible costs associated with these facilities, and we owe it to the taxpayer to ensure that their share of these costs is reasonable, fair, and open to regular, public scrutiny.

"Rather than love, than money, than fame, give me truth." - Henry David Thoreau