Saturday, January 23, 2010

City of Ottawa 2010 Budget

January 21, 2010




City of Ottawa 2010 Draft Budget


“in a Nutshell”




City Council will be meeting next week (Jan 26th,2010) to discuss the 2010 Budget.

The following information will provide the resident taxpayers of Ottawa with "all they need to know" about the 2010 draft budget.


Revenue from all sources, including property taxes, is expected to increase by $96 million dollars for the 2009/2010 period. $64 million of that new revenue will be used for additional employee expense. Almost all of the remaining new revenue ($32 million) will only cover inflationary costs for the balance of “other City budget expenses”.

Nothing has changed at city hall over the years other than employee and inflationary costs. Councillors can easily adopt the budget next week in one day as they did last year.

The resident taxpayer will pay an additional 3.9 percent more property tax than last year ( not including the increase in your property value) while commercial/industrial and “in lieu of “ taxes remain flat. The weight of the tax increase is on your shoulders only.
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Senior City staff presented the 2010 Operating and Capital Budget dated December 9th, 2009.
 
The detailed draft operating budget reflects 2010 projected revenue of $2,318,746,000 ($2 billion $318 million $745 thousand dollars) and total expenses of $2,318,745,000 ($2 billion $318 million $745 thousand dollars). 

Of the total 2010 projected operating revenue, employee expense is $1,221,997,000 ($1 billion $221 million $997 thousand dollars)

Now, the 2010 budget is projecting $93 million dollars in new revenue over 2009 from all sources including grants etc.



Of the total 2010 projected new revenue of $93 million, $64 million will be utilized for employee salary, wages and benefits.


Employee Expense is devouring 69 percent of the new projected revenue.


The majority of the balance of new revenue ($29 million) will only cover annual inflationary expenses on the remaining city operating costs of $1,096,748,000 ($1 billion $96 million $748 thousand dollars). This is no different than prior years. The city is at an economic standstill and has been for the past decade while employees reap outrageous salaries and benefits gains and the property taxpayers are driven into the poor house because of the lack of participation in the democratic process by many resident taxpayers.


Of the projected 2010 new employee expense of $64 million, almost $23 million of that amount is designated for OC transport employee expense, or 36 percent of the total.


The last time I looked, OC transport has approximately 14 percent of total City employee FTE (full time equivalent) positions at the City.


The transport Committee should be happy with this, especially Alex Cullen. I projected last September at a city hall meeting that this would be the case in 2010. Alex Cullen was not happy with my projection. Well, now he has no choice, but to acknowledge it.


The other thing about "employee expense" that is mysterious:


In 2010, total employee costs are projected at $1,221,997,000 ($1 billion $221 million $997 thousand dollars). This represents 53 percent of the total budget. Employee expense as a percentage compared to revenue is the highest of any municipality in Ontario.


The 2008 City of Ottawa audited financial statements certify total employee expenses in that year of $1,176,349,000 ($1 billion $176 million $349 thousand).


Now, the difference between the 2010 employee expense projection and the 2008 figure is $45,997,000 ($45 million $997 thousand) for the two years.  

That is simply impossible.


2008 Audited Financial Statements: Employee Expense $1,176,349,000
2010 Draft Budget: Employee Expense $1,221,997,000
The Difference: $ 45,997,000


The increase in employee costs as per the 2010 budget between 2008 and 2009 is $65 million and the increase between 2009 and 2010 as stated above is $64 million. (rounded numbers)


The draft budget reflects the total increase in employee costs from 2008 to 2010 of $130 million.


One cannot have a difference of $45 million for employee expense between the most reliable source for financial data as the 2008 audited financial statement and the 2010 projected budget, when the 2010 budget itself totals the difference as $130 million for the same period.


Therefore my conclusion is that employee expense will be recorded in the future 2010 audited financial statements as $1,304,997,000. In other words, Senior Staff are knowingly underestimating 2010 employee expense by $83,000,000 ($83 million dollars). Can you imagine?


It is clear that something has to change at the City of Ottawa this municipal election year for the good of democracy and the pocketbooks of the taxpayer.


*This means a total change in councillors at election time


*a change in senior staff


*a reduction in employee salaries and benefits through employee layoffs


*or an employee cost freeze and/or salary and expense rollback


*and more residents of the City of Ottawa to embrace democracy by direct participation in the municipal process before it is lost for good.




Bill O'Malley


Comments are welcome at wmomalley@gmail.com