Paramedics 2011 Draft Budget

Paramedics 2011 Draft Budget

Transit, Fire, Police protection and Paramedic Services are very important elements in base City services, but at a reasonable cost.

A trend has developed whereby these services are expanding far in excess of the population of the city. Employee costs make up the lion’s share of the total expenditure and the increase in this cost is far in excess of those experienced in the private sector.

That’s the facts!

In 2002, under a different name, the budget for paramedics was $29,307,000. Employee expense was $23,186,000. The number of employees totaled 348.

In 2011, the draft budget for Paramedic Services reflects a gross expenditure of $69,760,000 with $57,303,000 of the amount expended for employee compensation. Total numbers of employees on hand or to be added in 2011 are 600.

So what we have again, and again, is in this situation, the gross expenditures increasing by 138 percent in 8 years and the employee expense increasing by 147 percent, while the number of employees increased by 72 percent.

In 2011, the gross expenses are offset by grants from The Ontario Government of $37,567,000 and various fees of $280,000. But folks, this is our tax money, municipal or provincial. The cost doesn’t change.

Average compensation cost in 2002 was $66,626.00 and in 2011, the draft budget employee cost is $95,505.00. Nice if you can get it.

Bill O’Malley

The Ottawa City Police 2011 draft budget

 

The Ottawa City Police 2011 draft budget

This is another story about “entitlement” to taxpayer’s cash for excessive levels of employee compensation. It applies to the City of Ottawa Police Service, Toronto Police Service and other service boards in Ontario, including the Ontario Provincial Police.

In Ottawa, it is apparent from the number of policeman with salaries, not including benefits, reaching well in excess of $100,000 annually. All of the individuals of various ranks are listed on the annual Ontario Government report for each city, of salaries over $100,000. It is troubling to say the least.

For the City of Ottawa, the police had a total budget of $128,818,000 in 2001. In that year, employee costs were $108,158,000 or 84 percent of the budget. The number of civilian and police officers in 2001 totaled 1,486. That’s $72,785.00 average cost per employee.

Fast forward to the 2011 draft budget and we find that Gross Expenditures are $258,013,000, revenue of $19,175,000. The revenue comes from the Federal and Provincial Governments (your tax dollar) and $8,837,000 in projected fines. So much for the rumour about quotas for fines!

Therefore, this means that the financial requirement for the operation of the City Police has increased 104 percent in the period 2001 to 2011. How can that be? Continue reading!

Projected employee costs in the 2011 draft budget totals $210,159,000 plus overtime expense of $5,375,000 or $215,534,000. That’s 83 percent of the Budget, approximately the same as in 2001. The number of civilian and police officers for 2011 total 1,946 or $110,757.00 per employee. This figure is actually low for the police officers. Civilian salaries are lower.

So let’s see what is happening. The growth in the number of employees from 2001 to 2011 is 31 percent. That’s much higher than the population growth. And even with a 31 percent growth in employees, the total compensation costs increased 67.3 percent. And the total budget requirement has more than doubled.

This is called “entitlement”.

The City of Toronto Police Department expenses 90 percent of its total budget on compensation, the City of Ottawa at 84 percent, the City of Ottawa Fire Services at 90 percent. You begin to see the problem. And this problem must be resolved soon.

What we haven’t tackled are the unfunded future pension costs for the Police Department. This is a disaster in waiting.

The Ontario Provincial Police “ Brother’s” Union appear to be the “lead” in manipulating municipal police compensation and it is past the time that the Ontario Government rectify this unsatisfactory situation now.

Do you know of any other organization or private business that can expense upwards of 90 percent of its earned revenue on employee compensation? I don’t think so.

Taxpayer’s dollars are there for the taking and the barrel is never empty. Or so you think.

Bill O’Malley

The Ottawa Fire Services 2011 Draft Budget

 

The Ottawa Fire Services 2011 Draft Budget

The Ottawa Fire Department expects revenue of about $688,000 in 2011 from various service levies. Not much, but it all helps. The balance of required income is extracted from the taxpayer.

The operating expense for 2011 is projected at $132,645,000. Employee expense represents $119,190,000 of that expense, or 90 percent.

The Ottawa Fire Department is a “special” case because it reflects the issue of “public employee expense”.

In the year 2001, the fire department expensed $68,250,823 in salary, wages and benefits to 949 employees. That would make the average annual employee cost $71,919.00.

In 2009, there were only 983 employees and a total of $104,192,000 in employee expense. That would make the average cost per employee at $105,994.00

In 2011, employee costs are projected at $119,190,000 with the number of employees increasing to 1,048. That would make the average cost per employee at $113,731.00.

There are a few points to make here.

From the year 2001 to 2010, the number of employees in the Fire Department increased from 949 to 1,003. That is a percentage increase of 5.7. I like this number because it reflects the real, more conservative growth numbers in population during the same period. My figure for growth in population in the City of Ottawa during the 2001-2010 period is liberal 10%.

If you look at it in a different way, one could wonder if the Fire Department isn’t a “closed shop”. 

Let’s look at the employee expense as really, with employee costs at 90 percent of total expense, that is all you need to analyze in this department.

Because the number of employees has remained relatively stable during the period 2001-2011, it is easier to more accurately assess the real increase in cost per employee. This happens to represent a 67 percent increase in individual employee costs from 2001-2011. You would never have your salary and benefits increase like this in the private sector.

The 67% takes into account the additional 99 employees hired or to be hired throughout 2001 to the end of 2011. So the 67 percent increase in individual employee expense is probably low. The figure for senior staff (and they are mostly senior staff) is in the range of 75 percent.

Inflation over the same period was approximately 27 percent. I guess you know where I am going with this. You can say it this time rather than me..

The reality: SALARIES ARE TOO HIGH, BENEFITS AND PENSIONS ARE TOO GENEROUS AND THE WORKING CONDITIONS ARE PRETTY GOOD, ALL IN A CLOSED SHOP.

The Fire Departments around Ontario use union negotiating in one city to increase salaries and benefits in another city. It is a game we can no longer afford to play. Just wait until you hear about the next demand regarding shift work.

Do you know what the average individual annual salary is in Ontario? Find out. You will be shocked!

Bill O’Malley

City of Ottawa 2011 Transit Draft Budget

City of Ottawa 2011 Transit Draft Budget

I know that the population of Ottawa has grown approximately 10 percent since Amalgamation in 2000.  You will see the real numbers in the next census. However, Transit expenses have doubled since 2002 alone.

There are reasons for incremental increases in annual transit expenses, but you would have to come from another planet to accept a doubling in expenses in 9 years.

The Ottawa Councillors that operate their own incorporated businesses would be bankrupt if expenses were allowed to increase in this fashion without a similar increase in real income. Thank goodness that some of the left leaning councillors were defeated or retired prior to the recent election.

Transit income from ridership and other services rose from $98,303,000 in 2002 to $150,290,000 in 2008. The Transit revenue forecast for 2011 is $168,890,000. This 2011 projected revenue figure is somewhat optimistic given the historical trend of real annual revenue increases. The revenue numbers are up due mostly to individual bus fare increases, not from the slow growth in actual ridership.

Taxpayers have to make up the difference between the gross expense and ridership income. Wow!

The total cost of the Transit operation in 2002 was $196,187,000. The 2011 Transit draft budget expense is projected at $402,848,000.

The majority of the increased expense is attributed to Salaries, Wages and Benefits.  In 2002, this expense was $92,927,000 and proposed at $238,878,000 in the 2011 budget. That’s a 157 percent increase in employment costs if the 2011 budget is accepted by councillors.

On the other hand, total Full Time Employees (FTE) in 2002 numbered 1,742. In 2008, the official number was 2,142. In the 2009 budget, the 2008 number was restated at 2,748 and now in the 2011 draft budget the number jumps to 3,055. No matter what numbers you believe, you can readily calculate that the increase in the number of employees has not come anywhere near the ridiculous employee expense increase.

I am not quite sure why the employee numbers changed, but it may have something to do with the operations related to a new 2009 category of expense referred to as Transit Equipment. I am looking for the answer to this now.  The “Gross Expense” of the department has jumped from $330,293,000 in 2008 to a proposed $402,848,000 in 2011. That’s a lot of money.

The Transit Department’s 2010 overtime expense is estimated to be $17 million. The 2011 overtime budget for transit is projected at $12 million. Only time will tell if the department is dreaming in colour. Expenses only seem to go up in this department, not down.

If you want an example of “out of control” spending, you are looking at it. Weak management, leftist councillors and a very serious militant union have allowed this situation to come to a boiling point. Inadequate provincial restraints in policy and unelected arbitrators are also all collectively responsible for this fiscal mess.

The provincial government must make transit an “essential” service in all major Ontario cities and implement a three year wage freeze in order to bring salaries more in line with the private sector. In addition benefits including pensions, must be reassessed and reduced.  All benefit costs must be subject to competitive bids.

Part 2 of the 2011 City of Ottawa draft budget will provide you comments on Fire Services.

Bill O’Malley

2011 Draft Budget Disappointment

My preliminary glance at the 2011 Budget is one of disappointment.  It is a timid start to fulfilling Mayor Jim Watson’s responsibilities. Senior Staff are still running the show along with the unions. Tax and spending continue on the road to financial chaos.

The residents recently voted in a new Council and indicated that “change” in the direction of the fiscal operations of the City was necessary. The new members of Council had better take a hard look at the 2011 Budget and set the “change” in motion. If Jim Watson can’t do it, you sure can.

The majority of proposed new taxes only support increased salaries and benefit expenses. You might want to read some of my previous blogs on this subject. And to add insult to injury, Senior Management want to hire more employees in 2011 to add to a level of employment expense that is the worst in Ontario, even when compared with Toronto.

We should be reducing the number of employees in addition to closing down services that are not essential and, in fact, intrude on our democratic rights.

One glaring example of stupidity in the 2011 Draft Budget is the declaration of thriftiness by reducing expenses of $1 million dollars on outside legal help and external consultants. In this category, $1 million dollars is nothing but a drop in the bucket. Try $50 million or more. This is just ridiculous.

And it goes on. “$9 million in budget pressure in annual debt servicing costs associated with the replacement of transit vehicles. This pressure is entirely offset by efficiency savings in transit’s operational costs.” I mean really, does this statement make any sense?

Speaking of Transit. The department is budgeting for $12 million in Overtime Expenses. 2010 actual overtime expense is estimated at $17 million I think someone is trying to fool the taxpayer.

Do you recall a few years ago when there was an uproar from the Auditor General about overtime costs. The figure at that time for all departments was approximately $26 million. Well, the 2011 draft budget from all departments is seeking $30 million in overtime compared to a 2010 estimated expense of $36 million. This is the mentality of senior management and I guess, this one slipped by Jim Watson. I can only hope that the new Council will not let this one ride.

From my preliminary look at the numbers for all departments, the expenses remain generally “constant” as a percentage of the total pie. Senior Staff are not changing direction in any manner whatsoever.

I will have more to say on this in the coming days.

I did wonder where the 2011 budget figures were for the Library. For the Police budget numbers, I had to go to their web site. This is not appropriate.

In reality, this 2011 Draft Budget is only a partial picture of the operations of the City. It does not include the Rate Supported Budgets, Ottawa Housing, Ottawa Hydro and other operations and expenses that I have commented on previously.

We need all of the draft budgets released on the same day and approved by Council as a package. You can have your 2.45 percent property tax increase, but can you handle the 10% Rate Supported increases or Hydro Ottawa’s greedy increase.

We will be paying a lot more than 2.45% this year.

As a note of caution, residents should make themselves aware of what is going on in some of the US cities. Police and fireman layoffs, no money to pay salaries and other expenses, reduction in union wages and benefits to prevent layoffs, pension defaults and in a few cases, city bankruptcy. I mention this only to make a point that we cannot roll along like nothing has happened over the past two years and continue on our merry way. In the case of Ottawa, it is over the past 10 years. We must be prudent.

And what I see so far in the 2011 Draft Budget is not prudent.

Bill O’Malley

Ottawa Community Housing

Ottawa Community Housing provides and manages affordable housing for low and moderate income households in Ottawa.

OCH is controlled by the City of Ottawa. The housing Group had revenue of $131 Million in 2009. Specifically, $62 Million was from tenant rents, $65 Million from the taxpayers of Ottawa and the balance was comprised of miscellaneous revenue.

To put it another way, Ottawa Community Housing spent $131 Million in 2009 and had earned revenue from rents of $67 Million. The annual shortfall of $65 Million was contributed by the property taxpayers of Ottawa.

Perhaps that is not so bad, considering the benefits from assisting those in need.

However, in this election year resident taxpayers should take issue with a few noteworthy items.

1) As of Sept 18, 2010, OCH has not published its 2010 budget on their web site. The year is almost over. Is there something wrong at OCH?

2) The 2011 OCH Budget must be consolidated with the overall City of Ottawa 2011 Budget. The financial results of OCH are included in the annual audited statements of the City, but are not included in the annual City Budget. This is just unacceptable.

3) The Mayor and Councillors that sit on the Board of OCH must explain to the electorate why OCH had $42 Million in marketable securities on its balance sheet in 2008 with an audited “Fair Market Value” of only $35 Million. That was a write-down of $7 Million dollars.

So let’s take a look at the investments. 1 and 2 can be resolved quickly by a Council directive.

Investments comprised the following:

Liquid assets, Government of Canada fixed income, provincial fixed income, municipal fixed income and corporate fixed income totaled $7,303,223 of the $42 Million in investments. For the most part, these are conservative investments.

The Auditors noted that OCH is subject to market risk, foreign currency risk, and interest rate risk. This should not be.

The remaining investments are in this category, namely:

Canadian common equities ($2,522,528- year end value of $2,584,920):

Foreign common equities ($16,455,320- year end value of $11,866,647)

Mutual Funds ($15,551,865- year end value of $12,778,978)

Why is OCH involved in these investments?  OCH had to buy these risky investments, so it is presumed that somebody made commission on the sale to OCH. Who made the commission? What was the idea of putting funds into these risky investments and ignoring necessary repair of rental units?

In 2009, $20 Million of these investments were sold. That is good, but at what cost?

Council has an obligation to put in place preventative measures that would restrict this type of investment in the future. Council must also let the electorate know the details behind the reason for these purchases rather than investments in rental housing repairs.

There is no good reason for OCH to do anything other than provide and keep rental units in good repair. They must keep their nose out of these irresponsible investments.

Bill O’Malley

Ontario Financial Information Municipal Report

Ontario municipal elections are slated for late October 2010 and other than the Toronto race, things have been quiet in Ontario.

I think that the battle is about to begin though.

However, there is a problem.

The majority of Ontario municipalities have issued their audited financial statements, but the “meat” of the information which is contained in the Provincial Financial Information Report (FIR), has not been posted to the Ontario Municipal Affairs and Housing website (except for a few smaller municipalities). The information is public under the Municipal Performance Measurement Program.

Jim Watson, the liberal candidate for mayor in Ottawa was the minister of this department until recently (he resigned his provincial cabinet post to run for mayor of Ottawa) and I cannot help being suspicious of the delay. What is going on? The voting public needs this information as do the candidates for council. You can refer to it as the “Stewards Council”.

McGuinty has delayed the release of critical information before and it appears that this is another example. The MMAH staff have communicated with me and they blame the delay on new data (City assets and depreciation) which is now included in the report. My research on 2009 FIR information released to date for some of the smaller Ontario municipalities reveals that no delays are warranted as the added information has been audited in the released financial statements of each Ontario municipality

This is unusual. I can only tell you that this is an infringement on democracy.

Municipalities in Ontario are in trouble and it is only for “one main reason”. Salaries, wages and benefit expenses are increasing at an unsustainable annual rate. Of course there are other problems, but there is no use tackling the other inefficiencies unless the employee expense is corrected. Some politicians and media are giving up and saying that you can’t fight the unions and left leaning Ontario arbitrators. You can’t fight a Premier that has shown his lack of stewardship in Ontario. I disagree.

It is only McGuinty, the Premier of Ontario that can resolve this problem. As you may know, the Premier has alluded to a public service wage freeze in Ontario for next year. This is a must and should happen “now” rather than later, but don’t hold your breath. McGuinty is only positioning himself for the next provincial election and nothing will come of this issue.  

Municipalities cannot freeze wages on their own. It requires provincial approval. Don’t let would-be councillors (Stewards of our money) tell you they will freeze wages! They can’t.

So what are we going to do in our voting pattern in the upcoming municipal elections?

First of all, population growth in the Province has been meager for other than a few municipalities and the city of Toronto, which is affected by immigration growth. Employee costs however, are going up like a rocket.

Action is needed everywhere!

1) Municipalities with normal growth can “freeze” hiring. They can remove all authorized positions that are currently unfilled, off the table.

2) Next, municipalities can identify employees that are working in positions that are “nice to-be positions”, but not necessary for the basic operations of the municipality and lay-off these individuals on the basis of a “scale rating” of the importance of the job.  Municipalities are providing services that are not necessary in the operation of the city.

3) Most municipalities hire outside consultants to prepare studies and reports that are not essential to the operation of the city. In most cases, these consultants are hired only to protect the rears of senior management. If senior management cannot perform their function, replace them quickly.

4) The City of Ottawa and other municipalities must terminate the policy on “fair wages”. In reality, this policy favours the unions and not the taxpayer. This is contrary to the Ontario Municipal Act. The fair wage policy imposes levels of compensation on companies doing business with the City. The policy preempts competition, paving the way for a more socialist society than what we have today. We must get back to the basics of democracy.

5) Pension and other benefits are too rich for the taxpayers and are far better that anything available in the private employee market. And it adds insult to injury where a pension shortfall (due to risky investing in the stock market), is automatically covered by the taxpayer in the manner of increased taxes. Municipal politicians must change this. There must be more competition when purchasing benefits from the banking and insurance industry. If you check your local municipality you will find that competition is a non event.

And in the City of Ottawa you cannot access any financial information for the past several days. Why? There has been an updating of the site presentation format recently, but why is it that only the financial information is not accessible?  I don’t believe in coincidences so who is doing what? Someone better ask senior management.

Bill O’Malley