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

City Hall Budget Numbers Do Not Balance

I voiced my concern in January and April 2010 that the 2010 Ottawa Budget numbers for salaries, wages and benefits did not balance with the relative numbers in the 2008 audited financial statements.

This revelation raised much concern at City Hall. After denials and insults from the City, Staff finally explained that the 2010 salaries, wages and benefits budget did not include employee expense associated with the Rate Supported water and sewer operations, our local boards and agencies, such as Ottawa Community Housing Corporation, and adjustments for post retirement and post employment expenses.

This is all well and good, but the annual city budget must include “all” consolidated revenue and expenses. Otherwise, what is the use of having a partial budget?

I told you so.

My prediction was that the 2009 audited financial statements would reflect employee expense  at $1.3 Billion Dollars or so. Well, the recently released 2009 audited financial statements reflect this expense at $1,258,000,000. So my projection was off slightly, but certainly not off the point that the 2010 Budget and 2009 audited financial statements for employee expense did not add up.

In the adopted 2010 Ottawa Budget, the “Actual” figure for 2009 employee expense, including overtime, was $1,185,650,000. The audited 2009 audited financial statements reflect $1,258,000,000 in employee expense.

Now, that really makes my point!

There is a difference of $72 Million dollars between the 2009 budget figure and the 2009 audited financial statements, and Ottawa residents want the difference identified.

Ottawa Council must present an annual budget that includes all operations of the City and operations owned by the city, including all boards. This is a democracy for heavens sake and it is an absolute insult that this critical information must be dragged out of Council.

Or, were Council Members aware of this?


Bill O’Malley

The Party at City Hall is Over

 

                                  What a Party It Has Been!

Anyone running in the Ottawa municipal election this fall should be aware of the preliminary financial results for 2009 and the comparative financial figures from the year of amalgamation. If elected, you will be a “Steward” of the taxpayer’s money. You will have a major job to perform in cleaning up the financial mess created by those councillors that have more than 8 years on council. Every one of them is to blame because they have not spoken out on the subject.

Also to Blame:

-Not the current Mayor. He spoke out about union wages and benefits and paid the price.

-Senior Management for incompetence and inefficiency

-Greedy Greedy Public Sector Unions

-And, the McGuinty government for allowing outrageous wage and benefit settlements in the Ontario public sector that filtered down to Ontario municipalities by unelected and irresponsible, so called, arbitrators.

Ottawa is the worst performing municipality in Ontario considering financial results in two categories of expenses: (1) Salary, wages and employee benefits and (2) Contracted Services. This takes into consideration the official growth in population in the City of Ottawa between 2001 and 2006 by Stats Canada of 4% and estimated (liberally) at 4% since the census to the end of 2009. The population growth of 8% during the 2000-2009 period is miniscule compared to the growth in city revenue and expenses.

The following financial figures do not include the extremely generous “unfunded future employee benefits” which will keep the taxpayers in the poor house for years to come.

The financial figures represent a summary of the position of the City of Ottawa. The “drilled down” numbers for the comparative period will be available for resident taxpayers and individuals running for council, no matter what your political thinking may be, in the very near future.  Simply put, Ottawa cannot continue to increase taxes and user fees and hand over this money to employees and consultants and contractors.

Take a hard look at the numbers and ask yourself the questions: Think about low interest rates, low inflation and the efficiencies that were promised by Bob Chiarelli.

The Highlights:

Annual Revenue in 2009 is $953 million higher that in the year 2000

The Category: Salary, wages and benefits is $593 million higher than in the year 2000

The Category: Contracted Services is $116 million higher than in the year 2000 (2000 is estimated at $60 million)

These two expense categories accounted for 75% of the expenditure of the additional revenue generated.

Please note:

Financial figures are compared from the day of Amalgamation (Dec 31 2000) to December 31 2009 unless otherwise indicated by *.  Some classes of revenue and expenses have been reclassified as demanded by the Province of Ontario. See Note 18 in the 2009 audited financial statements.

Comments to wmomalley@gmail.com

Municipalities Out Of Control

Source: Audited Financial Statements
City of Ottawa
As at Dec 31st							%
000’S	Amalgamation						Increase
	Date
Revenues	2000		2004		2009
Net taxes available for municipal purposes	$934,243		$1,059,355		$1,286,044		37.66
Fees and User Charges	$375,232		$467,690		$623,350		66.12
Government Grants	$276,127		$363,975		$471,419		70.73
Investment Income	$45,158		$40,448		$26,071		-42.27
Contributed Tangible Capital Assets	N/A		N/A		$145,296		N/A
Interest from Ottawa Holding Inc.	N/A		$16,455		N/A		N/A
Equity in earnings of government  business enterprises	N/A		$19,659		$29,414 *		49.62
Fines and Penalties	N/A		$18,767		$23,567 *		25.58
Development Charges	$11,144		$47,052		$81,392		630.37
Other Revenue	$101,365		$30,321		$10,369		-89.77
Total Operating Revenue	$1,743,269		$2,044,063		$2,696,922		54.70
Operating expenditures by object							%
	2000		2004		2009		Increase
Salaries, wages and employee benefits	$665,004		$922,292		$1,258,156		89.20
Contracted and general services	$0		$86,219		$176,315 *		104.50
Materials, equipment and supplies	$329,343		$296,878		$500,698		52.03
Interest charges	$55,164		$61,462		$64,594		17.09
Rents and financial expenses	N/A		$35,537		$51,634 *		45.30
Third-party social, cultural and recreation programs	N/A		$313,153		N/A		N/A
Capital Expenditures	$311,963		N/A		N/A		N/A
Other	$356,047		N/A		N/A		N/A
External Transfers	N/A		N/A		$335,185 *		N/A
Amortization	N/A		N/A		$208,205 *		N/A
Expenditures recovered from capital	N/A		-$28,855		N/A		N/A
Total Operating Expenses	$1,717,521		$1,686,686		$2,594,787		51.08

The Great Canadian Census Debate

Canadian Census Blog

Munir Sheikh, the chief statistician of Statistics Canada abruptly quit, resigned, retired or was fired from his government job this past week. It appears that he actually quit in protest to the government’s position in abolishing the mandatory long-form census questionnaire. Sheikh issued a statement on leaving his position indicating that a mandatory long form census questionnaire was necessary to obtain accurate census data.

Number one is that Mr. Sheikh politicized his government job by issuing that statement. Government employees cannot play partisan politics with their government position. They must follow the wishes of the government of the day or pay the penalty. Mr. Sheikh deserves to be penalized for his very public opposition to the change in government policy over the long-form census questionnaire.

Number two is that Mr. Sheikh played willfully into the hands of the partisan media like the Globe and Mail, CBC and other elitist groups in Canada that consider themselves Royalty. Dam the people.

While other countries are moving to abolish any kind of a census, the media and elitist groups, unrepresentative of the people of Canada, are bulldozing their way to manipulating census opinion by half truths and outright lies.

All of the citizens of Canada should be educated as to the questions asked in the long-form census questionnaire. A good start for the media is to publish the questions asked in the last long-form census and then let the people decide if the questions deserved to be answered.

The last long-form basically asks you to reveal every financial detail about your household and your employment history and even goes further by asking your permission to access your income tax return. The media is purposely leaving this aspect of the long-form from their discussion of the pros and cons of the value of the information.

Rather, the media is misleading the public by referring to unimportant questions on the long-form that ask for information about how many rooms you have in your house and what time do you leave for work in the morning.

The elitist groups in Canada and the media have to level with the public. The provincial and municipal governments already have more than sufficient information in their hands to make informed and enlightened decisions on various aspects of local development without financial information from the long-form census.

Further, we are equal under the laws of this country and if 20 % of the population was required to answer questions in the previous long-form census, than in the up and coming census, 100% of the population must answer the long-form. Otherwise, this becomes a Charter Issue.

And Statistics Canada have stated that your in-depth revelation of financial data is secure in the hands of 6000 Stats Can Employees and to the elitists that buy the information from Stats Can.

Bull:


Bill O’Malley