City of Ottawa Review 2000-2007

Municipalities Out of Control

November 9, 2012

Before I reveal new financial figures (2009-2010-2011-2012) for the City of Ottawa and other Ontario municipalities, I thought that I would post a writing that actually wasn't published on my blog, but a summary of it was. 

The July 2008 detailed research is also timely because the new data you will see in my new writings will be relevant to the July 2008 City of Ottawa figures. The research for this particular article was time consuming, but validated in the end by staff at the City of Ottawa.

July 2008

 Please Note: Employee expense (2001-2007) at the City of Ottawa has devoured 81 percent of all new revenue generated since amalgamation. Senior Staff and Councillors at the City of Ottawa must urgently explain.

Information for the Resident Property Taxpayers of the City of Ottawa 2008

“What Each of You Should Know”

about the financial position of your city

On January 1, 2001, residents in the 12 surrounding communities of Ottawa were incorporated into the new City of Ottawa.

Whether you receive a property tax bill directly or through your landlord or commercial enterprise, you are a taxpayer of this city and you owe it to good governance to keep abreast of the spending habits of the city managers and city councillors.

The amalgamation plan of these 12 legal entities was to provide efficiencies which would be translated into tax savings for all resident taxpayers. Well, this didn’t happen as you know. Let’s find out what went wrong.

This financial review of the City of Ottawa analyzes the largest expense, that being employee compensation. For reference purposes, the employee expense is compared with “Total” revenue.

Total revenue includes direct property tax, in-lieu-of property tax levies, user fees, grants from provincial and federal governments, license and permits, gas tax receipts, fines and penalties, cash return on city investments, sale of city owned assets, gaming and casino revenues and transfers from revenue of prior years accumulated in the capital account and/or other reserve funds. It does not include funds received (and spent) from any increase in borrowing authorized by city council. The borrowings just add to the debt of the City for you and future generations to repay.

Property taxes may not increase in any given year, but revenue from the many other resources of the city continue to increase. You pay the increase in one way or another.

Here is the summary position of Total Revenue and Employee Expense from

January 1, 2001 through to December 31, 2007.

 as at December 31^st

City of Ottawa Financial Data	Total Revenue	Salary/Wages	Benefits	Total Compensation
2001	1,697,836,210	610,700,643	105,658,994	716,359,637
2002	1,852,882,054	658,801,750	113,986,227	772,787,977
2003	1,975,379,611	716,354,387	118,305,253	834,659,640
2004	2,050,927,897	766,074,028	146,915,380	912,989,408
2005	2,074,817,994	777,921,705	162,665,030	940,586,735
2006	2,191,865,889	829,189,405	167,340,853	996,530,258
2007	2,297,280,941	884,415,199	175,534,717	1,059,949,916
% Change	35.31	44.82	66.13	47.96

2001 is the base year so the above “change” occurred in the past 6 years

You should note:

Revenue increased 35.31 percent since 2001 or an average of 5.9 percent per year

Salaries increased 44.82 percent since 2001 or an annual average of 7.47 percent

Benefits increased an unacceptable 66.13 percent since 2001 or an annual average of 11.05 percent per year

Total Compensation (salaries and benefits combined) increased 47.96 percent since 2001 or an average of 8.0 percent per year. Now, calculate your personal salary and benefit increases over the past 6 years. If it fits into the above numbers, good for you. However, most of you will be substantially below the percentages expressed above. You will then begin to understand the problem at Ottawa City Hall.

Another glaring fact:

Since amalgamation on January 1, 2001 new revenue has been generated and new employee expense has been incurred.

What percentage of the new revenue was expended for employee compensation?

City of Ottawa	Data Source: FIR	Total Annual Revenue	New Revenue compared to the year 2000	Total Annual Employee Expense	New Employee Expense compared to year 2000
Base Year Financial Statements	2000	1,743,269,000	N/A	665,004,000	N/A
	2001	1,697,836,210	-45,432,790	716,359,637	51,355,637
	2002	1,852,882,054	109,613,054	772,787,977	107,783,977
	2003	1,975,379,611	232,110,611	834,659,640	169,655,640
	2004	2,050,927,897	307,658,897	912,989,408	247,985,408
	2005	2,074,817,994	331,548,994	940,586,735	275,582,735
	2006	2,191,865,889	448,596,889	996,530,258	331,526,258
	2007	2,297,280,941	554,011,941	1,059,949,016	394,945,016
Total New			1,938,107,596		1,578,834,671

(EG) 2007 Revenue was $554,001,941 more than base Revenue in 2000

($2,297,280,941-$1,743,269,000=$554,011,941)

Other major Ontario cities have accomplished much better results in the same method of analysis during the same period as compared to Ottawa.

Now, just to be sure that I wasn't dreaming in colour, I used the Audited Financial Statements of the City of Ottawa for the years 2000 to 2007 to verify the percentages developed from the Financial Information Report. Well, the numbers weren't exactly the same, but just as devastating. The same exercise with the audited financial statements reveal 72.24 percent of the new revenue generated was devoured by Employee Expense. It also reflects my concern that the format on the three major reports must be coordinated. No wonder taxpayers are confused.

Audited Financial Statements

Total New Employee Expense as a percentage of New Revenue generated since  2001
New Revenue	2,385,610,000
New Employee Expense	1,723,462,000
Percentage	72.24

The following table shows you the detail of the calculation

Ottawa Audited Financial Statments	Revenue	New Revenue	Employee Expense	New Employee Expense
2000	1,743,269,000		665,004,000
2001	1,923,600,000	180,331,000	726,636,000	61,632,000
2002	1,872,026,000	128,757,000	772,106,000	107,102,000
2003	1,961,730,000	218,461,000	840,484,000	175,480,000
2004	2,044,063,000	300,794,000	922,292,000	257,288,000
2005	2,153,202,000	409,933,000	979,280,000	314,276,000
2006	2,234,437,000	491,168,000	1,007,586,000	342,582,000
2007	2,399,435,000	656,166,000	1,130,106,000	465,102,000
Total		2,385,610,000		1,723,462,000

If it wasn't discouraging enough to look at the increase in Employee Expenses as shown above, take a look at the acceleration of employee costs versus total revenue year by year.

Audited Financial Statements		Total Employee Expense as a percentage of Total Revenue
2000	Base Year	38.15
2001		37.77
2002		41.24
2003		42.84
2004		45.12
2005		45.48
2006		45.09
2007		47.09

 Future Taxpayer Debt:

The charge to Unfunded Liabilities for future employee benefits for 2007 was some $50 million dollars, equivalent to a current 5% property tax increase. The amount, as extraordinary as it is, needs to be specifically explained to the taxpayer by senior management. You may not like the explanation. City councillors must inform the resident taxpayers annually on the total “accumulated” unfunded liability charge at the end of each financial year.

 What is the total accumulated Unfunded Liability for the City of Ottawa as at December 31, 2007?

The City Manager should answer this question.

Ottawa	Unfunded Liabilities for Future Employee Expense
2001	0
2002	0
2003	-814,371
2004	10,326,437
2005	16,739,907
2006	-293,552
2007	50,559,157

Full time employees remained below the 2001 level except for a jump in 2007, the year that the general public raised concerns about the number of employees. Part-time employees declined and the number of seasonal employees is not a major factor in the number of “full time equivalent” employees.

Ottawa	Full Time Employees	Part Time Employees	Seasonal Employees
2001	13,326	4,315	0
2002	11,633	4,374	118
2003	13,492	2,821	82
2004	12,137	1,759	38
2005	12,773	1,562	34
2006	13,087	1,600	23
2007	13,461	1,634	50
% Change	1.01	-62.13	N/A

 Note: The increase in the number of employees does not account for the unreasonable increase in employee compensation as show in the first section of this report.

Employee “hours worked” including Boards

Ottawa	Employee Hours Worked
2001	22,950,219
2002	22,104,578
2003	22,764,598
2004	25,213,068
2005	25,532,926
2006	26,336,079
2007	26,963,938
% Change	17.49

 Note: The following chart reflects the increase in “hours worked”. The numbers indicate a continuing “overtime” problem at the City of Ottawa.

City of Ottawa
Employee Hours Worked *	2001	2007	% Change
Administration	1,041,070	3,930,817	277.57
Fireman	1,623,375	2,052,232	26.42
Police	n/a	3,622,580	n/a
Transit	3,592,680	3,640,000	1.32
Public Works	4,935,565	3,634,800	-26.35
Ambulance	0	707,980	n/a
Health Services	966,004	1,046,994	8.38
Homes for the Aged	1,705,080	992,771	-41.78
Other Social Services	1,949,064	1,409,220	-27.70
Parks and Recreation	3,422,394	3,713,385	8.50
Libraries	215,385	702,065	225.96
Planning Department	566,550	658,840	16.29
Other	2,179,572	326,274	-85.03
Total	22,950,219	26,437,958	15.20
*Not including hours from local boards

The relevance of these numbers are reflected in the “% Change” column.

Salary, Wages and Benefits by Department

$

City of Ottawa
Salary, Wages, Benefits Detail	2001	2007	Yr over Yr 2001-2007 % Change
General Government
Governance	4,378,261	7,857,068	79.46
Corporate Management	28,885,393	26,151,378	-9.47
Program Support	114,075,795	168,341,571	47.57
Sub Total	147,339,449	202,350,017	37.34
Protective Services
Fire	68,250,823	98,431,067	44.22
Police	110,457,373	176,505,567	59.80
Conservation Authority	0	0	n/a
Protective Inspections	3,707,382	19,082,055	414.70
Emergency Measures	215,653	510,873	136.90
Provincial Offenses Act	242,227	3,584,391	1,379.77
Other	0	0	n/a
Sub Total	182,873,458	298,113,953	63.02
Transportation Services
Roadways	45,083,296	45,210,438	0.28
Winter Control	8,222,330	22,863,361	178.06
Transit	99,461,902	135,602,208	36.34
Parking	5,158,754	5,362,960	3.96
Salary, Wages, Benefits Detail	2001	2007	Yr over Yr 2001-2007 % Change
Street Lighting	300	650,183	n/a
Air Transportation	0	0	n/a
Other Light Rail	0	0	n/a
Sub Total	157,926,582	209,689,150	32.78
Environmental Services
Sanitary Sewer System	8,435,543	12,474,364	47.88
Storm Sewer System	1,079,119	1,533,341	42.09
Waterworks System	16,039,260	21,393,217	33.38
Waste Collection	1,128,021	2,276,035	101.77
Waste Disposal	1,071,530	1,465,261	36.74
Recycling	1,146,895	599,434	-47.73
Other	0	0	n/a
Sub Total	28,900,368	39,741,652	37.51
Health Services
Public Health Services	13,750,490	33,307,518	142.23
Hospitals	0	0	n/a
Ambulance Services	18,322,991	36,356,070	98.42
Ambulance Dispatch	0	5,139,403	n/a
Other	0	0	n/a
Sub Total	32,073,481	74,802,991	133.22
Salary, Wages, Benefits Detail	2001	2007	Yr over Yr 2001-2007 % Change
Social and Family Services
General Assistance	40,088,104	48,517,284	21.03
Assistance to Aged Persons	28,665,329	38,147,994	33.08
Child Care	6,662,956	12,595,902	89.04
Other	0	0	n/a
Sub Total	75,416,389	99,261,180	31.62
Social Housing	3,454,380	24,724,013	615.73
Recreational & Cultural Services
Parks	4,577,180	16,995,806	271.32
Recreation Programs	36,247,265	38,761,016	6.94
Rec Fac Golf Ski	9,570,336	0	-100.00
Rec Fac Other	0	2,063,193	n/a
Libraries	15,886,572	26,212,144	65.00
Cultural Services	0	6,478,455	n/a
Other	0	0	n/a
Sub Total	66,281,353	90,510,614	36.56
Salary, Wages, Benefits Detail	2001	2007	Yr over Yr 2001-2007 % Change
Planning and Development
Planning and Zoning	18,806,083	18,542,696	-1.40
Commercial and Industrial	3,288,094	1,831,737	-44.29
Residential Development	0	0	n/a
Agricultural and Reforestation	0	380,913	n/a
Tile Drainage & Shoreline	0	0	n/a
Other	0	0	n/a
Sub Total	22,094,177	20,755,346	-6.06
Grand Total	716,359,637	1,059,948,916	47.96

Now let's look at how Budget Data is compiled

2007 City of Ottawa Budget Data on

Compensation and Full Time Equivalent (FTE) Employees.

The information format does not match the above Financial Information Return

2007 Authorized Compensation Budget for Ottawa			Average Cost per authorized FTE Employee
	2007 Compensation	2007 Authorized FTE
City Officials*	8,534,000	n/a	n/a
City Manager	3,913,000	35.00	$111,800
Sub Total	12,447,000	35.00	n/a
*Elected Officials Total Budget
2007 Authorized Compensation Budget for Ottawa	2007 Compensation	2007 Authorized FTE	Average Cost per authorized FTE Employee
Community & Protective Department
Deputy City Manager	2,541,000	27.00	$94,111
Employment & Financial Assistance	46,584,000	595.00	$78,292
Parks & Recreation*	48,798,000	951.87	$51,265
Housing	5,293,000	65.40	$80,933
Fire Services	96,186,000	990.00	$97,158
Paramedic Services	40,584,000	449.45	$90,297
Long Term Care	37,069,000	559.35	$66,272
Public Health	34,681,000	449.50	$77,155
Cultural Services & Community Funding	7,242,000	112.70	$64,259
Bu-Law Services	12,252,000	163.40	$74,982
Emergency Management	482,000	5.33	$90,431
Sub Total	331,712,000	4,369.00	$75,924
Note: Child Care Expenses included in Parks & Rec
Library	25,327,000	452.40	$55,984
Police	167,451,000	1,799.00	$93,080
2007 Authorized Compensation Budget for Ottawa	2007 Compensation	2007 Authorized FTE	Average Cost per authorized FTE Employee
Public Works
Deputy City Manager	2,916,000	32.49	$89,751
Fleet Services	46,425,000	635.23	$73,084
Surface Operations	57,450,000	852.25	$67,410
Drinking Water Services	24,775,000	333.62	$74,484
Solid Waste Services	5,253,000	81.75	$64,257
Wastewater Services	15,566,000	197.99	$78,620
Traffic & Parking	22,254,000	309.77	$71,840
Infrastructure	20,949,000	254.82	$82,210
Sub Total	194,788,000	2,697.92	$72,199
Planning, Transit and Environmental
Deputy City Manager	817,000	10.00	$81,700
Transit Services	131,401,000	1,905.70	$68,951
Building Services Ontario Code	12,334,000	165.50	$74,526
Building Services Other	615,000	8.75	$70,285
Infrastructure Approval	9.804,000	121.50	$80,691
Infrastructure Policy	7,262,000	78.00	$93,102
Economic Development	1,497,000	16.00	$92,437
Sub Total	167,730,000	2,305.45	$72,785
Committee of Adjustment	752,000	10.00	$75,200
2007 Authorized Compensation Budget for Ottawa	2007 Compensation	2007 Authorized FTE	Average Cost per authorized FTE Employee
Corporate Services
Chief Officer	1,779,000	18.50	$96,162
Real Property Management	49,694,000	739.45	$67,204
Information Technology Services	29,756,000	363.00	$81,972
Finance Services	35,484,000	501.56	$70,747
City Clerk	9,012,000	130.34	$69,142
Employee Services	14,718,000	174.60	$84,295
Client Services	8,807,000	122.23	$72,052
Legal Services	4,817,000	54.00	$89,203
Sub Total	154,065,000	2,103.68	$73,236
Auditor General	905,000	8.00	$113,125
Grand Total	1,055,177,000	13,780	$76,573

Note: The 2007 compensation budget was exceeded. See FIR results.

Complete annual data (2001-2007) is available upon request by email.

wmomalley@gmail.com

Important:

The source of this data is from a report submitted annually to the provincial government called the Financial Information Report or FIR. The annual report is signed “as accurate” by the treasurer of the City of Ottawa. Every effort has been made in my analysis to reflect accurate recordings of the information contained in annual reports from 2001 to 2007. The year 2000 (prior to amalgamation) is based on the consolidated position of the 12 communities as reflected in the audited financial statements.

Some months ago a recommendation was made to Jim Watson, the Ontario Minister of Housing and Municipal Affairs, that all Ontario Municipal Budgets follow the format of the FIR. He did not reply.

In Ontario municipal accounting, there must be a clear, comparable relationship between the annual Budget, the annual Financial Statements and the annual Financial Information Report (FIR). Currently, the method of municipal reporting deprives resident property taxpayers of vital financial information and the spending habits of city management and councillors. It is labour intensive to compare financial data in a given department because senior management change (at whim) the sub groups within the department and the information available from three different sources are in different formats.. It is not cynical to question the motives of Senior Management.

If financial information was revealed in an easy to understand, and accurate, manner, you would have a much greater participation in the municipal electoral process than has been evident over the past twenty years or so

Bill O'Malley

Ottawa

1

Mayor of Ottawa needs a shake!

Hi All,

Procurment!

Why is the senior management hiring a Quebec Firm to audit its procurment system. Has anyone heard about the Corruption Inquiry in Quebec?

Published Blogs have indicated that the City of Ottawa is one of the few municipalities in Ontario that does not publish all contract detail. Well,  I have looked at The City of Ottawa's claim to fame in publishing all contract information. Believe me the information is basically worth ZERO.

Can anyone tell me why a fireman for the City of Ottawa should have an average pay package of salary and benefits of $133,000 per annum and the average police employess cost is $129,000. Is anyone able to tell me why the average Canadian salary is a low $43,000. Something is wrong and I have the answer.

Can anyone tell me how the City of Ottawa paid an increase in salaries and benefits to its employees for over $60,000,000 in one year, (our employees) while the total income of the City declined in that year. Where did the money come from?

I have a lot more for Jim Watson to contimplate. He is not telling, but I am. As for the Council? I have no comment at this moment. It would be a waste of ink.



Bill O'Malley

Ottawa Housing Service 2011 Draft Budget

Ottawa Housing Service 2011 Draft Budget

Jim Watson was the Minister of Housing for Ontario prior to resigning his seat and running for the position of Mayor of Ottawa.

So it is not surprising that the Ottawa Housing Department has been moved from Community and Social Affairs Committee to the Planning Committee. The move doesn’t make any sense and Jim Watson has to be questioned directly about it. There is something sinister going on here.

The 2011 budget calls for 61 FTE  (employees) at an average salary of $102,459.00, up from $76,582.00 in 2005. This is the typical 6 percent annual increase in employment expense experienced in almost every City of Ottawa department since amalgamation. FTE has declined from 67 in 2005 to the current 61 proposed for 2011 in the Ottawa Housing Service Department. So there is clearly something wrong here, but no one wants to talk about it.

The real story! It’s the revenue versus the expenses.

The revenue consists of $146,878,000, all from you, the taxpayer:

 $88 million from the municipal taxpayers of Ottawa

 $29 million from the taxpayers of Ontario

 $29 million from the taxpayers of Canada.

And this is where the money is spent:

2011 Expenses

Manager's Office $577,000 Housing Programs $103,898,000 Family and Emergency Shelter $18,432,000 Affordable Housing $408,000 Domiciliary Housing $9,257,000 Homeless support $7,124,000 National Homeless Initiative $7,352,000 Service Innovation -$170,000
What’s missing from the above numbers? We need to know the breakdown of expenses for each category. I think that is reasonable. If you want to spend  $104 million this year on the Housing Program category,  provide the details please. I am not sure why our municipal tax dollars are being  spent for a National Home Imitative. Councillors  will have to figure this out and report  back to the taxpayer. And that leads to questions about the operations of The  Ottawa Community Housing Corporation, wholly  owned by the City of Ottawa. As noted in my previous writings in 2010, the 2011  Budget for this Corporation must be incorporated into the overall city budget and preferably, within the  Housing Service budget. This our money. The Ottawa Community Housing released its 2011 draft  budget on January 13th, 2011. I wasn’t impressed.  The  Corporation is projecting average manageable costs per  unit at $2,923.00. Manageable costs include administrative and maintenance  salaries and benefits, maintenance overhead, maintenance  materials and services, insurance and bad debts. There are  1044 units. I find the cost per unit extremely high.  and will  research available information on other similar operations  across the Country and report on the results in the coming  weeks. In the meantime, Jim Watson or senior management have  to explain why the Housing Service Department has  moved to the Planning Committee. Bill O’Malley

Ottawa Public Works-Notes.

 

Sometimes, as I am reviewing the data from the operations of the City of Ottawa, my head involuntary moves from side to side. The numbers are that unreasonable.

Take for example numbers from the General Manager’s Office. In 2009, there were 19 authorized FTE (employees) and annual employment expense of $1,490,000 or an average per FTE of $74,421.

For 2011, FTE has decreased to 17 yet employee costs increased to $1,748,000 or $102,823 per FTE. My friends, that is an increase of 38 percent in just 2 years. What is going on?

If we skip over to Traffic, Management and Operational Support,

We find that there has been virtually no change in the number of FTE over the past two years, yet employee expense for 2011 has rocketed by 12.35 percent. Geez!

Bill O’Malley

Transportation Committee-Public Works

Transportation Committee

Public Works

There are 6 sub-departments in this group.

Roads and Traffic Maintenance

Traffic Management and Operational Support

Public Works General Manager’s Office

Transportation Planning

Fleet Services

Parking

We will commence this section with a short overview of the total department.

Overview:

Public Works wants to spend $234 million in 2011. Of this amount, revenue from fees and services and other recoveries will reduce the amount to a net expense of $136 million of your property tax dollars. It will take 1100 employees to run the operation, each employee costing an average of $81,026. Employment costs are projected to increase 10 percent for the years 2010 and 2011. There is no significant increase in employees since 2009. Please take note!

Roads and Traffic Maintenance

This sub-department is projecting Gross Expenses of $131 million, less recoveries and revenues, netting an expense of $116 million. They want to spend $55 million on employee costs, $43 million on material and services and $27 million on fleet services. There are 691 employees each costing the department $80,228 in 2011.

The requested average employee costs are 12 percent higher than 2 years ago (2009).

We should stop here and think about the unreasonable escalation of these expenses. In general, City of Ottawa employee costs have been increasing at an average of 6 percent every year since amalgamation. The employee expense is some 53 percent of the total City of Ottawa budget. That’s translates into an annual increase of some $70 million year. A 2.5 percent property tax increase this year will not cover this expense. There are ways to make up the shortfall, but it won't be from other expense reduction in other categories. It will be from User Fees, fines and penalties, gas tax or other government grants from the provincial and federal governments. It is obvious to all but senior management and councillors that something has to be done to reverse this dangerous trend.

Material costs in this department are “flat”since 2009, but Fleet costs are projected to increase 9 percent for the years 2010 and 2011. How does a sub- department spend $27 million in one year on fleet costs?

Well the answer is that $23 million is attributed to “fleet maintenance costs”. The 2011 costs are 12 percent higher than the close of business of year 2009. Is the rolling stock falling apart or what? Management needs to examine fleet costs soon.

General operations expenses are 11 percent higher than 2009.

These three expenses make up the lion share of the total expenses.

You should not have any difficulty recognizing the problem. You might want to ask your councillor more about the operations in this department.

Bill O’Malley