A whole lot of budget blunders for 2013
By Laurie Charlton
Thanks in large part to our grossly overpaid, and often absent, CAO and our unaware and uninformed council, this year’s budget preparation process was probably the most dysfunctional the City of Rossland has ever experienced.
It is very difficult to determine exactly what is going on because there is a distinct lack of detailed information available about the budget. Only a very cursory and unaudited summary of 2012 revenue and expenses was provided for council’s consideration. Information about the 2013 budget was equally deficient. There was almost no opportunity for the community or council to have any input into budget preparation. The primary reason seems to be that our overpriced CAO, masquerading as the Financial Officer, was off gallivanting, who knows where, for a good part of early 2013.
The community’s limited opportunity to learn what was happening was virtually eliminated because of a so-called “technical glitch” at City Hall that resulted in a critical budget meeting not being advertised to the public.
If there was an equipment malfunction, City Hall operations would have been disrupted but there was certainly no indication that happened. Councillors seem to have received all the agendas and supporting information (such as it was) electronically without difficulty.
In addition to the delay in undertaking the budget process and the failure to advertise key meetings about the budget, the CAO failed to have the 2012 audited financial statements prepared for council’s consideration prior to the May 15th deadline imposed by the Community Charter. Council, which carries the ultimate responsibility for submission of the audited financial statements to the Ministry on time, broke the law. Instead of insisting on the completion of the audit on time or imposing appropriate discipline on the CAO for failing to do so, council meekly ignored the issue and simply rubber-stamped the substandard financial plan put forward by the CAO. How could a reasonable 2013 financial plan be properly prepared by council without knowing what the true results for 2012 were?
Most of council’s discussion about the budget was centered on cuts to the grants for community groups. After extended discussion, council actually cut overall assistance by less than $7,000. While they were nickel and diming community groups, they seem to have completely overlooked the huge increases in other areas of the budget.
For example, General Government services saw a 12.8% budget increase over last year’s actual expenses that totaled just over $100,000. Of course we know that’s mostly to pay for the exorbitant salaries for the CAO and the Corporate Officer and the new executive secretary who was hired so the City could save money. Protective services saw an increase of 16.0% or over $22,000. The budget for sewer operations increased 23.2% or almost $92,000. Water operations got a budget increase of 16.8% or almost $81,000 over last year’s actual expenditures. Few, if any, questions about these increases were asked by council while they haggled about supporting community volunteers.
And then there’s the $50,000 in the budget for “arena upgrades”. Could that be the partial cost of correcting the problems left by our former Building Inspector? Why haven’t we heard anything from Mayor Granstrom about the steps he promised would be taken to investigate the issues surrounding the arena upgrades? I suspect that nothing has been done or will be done. His worship just wants the matter to disappear.
Capital expenditures were cut to compensate for these increases. This is a foolish decision because it only serves to increase the City’s infrastructure deficit. Delays in replacing or renewing aging roads and pipes will only increase costs in the future.
There are a number of other flaws in the budget/financial plan that was rammed through by council in a rush to meet the deadline for adopting the tax bylaws.
CAO Cecile Arnott indicated that overall assessed property values decreased by 3.8% in 2013 therefore the tax rate was increased by 3.7% to obtain the same tax revenue as in 2012. Single family residential assessments only decreased slightly more than 1% for 2013. The net effect for owners of single family dwellings, which provide about 88% of all property value tax revenue, was actually a tax increase of about 2.6%. Once again, the winners in this crap shoot are the owners of vacant parcels and condos who are the beneficiaries of about a 5% tax decrease.
The financial plan, as adopted by council, seems to have excluded from revenue the property value tax for non-market change assessment. The overlooked $32,000 from this source would easily have allowed our volunteer community groups to be funded at respectable levels.
The revenue from the Ophir Reservoir Parcel Tax is underestimated by about $14,000 even though there was a 17.6% increase in the tax rate. The tax bylaw was adopted on May 8th. On May 9th, a notice was published stating the tax roll was available for public inspection and that complaints could be registered by May 23rd. This is just another example of the screw-ups occurring at City Hall. In every other jurisdiction, the tax roll is made available for inspection, and any complaints are adjudicated, before the roll is authenticated and the tax bylaw adopted. Not in Rossland though. Our overpaid staff seems to want to get the cart way out in front of the horse.
Most troubling of all is the incomplete reporting of the costs for the Columbia Avenue project. Costs provided to council in the abbreviated summary of 2012 expenses appear to be about $2,000,000 less than actual costs. This deficiency is perhaps partially offset because there is no indication in the summary that the supposed $1,400,000 grant from the Ministry of Transportation and Infrastructure (MOTI) has been, or will be, paid to the City.
The information provided suggests that most of the City’s reserves were used in 2012, presumably to cover the costs for the Columbia Avenue project. Since many of the City reserves are statutory reserves and can only be used for the purposes for which they were established, the reserves must be replaced. That’s why the CAO is recommending that an Alternative Approval Process (AAP) be undertaken to borrow over $4,000,000 over 30 years to replace the reserves.
There are several significant questions about this proposal. Is $4,000,000 going to be enough given that the costs for the Columbia Avenue project are significantly higher even after considering any grant from the MOTI? Why would we want to borrow for 30 years rather than a more realistic 15 years? The difference in cost to the City at the current interest rates posted on the Municipal Finance Authority website indicate the City would pay about $1.7 million less over 15 years than over 30 years although this would mean an increased annual payment of about $110,000.
I wonder what story we’ll get from City Hall about the costs for the Columbia Avenue project when the AAP process starts? Whatever the story, it will probably be in the middle of the summer when few people are around to hear it. That’s consistent with council’s lack of interest in keeping the people of Rossland informed.
Blunder is defined as a serious mistake typically caused by ignorance or confusion. I think the definition fits council’s actions around this year’s budget.
Laurie Charlton is a retired chemist who was a Rossland city councillor for 17 years between 1975 and 2011.
