Ratepayers Comments on TML Draft Budget - 2022


Subject:  Muskoka Ratepayers Comments on TML 2022 Draft Budget

Date:       November 30, 2021

To:           Mayor, Councillors and Senior Staff

From:      Muskoka Ratepayers' Association (MRA)

 

My name is Don Furniss and my address is 1208 Beaumaris Rd, Beaumaris, ON P1L 0M8, I am speaking on behalf of the Muskoka Ratepayers' Association.  The MRA would like to thank your worship, councillors and staff for this opportunity to provide our comments on next year’s budget.

The MRA, due to time constraints, will comment on only four major concerns, staffing creep, non-restricted financial reserves, liability insurance and facilities infrastructure, plus a general comment.

In general, the MRA is pleased to see multi-year forecasting for both operational and capital expenditures (we assume there will be a high degree of efficacy in these numbers).  The use of dedicated budget software should make the process more productive and less time consuming for staff verses the former use of Excel spreadsheets.  The objective of having the budget completed very early in 2022, also has a downside.  Truncating the accumulation of actual 2021 data, we believe negatively impacts the efficacy of prior year forecasts and actuals.

All governments expand over time.  Mission creep and bureaucratic inertia make it hard to contain or pare back.  Voters, lobbyists, politicians and employees have vested interests to perpetuate increased spending.  This council needs to be fully aware that this cost disease runs rampant through almost all governments. Government inefficiency along with a captive source of revenue (the taxpayer) amplifies this propensity to spend other peoples’ money. 

Six years ago in 2016, Wages and Benefits were $6,857K, in 2022 they will be $8,744K, more than a 27% increase, or over 4% per year compounded, note many employees were limited to 1 - 2%  per year in a 5 year union contract.  Let’s look at some of the reasons for above inflationary creep:

  • Communications; this was a Fednor intern position in 2016. In 2022, with the proposed additional hire at 100K, it will be a two person department costing $202,800K per year.
  • Human Resources; this was a half time contract position to deal with health and safety programs to ensure compliance with provincially mandated legislation.  In 2022 it is a three person department costing $295K per year
  • By Law Enforcement went from a part time summer position plus 2 summer students for septic inspections in 2015 (estimated cost less than $50K). In 2022 there will be two full time by-law officers, a septic inspector and 2 part time by-law officers plus we assume part time septic positions.  The cost for 2022 is $307K.
  • While staff increases in Building so far have been self -funding from permit fees, these fees from taxpayers are not a limitless source of revenue.  Increases in the number of inspectors, adding to full time staff compliment via replacement of seasonal or part time staff should be a concern to council especially when it is unlikely that the robust building activity of the past 15 years will continue to infinity or even under the new OP.   Any added headcount must be considered in the same light as a multi-million dollar capital investment, because that is literally what it is, a perpetual annual expenditure.

By-Law and Planning are primarily individual property specific services, like Building.  It is the MRA’s belief that costs to run many of the activities of these departments should be recouped via fines, penalties and fees.  Based on budgets for By-Law of $307K up from $90K in 2016 ($25K in 2015) and cost recovery of only $24K.  The MRA questions the need for this level of enforcement expenditure.   Certainly, the staffing levels cannot be justified based on penalties and fines ($12K).  Revenues seem to indicate there is a high level of compliance with the TML By-Laws.   Is council using a sledge hammer to try and satisfy a few squeaky wheels?   The MRA believes a professional evaluation of by law enforcement needs, must be done, verses knee jerk solutions to perceived problems via the lens of squeaky wheels.

The MRA has expressed our concerns to staff and council over many years about inadequate reserves and their continued depletion.  This budget further reinforces those concerns.

First. The ten year forecasts start in 2022, with the current year forecast and prior year actuals nowhere to be found.  This lack of information obfuscates the publics ability to objectively compare prior history to future projections.   The MRA finds this lack of transparency very concerning.

During the 2021 Budget Process the MRA expressed our concerns regarding declining reserves and the impending crunch date when depleted reserves will not fund capital needs and emergencies, let alone meet acceptable provincial guidelines.  In the 2021 Budget the total closing balance reserves were $17,655K.   The 2022 Budget opens with a $15,474K balance.  The MRA would like an explanation for the $2.2 million deficit variance.   While almost three million dollars was budgeted for arena floor replacements in 2021, it appears none has been spent and are now in future years capital forecasts.  Furthermore, closing reserve balances continue to decline by almost 2.5 million dollars over the next 4 years.  This council continues to under tax and finance capital expenditures from reserves that future taxpayers will have to pony up.

Liability Insurance premiums have increased from $619K (4% of Operating Expenses) in 2018 to $1,130K (8% of OE) in 2022 and are forecast to be $1,617K (almost 11% of OE) in 2024.

The MRA continues to express grave concerns regarding the magnitude of TML liability insurance premiums.  Last year we indicated that TML is paying more than the District and at least 3 times that paid by Lake of Bays and Georgian Bay Township.  In addition, the TML has the highest deductibles.  These premiums are based on claims experience.  The MRA has emphasized the need for risk mitigation actions to drive down claims and premiums.  We were very disappointed in council's Zoom call meeting with your insurance broker BFL in May 2021, that not one of you raised even one question, let alone the simple question, “What do we need to do differently to drive down our premium costs?”   The MRA sincerely hopes this is not an indication of lack of interest in this topic, because we believe getting these costs and claims under control needs to be Job One for this council in 2022.

The MRA is pleased that a new fire station for Minett is still in the long term capital budget, all be it 30 years after it was first slated for replacement.  We continue to be concerned about the number of firehalls, arenas and community centers in TML.  Many have seen better days long, long ago. There needs to be a thoughtful plan to rationalize and modernize these 26 facilities for the long term benefit of the community at large, not just micro areas.  

The fourteen community centers generate only $ 12K of revenue and cost $446K annually to operate and will consume about $2 million in capital over the next 10 years. 

The two arenas bring in $67K in rental income per annum, cost $623K to operate (more now with ice in Bala) and have $ 5.6 million in capital requirements over the next decade.  

The ten firehalls should be closely examined for consolidation along with upgrades to Bala and Milford Bay.  Long term equipment rationalization, could provide some significant savings over the next ten to twenty years.   

It seems to the MRA that a good portion of this almost $20 million in taxpayers money for just arenas and community centers over 10 years could be better used to serve our aging communities needs over the longer term.

The MRA thanks you for the opportunity to provide our suggestions and comments.

Sincerely
Liz Denyar, President
Don Furniss and Doug Brydon, Directors
 

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