Letter: The Illusion of Expense Reductions
On January 29, 2024, the City Treasurer informed us recent changes had reduced the proposed tax increase to $914,784. However, some of these changes are cause for concern, Jim Hutton writes.
LETTER TO THE EDITOR
On January 29, 2024, the City Treasurer updated us on the budget and informed us that recent changes had reduced the current tax increase to only $914,784.
However, some of these changes are a cause for concern. Some examples are:
1. 100% of the Grey Sauble Conservation Levy of $304,808 was transferred to water rates this year.
This is not reducing expenses it’s just moving them from taxation and hiding them in the water rates to give the illusion of reductions. More importantly, you will be charged based on your assessment, so if your assessment is high, you will pay more to support Grey Sauble Conservation, which will be added to your water bill. Removing this from taxes gives the illusion of an expense reduction!
If you examine the draft budget presented on 01 Dec, you will see that $1,597,593 in expenses was already charged to Water and Wastewater. Burdening cost centers with the cost of services they receive from other departments is not uncommon. However, this seems to be a one-way street, and this practice appears to be selective. The city should either fully burden all cost centers or none.
I think we need to re-examine our relationship with Grey Sauble. Why do we contribute to this agency when they spend most of their resources on the watershed in other municipalities? Grey Sauble does little or no work within the Owen Sound boundaries so we should examine the cost-benefit of this relationship.
2. Staff recommend that the Art Gallery’s $50,000 debt payment be moved to the 2023 operating surplus.
First the fact that there is a operating surplus from 2023 means that they charged us more taxes than they needed. All of this surplus should be used to reduce this year’s taxes. The recommendation states:
“Staff recommends funding the balance owing to the Art Gallery deficit from the 2023 operating surplus and the annual payment of $50,000 be removed from the 2024 operating budget and all future years.”
For those that don’t remember the Art Gallery debt occurred during the time the Art Gallery a Not-for-Profit. The Directors of this Not-for-Profit found they couldn’t continue operating it and asked to come back to the city.
However, they had run up some $700,000 in debt.
This debt was the responsibility of the Directors of the Not-for-Profit as per the case law that existed at the time. However, Mayor Ian Boddy told us that it was appropriate for the city to assume this debt because the Art Gallery would pay the city back, which it has been doing at a rate of $50,000 per year.
The Mayor made a promise to us at that time, and he will be reneging on that promise if the remaining debt, which is likely in the order of $400,000, is paid from the 2024 budget and all future budgets until it’s paid.
If we do this, it will give the illusion that the Art Gallery is doing better. They have already moved some of the Director’s Salaries & Benefits to Tourism, which has already reduced the Art Gallery’s expenses. The facts are that the Art Gallery appears to be failing based on two line items, which are a measure of local support.
First, the Membership line item shows the anticipated revenue from membership of only $7,500 in 2024, down from $9,500 in 2023 and $15,500 in 2022. As well, the revenue from the Gift Shop line item is budgeted to be only $3,650 in 2024, down from $9,650 in 2023. The Gift Shop had over $20,000 in revenues in 2021 and 2022 now we are looking at revenues of only $3,650. This is a clear indication that traffic is down significantly suggesting that activity at the Art Gallery has slowed over the past few years.
Paying this debt from last year’s surplus gives the illusion of an expense reduction!
3. Parks is adding a full-time position and eliminating seasonal and student time for a net savings of $20,000.
This is clear a migration of work from seasonal to full time which will cost taxpayers in all future budgets. This should not happen! There has been a migration of seasonal and part-time to full-time in the past.
We need to: Stop Growing the Workforce!
We need to do real expense reductions and not just move expenses around to give the illusion of reductions. Here is what would happen if the city was operated as a highly efficient business concern:
End the relationship with Grey Sauble Conservation, to taxpayers save $304,808 – that’s almost a one percent tax reduction.
Hold the Art Gallery to its commitment to pay its debt – the Mayor promised.
Do not add another full-time Parks position – stop growing the workforce.
Donate the Art Gallery to the County and if they don’t want it, do what we did to the Airport, which was also a service catering to a small group, shut it down.
Eliminate three (3) management positions to close the Managerial Gap with Cobourg.
The Budget will go before Council on February 26, 2024. Email members of Council and ask them not to pass the budget but instead send it back for meaningful reductions. Their email address is: email@example.com.
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Letters to the Editor do not necessarily reflect the opinions or beliefs of The Owen Sound Current and its editor or publisher.