The end of the Budget line

We are happy to post another of David Daniels pieces – his summary of the Budget process which came to and end for this year on Monday.

THE END OF THE (BUDGET) LINE

At its June 22nd meeting, Council adopted the Town’s budget for fiscal year 2009-2010 budget.

The residential rate will be $1.40 per $100.00 of assessed value.  This rate will translate into an average tax increase from last year of around 2.9% for home owners.  A residential rate of $1.36 would have resulted in no tax increase.

The commercial rate will be set at $3.49, I recall, which will result in no tax increase for commercial property.

During the last fiscal year, the Consumer Price Index (CPI) for Nova Scotia decreased by 0.4 per cent according to Statistics Canada.  (April 2008 – April 2009.)

The Budget Process

Since February, the Council has held nine meetings at which the budget was discussed.  The public was permitted to attend all these meeting; however, citizens were permitted to provide input at only one, the May 26th meeting.  Draft budgets were not made available to the public until the May 26th meeting.

The public was not permitted to ask questions at any of these meetings.   When I attempted to ask questions at the May 26th meeting, I was told by the Mayor that questions were not permitted, just “input.”  I was told to submit questions in writing.  I did.  I received no answers.

(Numerous questions were asked by residents at last year’s budget meetings.  The Mayor appears either to have  forgotten or decided to disregard the newly adopted Municipal Planning Strategy which called for “citizen engagement through ongoing community consultation” and “empower[ing] people and foster[ing] participation.” )

Funding in the amount of $5000.00 to the Landmark East School (LE) was discussed at the June 15th and 22nd meetings.  $5000.00 works out to be $1,250 for each of the four LE students who live in Wolfville.  Council rejected this proposal.

Councilor Irving argued this expenditure was fair since the Town paid to the AV School Board $1,250 for each Wolfville student attending the public schools.   In addition, for certain students with learning disabilities attending LE is crucial since the public schools were not equipped to provide the support needed.

The main argument against funding: education is a provincial responsibility.

But this argument did not prevent the Town from committing to contribute over $114,000 of taxpayers’ money to the hospital and the construction of a new hospice in Kentville.  Health care is also a provincial responsibility.

The Mayor pointed out, as I recall, that the Town has been contributing to health care since 1930.  There was no mention of the advent of medicare in the late 1960s when health care became a Federal and later Provincial responsibility.

There may be good reasons why a municipality should fund health care and not education.  But “tradition” of contributions to health care by itself does not justify funding one and not the other.

During the budget discussions there were differing views presented on whether budgeting going forward should be based on previous years’ actual expenditures or last year’s budgeted amounts.

Determining how much should be budgeted in the future based upon what was budgeted in prior years makes sense, but only if the amounts budgeted in prior years was based upon actual needs and those needs remain the same.

But actual expenditures in past years can provide a very good indication of how much should be spent going forward.  To assume that past budgeted amounts should form the bases of future expenditures and to disregard how much was actually spent in past years, does not make sense.

One simple solution: Staff should have reviewed each line item.  If the actual expenditures in past years varied from the amount budgeted in those past years, and the amount requested differs from the actuals, then an explanation should be forthcoming.  In the end, each expenditure should be justified on its own merits.

Doug Lutz proposed categorizing and prioritizing Town expenditures.  The category with the highest priority would be “core” services, such as street maintenance and protective services.  Although some residents spoke against the particulars of the scheme Mr. Lutz proposed, saying perhaps there should be two rather than three categories and disputing his characterization of “cultural” spending, no resident objected to Mr. Lutz’s overall approach.

One councilor stated at the June 22nd meeting that Council should have done more than set a target number for Staff to achieve.  What Council should have done, but did not, was to set priorities for the Staff.

Perhaps the Fiscal Sustainability Task Force may recommend priorities for next year.

The End Product

On February 10th, Council instructed Town Staff to draft a budget which would limit tax growth to that generated from new development.  To achieve this goal, Staff was required to produce a draft budget where the residential rate would be $1.36.  Staff did not comply, but rather produced a budget which required the residential rate to be set at $1.39.    (The budget Staff presented to Council at the May 22nd meeting did not include funds for the school playground or hospice.)

At the April 13th budget meeting, Councilor Laceby told Council that the cost of operating Town staff had increased at a rate of 22% per year during the prior ten years.  My figures show that the “General Government” expenditures rose by about 89% over the past ten years while the CPI in Nova Scotia increased by approximately 32% from 2000 to 2008.

Council did not dig deep enough into the Town’s administrative/governmental costs.  Council did replace  one IT staff position with a private contractor.  Delving into issues of staff employment is tricky.  Issues of worker morale and allegiances come into play.  After all, Council members work with staff.  But precisely because of the “closeness” factor, getting the public involved would have been useful.

For 2009-2010, the town is allocating $57,500.00 for council and staff training, conferences, seminars and travel expenses.  To my knowledge, neither the Council nor Staff did a cost-benefit analysis to determine the level of funding for these expenditures.  (FULL DISCLOSURE: as a member of the Planning Advisor Committee I was reimbursed for a night’s hotel stay in Halifax for attendance at the planning conference.)

Not to end on a “destructive” note, Town Staff and Council spent many hours in reviewing and drafting this year’s budget.  The Town’s overall expenditures this fiscal year compared to last appear to have increased less than 1%.  Certainly this budget was written with more care than last year’s budget.  It would have been helpful and proper if the public (those who will ultimately pay Town bills) had been given more opportunities to participate.  Hopefully next year’s budget process will be improved and will carefully consider any recommendations made by the Fiscal Sustainability Task Force.

David A. Daniels
June 23, 2009

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One response to “The end of the Budget line

  1. As always, David is informative, balanced, and thorough.
    Thank you.