Lot’s of people keep asking me I see all these new municipal trucks running around, new consultants coming in every week, it seems like we are spending money like crazy. Is the municipality going to spend us into a big hole?
The short answer to that is No they are not, not for now any way.
The long answer, in politics timing is everything. When the end of 2012 rolls around the books will be prepared, the auditors will come in one beautiful Tuesday evening in March or April, administration and the auditors will sit down in front of council and gleefully announce a surplus of say $300,000 everybody will go home in the best of spirits. Knowing there will not be another financial statement until after the next election, no problem that in 2013 the operational budget will increase by $844,000.
So how do they make the numbers work for 2012? You create wiggle room.
Step 1 underestimate revenue, if you look at the audited financial statements for the last three years in the two categories Property Tax, User Fees and sales of goods those make up roughly 75% of the municipalities internal revenue. Revenue in those areas has exceeded budget by any where from $236,000 to $692,000 each year for an average of $395,000.
Step 2 this is a very effective area to create flexibility in your budget especially when you are going through a lot of turn over or creating new positions in your organization. This year the municipality had all kinds of turn over in staff. So here is how it works, you place dollars into your budget for positions, even though you know that those positions may not be filled for the year instant wiggle room we have had a lot this year.
I will lay them out for you and yes I know my numbers will not be 100% because I am not privy to the salaries of the administrative positions but I will take my best shot based on my six years of experience on council;
Manager of Corporate Services-Salary $60,000-$5000 per month-vacant for seven months, savings $35,000.
Director of Planning/Public Works-Salary $120,000- $10,000 per month-vacant for one month, savings $10,000.
Fire Chief-Salary $105,000-$8750 per month-vacant for eight months, savings of $70,000.
Manager of Operational Services $90,000-$7,500 per month-vacant for three months, savings of $22,500.
First Peace Officer $65,000 per year-lets assume only budgeted for seven months-$38,000-$5400 per month, vacant for one month, savings of $5,400.
Second Peace Officer $65,000 per year-lets assume only budgeted for seven months-$38,000-$5400 per month, vacant for two months, savings of $10,800.
Building Inspector $58,000 per year-$4,800 per month, vacant for one month, savings of $4,800.
Mechanic $68,000 per year-$5,700 per month, vacant for two months, savings of $11,400.
Electrician $75,000 per year-$6,300 per month, vacant for four months, savings of $25,200.
Accounting $65,000 per year-$5,400 per month, vacant for three months, savings of $16,200
Second Accounting $65,000 per year-$5,400 per month, vacant for two months, savings of $10,800.
If you add up all of the savings in each one of those positions, you come up with a total of $222,100 then remember for every dollar in wages the municipality spends they allow 25% on top to cover the cost of benefits so that number now becomes $277,625. Now I understand that some of these savings may have been off set by additional overtime but it will not be anywhere near this total.
So easy lets create a surplus this year under estimate revenues and build room in the Wages and Salaries area.
The key question then becomes what happens when you have a year where revenues are close to budget, and all of these positions are filled for the full twelve months? It will not matter to this council because that financial statement will not be seen until five months after the next election!