Mumbling and Bumbling at the Eleventh Hour-2013 Mill Rate

Today at 3pm I attended a Special Council Meeting fully expecting to hear First Reading on the mill rate bylaw. 

The bylaw that drives the revenues, that operates the municipality, it's programs it's facilities and everything else that matters to us the taxpayers. 

Well after five months of intense debate, numerous meeting, two years of working on the tri annual budget and a Council commitment to not increase the mill rate by more than 2.5% per year we have a big oops.

Here at the eleventh hour we find out that the 2% reduction in the assessment base that administration and council had anticipated is really a 5% reduction. 

What does that mean in simple terms? a short fall of "$295,000" this year, what did administration offer as a solution to that short fall? Two options, one to take $295,000 out of reserves or two to increase the mill rate by 7.5%.  

What did council do, they voted to have administration come back with a 4% reduction in the operating budget despite administration claims that the budget has already been cut to the bone and that they would now have to look at reducing services and programs. Let`s not lose site of the fact that cutting the operating budget by 4% over a twelve month period is one thing by the time the mill rate is in place one third of the year will have gone by, in reality that 4% will become 6% over an eight month period. 

Timing-Council must give the mill rate bylaw three reading, which they have not been willing to do in one meeting so they have to find $300,000 in savings and schedule another special meeting between now and next Tuesday the 16th.  If third reading is not done by the 16th bills will not go out on time, (April 30th) the province requires that  residents have 60 days from the date of billing to pay their bills. Administration claims that somewhere between 65-70% of our residents pay their taxes in one payment at the June 30th dead line. Which means if the bills are late the municipality runs into a cash flow problem at the end of June.

Can you believe that we are in this position on April 8th after five months of the Budget process. 

Coming soon, time to pay the piper

Last week at the council meeting the head of finance was giving the council an update on the financial state of the municipality to the middle of August. Within that discussion somebody pointed out that there is an almost $300,000 liability for accumulated sick time for the municipal staff, a couple of other councilors seemed unaware of this. Which surprised me in the sense that this number appears in the annual municipal financial statements every year, which council just reviewed three months ago.

For the benefit of my readers where does this come from?

Municipal employees hired after July 1 2008 receive one and a half sick days per month (prior to that it was two days per month this was changed during the bargaining process at that time). If they do not use these days they get to accumulate them up to a maximum of 120 days, which they are then paid out on a 50% basis when they retire. (For example 60 days times 8 hours @ approx $30 per hour equals $14,400 per employee). The difficulty with this benefit is that after an employee has been with the town for less than seven years the 120 days are accumulated and in some cases it becomes an additional 18 days a year off. If they do not use them they lose them, there is simply no incentive to not use them.

Now they are aware maybe this council will have some ideas to deal with this issue.

The next issue related to this and where it becomes increasing difficult to manage the municipal finances especially when the workforce is expanding is the cost of payroll. I am told that the town of Pincher Creek’s employees just turned down a three year contract with a wage increase of 3%, 2.5% and 2.75%. The Municipalities contract with CUPE is up at the end of the year, applying those same increases to the Pass would see some huge additional costs. In the 2010 financial statement (which would not cover the new positions created this year total cost of Salaries, Wages and Benefits was $4,923,486 increase those numbers by the percentages above 2012 would go to $5,071,191, 2013 $5,197,970, and 2014 $5,340,915.

That’s an additional $839,618 over the next three years or to put it in very simple terms it would take an average increase of 2.4% in taxes each year to accommodate those additional costs. Several factors that will come in to play here; the impact of the new positions created this year, maybe Cupe will be willing to accept less in this round of bargaining than they would in Pincher and surrounding areas. Or the workforce through gains in efficiencies will shrink enough to offset any additional wage increases.

Just some things to think about especially if there is further consideration to increase the municipal workforce.