Making the numbers work, Crowsnest Pass style.

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!    

2011 Crowsnest Pass Budget, dollars and the wonderful things you can do with them.

Council this week looked for more clarification on a few issues, that they appear to be going around and around on.

Administration has given them the opportunity to have a 0% increase on the tax rate.

This is good in the sense that are taxes are high enough, I agree with Councilor Gallant that taxes are a deterrent to attracting people and businesses to the Pass.
Hard enough to say to a coal miner we want you to travel an extra hour a day to work, plus we will charge you an additional $700 a year in taxes to live here.

The bad side to this budget is there is absolutely no allowance for dollars into the reserves for a number of years those reserves were depleted to catch up on infrastructure projects. Two years ago the majority of council put an end to a proposed new shop in Coleman that started out at a cost of less than $400,000 and grew to $1,300,000 which would have virtually wiped out almost all the reserves we had.

Council last year budgeted for $450,000 to be put back into reserves which would have allowed them to grow for the first time in many years. To allow for that same amount to be put in reserves with the present proposed budget you would be looking at a 7% tax increase.

The issue of borrowing money to buy equipment, for the last six years council set aside $250,000 per year for purchasing new equipment. This year that $250,000 is not being put aside its being borrowed in addition to another $300,000 to buy a grader and a track hoe. If that $250,000 was put into the budget for equipment you would now be looking at a 4% tax increase, instead the municipality is taking on $550,000 of debt.

Number of councilors have raised the concern about the justification of the track hoe, administration stated that they are spending $10-13,000 a year to rent a machine. Those numbers by any financial formula do not justify borrowing $250,000 the saving will not even cover the payment on a machine, let alone depreciation.

The issue of hiring, one I struggled with personally for years. I agree with Councilor Saje do an organizational review before you hire more people. Much wiser approach than Councilor Mitchell standard position of “if administration feels we need these positions,then we should fill them”

Administration argues that they have to grow to find the inefficiencies in the organization, with positions being deleted down the road as attrition takes place.

Government positions seldom disappear once they are put in place, work is found to
justify them. In addition you run into labor relations issues with your employees, I have never yet heard of a CUPE local that stated we don’t need that position any more.

Water Meters are going to be sent to the purgatory known as further study.

Administration is also counting on the sale of municipal land to the tune of $125,000 to balance the budget, the current market is almost making the sale of land impossible unless you are prepared to give it away. Should the municipality do that with the taxpayers assets? Should they be in competition with private sellers forcing land values even lower?


Where will the process go from here? A number of councilors have already expressed the willingness to increase taxes by a smaller number than 5.3%.

They will chop at least a couple of the full time positions, placing those savings into reserves, they will increase taxes by 1-2% with the cash like wise going to reserves. The fiscally conservative councilors will get to vote against the increase, which will pass any way.

The track hoe will also go the same direction as the water meters, to be re evaluated when further inefficiencies are found.

Finally Councilor Saje raised the issue of the lack of dollars (zero) for the New Strategic Direction of council, I also have not heard of any dollars for marketing or promoting the community. Likewise for new recreation facilities, affordable housing the only reference that as been mentioned in that regard is Councilor’s Gail idea to put a tax on weekenders that own more than one home in the Pass, which some how will encourage those people to provide those home’s to lower income families.