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!
