Turning the City around before it sinks
By Leslie Campbell, January 2013
The annual cost to taxpayers of an average City worker is $91,000.
Because Victoria City council has resolved to limit tax increases for each of the next three years to 3.25 percent, City staff have been busy trying to figure out how to keep that resolution. But they themselves may be the elephant in the room. At a presentation to media on December 13, Brenda Warner, director of finance for the City of Victoria, compared the challenge to turning a huge ship around. She expressed confidence in being able to make enough adjustments for 2013, but admitted it would be more difficult in the following two years.
She told us budget reduction strategies under consideration include: Automating parkades during slow hours (saves $300,000); reducing summer concerts and similar programs (saves $82,000); lopping off $9000 by not increasing mayor and council salaries; and replacing annual plant displays with perennials (saves $150,000). The biggest potential savings—of $602,000 in 2013—comes from limiting police and library budget increases to two percent.
Later, my number-crunching skills got a good workout as I attempted to wrap my mind around the City’s challenges. It’s difficult to disentangle all the numbers and to meaningfully compare one set of numbers to others that use annoyingly different categories and combinations. But one thing is clear: the largest expenditure is people—salaries and benefits—at 52.59 percent of the City’s $195-million operating budget.
In 2012 there were about 1120 people working for the City (including police). That works out to an average cost per employee of about $91,000. This includes benefits (medical, dental, life insurance, pension etc) and employer costs (WCB, employer portion of EI and CPP). Staff costs will increase regardless of City frugality on other fronts because collective agreements guarantee an annual two percent increase to all but a handful of City staff through 2013.
One of the budget reduction strategies under consideration concerns that handful. By implementing a zero percent pay increase for 74 “exempt employees” (mostly managers), $200,000 could be saved. According to the communications director, “Total salaries, benefits and employer cost budget for exempt staff (excluding police) is $11.5M.” These employees, therefore, cost the City and its taxpayers, on average, $155,405.
I do not profess to know how or why it has happened, but the increases at the upper levels—easily seen in the Public Bodies Reports on the City website—are dramatic, whether you look at dollar amounts or year-to-year percentage increases. Take just one employee’s wage (not including non-taxable benefits and employer contributions, or expenses): the director of legislative and regulatory services was paid wages of $123,578 in 2007; $135,707 in 2008 (a 10 percent increase); $150,788 in 2009 (11 percent increase); $165,489 in 2010 (a 10 percent hike); and $180,400 in 2011 (up 9 percent). In all this represents a 46 percent hike over that five-year period. And his not-yet-reported 2012 wage will be even higher. This is the same City department that in 2012 made a tremendous fuss over its shortage of financial resources to process FOI requests in a timely manner. No wonder.
So, though the City is considering capping exempt staff salaries at 2012 levels, you’ll forgive me for saying: It’s a little late! In fact, if we were interested in running a City as if sustainability really mattered, we’d be rolling such wages back. City budget notes warn that even “a zero percent increase over the long-term can have implications in terms of staff retention and recruitment,” but that seems a risk worth taking.
Looking at the revenue side of the City of Victoria’s budget, I discovered tax revenues increased each year since 2007 by about six percent. In 2011, the City had $23 million more in property tax monies to work with than it did in 2007—most of it gobbled up by salaries and benefits—for the same number of employees. Unsurprisingly, those who already had high incomes benefited the most.
During that same period, Victoria’s residents, along with everyone else in the world, were hit by a painful recession. Many lost their jobs or had their hours cut back. Those running small businesses (90 percent of Victoria businesses have less than 20 employees) took huge hits in revenues and have had to cut back on all fronts. Some haven’t made it; witness the “for lease” signs around town. Certainly many Victoria residents would be thrilled to just have job security and forego increases until the economy signals real growth again.
I am all for a strong collective approach to take care of the City’s parks, infrastructure, policing and fire protection. I support decent wages. But we need an honest, broad-minded appraisal of what’s decent—and sustainable—in this city.
Councillor Lisa Helps has noted that the average annual wage in Victoria is $38,000. Last summer, she involved local citizens in budget discussions. She expressed worry about “budget creep,” and has told me, “If 50 percent of City expenses are salaries and benefits, logic says that that’s where the biggest creep has been.” Many of the suggestions brought forth from her five public sessions show both the common sense and ingenuity of ordinary people. Around staffing, for instance, it was suggested the City’s department of sustainability be integrated into existing departments, and the communications department be folded into the City manager’s office. See other suggestions on her blog and plan to attend the City’s own public sessions in January. Your views could make a difference.
Leslie Campbell wishes everyone a very Happy New Year. She notes that numerous studies show that once one’s basic needs are accommodated, one’s income level has no influence on one’s happiness.