Doherty’s Magic Money Fairy

the money fairyAt 3:55:20 in the video of Monday’s Collingwood Council meeting, Councillor Deb Doherty utters the self-congratulatory claim that she is “glad” the costs of the upcoming judicial inquiry to pursue the Block’s maniacal conspiracy theories are not coming out of “taxpayer funds on an annual basis.”

I can hear your head shaking. Where does she think money comes from? And since taxes are calculated yearly, is there any other sort of taxation aside from an “annual basis”? Well, read on…

This bit of financial wisdom comes from the same councillor who last year expressed bafflement over what dividends are and complained that the town wasn’t getting one from the utility to which it had caused excessive operating costs. This from a person charged with helping manage the town’s financial well-being.  Maybe she has other talents.

The costs of this inquiry were estimated at $1.4-$1.6 million in a staff report presented to council April 30. That estimate was vague because it didn’t include the costs of staff time to prepare reports, gather documents and appear at hearings, and possibly other expenses. A similar inquiry held in Mississauga was also estimated around $1.2 million ended up costing the municipality $6.2 million instead!

Doherty made her comment during a discussion on how to pay for the judicial inquiry that Deputy Mayor Saunderson demanded – without anyone (including him) bothering to figure out how to pay for it or even include it in the current year’s budget (Saunderson himself wasn’t at the meeting to answer questions, and my sources tell me he didn’t bother to inform anyone he wouldn’t be there!). So the costs get passed on to the next council (one that will, mercifully, be shorn of Blockheads).

Well, we all know finance has never been The Block’s strong suit. Or ethics, responsibility, openness, public consultation, fairness – but they are huge in conspiracy theories. Yuge, as Trump would say.

So how will the town pay for the inquiry? By taking the money from reserves. And how does money get into reserves in the first place? Yes, you’re going to tell me it gets funded from taxes which we, the taxpayer shell out every year. But clearly Councillor Doherty doesn’t understand that rather basic concept. I suggest she likely believes a Magic Money Fairy flies by at night and with a touch of her wand refills the coffers The Block have depleted.

As soon as she had uttered these words, Councillor Edwards corrected her, noting that “any money we spend comes from the taxpayers’ pocket.” *

True, but that apparently escaped Deb, who retorted that it wasn’t coming from taxpayers’ funds “this year.” So it seems no tax revenue went into reserves in 2018, at least in her mind. Need I tell you how utterly incorrect she is? Or that The Block initiated a fixed, extra 0.75% added to annual taxes to fund reserves? For which she voted? Which has been in the annual budget three times? For which she voted each time ? Okay, stop laughing.

It seems her Magic Money Fairy will simply fill up those reserves regularly so The Block can continue their spending-like-a-drunken-sailor-on-shore-leave-in-a-brothel tactic of financial management. While giving themselves a pay hike every year.

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Misconceptions About the Town Debt

Clock TowerYesterday members of council received a letter from our auditors that should clear up any misconceptions floating around about debt and debentures. It is clear and succinct.

I was also forwarded an email from a candidate (sent to his supporters) with misleading statements about how much debt there is. I don’t know if it was deliberately meant to be misleading – I suspect rather that the candidate simply doesn’t understand municipal finance. But it isn’t really a complicated process.

And no candidate should make claims based on misunderstanding or misinformation. It is their responsibility to get and present the facts, not fantasies, nor opinions.

In response to concerns over such inaccurate claims and misunderstandings, we asked for a clarification. Sue Bragg, B.B.A., CPA, CA, and partner in Gaviller and Company, which audits the town’s financial statements every year, wrote the following (emphasis added):

We understand there have been some inquiries regarding the “definition of debt” and how the debt levels have changed during this last term of Council.
Our professional opinion is that debt is external, contractual debt, typically in the form of bank loans, debentures and mortgages. This definition is in keeping with the presentation of debt on the Financial Information Return prepared annually for the Ministry, as well as the Ministry’s calculation of the Annual Repayment Limit.

Okay, here’s the first important point: debt is external. That’s both the professional and the legal definition of municipal debt as defined by the Ministry of Finance.

Debt is what we owe outsiders: money borrowed with interest and bank charges to be paid. It’s what affects your taxes. It’s our debentures.

It is not any internal loans we have. I’ll get to those a bit later and explain how they work. Just keep in mind that they are not debt by any professional or Ministry calculation.

So then what is our actual debt? Ms. Bragg continues (emphasis added):

As per the 2010 audited financial statements: long-term debt was $45,507,356 and there was a bank demand loan in the amount of $664,013 for a total of $46,171,369. As per the 2013 audited financial statements: long-term debt was $36,860,776 and there was no bank demand loan debt.

We are unable to comment on the 2014 balances as we have not audited those transactions to date.

Got that? We started with a total debt of $46.17 million ($45.5 million in debentures) when we took office. As of Jan. 1, 2013, this council and staff had brought it down to $36.86 million. By the end of 2014, we estimate it will be roughly $38 million because we will pay down more this year, but we also need to borrow for two earlier projects).

At the end of our term, this council will have paid down approximately $7.5 million of our debt, as we have been saying for months now. These are the facts verified by the auditor.

Our debt is not the $50,361,230.00 some candidates are suggesting.

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