Small town rules

Small Town RulesIn their book, Small Town Rules (Pearson Education Inc., USA, 2012), authors Barry Moltz and Becky McCray explain seven rules for businesses that use the model of a small town to offer advice on growing and maintaining a business n the “connected economy.” And while most of their rules are aimed at businesses, I suggest some are equally applicable to small towns like Collingwood.

Don’t get me wrong: a municipality is not a business and despite some common functions and shared accounting techniques, a municipality cannot be run in the same manner as a for-profit business. For a start, we have split roles between management (politicians and administration), and the political role – even of the head of council – is only part-time in the vast majority of Ontario municipalities. Plus no single member of council has more authority or power than any other (one vote per person), unlike a corporate president or CEO.

Municipalities, unlike corporations, cannot run deficits. And they are responsible for a large array of services that are not, nor ever will be profitable (parks, for example, but also social housing, public transit, sidewalks, garbage pickup, libraries, museums and so on). But all of these services contribute to the quality of life than makes living here so wonderful, and on which we have come to depend.

And more than depend: municipalities that have lesser service levels or lack services entirely don’t have the economic advantages that those with those services have. That’s important when trying to attract new businesses to your town, or to retain existing businesses. Those services help create the municipal brand that people come to associate with your community.

Corporations are responsible to their shareholders and pay dividends only them, where municipalities are responsible to the entire community, and serve the greater good (or should do so, this term notwithstanding).
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The test of integrity

Got insurance?I’ve been complaining all this term that Collingwood’s standing committee system is broken. It is redundant, ineffective and expensive. It continues in use only because it was the brainchild of the interim CAO who The Block worship.

But it is about to come under a test: one that will determine the integrity and ethics of both the system and The Block.

On July 10, the Corporate and Community Services Standing Committee received a report on the services of Fire Marque, an insurance collection agency. The report was requested by Councillor Jeffrey, close friends (as are all of The Block) with one of the company’s salesmen: the former mayor.

What Fire Marque does is to bill insurance companies for the cost of fire department responses to emergencies – costs already paid for by your taxes. As explained on Elliott Insurance:

Fire Marque is basically a collection agency. They’ve enticed the municipalities to sign up with them to collect fire department coverages from the insurance companies’ policies. So after an individual has a fire, the fire department will send off information to Fire Marque about the situation and what it cost the fire department. Fire Marque will then contact the person who had the fire and ask who their insurance company is. Then they basically bill the insurance company for the fire department charges, up to the limit that is allowed under the [homeowners insurance] policy.

Fire Marque keeps 30%, and the rest goes to the municipality, essentially double-dipping. The homeowner or accident victim then faces a potential increase in his or her insurance policies as a result. So the homeowners get hit twice: through taxes and again through higher insurance rates. No, the municipality won’t lower your taxes because they double-dip. You’re still on the hook. Again from Elliott Insurance:

On the negative side, as insurance companies, our premiums are driven by our claims costs. So, if we are now paying for fire department charges that we were not paying for before, our claims are going to go up, and we will have to raise premiums to cover the extra costs. When you look at it from a community wide basis, financially it would be much better for the municipalities to just add a few dollars to our taxes because the same people who pay property taxes pay insurance.

Knowing it could raise insurance rates, homeowners may be reluctant to report a fire until too late.  They may try to put it out themselves rather than risk the rate hike. The very same effect happens with car accidents and home problems already. The new contract could end up putting more people’s lives and homes at risk because they hesitate to call for a service they know they will have to pay for.

Setting aside the ethics of this practice (read the full piece on the linked site and decide for yourself), the double-dipping, the harm to the taxpayer and whether the town should encourage ambulance-chasing tactics, let’s look at the standing committee system again.
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