The $100 Million Mayor?


Your tax dollars at workIn a story on CollingwoodToday, our mayor, Brian Saunderson, shrugs off the costs of his Vindictive Judicial Inquiry (the SVJI) as being but a drop in the bucket for the town’s annual budget:

He noted the town’s annual budget is nearly $100 million, and the inquiry costs amount to less than ten per cent of the yearly budget.

Perhaps he was flustered by being challenged over the egregious waste of taxpayers’ money on the SVJI and just pulled that budget figure out of his hat. Perhaps he plans to spend a LOT more of your tax dollars on reports-about-the-report-about-the-report so we end up with a $100-million budget. Perhaps he just wanted to inflate his own status so he looks more important as he campaigns to be the next MPP while he stays in office as mayor. But the town’s actual budget, according to Collingwood’s audited financial statement for 2019, shows a revenue of $61.6 million, with expenses of $60.3 million. However, you really need to read an audited report to understand the town’s costs and revenue streams, not simply the projections in a budget.

Yes, I suspect you’re wondering, too, if our mayor is clueless about the town’s finances. After all, $60 million is hardly an unsubstantial amount. In fact, it seems outrageously high for a small town with 24,000 residents. But it’s still a long way from $100 million. And you’re probably wondering why the media didn’t call him out on that, too. So am I.

The town also collects taxes for the school boards and the county: these get passed along to these authorities and are NOT part of the town’s operating budget. In fact, the town’s own operating budget is considerably less than $60 million: page 24 of the audit shows it was $34.1 million in 2019.

You should spend a little time reading the audit, or at least more time than our mayor seems to have spent on it. You might find some interesting data, like how much the town really got from the sale of the airport (page 26): $2,067,531, or about half of what Saunderson and the former council said we’d get (the selling price was $4.1 million). Given that the airport was assessed at around $6 million a few years back, I’d say we lost a LOT of money on that sale. But I digress.

You can also check the town’s 2020 budget here. It shows (p.5) a projected operating budget of $59.9 million, which, although it’s not clearly stated, I believe a significant portion of which also goes to the county and boards of education, with $33.9 of that raised from taxes (p. 4). And keep in mind that a good portion of the income in the budget is from user fees such as water and wastewater charges, which go to fund specific departments or facilities (such as the water treatment and sewage plants).

There is $33.4 million projected for capital expenses, but it clearly says (p.8) “Much of the funding for these projects comes from reserve funds, grants from the federal or provincial government or development charges. Only 1.53% or $510,000 is being taken from 2020 taxes.” Since reserve funds were allocated in previous budgets, they should not be counted as part of the current budget. And since this is a wish-list, not an actual expense — several of the projects were not initiated in 2020 (i.e. improvements at the intersection of Third and High Streets for $3M) or they are multi-year projects that may be partially implemented, and many are projects for the future — the capital budget cannot be accurately (or honestly) simply added to the operating budget to arrive at a total.

So no, we’re not a $100-million community.

Most capital projects are financed by debentures, so what you really need to look at is how the annual borrowing cost affects the operating budget, not simply add up all the total project costs shown in the capital budget. It’s like buying or leasing a car on monthly installments: what matters is whether you can pay the monthly costs, not the total vehicle cost. Similarly, banks don’t ask if you can afford a $600,000 house: they look at whether you pay the monthly mortgage costs. And you certainly don’t tell people you’re worth $600,000 before you’ve made even the first mortgage payment. The remaining value on the mortgage is a liability, not an asset until it’s paid off.

The real budget that should be considered is the operating budget that shows what money is being spent on the town’s own needs and functions (like p. 25: paying the salaries of more than 230 municipal employees, an increase of more than 40 since 2014). And you only get to really see what was raised and spent in the auditor’s report of the previous year (not yet released for 2020).

As I read it, page 16 of the 2019 audit shows that at the end of 2019, the town was still owed $7,543,784 from Epcor to cover the sale of what was a publicly-owned utility to a for-profit corporation (done by Sanderson and his supporters on council without even the pretense of public consultation). If I understand that correctly, we don’t actually have all the money from the sale, so until we do get it all, it can’t be used in any calculation on how to spend it.

Pages 17 and 18 show that the town owes more than $28.3 million in debentures. Of course, all municipalities go into debt to borrow for infrastructure projects such as roads and sewers, so that’s not unusual. Most of these date back to several councils past.

But what confuses me is the several debentures totalling $7,543,784 for Collus (the former, publicly-owned utility that Saunderson and his Block sold). I’m not an accountant, but it looks to me that cancels out the amount owed to the town by Epcor. If so, how much did we ACTUALLY received that can be spent as of today? (subtracting, of course, the $9 million for the SVJI). Page 21 shows that $17,679,427 was set aside in reserves from the two sales (both done without public consultation), but the figures in this audit seem to suggest that that reserve may not accurately reflect the actual amounts received for these sales (and the actual amounts are lower). Like I said, I’m not an accountant, but it sure looks that way.

Page 17 also notes,

The property at 45 Heritage Drive known as the Terminals, owned by the Town of Collingwood, requires significant repairs and remediation. Council of the Town of Collingwood have not reached a decision regarding how to proceed on this matter, but it is likely that any decision will result in significant cost to the Town. The range of costs is $8 million to $10 million. $8 million (2018 – $5 million) has been recorded as a liability.

As far as I am aware, this council has still not made any decisions on the Terminals (or on much of anything else of significance this term), and the liability for the structure continues to mount. The liability for their vacillations over the Terminals will cost us around an extra $500,000 or more a year.

Back to the article. Saunderson also commented,

“This went on longer than scheduled … the fact is, this is an extremely complicated and complex manipulation and victimization of our community … it will cost us $20 to $30 million by the time we get down to talking about our next recreation facility,” said Saunderson. “Unfortunately it was an investment we had to make.” 

Manipulation and victimization of the community? Risible piffle from a man desperate to justify the excessive financial burden he has placed on the town. He’s not a victim: he was the instigator. That money could have been better spent fixing our decaying streets and crumbling sidewalks instead of funding a personal vendetta.

The real victims are taxpayers who have to pay for the SVJI that they never got consulted or even warned about. We are also the victims of a massive betrayal of public trust by the previous council that sold our publicly-owned utility and airport to for-profit corporations with no public consultation, hiding behind closed doors to avoid public scrutiny while they schemed over the sales.

What taxpayers got from the events of 2011-12 that the SVJI looked at was a strategic partnership with a world-class, forward-thinking utility that was praised throughout the electricity industry at the time, and two superb, year-round, environmentally-engineered recreational facilities from the proceeds of that sale, so they didn’t cost taxpayers anything to build (had the council, agreed to the $35 million handout to the YMCA Saunderson and his committee wanted, property taxes would have gone up 10%!).

But wait… our mayor is quoted here saying his SVJI is going to cost us “$20 to $30 million.” Think about that: he’s talking about an inquiry originally estimated to cost taxpayers $1.4-$1.6 million, now reaching around $9 million, but which will continue to gobble up money until it bloats to two or three times that amount. Or maybe it already has?

In the story, former councillor Tim Fryer makes a good point:

Fryer suggested the costs incurred by other participants in the inquiry, but not paid for by the town, should also be included in the total price listed by the town. 

I agree: the figures touted by the town, as stunningly high as they are, don’t reflect the reality because there are many collateral or hidden costs not shown. And if we throw in the costs of the OPP investigation (which has not resulted in any charges since it was opened in 2014), the costs of the sole-sourced consultants and lawyers hired by the town in 2015-18 to set the stage for Saunderson’s inquiry motion (sneakily made in Feb. 2018, when three members of council were absent and could neither debate nor vote on it), the unaccounted staff time and expenses to accommodate inquiry requests and needs, as well as the $700,000 for the ongoing as-important-as-clean-dinking-water-reports-about-the report that are scheduled to go on until next fall, the REAL costs of the SVJI would be much, much higher than the $8.2 million in the official figures. It’s been suggested the OPP investigation has cost more than $3 million and may even be $5 million itself!

I wouldn’t be surprised if the real costs with all of these included topped $13 million or even more.

I find it risible, too, that some councillors continue to look for someone to blame when those responsible are actually sitting at the table beside them:

Councillor Yvonne Hamlin said the cost of the Collingwood inquiry is, in part, the fault of the province for a lack of legislation supporting a municipality when it comes to calling a judicial inquiry. 

That’s like buying a coat, wearing it for a year without cleaning or caring for it, then going back to the store to ask for your money back because it no longer looks good on you. I know, I know: no one at the table wants to accept responsibility for this debacle, but the province warned the town back in early 2018 the SVJI would cost a lot. As early as July, 2018, I was writing about the escalating costs of the SVJI; I wrote about them again in November and December of that year. You’d have to have had your head deep in the metaphorical sand not to realize the costs had leapt out of control within the first few months and just kept climbing. 

Even the former treasurer joined the recent council meeting and reiterated that back in the early spring of 2018, the council of the day was warned that the costs would likely escalate into the stratosphere exactly as the Mississauga inquiry about conflict of interest did. Council blithely chose to ignore the warning:

She said town staff received a letter on April 6, 2018, naming Associate Chief Justice Frank Marrocco as the commissioner of the inquiry and referring the town to a report prepared for the Mississauga Judicial Inquiry, which took place in 2011 at a cost of about $7 million. The Mississauga inquiry dealt with conflict-of-interest matters.

Five people at the table supported the motion for the inquiry. Four of them were re-elected: Saunderson, Jeffrey, Doherty, and Madigan. You want to blame someone for this costly debacle, I suggest you start with them. I suspect the taxpayers won’t forget them next election.

Collingwood deserves better.

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  1. Pingback: Saunderson’s Your Guy – Scripturient

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