* Council’s unanswered question

Published: March 11, 2010 6:00 PM Penticton Western News:

There’s tried and true axiom in business that says never hire a consultant unless you’re absolutely certain he knows what you want him say. The City of Penticton’s release of it’s “Core Services Review” is a good example of that axiom in action. The review (available at penticton.ca) while providing cover for council for recent management terminations and speculation over service cuts, really doesn’t say anything taxpayers or local politicians didn’t already know — delivery of core services cost more than than City can afford. This doesn’t mean taxpayers didn’t receive value for the consultants report, if for no other reason than current council can use the report to blunt, to some extent, the inevitable blame game with former City officials about which council spent more, or spent more ineffectively. Hopefully the public can be spared such drama over the coming months as this council deals with the issues.

There are a few red herrings in the review that ought to be dispensed with forthwith. First among these is the notion of “Long Term Debt” being “too high” as a percent of total revenue, compared with so-called peer municipalities. This metric is meaningless with respect to impact on taxpayers because the city is not in the same position as a private corporation or individual in terms of securitization of the debt. Whether or not we stack up well against, say, Port Moody in this comparison is also not illustrative for a number of variables — for instance, Port Moody residents can access services from a number of adjoining municipalities and has access to GVRD and TransLink assets. Taxpayers expect and, in fact demand, municipalities incur debt to build the capital infrastructure that makes a community a community. There is no business model to justify the building of libraries, roads, pools and rinks. But these projects make up the fabric of our communities and must be financed. This is a good use of our tax dollars.

Another red herring is the notion of management salaries being appropriate at the same time as management being deemed as “top-heavy,” or in some cases having a span of control (number of employees reporting to the manager) as too small to justify the salary level. While troubling in that this metric reflects poorly on the management competency of city council, addressing this issue (which has to some extent happened last week with the termination of three top management positions) will have only a symbolic impact on the overall budget woes of the City. As such it should be largely ignored in discussions of the big picture.

The challenge for the city, like every other level of government, is the impact of public sector union employees wages and benefits on the total expenses required to deliver services, core or otherwise. In Penticton, over $.77 of each tax dollar spent on delivery of services goes to municipal government employee wages. About $.19, or 25 per cent of that amount are benefits. According the review, City of Penticton wages, not including benefits, are as much as 30 per cent higher for city employees than for employees in similar private sector positions. Unfortunately or by design, there is no wage comparison in the review against other “peer” municipalities. Whether one supports or opposes wage/benefit levels of public employees, the message the consultants delivered, and the message this council wants, is that the City must significantly reduce public sector payrolls to meet the impending fiscal challenges. The review also makes clear that increased property and business taxes are not seriously being considered. Nor should such measures be considered.

This message will be rejected by the union leadership, and articulated with much apparent reluctance by the city. In the end, we’ll see increased contracting out of services, reduced city employee numbers and an increase in various fees and other “non-tax” related revenue sources from the city. This will be a painful process, particularly for the effected city employees and their families. However it is a necessary action, that should have been dealt with by previous councils, and now falls to this council. The only significant action the city has to meet its fiscal objective is to reduce the number of city employees. It is not clear why we needed a consultant’s review to justify the strategy — it is clear everyone already knew the answer to that question. The unanswered question is when does the downsizing start?

Mark Walker is the Black Press Group Publisher - South Okanagan