Monster, Chiller, Horror Budget

I do not know what to make of Monday’s “pretend” budget-cutting workshop but I suspect it may be viewed in some quarters as a poor use of a cash-strapped municipality’s resources.

To recap: as a prelude to the actual budget process this year, CBRM council held a session on Monday during which it imagined what would happen if it were to cut its budget by 10%

By Joel Friesen [CC BY 2.0 (http://creativecommons.org/licenses/by/2.0)], via Wikimedia Commons

The CBRM, after a 75% budget cut. (Photo By Joel Friesen, CC BY 2.0 via Wikimedia Commons

The answer, predictably, is: nothing good. As the CBC’s Tom Ayers reported:

According to the report, a 10 per cent cut would mean the loss of 75 employees.

It would also mean cuts to arts, culture and tourism organizations and an end to Canada Day and New Year’s activities.

Arenas would close, library hours would be cut and grants for heritage and low-income housing would be gone.

The 10% figure seems to have been chosen arbitrarily, which makes me kind of wish they’d really gone for it and modeled a 50% or 75% budget cut. Imagine the Power Point presentation outlining how a 75% cut in the municipal budget would lead eventually to a breakdown in basic water, sewer and garbage collection services followed, inevitably, by a cholera epidemic that would require us to turn Sydport back into a hospital, thus derailing our otherwise totally do-able container port plan.

I mean, if the point is to get the provincial government’s attention (and the point is to get the provincial government’s attention), then pull out all the stops: show an episode of The Walking Dead and pretend it’s a documentary from the Union of Nova Scotia Municipalities. Read aloud from Cormac McCarthy’s The Road. Flick the chamber lights on and off for dramatic effect.

Go big or go home.

 

Nonsensical

I couldn’t watch the whole meeting — it seemed like a poor use of my limited time — but I heard CAO Marie Walsh’s opening monologue and watched CFO Jennifer Campbell’s presentation and read the accounts by the Cape Breton Post and, as noted above, the CBC.

It’s not that I’m unsympathetic to Walsh, on the contrary, I’m wholly sympathetic and think it’s clear that the CBRM — like most Nova Scotian municipalities outside HRM — is struggling and needs a new deal from the province. The situation is nonsensical: our mandatory annual payments for education, corrections, the Property Valuation Services Corporation and public housing exceed the value of our annual operating grant. In 2019-2020, our mandatory payments totaled $19.3 million while our operating grant totaled $15.3 million. And the value of that grant has been frozen for years.

But the province knows this. And the province knows a 10% budget cut would be painful for any municipality. Monday’s exercise — using staff time to prepare a report about a 10% budget cut, using council time to present it, then inviting councilors to take turns complaining about it — would be like me preparing a report outlining what would happen if I cut off one of my arms, reading it to my friends, then inviting them to talk about what a terrible thing that would be.

Fun? Absolutely. Helpful? Not so much.

 

CFIB

Out of the flotsam floating around the council chambers on Monday, a power point slide caught my eye, not only for what it shows but for where it was sourced. I fished it out and if you’ll bear with me, I’m going to consider it in some detail, which will require a little detour into the Canadian Federation of Independent Business (CFIB) — a “knee-jerk right wing organization” with a habit of “grossly distort[ing] and manipulat[ing] the statistics” to make its arguments.

Slide showing per capita operating spending by NS municipalities.

 

The numbers on this slide are from the CFIB’s 2017 “research report” into Nova Scotia municipal spending.

Interestingly, while the CBRM is using this chart to argue it has cut operating spending to the bone, the CFIB used it to suggest the CBRM has a lot more cutting to do to be “sustainable.”

CBRM ranked 12th out of 18 municipalities for “sustainable operating spending.”

To understand that ranking, you have to understand the CFIB’s definition of “sustainable” operating spending. The organization explains it this way:

To provide a sustainable level of services to citizens, it makes sense that municipalities should only increase operating spending to accommodate growth in population to provide the same services to more citizens. In addition, it’s reasonable to expect that operating spending should be adjusted for inflation to account for any increase in prices.

We’ll get to the question of whether any of this actually does make sense¬† in a moment. Right now, I want to show you what “sustainable” operational spending looks like, according to the CFIB. Here are the organization’s three, top-ranked municipalities in 2017 —¬† Lunenburg, Inverness and Annapolis:

Here’s the lowest-ranked municipality, Yarmouth:

 

The CBRM’s operating spending compared to population over the last eight years looks like this:

 

The CFIB actually had to admit that “most” Nova Scotia municipalities met its benchmark in 2017, with “growth in real operating spending” of roughly 0.5% compared to population growth of 1.5%. Towns, on the other hand, saw real operating spending rise 4% while population grew only 2% which, in the CFIB’s books, is a terrible no-no.

 

Benchmarks

There is an obvious question here: is the CFIB’s “benchmark” for sustainable operating spending reasonable?

Toby Sanger, economist and executive director of Canadians for Tax Fairness, asked that very question back in 2013, when he was with the Canadian Union of Public Employees and the CFIB was claiming that:

…operating spending by municipalities has increased at unsustainable rates in Canada and in Canada’s largest cities because it has increased at rates above inflation and population growth.

Sanger asked:

[W]hy compare municipal operating spending to population growth and inflation to judge whether it is sustainable? That’s because the only suitable measure of whether this level of spending is sustainable — GDP, economic output or income — doesn’t support their claims.

He then explains:

If we compare operating spending by municipalities to GDP, which is a broad measure of ability to pay, it remains within historical averages of close to 3 per cent of GDP. In 2012, operating spending by all municipalities in Canada amounted to just 3.1 per cent of GDP, the same that it was 20 years ago, and down from the 3.3 per cent reached in 2009 during the depths of the recession.

But Sanger also noted — and I’m sure Marie Walsh would agree — that:

Municipal operating spending has also increased because of further downloading of responsibilities by federal and provincial governments onto municipalities.

That last is a factor CFIB’s analysts don’t consider at all, but it’s very real — look no further than those steadily increasing mandatory payments, all of which are for services that are — in theory — the responsibility of the provincial government.

In short, I think Campbell is right to use the low per capita number for the CBRM’s operational spending as an argument that we basically live within our means, even though that’s not what the CFIB is saying at all. It’s like turning their guns on them.

Okay, now back to our meeting, which remains in progress (it went almost two hours).

 

Discretionary

Here’s another slide that jumped out at me (you can click on it to enlarge it):

Slide showing CBRM schedule of operating budget by expenditure type

 

The circled items are “not exactly discretionary or easily reduced” according to Campbell

First, I would just like to say I would be fine with receiving my water bill electronically, which would save the municipality on postage fees to the tune of four stamps per year. Don’t ever say I didn’t step up and do my part.

Second, the biggest chunk of this “not exactly discretionary spending” — $66 million — is wages, salaries and benefits. Campbell noted it includes $5 million in “Fire wages and benefits” that can’t be reduced due to minimum staffing requirements.

Later she noted $1.5 million in grants for volunteer fire departments “which could only be reduced if fire departments agree to amalgamate.”

The closest she came to suggesting we don’t need 200 police officers was when she noted that our expenses for uniforms are part of police and fire contracts and could only be reduced through the elimination of positions.

But this budget-cutting exercise was supposed to have been inspired by the Grant Thornton Viability Study and that study tip-toed very cautiously to the conclusion that we have more police officers than we need:

W]hen assessing the efficiency of delivery, the comparatively high-number of officers, and the fact that the CBRPS has one of the larger department budgets, the CBRPS exhibit qualities that could potentially support consolidation.

Those qualities must surely include the fact that on any given day 30 to 40 of those officers are on sick leave and yet, somehow, we stumble along without them.

In fact, the CBRM has agreed to undertake an in-depth study of police staffing which seems to me a more rational response to the Viability Study than this 10% budget-cutting charade.

But such possible savings aside, the authors of the Viability Study were clear: the CBRM cannot “independently” solve its financial woes.

So why make this big, pointless show of trying to?

Do we really want to give the province ideas?