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To the editor:
The 2025 water budget report opens with a page of marketing material that would only be useful to attract investors to the city’s water system.
This information offers no value to the council in fulfilling its responsibility to review and approve the budget. Including such content is not only a poor use of time but also suggests inefficiencies within the staff, as resources appear to be available for unproductive tasks.
Once again in 2025, despite earlier plans to phase out such transfers, an $825,000 transfer from reserves is proposed to reduce cost increases.
Originally, a $300,000 transfer in 2021 was to be reduced to $150,000 in 2022 and $75,000 in 2023. Instead, in 2023, the transfer was increased to $825,000, with assurances it would end in 2024. However, the phaseout was delayed, and an additional $825,000 was transferred in 2024, even though the full amount wasn’t needed.
Presently, $2.785 million will have been drawn over five years with no concrete plan to stop this runaway train. Ask staff to provide a detailed plan outlining which taxpayers are going to pick up a shortage of $2.785 million in revenues.
This situation highlights the fallacy of using reserves to manipulate levies or avoid reducing costs.
Reserves intended for one-time or unforeseen needs. Using reserves to reduce operating budgets violates the principle that current taxpayers should fund the services they receive and future taxpayers should not be expected to pay for services enjoyed by previous citizens.
The majority of the city’s reserves are not being used to mitigate calamities or catastrophes. Accumulating reserves distorts municipal finances, creates inequities among taxpayers, and leads to long-term financial strain.
Under the report heading "Capital Investment," it is stated that “Based on the City’s Asset Management Plan, this investment is currently underfunded by approximately $5.8 million annually.” This fearmongering merely supports staff’s continued request for ever-increasing capital levies.
This faulty concept that we are underfunded supposes that cities must fully fund the replacement cost of their existing infrastructure in advance. It has no basis in fact and is groundless as a concept. What the figure does highlight is the future costs required by the next generation of taxpayers who will need to replace crucial infrastructure which necessitates the need to curtail current spending on elective projects that are expensive to build and operate, like a community centre or freshwater outdoor pool.
This is especially true in a city such as North Bay where the population is basically stagnant. If we are to follow this faulty reasoning, immediately upon completion of the community centre project it will be $48 million unfunded since we are only funding $15 million of the $63 million cost. This type of misdirection by senior staff highlights a significant area for improvement required in the quality of service being delivered.
Salaries and benefits have increased from $4.4 million in 2023 to $5,393,811 in the 2025 budget ($6,227,493 - $833,682) which is a 22% increase in two years with exactly the same full-time employee numbers. Ask staff for an explanation of this increase and have a discussion based on its affordability. The current average wage cost per employee in the water department is now over $100 thousand.
Every year the budget has contained the footnote “* Actuals subject to year-end adjustments and accrual “. So once again council members are supplied with actual figures which are of limited use for comparison to the financial requests made in the 2025 budget.
What council members require are the 2024 figures to Dec 31, 2024 so a comparison can be made to the 2025 budget, not to 2024 budget figures. Comparisons to the 2024 budget estimations are immaterial. Regardless of the final results, the budget figures from the previous year merely build any surplus into the following year’s levy which perpetuates the overcharging for services rendered.
The allocation of administration and overhead expenses (Acct 7010) from various city departments amounts to $2.1 million in 2025. This charge has risen 35% since 2019. It would be interesting to get a breakdown and support for this calculation. While it does not affect overall taxpayer costs, this shift in expenses to the water department serves to disguise increases in the tax burden.
The allocation of vehicle expenses (Acct 7001) from the Fleet department amounts to $1.1 million in 2025. This charge has risen 126% since 2018. This increase is largely due to the misguided policy now in place which is requiring taxpayers to fully fund the replacement cost of vehicles prior to them being purchased.
This policy is ill-advised, contrary to municipal funding principles, and has been denounced in previous correspondence. It must be discontinued immediately.
The budget includes a 2% increase over the prior year’s budgeted water and wastewater revenues, as well as a CPI factor is to be included in the proposed budget to support both the capital levy and debenture principal and interest payments. Taxpayers are also being billed for debenture principal and interest payments due in 2025 amounting to $3.5 million. This appears to be a duplication in the collection of funds.
Debenture financing has remained at $3 million since as early as 2012. This figure should be increased on a yearly basis to preserve the concept of charging current taxpayers for the services they enjoy.
I have still not received any serious rebuttal to my earlier comments regarding the 2025 budget. Am I to assume that the pleas on the website are once again simply public posturing?
To the Mayor, it has been over a year and I still have not received any indication that you are looking into arranging a meeting between yourself, senior staff, and myself. If you are not anxious to have senior staff support the questionable policies they have recommended to council over the years, please let me know.
Donald Rennick CPA, CA
North Bay
