- by David Clark

Municipal budgets come with really big numbers attached for various projects and operational costs. For most of us it is very hard to comprehend big numbers, like $55,000,000, which is the Owen Sound budget for 2022.

Always the impact of the budget is presented as how much of a tax increase (or if we are really, really lucky, a decrease!) will it have on a home with the “average” assessed value.  Let’s look at this big number in a slightly different way.

    What if we look at it as a “per-person” cost: How much money will the city council spend “per-person” on your behalf? Of course, the city is not spending money directly on each person, but presenting it as a per-person cost allows us to determine, for our self, our perceived value of the benefit of such spending.

    The following table illustrates this approach, for one, two, and four people.

The budget is funded from a number of “pots of money”, including use of reserve funds (20% for capital), federal and provincial transfer funds (7% for operational; 49% for capital), user fees (17%), and property taxes (76% for operational; 20% for capital). Keep in mind that all these monies are from taxpayers. Reserve funds are funds collected in previous years which are committed to future projects and other uses.

The budget is used for road work, covering the cost of lost development charges (subsidizing property developers), parks and playgrounds, snow plowing, tree grates for downtown, water and sewage treatment, library and art gallery, councillors’ pay, training and conferences, benches and waste cans in parks, computer and technology upgrades, fire and police, grants for business owners to enhance their store front, and a lot of other things.

The following graph illustrates the forgoing table graphically, and for the past twelve years. I included a separate calculation for those aged 20-years and older as this is the age range that are likely paying property taxes directly (own a home) or slightly less directly as a portion of rent paid to a landlord (renters). Keep in mind that every renter contributes to property taxes, as do those in various care homes, and tourists renting a motel/hotel room, for example. Every property pays property tax. It is included in every “bottom line” of every business and in our personal home-cost budgets.

The following table provides a comparison to several communities; one similar in size to Owen Sound, and two larger, and based on (actual) total population.

Budgeting Priorities

Council’s approval of the budget included a ranking of various projects to identify which projects have more importance, impact, and immediacy. This is a good strategy. I have no doubts that the budgeting process is a significant challenge. There is a section of the budget document (posted on the city’s website) that ranks and lists various capital projects.

One might wonder if there is a correlation between the budget amount and its ranking. In other words, does a higher budgeted item/project dictate if it gets a high or low ranking? Or vice versa?

The statistical correlation test indicates there is a moderately-strong relationship (r=0.56; p=0.001) between higher costed projects and higher-ranked ones, but it does not tell us why. Maybe higher-cost projects are more important. Or maybe the higher budgeted amount (unconsciously) influences the ranking.

You be the judge. Below are two tables listing capital projects by ranking and by budgeted cost. There is a total of ninety-eight projects listed, of which three had no numerical ranking. For those three I guessed at a “priority score” based on their “priority level” (e.g., high low moderate) and as other priority scores matched to priority level. I list only the top and bottom twenty projects.

These projects total to $40,103,200. Some are scheduled to be done over a number of years. For details visit the city’s website and view the budget document.

David Clark is an Independent Researcher, Member of the Canadian Economics Association