– by Jim Hutton

Soon you will take your place at the first meeting of Council for the term. Given the times in which we live, this term will likely be one of the most challenging terms in many years. The Owen Sound voters elected you, because they believe that each and every one of you are the best suited to take on the many challenges we are facing – skyrocketing taxes, our homeless population, our failing transit system.

The Magnitude of the Challenges

We are currently experiencing record high inflation at 6–7% and some economists are predicting that we are headed into a recession. At the same time there is wide recognition that city expenses and the city workforce have grown well beyond what they should be for a municipality of our size. As I pointed out to you over the past several weeks, Owen Sound taxes have been growing at over twice the rate of inflation. Between 2011 and 2020 revenue from taxation increased by $8.4 million, or 38%, the Consumer Price Index (CPI) increased by only 18.3% during this same period. See www.OwenSoundTaxes.com.

Your challenge now is to mitigate the damage caused by successive tax increases over the past 10 years, by introducing a plan for successive tax reductions over the next 10 years. This can only be achieved by dramatically reducing city expenses. As we all know the largest expense in any business or public institution is the salary-wage envelope. Hence reducing this expense will be unavoidable if you are serious about ‘right-sizing’ expenses.

Staff Reductions

As challenging as staff reductions can be in a public institution, it will be unavoidable during your term. Hence, the sooner you take on this challenge the better. To begin this process, I suggest you examine the staff growth over the last 10 years. An era to focus on is the 5-year period between 2011 and 2016 where salaries and benefits ballooned by $3.6 million or 16.3% during a period when inflation grew by only 7.9%, according to the city’s audited financials. The magnitude of this growth in salaries over such a short period is alarming, given that Owen Sound’s population was relatively stagnant during this period.

Then compare the Owen Sound city workforce to that of Strathroy’s along with the services that they each provide their residents, which, by the way, are nearly identical since they both employ their own fire and police employees. In 2020 Owen Sound salaries and benefits expense was $25.9 million while Strathroy’s was only $14.2 million. Strathroy spends $264 and $48 per capita on police and fire respectively while Owen Sound spends $371 and $232 per capita for these same employees. Perhaps a Council field trip to Strathroy to meet with their Council would shed some light on how they can service a larger municipality for $11.7 million less than what costs Owen Sound.

Although, this is a problem that was created by past Councils, during a period of relatively low inflation, taxpayers are looking to you to correct the city’s staff size in spite of current inflationary pressures. You owe it to those who just voted you into office to personally do this research for yourself and draw your own conclusions on the appropriateness of the current staffing levels relative to the size of our municipality and then take the appropriate action to ‘right-size’ the workforce.

Critical Thinking

When it comes to important financial decisions you will often see data presented in a way that distorts or disguises the real impact of the decision you’re facing. In these cases, you need to apply your own critical thinking and analysis to fully understand the impact of the decision that you are about to make. You may be told that historically Owen Sound’s tax increases have been less than those in our surrounding communities and therefore we can afford to be more aggressive when it comes to raising taxes. 

This statement is factually correct, but conclusion is not. Our annual tax increases, on a percentage basis, have indeed been less than Georgian Bluff’s, for example. However, this should not be interpreted that Owen Sound’s Council is doing a better job of holding the line on tax increases. In fact, the opposite is true. In 2020, a one-percent increase to Georgian Bluffs $10.1 million tax revenue was $101,230; while a one-percent increase to Owen Sound’s $30.4 million tax revenue was $304,103. This means that a 1% increase in Owen Sound, has the same impact on taxpayers as a 3% tax increase in Georgian Bluffs.  Therefore, to have the same impact on taxpayers our tax increases need to be one-third of Georgian Bluffs on a percentage basis.

This becomes obvious when you compare taxes per capita. In 2020 Georgian Bluffs taxes per capita were $912 while ours were $1,407 – a difference of nearly $500 per resident. The point is, that if you want to put an end to the excessive growth in expenses, that have been driving the high tax increases, you have to apply critical thinking and analysis to everything that comes before you, by asking those difficult, probing questions and not accept anything presented to you at face value. Challenging the data as presented, should never be seen as an unwarranted attack on the presenter, since these are not personal questions from yourself, but rather questions you are asking on behalf of the taxpayers of Owen Sound. The above numbers can be verified by BMA reports. A complete analysis is available on my website at www.OwenSoundTaxes.com.

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In Part II, I will introduce the need to do things differently this term and break away from the practices that have proven ineffective in stimulating growth and prosperity over the past 20 years.