I appreciate that understanding municipal finance is challenging. As much as we try to draw analogies to everyday life, the reality is that it is just not that simple. That does not mean that a layperson cannot understand municipal finance. Realistically though, it does require an investment of time that many are not prepared, or simply are too busy, to commit. Unfortunately, this creates an environment where ideological agendas, assumptions, bad memories, lack of time or simple laziness can cause havoc – deliberately or unintentionally – and erode confidence in local government.
One example: I recall an all-candidates meeting when we were asked about the City’s participation in the Infrastructure Stimulus Funding (ISF) program. I was to respond last. Each mayoral candidate before me railed about the massive debt the City had incurred to participate in this program.
The problem with their outrage? The City did not use debt to match federal and provincial dollars. We used cash.
The last term of Council established a very wise policy that the maintenance and replacement of infrastructure cannot be debt financed. It doesn’t seem to matter how many times we communicate this pragmatic fact, it doesn’t seem to land in some quarters.
When it comes to maintaining and replacing our aging infrastructure we are already 100% “pay as you go”.
Our success in the Infrastructure Stimulus Funding program improved the City’s financial position, made at least a tiny dent in the infrastructure gap, repaired some roads, made our buildings more energy efficient, kept our toilets working, our streets from flooding and our water flowing, and, oh yes, put people to work during a recession. Remarkably, some still try to pick away at this. Yes, road closures to repair infrastructure are always inconvenient but how do you measure that against dodging potholes or your basement filling up with your neighbour’s sewage?
Ideology is expensive. You do not have to look hard to see an all too familiar pattern in action. A new Council sweeps in with big promises of “fiscal constraint”. It starts out sounding great but the only way to deliver on those big promises is to be “penny-wise and pound foolish” and hope no one notices. But the taxpayer does notice. They notice if the City’s infrastructure is crumbling. They notice if their neighbourhood doesn’t have the same level of services as others. Simply put, they notice if their government is not doing their job. Predictably and legitimately, they begin demanding change and a new Council will be swept in with the unfortunate task of playing catch up – unfortunate, because it won’t be long before the usual suspects begin calling it “uncontrolled spending”.
Governments can certainly get themselves into trouble with too much spending especially federal and provincial governments that can incur debt for both operating and capital spending, unlike municipalities who can only incur debt for capital projects. That is why having strong debt and reserve management policies to manage capital spending, and unremittingly protect our financial position, are paramount. The City of Guelph has these policies.
This fall, I fervently hope, we will take the next step and approve our first sustainable 10-year capital budget. Instead of continuing to be a victim of the expensive and deceitful ideological see-saw we seem to be trapped in, we will find the balance that allows your local government to do its job – provide efficient and effective services to a vibrant and growing community, protect the public interest, and be responsible stewards of public assets.
Despite the challenges of communicating municipal finance, it is our job to keep persisting. The annual Financial and Community Report is a new effort in that regard. The Overview provided with the proposed 10-year Capital Budget is another. You will also find this year’s Operating and Enterprise Budgets more accessible. And we will continue to improve our communications with your input.
Patience is the key, along with my hope that pragmatism will prevail over ideology.