A resolution by Niagara Falls and Regional Councillor Bob Gale that would see Niagara Region departmental budgets limited to no more than a four-percent increase, a corporation-wide hiring freeze and a “red-circling” of wages for Regional staff making more than $125,000 per year, was defeated at last Thursday night’s Budget Review Committee of the Whole meeting.
His efforts came after staff provided an initial suggestion of a nine percent increase for Niagara Region’s 2024 budget. Staff used this figure in July for the potential percentage increase to the general levy, which does not include any special levies that could come forward. The number caused some sticker shock for Gale.
His motion was first introduced at the September 21 Regional Council meeting with a proposed 2.5 percent limit on departmental budgets. After reading through the resolution that evening, he commented that, “We (Regional councillors) talk a good talk on cost control but we don’t act on cost control. We have somehow abandoned giving staff direction on the budget.” He also claimed that past efforts at budget mitigation “had been deferred to avoid debate.”
Upon conclusion of Gale’s comments at the September meeting, without a hint of irony Pelham and Niagara Region Councillor Diana Huson moved a motion to refer the matter to a future Budget Review Committee of the Whole meeting, with a request that staff provide a memo identifying the impacts and consequences of approving Gale’s proposed motion.
Debate certainly occurred Thursday night but before the spirited discussion unfolded, staff had prepared a report rebutting the three desired outcomes of Gale’s resolution, raising obvious questions about the impartiality of senior staff who advised against recommendations that would limit their own salary increases and departmental budgets.
In September, Gale had questioned why the past practice of council setting a budget guidance benchmark had stopped (it is common practice in municipalities for council to ask staff to come back with a budget that does not exceed a specific targeted percentage increase, often around two to three percent to reflect benchmark inflation over an extended period). When municipal spending is not in line with inflation, it raises questions about the effectiveness of elected officials whose duty is to protect the taxpayers that voted for them.
The staff report pointed out that the Regional Council had approved By-law 2019-79, which sets out policies to guide the development of the Region’s budgets. The report highlighted that the by-law “formalized a new approach to budget planning based on feedback received from council, specifically that an arbitrary percentage amount was not the best method to adequately present the challenges facing council in a particular budget year.” Gale voted in favour of the by-law in 2019.
With regard to an immediate hiring freeze, Gale’s resolution recognized that there could be special circumstances in 2024 when hiring might be necessary but that the presenting of a business case, before the appropriate standing committee, would be necessary to justify any expansion of departmental staff.
Staff pointed out that the process in place since 2008, the Corporate Delegation of Authority Policy, already requires that any increase in the full-time employee (FTE) count be approved by the Regional Council with the expectation that elected officials determine if additional staff are required to meet service-level standards and demand created by their approved policies. For example, contained within the Water and Wastewater Budget report on Thursday’s agenda was a recommendation to make one temporary FTE into a permanent FTE to provide specific capital project coordination.
Staff recommended that a wage freeze would contradict council’s recently approved Strategic Priorities document that committed the Region to being an employer of choice that invests and supports a skilled workforce. Further, the staff report cautioned that such a freeze would negatively affect the Region’s ability to recruit and retain talent.
These are common rationalizations used in the municipal sector, but salary comparisons with the private sector in Ontario and higher levels of government suggest these justifications are self-serving and not grounded in detailed analysis of wages across sectors.
For example, according to Ontario’s 2022 public sector salary disclosure (known as the Sunshine List) which includes individuals employed in the provincial public sector who earn $100,000 or more, Director-level employees with Niagara Region commonly made between $150,000 and $190,000 annually. According to Statistics Canada data from the 2021 Census, the median wage of “Senior Managers” in the public sector was $120,000; research by the Fraser Institute comparing 2021 data shows non-union public-sector jobs pay, on average, 8.5 percent more than comparable positions in the private sector.
When benefits were considered, the taxpayer-funded public sector jobs far outdistanced those in the private sector, with 86.6 percent of government employees covered by a registered pension plan, compared to just 22.9 percent of private sector workers.
Despite the staff recommendations against any salary freezes, it was up to the will of council on whether to pass the mitigation measures proposed.
First up, though, on Thursday’s Budget Committee of the Whole meeting was consideration of the Water and Wastewater Budget but before that could happen, Gale called a “Point of Order”, not related to his resolution, but concerning the Region’s public consultation surrounding the 2024 budget.
Quoting from a report in July that set out the budget timetable, he reminded council and staff that there was to be a public engagement campaign to aid council in making critical budget decisions beginning in August, with the results of the campaign to be communicated to council in October.
The councillor asked if he had missed the results of the campaign — only to be told by staff that the public survey had been “deferred”.
An apoplectic Gale responded: “After the highest tax increase in recent memory (in 2023), and we are not going to hear from the public? The rest of council must be disturbed by this?”
'After the highest tax increase in recent memory (in 2023), and we are not going to hear from the public?'
Staff promised that the survey would go out next week, with a three-week turn-around time for responses.
It was pointed out that council would not have any formal public feedback in time for November 16, when members are expected to make a final decision on the Water and Wastewater budget. Later in the meeting, Gale asked if staff had simply forgotten about public feedback, only to receive a “no” response, without any explanation for the missed deadline.
What followed was another sobering budget-related presentation, this time regarding the Water and Wastewater budget. Staff were recommending a 7.9 percent increase to the budget over the 2023 operating budget, made up of 3.85 percent for base operating and 4.1 percent for enhanced capital financing. The proposed increase equates to an approximately $11.4 million addition to the budget, which would bring the cumulative total of the water and wastewater budget to $154.6 million for 2024.
Helen Furtado, the Region’s Director, Financial Management and Planning/Deputy Treasurer, at the outset noted that not only did the proposed budget have to account for inflation but that the budget deficit from 2023 had to be “right-sized” in the 2024 budget, due to higher than anticipated costs for chemicals, sludge disposal, repairs and maintenance and utilities.
The implications are that the proposed 7.95 percent increase will be in excess of a 10-year annual 7.15 percent increase that had just been approved by the council just two weeks earlier as part of the Region’s Water and Wastewater Financial Plan. In addition, the desired level of capital spending in 2024 will have to be reduced from $7.3 million to $5.9 million.
Todd Harrison, the Region’s Commissioner of Corporate Services, explained the issue at hand for Regional councillors: “The (Water and Wastewater) system needs renewal. That is the unfortunate truth we are facing. We could reduce it (the financial impact) but you would be continuing to accelerate the problem in the future. The system needs adequate funding and what we are proposing will get us in the next five to ten years to where we are correcting the historical underfunding of the system.”
After what Budget Chair, Councillor Wayne Redekop, described as anxieties shared all around the council chamber, related to the proposed budget increase, Gale proposed that staff be directed to prepare a report on developing a budget guideline for the Water and Wastewater budget at two percent above the Bank of Canada’s inflation rate. “We have to try and get the budget down.”
After a recess was called for staff to determine what the implications might be of Gale’s motion, it was decided that a report would come back to the Budget Committee of the Whole on November 16, and with clarification that the Bank of Canada’s inflation rate is 3.9 percent, staff was directed to come back with a report using 4 percent as the water and wastewater budget increase guideline. The motion was approved by the majority of Regional Council.
With the ultimate decision on the water and wastewater budget deferred for another two weeks, it was time for the council to deal with Gale’s budget mitigation measures resolution.
Fresh off the motion setting a guidance of a rate of inflation increase of four percent related to the water and wastewater budget and with a slight modification by St. Catharines Regional Councillor Peter Secord, the first of Gale’s budget mitigation measures now read that all Regional departments and (the Region’s) Agencies, Boards and Commissions (ABCs) collectively present council with departmental and ABC budget line reductions that would cap their individual increases at four percent for 2024.
'Staff are thinking long term, long term, getting us out of a hole from previous councils'
It was pointed out by staff that all of the ABCs had already completed their proposed budgets, and with the exception of the Niagara Peninsula Conservation Authority all had increases above four percent. Staff also indicated that the projected departmental increases in the operating budget were a small component of the overall tax increase, projected at nine percent. The department increases would account for a 2.8 percent increase of the Region’s budget.
The second mitigation measure from Gale’s motion was removed when it was agreed that it was redundant, as any increase to the staffing complement is brought to Regional Council for approval. The third mitigation measure, freezing the wages of staff making in excess of $125,000 per year, remained despite Harrison, who is also the treasurer, indicating that the financial cost savings of such a measure would be a mere $300,000, a figure he offered when directly questioned regarding the financial impact of a freeze.
A number of councillors spoke to the mitigation measures, with most expressing opposition before they were defeated.
St. Catharines Regional councillor Haley Bateman, said “Staff are thinking long term, long term, getting us out of a hole from previous councils. They do not want to come to us with a (budget increase) number that frightens us. At the end of the day, the number is defendable.”
Niagara-on-the-Lake Lord Mayor and Regional Councillor Gary Zalepa said, “You are not going to meet your target by putting an arbitrary number on (Regional) housing issues, just for one example.”
Both remaining mitigation measures were defeated when the vote was finally called.
Gale had one final mitigation measure he brought forward: that staff report back on options to implement a seniors’ rate reduction program for their 2024 water bills, similar to ones available in St. Catharines and Niagara Falls. Despite the intention of the motion, it was pointed out that the Region does not directly bill homeowners, which is done by the lower-tier municipalities, and would therefore have no way of implementing such a program. As a result, the motion was also defeated.
Despite the lack of success of most of his motions, Gale remained positive: “(I) am proud of the conversation we had tonight.”
Regional budget discussions will continue weekly until mid-December, with November 9 dedicated to Niagara Regional Transit and Waste Management budgets.
