Why was there Excessive Expense Growth

The ‘Facts are the Facts’ but why are Owen Sound Taxes so much greater than other similarly sized municipalities? I’m sure there are many taxpayers with their own theories on why this has happened over the years. Below are my thoughts on how we got where our spending is so much greater than other municipalities.

How it Got Started

First Owen Sound is unique in that there really hasn’t been any real growth over the past 40 years and during this time the residential taxpayer has had to carry more and more of the burden. At the same time there was upward pressure from staff to grow expenses and expand the workforce in spite of the workload not increasing since the population was stagnant. Why is this? Well, within public sector administrations there is a natural tendency for managers to grow expenses and the workforce, perhaps partially driven by a desire to build empires and grow silos. This can happen completely independent of increases in the workload. As departments grow, new projects and assignments expand to soak up the extra capacity. This has resulted in a tendency to solve workload challenges by adding new positions and increasing expenses by hiring consultants to do work that should be done by city staff.

The Driving Forces

I have over 30 years of experience managing public sector administrations in both federal and provincial environments. What I’ve learned over the years is that in traditional public sector administrations managers sometimes have their own informal organizational goals that are often in conflict with the organization’s formal leadership. If one of those goals is to expand the size of the empire, regardless of any ‘real’ additional work – given that the population is stagnant hence service demand is flat – you will see an attempt to leverage any perceived new demand to argue for an increase in expenses or staffing. Here is just a small example of how staff is able to persuade Committees to increase expenses and expand the workforce.

This occurred at the Corporate Services Committee Meeting on November 09, 2023. BDO Canada, the city’s auditor, briefed the Committee on new rules issued by the Public Sector Audit Board (PSAB) regarding Asset Retirement Obligations (ARO’s). This PSAB regulation requires municipalities to determine if there will be a cost to remediate contamination etc. when the asset is no longer needed. For example there will be a cost to retiring, a property with contaminated soil or a building with asbestos since these hazards will have to be remediated before the asset can be retired. This future cost is a liability that must be now recorded in the annual audited financial statements.

The staff recommended hiring a consultant to assist staff in identifying any potential obligations for every asset and hiring a part time employee to assist with the workload. Staff claimed that they “didn’t have the expertise or the time” to perform, what appears to be well within the scope for any professional engineer on staff.

Staff came fully prepared to support their arguments and had even researched the cost and presented argument that this consulting contract should be given to the city’s current audit firm, BDO, in spite of the obvious conflict of interest. However to their obvious surprise their initial sales pitch failed. Three members of the Committee suggested that the city should put this off until next year to give time to better assess what others were doing since there really wasn’t any downside to delaying it. One member of the Committee made a motion to that effect. This sparked an immediate reaction from staff as you can see in the video. In spite of their being a motion on the floor both the Director and the City Manager offered their unsolicited opinions and spoke strongly against postponing the action. Staff is not members of the Committee. According to the Procedural Bylaw staff is there to respond to questions from Committee members. Section 115 states:

When a motion is under consideration, a Member may ask a concisely worded question of another Member or appropriate staff person, through the chair, prior to the motion being put to a vote.

In other words staff’s role, once they present their recommendation and argue their points, is to be there to respond to questions from the members. It is not to participate in the debate on a motion which is in violation of section 115. for the Procedural Bylaw. As in this case their supplementary arguments were persuasive and clearly changed some the minds of some Committee members since the motion failed.

Corporate Services Committee November 09, 2023

As you see in the above example, the vehicle to achieve staff objectives are the “Staff Recommendations” which are delivered to Committees and Council with passion and well developed sales pitches. So, in this case, what prompted these senior managers to argue against a motion? First you may hear an argument that the novice Committee member didn’t make his motion abundantly clear. However he clearly stated that he would like to make a motion but wasn’t sure exactly how but did go on to state exactly what he wanted. As well the Chair confirmed that there was a motion on the floor when just before calling for a vote he asked the member to repeat his motion.

As far as motivation for staff to speak against the motion it was clear that they were taken by surprise by the look on the Clerk’s face when the motion is tabled. They clearly realized that their recommendations were about to be rejected and felt they needed to respond. Why? Could it be that without this new work they wouldn’t have an argument for a new Part Time employee? Who Knows? What we do know is that Corporate Services is overstaffed and has at least two managers more than similar municipalities. Given this, it seems incredulous that Corporate Services lacks the capacity to absorb this additional workload and they certainly don’t lack the expertise in the Engineering Department. Yet they were successful in this case to persuade Committee members to defer to the staff recommendations.

Absence of Effective Checks and Balances
I’ve observed many examples of this technique over the past ten years. I believe that staff uses this technique to inappropriately influence Committees and Council to achieve their desired outcome. Members of Council and Committees unknowingly facilitate this by frequently deferring to the staff recommendations when there is any doubt. In the case cited above, the members deferred to staff in spite of staff arguments not presenting any real reason that the ARO requirement needed to be implemented this year. The only reason they gave was essentially; we’re going to have to do it eventually so why not get on with it. This was in spite of three committee members giving real reasons to delay.

I believe that this is a small example of just how staff can inappropriately influence a Committee and/or Council to achieve their objective by leveraging the practice of “Staff Recommendations”. This behavior is quite likely, at least partially, responsible why Owen Sound Expenses and workforce have grown well in excess of similar municipalities. Therefore it is essential for each member of council to understand the potential for conflicting goals and challenge staff when necessary. It’s also important to maintain an arms-length approach to their relationships with senior staff and apply a good measure of independent, critical thinking when considering staff proposals.

Overstaffing developed incrementally over a long period of time. It nearly always involved what appeared to be reasonable requests supported by persuasive arguments of the need. For example, we are conscious about climate change, so, of course we need to create a new climate change position. We create a new Short Term Rental (STR) program, so, of course we need to create a new position to manage the program. Owen Sound is the only municipality that does this. Other, ‘cost- conscious’, municipalities build in climate change initiatives into the coalface by educating front line staff and add new requirements, such as the STR program, to existing staff by prioritizing their activities.

We saw a similar example some time ago as well when the Human Resources manager became swamped by a large volume of firefighter grievances. This temporary workload challenge was addressed by creating a second Human Resources manager position. This was certainly not the most cost-effective way of dealing with this problem. This decision by senior management to solve this problem by hiring a second HR Manager gives us some insight into management’s priorities.

This is exactly how I believe that Owen Sound expenses and the size of the Owen Sound workforce have grown much faster than other municipalities in spite of service demands not significantly expanding given Owen Sound’s population growth was non-existent.

Without Council establishing effective ‘Check and Balances’ on staff recommendations Owen Sound expenses and staffing will continue to force annual tax increases. As shown in figure 19 above if Council does not address this problem expenses will grow to $74 million by 2030 and taxes will experience a 24.3% growth from 2022 to reach a record high of $41.1 million.

View the Full Version Video of the November Corporate Services Meeting

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