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Thunder Bay City Council Swimming In Cash - Again

Thunder Bay City Council Swimming In Cash - Again

THUNDER BAY, ONTARIO  ~~~~~~~   June 13, 2021  (LSN)  Well, after a break of a few weeks, Thunder Bay City Council will be back in session this evening and the agenda is long.  Of course, much of the attention will be focused on Councillor Peng You’s move to put a question on the next municipal ballot regarding the size of council that specifically would ask: “"Are you in favour of a smaller city council, one made up of 8 councillors elected at-large and one mayor elected at-large?"  

 This is an old issue in Thunder Bay and usually resurfaces the year before an election and is a cheap and convenient way for a councillor to get attention as being fiscally responsible while not having much happen afterwards.  As we all know, the current arrangement consists of 12 councillors (seven ward and five at large) as well as the Mayor elected at large.

Reducing the size of council as an economy measure is largely symbolic as a $200 million plus tax supported budget is not going to be significantly affected by having four fewer councillors.  The quality of council is a more significant factor in driving the budget than the quantity of councils and council would be better off having fewer councillors and paying them more to attract better candidates able to actually analyze issues and make better decisions.  So, the question Councillor You wishes to place on the ballot is typical in that it is a simplistic question designed to address a much more complex issue.  A smaller city council makes sense as a symbolic political gesture and would be more useful if some of the meagre savings were reallocated to attract better candidates. 

However, there is also another issue here and that is the effectiveness of democratic representation.  Moving to a completely At-Large system potentially reduces accountability for neighborhood issues.  Councillors must be assigned to a Ward.  Otherwise, you have a council composed of a mayor and eight mini mayors each of whom will be more concerned with the big picture at the expense of the more mundane grass roots concerns of constituents.  It is a question of balance and a completely at-large-system runs the risk of affording councillors the opportunity to shirk even more when it comes to neighborhood issues they would rather avoid.  It is bad enough now having a mayor and five prima donnas with the ward councillors having to pick up the slack.  Good luck getting attention once they are all at large.  

However, that is only one of many issues this evening.  The other, tucked away near the end of the 248-page Committee of the Whole document, is the non-consolidated financial statement and reserve fund update.   It turns out that even with the ravages of the pandemic and the wringing of hands about budget problems and the need for resources, the City of Thunder Bay has turned out to have a net positive variance in 2020 of $4.1 million or in other words a surplus.  Moreover, in terms of total assets: “Cash and investments of $131.6 million have increased by $11.7 million from the prior year, primarily resulting from an increase in reserve funds of $21.8 million.”  It would appear that all that federal and provincial money was not all spent on the pandemic and substantial savings were generated.  Given that Thunder Bay was projecting a $3 million surplus for 2021 at the same time that 2020 seemed to only be on track for a $1 million surplus, it would appear that things have improved even more. 

Now of course, municipal governments of course are not allowed to run deficits on operating expenditures by the provincial government, so deficits are covered out of reserve funds while surpluses augment reserve funds.  Having reserves is important and fiscally responsible. At the same time, many municipalities – Thunder Bay included – are now in the practice of running habitual surpluses funded by tax increases that are often higher than they need to be. The 2020 and 2021 tax hikes are in the end larger than they needed to be.  The City of Thunder Bay consistently overshoots with the increase used to fund a savings program at ratepayer expense. For 2020, there was additional help from Ottawa and Queen’s Park and Thunder Bay is now swimming in cash.

#LSN_TBay  #LSN_Econ

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The Northern Economist blog started on Shaw Webspace as commentary and analysis of economic issues and policy from a Northern Ontario perspective by Livio Di Matteo, Professor of Economics at Lakehead University in Thunder Bay, Ontario, Canada. It had regular posts from November 2010 to February 2012. Posts continued on Northern Economist 2.0 until 2013 when I took an extended break. Occasional posts resumed effective December 2016. With Shaw terminating its blog space functions, I have archived the old posts at: northerneconomistarchive.blogspot.ca.

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