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Thunder Bay Budget 2022 Once Again the Drama Begins

Thunder Bay Budget 2022 Once Again the Drama Begins

NORTHERN, ONTARIO   ~~~~~~~   June 27, 2021  (LSN)  The City of Thunder Bay has launched its Budget 2022 consultation process with a town hall meeting that occurred on Tuesday of this week.  The online meeting hosted by the elected chair of the finance committee as well as the treasurer and city manager, provided an overview of city finances as well as the opportunity to ask submitted questions.  

 Of course, this ensured that nothing would be said about the ongoing leaky pipe saga which continues unabated in city neighborhoods or indeed anything else deemed too awkward. Not surprisingly, given the federal and provincial abundance that has been showered on municipalities everywhere, the financial impacts of COVID-19 in 2020 were borne well and even generated a surplus of about $4 million.   The presentation also made the usual plea for funding infrastructure deficits which apparently is estimated at $20 million every year.  It is a deficit which no matter how much is spent just seems to get bigger

The presentation on the city's finances was actually useful in that it tried to present a discussion of how the basic budgets fitted together in terms of tax and rate supported expenditures as well as the capital budgets and provided a breakdown of where the money went.  The City Manager did go on to say that the budget was complex and the plethora of multi-colored slides did certainly convey an impression of complexity.  However, municipal budgets are actually not that complex - they are only presented in such a manner because it is to the advantage of administrators who may want to manage the amount of scrutiny. 

The CD Howe Institute has already noted that municipal budgeting in Canada is a bit of a travesty with opaque and late budgets that impede understanding and accountability.  Moreover, the format of budgets differs from the public sector accounting standards used in year-end financial statements making budgeting very  confusing, even for elected councilors. The fact is the budget is really quite simple.  Money comes in and money goes out.  In general, more money comes in than goes out which is why there is an operating surplus that is then placed into reserves.  

The most entertaining part of the evening was the City Manager's response to a question as to why Thunder Bay's municipal staffing levels seemed to be so much higher than other municipalities with comparable populations which of course leads to the real elephant in the room, the number of employees on the provincial sunshine list.  The answer provided was that the comparisons provided - municipalities like Kingston, Cambridge, Guelph, Waterloo and Whitby - were not really appropriate because they were lower tier municipalities.  Thunder Bay was a single tier municipality and responsible for delivering police, fire and paramedic services whereas these other lower tier municipalities only had to do fire. Indeed, the dancing around required to answer this question and other questions suggests that the current City Manager may have a promising future as a chief medical officer of health at either the federal or provincial level.

Now, Ontario does have two broad  types of municipalities: upper-tier and local with the latter divided into lower tier and single tier municipalities.  County and regional municipalities are considered upper tier.  A single tier municipality is a lower tier municipality that is not part of an upper tier.  A lower tier municipality is a municipality that is part of an upper tier - the City of Waterloo for example is lower tier because it has both a local municipal authority and is part of a regional municipality.  On the other hand, all the northern Ontario municipalities are considered single tier - including Sudbury, which despite being considered as a regional municipality, is regional only in terms of its geographic coverage. 

So, given that we should compare apples with apples, let us compare the five major northern Ontario municipalities in terms of their sunshine lists: Thunder Bay, Timmins, Sault Ste Marie, Greater Sudbury and North Bay.  Figure 1 presents the number of municipal workers earning more than $100,000 in 2020 and not surprisingly, the numbers track pretty closely with population size with Sudbury in first place with 592 employees on the list and Thunder Bay next at 557.   North Bay comes in next with 187, then Timmin with 144 and Sault Ste Marie - which is actually bigger than North Bay or Timmins - at only 114.  

 

Figure 2 takes the total salary bill for its members on the provincial sunshine list and divides by the number of employees on the list to provide the average salary per municipal sunshine lister.  In this chart, North Bay comes out on top at $131,015 per municipal sunshine lister followed by the Sault at $127,787.  Then comes Thunder Bay just below the Sault at $127,319 followed by Timmins at $121,643 and then Sudbury at $120,912.   This particular ranking would probably be the most pleasing to city administrators as it places Thunder Bay in the middle of the pack.  Expect to see this slide in a future City of Thunder Bay budget presentation.

 

However, the real comparison should be relative to your resources available and in this regards it is always per capita comparisons that should be done if you want an estimate of per person effects.  Population is correlated with the size of your economy and resources available so what happens when we take the total salaries paid to municipal sunshine list members and divide by city population?  Figure 3 shows this and reveals that Thunder Bay spends about $640 dollars per capita on its municipal sunshine list employees, well above the next highest North Bay at $475.  Sudbury is next at $434 followed by Timmins at $419 and Sault Ste Marie at $199.  Thunder Bay spends 35 percent more than North Bay in per capita terms and 47 percent more than Sudbury - which stylizes itself as a "regional" municipality.


 The truth probably is that Thunder Bay spends so much because it is behaving on the expenditure side like a regional government especially in district housing, paramedic services and public health but it has the resource base of a single tier municipality.  Needless to say, we have here an irresistible spending force which has yet to come up against an immovable budgetary object.  That immovable budgetary object is the property tax and rate paying property owner of Thunder Bay whose taxes on comparable properties across these five cities are generally higher.  Property owners in Thunder Bay are essentially helping to pay for a regional empire they probably did not ask for.

Northern Ontario 
Thunder Bay, Sault Ste Marie, Sudbury, North Bay, Ontario

#LSN_Econ  #LSN_TBay  #LSN_SSM  #LSN_Sudbury

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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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