In an interim report earlier this year, the consulting firm KPMG presented Midland Council with opportunities for 38 operational savings ($793,000) as well as 20 personnel related savings ($956,000) arising from retirements expected by 2016. Under KPMG’s timeline, $560,000 of the operational savings can be achieved in 2013 with the balance in 2014.
Fast-forward to October 17 and the first draft of Midland’s 2013 operating budget with a whopping 4% overall increase despite Council’s earlier request for three scenarios at
-2%, 0% and +2%. Council responds to this draft by directing staff to aim for a 0% overall increase including roughly $230,000 in new spending targeted at tourism and economic development.
Then on November 1st,KPMG makes its final presentation to Council. They comment on staff’s latest draft budget that shows spending less than 1% over 2012 before new initiatives. At this point no payroll savings are yet factored into the budget. Zero seems within reach despite fire, police and library budgets still showing 6.7%, 6.4% and 2% increases respectively. Mayor McKay confirms zero means zero including all new initiatives.
KPMG has reported that payroll and benefit costs make up almost 70% of Midland’s annual operating costs. According to KPMG, these costs increased a whopping $2.5 million (19%) in four years from 2008 to 2012. The average non-management employee is now paid $58,000 a year and the average management employee $82,000. Built in increases in payroll costs result in a $600,000 spending increase each year – roughly equivalent to a 3% tax increase all by itself.
Staffing issues were dealt with in a closed-door Council meeting also held on November 1st. Midlandcommunity.ca continues to believe that Council must review staffing with a plan to reduce it through a hiring freeze and other measures. KPMG has showed that as many as 26 positions could be reduced through retirements over the next few years with staff reassigned as required to meet revised operational needs. The latest draft budget still shows no payroll savings which when identified should make -2% quite doable.
Midlandcommunity.ca is pleased Council decided to seek assistance from an independent third party like KPMG to review this complex matter. We are also pleased that Council restrained spending in 2012 and is adopting a rigorous approach to the 2013 budget.
Let us encourage Council to look for financially sustainable ways to meet our Town’s needs that always take into account ability to pay. To ensure we get full value from the $49,000 KPMG study, let us also encourage Council to maintain its resolve for a 0% or lower increase in spending next year including all new initiatives.
Midlandcommunity.ca – November update.