The theme at the November 2nd Thunder Bay City Council, Meeting will be “saving money in a roundabout way.” Despite all the hand wringing and gnashing of teeth during the spring and summer over the impact of COVID-19 it turns out that for 2020 the City of Thunder Bay will be seeing a positive variance on their operating budget – that is, a surplus – of about $1 million. However, this positive outcome is not really the result of any great fiscal sacrifice or structural reforms on the part of our municipal councillors but mainly the result of money from other levels of government coming to the rescue.
While there was indeed some cause for concern as user fee revenues dried up when the pandemic took hold, the City has been bailed out by other levels of government. First, there was over $9 million dollars in assistance from federal and provincial levels of government of which some will carry over into 2021. Second, the city was quick to issue temporary layoffs to about 800 workers which was not as regrettable as city officials might have you think because with layoffs in early April, most would have ended up on the Federal CERB – more government money.
The positive variance for 2020 means another $1 million will end up going to reserves which again means business as usual as the last five years will have now seen nearly $14 million dollars in accumulated positive variances. The City of Thunder Bay seems to typically overestimate spending and underestimates revenues and the inevitable resulting surplus is then banked. Taxpayers are thus not only paying for services but also for an indirect roundabout municipal savings program with tax levy increases since 2015 ranging from 2.3 to 5.7 percent.
There is fiscal prudence and then there is crying wolf. Indeed, between the “accidental surpluses” and the deliberate direction of funds into reserves as part of operating and capital budgets, the City of Thunder Bay has seen its reserve funds grow from approximately $99 million in 2015 to an estimated $137 million in 2019. Returning at least a portion of the “accidental” surplus to ratepayers in the form of lower tax levies is not something the City seems interested in doing given its insatiable need for more legacy projects. For 2021, ratepayers in Thunder Bay have already been prepared in a roundabout way for a tax levy increase of 3.45 percent as bringing about only a two percent increase would require $5 million in “savings”.
And speaking of savings and roundabouts, the other way to save money that will come up at this week’s meeting is a proposed roundabout at the intersection of Redwood and Edward. The concept of a traffic roundabout is actually quite good and common in many other cities – particularly in Europe. It can help smooth traffic flow provided they are properly constructed and properly used given the average Thunder Bay driver’s pathological inability to manage a merge lane. There is a small roundabout at Marina Park but that is not a real test under traffic flow conditions as it essentially connects road access within the park to parking lots.
The initial proposal was for a roundabout at Ford
and Victoria but the City’s Engineering Division after a study said the intersection
did not warrant one. A proposal for one
at Edward and Redwood seems odd given that the intersection was just fixed and
repaved but apparently there is more sewer work planned so now is a time to replace
more expensive traffic lights with a roundabout. While building the roundabout will cost $1 million
dollars compared to $850,000 for regular traffic signals, savings will emerge
over time in a roundabout way through lower operating costs over 20 years
which will be $150,000 annually compared to $275,000 annually for traffic
lights. That seems like a lot for annual maintenance for either option given that in other cities the annual maintenance estimates are closer to $10,000 but hey this is Thunder Bay so let us go with it.
If you simply sum up the costs over 20 years, the traffic lights will cost $5.6 million over that period but the traffic roundabout $3.85 million generating a total cost difference of $1.75 million at the end of 20 years. If we assume that the numbers for maintenance over 20 years are instead totals over 20 years then what you actually get is a total cost of $1.15 million for the roundabout and $1.125 million for the traffic lights - making the roundabout only slightly cheaper over 20 years. So, what really should be done is a cost benefit analysis under differing interest rate/discount rate scenarios. That is, there needs to be not only an estimate of the costs but a monetary estimate of the benefits in terms of commuting time saved or lives saved and injuries from the expectation of fewer accidents in a roundabout relative to traffic lights.
And you also need to apply a discount factor or interest rate given the weighting of benefits over time – a dollar today is not the same as a dollar tomorrow. Basically, projects with high-up front benefits and lower-upfront costs tend to be favored in any cost-benefit analysis but we have really no way of determining that in this case because all we have are cost estimates and no publicly available monetary estimate of anticipated benefits.
Still, costs are what are going to be used and it looks like savings so the Councillors will go for it whether there really are going to be savings over the next 20 years or not. It is likely none of them will be on council 20 years from now for a final reckoning. The Councillors are desperate for some feel good achievements given the beating they have taken over the spending on the turf facility and their cone of silence on the pinhole leak issue. At the midpoint of their mandate, they are not doing so well politically given a recent TBNewswatch Poll grading their performance that saw 50 percent of respondents give them a collective “F” and another 25 percent a D. Only 1.6 percent gave them an A. With those kinds of marks, none of them will be going to Thunder Bay’s political graduate school – higher political office.
