Paying Municipal Councillors

 Last evening's Thunder Bay City Council Meeting was notable for a number of items - the shelving of the Multipurpose Turf Facility tender but not the project, the lack of a major and substantive discussion on the city's growing tax arrears problem - but especially for the operatic self-flagellation of councilors as they reluctantly approved their pay increase in a scene oddly reminiscent of the coronation scene in Mussorgsky's Boris Gudonov.  The councilors finally convinced themselves to vote in favor of giving  themselves a pay increase that in the end will add about $3000 to a $200 million 2021 operating budget.  The crowning moment was the vote when 12 councilors voted in favor, but the Mayor in a grand gesture of fiscal rectitude and atonement for the increase in costs of the Turf Facility project to $46 million, voted no.  It was all really patently quite silly on a number of levels and perfect evidence that in the end, you get what you pay for even with municipal councilors.  

A couple of points.  First, at a base salary of $31,852 the salary paid to a City Councilor suggests that the job is really not very important and is something best taken up by people who either  have time on their hands, are desperate to supplement their income, perhaps are looking to make connections for their own private business interests, or are political careerists looking for a stepping stone to higher public office.  The purpose of being on Thunder Bay City Council should not be as a recruiting farm team for local political parties seeking provincial and federal candidates.

It is not that running for office is about the money but public office does involve a sacrifice of time, career and family and the current compensation is insufficient given the opportunity cost of what you need to give up to do the job effectively.  This means that in the end, while public service and commitment should be the main drivers of running for office, it is difficult to attract the best candidates especially given the character assassination involved that passes for a political campaign these days. If anything, the problem with Thunder Bay City Council is that for a city of just over 100,000 and twelve Councilors plus a Mayor, there is too much quantity and not enough quality.  A smaller council of eight councilors plus a Mayor would allow for compensation that better reflects the responsibility of the position and attract the caliber of person needed to make decisions on a municipal corporate budget of hundreds of millions of dollars.

Second, is the interesting message that City Administration has sent regarding what they recommend as an appropriate increase for councilors.  As it stands, the City Administration basically recommended that the raise should be tied to half the rate of inflation in the City for 2020 which was calculated at 0.55% based on an inflation rate of 1.1%. It is interesting that when putting forth budget proposals to the councilors, this same rule is not adhered to by City administration as historically the initial budgets proposed  have been well above the rate of inflation in the Thunder Bay.  Indeed, municipal employee pay increases in Ontario have even managed an exemption from current provincial legislation limiting public sector salary increases to 1 percent annually. In the end, why pay more to attract better candidates? City Administration in some respects has a vested interest in keeping the quality of city councilors where it is, as their lives would definitely become much more difficult if the quality of councilors increased.  

It really is a classic case of the bureaucracy completely capturing the legislative and policy process.  No doubt, the local community cable channel borrowing from the BBC would be well advised to produce and air a sitcom called Yes, Councillor.  The first episode could feature amusing discussions on staffing and pay increases between city managers and the councilors. On the other hand, this pretty much already occurs every Monday evening on the local cable channel.  We should look into getting Netflix to air the meetings -  as a revenue generating reality show.

Thunder Bay's Worsening Tax Arrears Problem

 

This Monday evening, one of the items on the discussion plate at Thunder Bay city council will be the newest report on tax arrears.  This year’s report shows that the problem is definitely worsening in terms of the number of properties in arrears as well as the value of those arrears and the revenue foregone.  This year’s list also features the waterfront Delta Hotel which owes $865,277 in taxes to the city of Thunder Bay.

 

Indeed, 2019 sees a jump in both the number of properties in arrears as well as the value as Figures 1 and 2 illustrate. The total number of properties in arrears grew from 266 to 389 – an increase of 46 percent while the value in total arrears grew from approximately $2.5 million to $4.4 million – an increase of 76 percent.  The total value of tax arrears since 2008 comes in at over 10 percent of the value of the tax levy.  Residential properties in arrears grew from 232 in 2018 to 338 in 2019 – an increase of 46 percent.  Non-residential (i.e. business properties) in arrears grew from 34 to 51 – an increase of 50 percent.  Along with the Delta Hotels, some prominent businesses in arrears include the owners of Kangas Sauna as well as Arnone Transport. 

 

Now of course, some might be inclined to argue business has been hard hit by Covid-19, especially in the travel and accommodation sector given Delta Hotel's tax bill but the reality is the money owed is from 2019.  Part of the longer-term problem is the economy has been slowing in recent years and tax rates increasing.  Part of the problem is also that it is apparent that some businesses are engaging in creative payment solutions – essentially not paying their taxes – until they absolutely have to.  It is a bit of a creative financing game that essentially defers taxes into the future while allowing firms to retain the money in the present. 

 

Perhaps the penalties for deferring your taxes in this fashion are not sufficiently large for businesses?  According to the City of Thunder Bay:

 

“All payments must be received by the City by the due date to avoid penalty. Penalties will not be cancelled if you did not receive your bill. You will be charged a late payment penalty of 1.25% on your outstanding balance if your bill is not paid by the due date and on the first day of every month on any outstanding balance. The Not Sufficient Funds (NSF) fee is $40.”

 

However, one wonders if the creative business approach to property taxation offers a way out for beleaguered homeowners to register their displeasure with the City of Thunder Bay?  Just imagine if all those leaky pipe home dwellers actually got organized and started to withhold their payments by six months or so – on an average bungalow with say a $4,000 tax bill, you are probably looking at penalties of about $50 dollars a month (an upper bound based on $4000 - remember you pay in  installments so  the penalty on a missed installment is less).  True, after six months or so that is a substantial amount of change but just imagine if large numbers of homeowners in Thunder Bay got sufficiently incensed to seriously disrupt the City of Thunder Bay’s short-term cash flow – the penalties six months or a year later be damned?  Irresponsible? Yes.  One should always render unto Caesar what is Caesar’s.  Still, one really wonders what it will take to get City Council’s attention? Perhaps business is showing us the way forward?

COVID-19 Case Count Developments Update: Ontario and Thunder Bay District

 Once a month is usually sufficient to provide an update of the COVID-19 case count numbers and associated trends but things are moving rapidly this month, especially in Thunder Bay, so an update mid-month is timely.  Today's daily case count was 1,268 for Ontario bringing the total up to 319,373 while for Thunder Bay there was an increase of 51 bringing the total count up to 2,390.  Figure 1 does the Ontario COVID-19 daily case count plot with LOWESS smooth for trend and it appears the downward trend has come to a halt with an uptick now being detected.  The new variants seem to be responsible for increasing case counts around the province and if they continue to gain hold we will have the third wave. However, the trend for deaths from COVID-19 remains on a downward path as illustrated in Figure 2. 

 

 

As for the Thunder Bay District, well based on Figure 3 we are still upward bound.  As our District Chief Medical Officer of Health has noted, the coronavirus is probably everywhere in Thunder Bay but that still has not blunted the public's enthusiasm for carrying on as usual if one is to judge street traffic levels as well as  store and mall parking lots over the last week.  The public's seeming lack of concern seems to be at odds with local public health officials and politicians.  The Mayor of Thunder Bay mid last week was on CBC Newsworld and making a case for Thunder Bay as a hot zone and the need for additional assistance including being included in the province's drug store pilot for AstraZeneca distribution.  

The only odd thing was that the Mayor's lobbying effort was a little late given that the program had already been effectively announced the previous week meaning the provincial planning for this had been in the works for some time.  Thunder Bay's case count ascent has been underway since January. One suspects that many variables go into the province designating hot zones (not that anyone is transparent and willing to reveal what they are)  and Thunder Bay is probably considered still a low "risk" because its spread is largely contained to itself given its relative isolation.  If a growing hot zone is adjacent to a large metropolitan center of millions of people, the problem has a different dimension.  Despite some remarks on social media that this is party politics at work, it is not.  It is geography.

In Ontario as cases start to mount and the new more contagious variants spread, it is becoming increasingly obvious that the only thing that will blunt this upsurge is widespread vaccination.  On the plus side, the vaccine delivery process is starting to ramp up but it is now a question of speed.  However, to vaccinate 14 million Ontario residents (with just one dose)  by the end of June requires that we dispense nearly 1 million shots a week.  This should not be a problem given that Ontario usually orders enough flu shots to vaccinate 30-40 percent of its population every year. In an average year 5-6 million flu shots are dispensed in just a few months.  It is not beyond the province's technical ability to effectively double that rate in an emergency.  Indeed, the Premier has stated that the province has the ability to administer 4.8 million vaccine shots a month. Yet it is currently running at about a quarter of that rate or about 300,000 shots a week because in the end you need a vaccine supply.

So here is the ultimate race.  The public is tired of following rules - not that they were ever particularly good at doing so aside for a few weeks last spring when they were actually terrified. As it became apparent that the result of getting COVID-19 for 90 percent of the population was a relatively mild illness, they have been doing their own interpretations of what social distancing and social gathering restrictions mean. At the same time, the virus has been evolving - while the public response has been devolving so to speak - and becoming more contagious so case counts are starting to rise again.  And the final element - the supply of vaccine - which is still not coming in quick enough and probably never will given that we do not have the capability to manufacture our own.

It Is Not Over Yet

 

On Monday evening, Thunder Bay City Council halted the process of constructing a new indoor multi-use turf facility by voting to not award the tender for the project.  This does not mean that the project is dead.  Rather, it was a decision made by the majority of councillors – many of whom are in fundamental agreement with the project but not its timing or cost – to not go with the current lowest bidder.  From an initial proposed $33 million, the project including interest on the 25-year debenture has now climbed to $46 million. That the project is not dead yet was confirmed by the Mayor in an interview this morning on CBC radio as well as other public comments made by proponents of the project.  This push to continue the project is also occurring despite what appears to be a rather large – albeit unscientifically polled – majority of 80 percent opposed.

 

The meeting on Monday evening was made remarkable by the concerted push by council members supporting the project to become increasingly strident about the need to invest in the multi-use turf facility project.  The standard claims about improving quality of life and attracting people to Thunder Bay were made but then the debate went a bit off the rails.  One councillor embarked on a sarcastic speech that essentially amounted to bullying the other councillors into seeing things his way by shaming them by arguing that they preferred to do nothing rather than something.  One is surprised that the councillor did not regale the councillors with a lengthy speech about how doing nothing does not make history.

 

The same councillor also tried to guilt the opponents with a fairness argument that other sports groups had gotten city-built facilities and now it was the turn of the groups using the Turf facility.  Indeed, in striking a coalition of support, the list of users for the facility now goes beyond soccer and apparently includes some eleven groups including Thunder Bay’s legendary pickleball players.  Moreover, the facility can even be used to host conventions.  It apparently is a reincarnated Events Center also - which incidentally a half-decade ago was also unable to garner federal and provincial support.  With all the proposed users, one wonders how many children will actually get field time to play soccer?

 

However, Thunder Bay’s grand recreational expansions of the past were done at a time of a much more buoyant tax base and economy.  It is not the 1970s anymore.  True, there will always be griping and opposition to spending on large projects but the other pressing issues facing the City – social housing for the homeless, crime, water infrastructure via the leaky pipe drama affecting thousands of homeowners – were conveniently not brought into the picture. Moreover, treating the turf facility as an isolated stand alone project when there are other infrastructure projects to be decided  - including a new police station - is disingenuous to say the least.

 

The councillor then began to draw comparisons with the Thunder Bay Art Gallery project despite the fact that the $30 million gallery project was largely being funded by its own fundraising campaign with a five million dollar contribution by the City of Thunder Bay as opposed to the Turf facility which will see its entire cost funded by the City via its own money  and a debenture. The Turf facility project was initially advanced as going ahead with partners at the federal and provincial level and funding from these other levels has never materialized.

 

The Mayor was somewhat more diplomatic saying he did not want to make comparisons but then proceeded to draw comparisons to the hospital project twenty years ago when the City made a $25 million contribution to the largely provincially funded project that was to be funded by a temporary tax levy increase.  The Mayor neglected to mention that after the funds had been raised, the tax levy was never removed and became permanently entrenched.  Moreover, unlike the Turf facility which had a private sector proposal for alternate facility that was rejected by City Council, hospital construction and operations in Ontario have always been largely public sector driven.  Even more, hospitals are seen as public necessities whereas sports facilities, while valuable and important, are difficult to place on the same level.

 

More interesting were the comments on the CBC radio interview this morning where the Mayor stated that the City’s finances were very good with only a $1.15 million deficit projected for 2021 and the lowest tax increase in a decade and that we could obviously afford the project.  Making long term commitments based on one year’s finances is never a good idea particularly giving recent City Budget projections calling for tax increases of 3-4 percent in years to come.  Moreover, not so long ago there was a wringing of hands over the cost of COVID-19 and only a few weeks ago the Mayor was again lamenting the need for more provincial financial support. 

 

The thing here is that in the end, in true Thunder Bay fashion, there were two groups involved in getting a new facility that were unable to work together.  One side earlier on seems to have successfully torpedoed the alternate group’s private sector proposal and have essentially gotten key city politicians and administrators on side with their idea for the publicly funded facility.  The initial proposal was for $33 million and was expected to garner support from other levels of government.  As noted, the total cost is now expected to be $46 million and shovels have not even gone into the ground yet, which once begun will no doubt reveal cost surprises. Given the history of rising costs in Thunder Bay public sector projects some councillors have rightly begun to balk. 

 

Yet, in the end I think the project will not die.  In Thunder Bay, proposed public spending projects are never too costly to completely die - they just need to evolve and stay the course.  The reason the Events Centre died in 2015 was the complete dearth of support from other governments. This time they can apparently at least tap into the Federal Gas Tax money.  The next two weeks are going to see a lot of horse-trading and behind the scene maneuvering led by the Mayor in particular in an effort to salvage the project in some format. Some of it will involve providing assurances regarding the state of the finances of the city and project costs.  As many have noted, all Monday’s vote did was turn down the current bid.  Even many of those who have been publicly branded by proponents as short-sighted civic do nothings for not supporting the project are actually not opposed to the turf facility – they are concerned about the timing and cost of the project.  If there is a convincing operatic performance by proponents that we can afford this after all, it will go ahead.  Unfortunately, this is simply business as usual when it comes to public spending and project development in Thunder Bay and continues Thunder Bay’s increasingly outdated civic vision.

 

 

Thunder Bay COVID Cases Trending Up Rapidly

Today's case count for the Thunder Bay District was 46, coming on top of 61 the day previous.  A LOWESS plot of the daily cases clearly show the steepness of the upward trend.  The Federal Health Minister this morning on CBC radio noted the situation in Thunder Bay is very serious and potentially exponential.  Given that exponential growth is a growth pattern that shows larger increases over time - that is the slope of a profile is getting steeper rather than diminishing - one might opine that we are probably already there.  The per capita new case count in Thunder Bay district is now the highest in the province.  When the plot is examined over the course of the year, Thunder Bay never really had a "first wave" and indeed its current wave occurs in two phases - a first one starting in November (circa Day 275) that in the end plateaued but never really subsided and a second one that begins to pick up speed the first week in January (circa Day 350) and has never really slowed down.  At present there are now 389 active cases and 35 hospitalized of whom 8 are in the ICU. Have a nice weekend.