Are cuts coming to Vancouver City Hall, or is this simply a clever PR exercise?
We are all watching with great interest as City Manager Penny Ballem and select members of her corporate management team begin the media roll-out in relation to the 2010/2011 budget. Having been through a few of these budget-making exercises before, I can vouch that they can be challenging endeavours even during more prosperous times.
For weeks, Vancouver City Hall watchers have eagerly awaited the release of Ballem’s Shared Services Review, a report on how Vancouver plans to restructure its civil service over the coming years. Ballem hired Sierra Systems and began work a number of months ago to identify possible duplications in order to help trim Vancouver’s annual operating costs. What they got instead was a preliminary budget with vague references to how the Shared Services Review could help to trim costs.
There's no doubt that the City Manager is sincere in her efforts to cut costs and reshape City Hall. Whether her efforts will amount to anything significant is up for debate. Unlike when she made massive structural changes to BC’s provincial health authorities during her tenure as Deputy Minister of Health, she may not have the political support she’ll need to make her reforms a reality.
The manner in which this whole cost-cutting exercise was rolled out over the last 36 hours is only going to add fuel to a growing level of frustration and cynicism among City staff. That’s because for the first time in recent memory, a draft budget including all the bells and whistles was heavily promoted to the media for them to chew upon and rip apart. In past years, these initial draft budgets garnered little to no media attention as they are only considered preliminary working documents.
As a comparison, late last year this Vision council was told the tax increase facing Vancouver residents was originally pegged at a whopping 11%. That was due to an initial projected budget shortfall of $57.4 million dollars. The difference between then and now is there were no news releases, nor any media conferences with a media-savvy City Manager (who is known to enjoy centre stage) dissecting each potential expenditure.
So why the different tactics from only nine months ago? Why is Ballem suddenly calling news conferences and providing the media with a line-by-line analysis of a preliminary budget? There are a couple of theories.
Theory One. Vision wants to make this look like they are facing financial Armageddon, only to bring it back from the brink. In politics, they call it setting the bar very low. Vision’s backroom operatives are praying that if Robertson brings in anything less than a 10% tax increase in the next budget he’ll be hailed as a hero for tackling this major “financial crisis” (as it is being labeled). Their whole media strategy is to make the current budget situation appear grim, and then come riding in on their white hybrid horse to save the day. By doing so, they could finally lay to rest the “perception” that Vision/COPE can’t manage a Popsicle stand.
If you recall during the previous COPE administration (2002-2005), the NPA opposition were able to paint them as big spenders and lacking any fiscal prudence. It was a label that stuck with the public, and stuck in the craw of then Chief of Staff Geoff Meggs. Mayor Geoff Meggs, the most politically astute member of his caucus, knows that if he wants to get his team re-elected, they need to shed the image that the NPA are better at managing the City’s books than the Vision. That’s why Robertson is so hell-bent on carrying through with this carefully crafted public relations budget “cutting” exercise, even if it does stress out their front-line unionized supporters in CUPE. If Meggs plays his cards right, he might just pull this part of the plan off.
Theory Two. Ballem needs to convince her loyal employees that things are so bad this year that they submit to her will when the Shared Services Review recommendations are made public. In other words, the current “financial crisis” will help Ballem ram through as many of the Shared Services Review recommendations as she can get away with. We can hear it now, “you don’t like the prospect of losing your job – tough, eh?”
The first phase of Ballem’s Operation Cut and Cover media strategy is now well underway. By going public so early in the process, Ballem has also cleverly boxed her political masters into a bit of a corner. If Vision leaves even one dime on the table in terms of potential cost savings, rest assured the NPA wil make it an issue right through until the next election.
So far, so good for Ballem, but the real test will be when she needs six out of eleven elected officials to back her up in the chamber later this year. It’s one thing for Vision to huff and puff and attempt to transform their public image from reckless spenders to fiscal conservatives, but it's a completely different scenario when it comes to voting for major layoffs and restructuring (assuming it ever comes to that).
We also note with some amusement that the almost invisible councillor Raymond Louie, Chair of the City’s Budget Committee has finally spoken out. Within moments of the news release from the City Manager’s office, Louie was telling whoever would listen that his target was a 0% property tax increase.
Yup...not 2%, not 4%...Louie wants to pass a budget with a 0% increase. He has asked staff to work through the complicated and tedious process of proposing a budget with a 0% tax increase. This is despite the fact he knows full well his council colleagues would never support anything close to a 0% increase.
When given the opportunity to keep costs down during the last budget, Louie chose to increase taxes by 8% and layer on a few new programs to boot. Does he think anyone believes for a moment that he would raise his hand in favour of a budget that included massive cuts to arts, daycare and park funding? If not, then why is he putting staff through this stress-inducing exercise?
Louie’s target of zero percent will also make it much more challenging for Robertson to claim he’s a fiscal conservative when his own budget chair says anything above 0% is too high. Not sure if Louie read the talking points from Vancouver Kid, but it's possible he was freelancing a bit on this one, much to the Mayor's chagrin.
You can expect that there will be a lot of heated debates in the coming weeks between the Mayor’s office and the City Manager’s office regarding what should stay and what should go. That’s because Ballem has simply invested too much time and money preparing for cuts to have her political masters pull the rug out from under her.
Then again, her political masters also have a lot riding on the outcome of this upcoming budget so they may actually want to have some input.
So where is this all going to end up? Here are a few possible scenarios to ponder:
- Taxes will likely be increased between 4-6%. On top of that, add the 2% increase to residential taxpayers for the business tax shift which is scheduled to take place again next year. Bottom line is Vision will never vote for a 0% tax increase.
- There will be no contracting out of garbage, lawn cutting or other services which could save the city millions of dollars per year – a big missed opportunity.
- A few high profile items from the Shared Services Review will be implemented and publicized. There will likely be amalgamation between a number of overlapping departments such as communications, HR, IT etc...at the Park Board, Police & Fire Departments and at the Library Board.
- Few if any city employees will actually be “laid off”. Expect that most employees impacted by the cuts will be offered jobs somewhere else within the system – the union heads have probably already been advised of this, hence their virtual silence in the media.
- A generous “buy out” package for employees seeking early retirement is considered.
- The hiring freeze will continue well into 2010.
- Fees for everything the city charges (including parking) will increase significantly this year. Expect no less than a 4% increase across the board. Well above the rate of inflation.
- Revenues from new developments will take a major leap in 2010 compared to 2009.
- The Drug Policy Branch will be eliminated and amalgamated into the work of other departments.
- Mayor and councillors will add to the 4.7% office budget increase they awarded themselves last spring. Expect another 3-4% increase in their office budget allowance again this year.
Only time will tell if any of this comes close to the mark but one thing is for sure, things ain’t going to be pretty at Vancouver City Hall for a while to come.
UPDATE: For anyone interested in a dose of reality about the financial situation handed over to Vision by the previous NPA administration, read the Finance Department's report from last year regarding a $15.1 million dollar budget surplus. Vision has now tucked away these funds to be used at some point in the future.
UPDATE #2: CKNW is reporting this morning that Mayor Gregor Robertson is backing away from the zero percent promised by his caucus colleague Raymond Louie. Only yesterday afternoon at a media briefing Robertson said, "I want to see what zero percent looks like."