Budget 2019: Savings and Re-aligments

Throughout the year, there has been a lot of discussion about tax rates, efficiency, and funding priorities. Based on these discussions, management has been doing a lot of work to create 2019 budget recommendations. I’m excited to see these- I am confident that Council will be well equipped to shape a budget the community will approve of.

In my last blog post, I listed four big goals I have going into budget. I want to increase spending in three areas while seeing the overall tax burden decline. This is a tall order.

I don't think it is often possible for an government to do more in some service areas while also cutting taxes. And it certainly shouldn't be expected to happen year-over-year. Eventually you get to a point where you at least need to raise taxes enough to keep up with inflation.

That being said, I think there are significant opportunities before us this year. We can do better with both the expense and the revenue sides of our balance sheet. I’ll be highlighting some of the opportunities to do that in my next few blog posts.

In this blog post and the next one, I’ll talk about the expense side of our balance sheet. Here, I will discuss how the City is working to both find savings and to better target spending. In my next blog post, I’ll take a look at what sort of savings need to be found just to achieve a 0% tax increase. Following those posts, I’ll unpack the other side of our balance sheet by highlighting some non-tax revenue and cash flow opportunities.

---

Finding Savings: Lean Methodologies

Every organisation needs to have ways to examine its processes to make sure that it is delivering the best possible value from the resources it expends. In a large organisation funded by the public, this becomes even more important.

There are many systems used for organisations to increase the value of their services. City management has chosen to adopt Lean methodologies. These have their root in Toyota’s efforts to enhance manufacturing efficiencies in the 1950’s. Since then, they have been successfully adopted by organisations of all sizes in the private, public, and non-profit sector.

If you aren’t careful with your questions, you might get a looonnnggg response from me about Lean: I was doing graduate work on its use in the non-profit sector before running for Council. I find it exciting and fascinating. But the essential thing you need to know: Lean is used to create an organisation that is focused around continuous improvement to help eliminate waste, improve processes, and boost innovation. Management has given a lot of attention to implementing it in the City. Employees are being trained, and it is already being used to find enhanced value for resources.

A few recent examples of the City making changes to be more efficient:

• Delegation of Council authority. Every time Council discusses something, the reporting process takes weeks and costs money. When Council processes were examined, a few types of decisions were identified where Council very rarely voted against a management recommendation. It was also discovered that these types of decisions were passed onto management in most other municipalities. As a result, bylaws and procedures have been updated to let management make more decisions about procurement, sponsorship of City facilities, and Discretionary Use Development Permits. These changes will have few if any effect on decisions made by the City, but they will save significant resources while making the City easier for businesses to work with. For example, the updated Development Permit process saves ~28 days and ~$1055 per application.

• Surplussing of Equipment. As staff pursue improved processes, they’ve found that there is Service Centre equipment no longer needed. It is being sold. This provides some immediate revenue. But more importantly, getting rid of surplus equipment saves ongoing maintenance, training, and replacement costs.

• Collision Reporting Centre Pilot Program. Non-injury, non-criminal collisions are now reported through the Collision Reporting Centre instead of through the RCMP detachment. This process allows insurance claims to be processed more quickly and accurately. It is also funded by private industry instead of the City. Now that our RCMP members and support staff don’t need to process as many accidents, the equivalent of three full-time positions worth of work has been freed up.

Other changes to find efficiency have been made, and I am confident that many more will be found going forward. We are working hard to build a continuously improving organisation.

---

Re-aligning Spending: Priority Based Budgeting (PBB)

Efficiency is important. But it doesn’t mean much if we are efficiently spending money in unimportant areas. If we want to enhance value, it isn’t enough to do more work with less resources. We also need to target that work to high value services

To better align City spending with community priorities, we are adopting Priority Based Budgeting (PBB).

Early in the year, Council adopted a strategic plan:

View fullsize

This plan includes a number of result definitions.

Everything the City does has been broken into hundreds of separate services. Each service has been given a score. This score is mostly based on how many result definitions it contributes to. However, factors like whether or not the service is legislated and whether or not citizens can access similar services from other organisations also contribute to the scoring.

These scores allow us to break services into four quartiles: groups based on how important they are to the community needs identified by Council.

At the same time they were scored, services were also costed. Staff determined how much each service costs in labour, supplies, and other resources. They have also determined how much is being spent in each service quartile.

I have not yet seen the results of this scoring and costing. But I am excited for them to be released heading into budget. They provide three important opportunities for Council and management.

• An evaluative tool. By seeing how much is being spent in each quartile, we will have an excellent snapshot of if money is being spent on high value or low value outcomes. We’ll know we are better allocating resources overtime if the spending in higher priority quartiles grows in comparison to the spending in low priority quartiles.

• A decision making tool. As we consider adding or taking away funding from specific programs, we’ll have a much more objective way to evaluate their importance to the community.

• A bench-marking tool. As other municipalities adopt PBB, we will likely have opportunities to see their scoring and costing information. This will help us compare both or priorities and our efficiency to others.

Priority Based Budgeting is a powerful tool that will help Council make much more informed spending decisions.

---

Thanks for reading!

Two friendly reminders:

In a few weeks, I’ll be hosting a coffee meeting. Its purpose is to discuss the 2019 budget. This will be at the Ernie Radbourne Pavilion at 2:30pm on Sunday, November 4th. More details can be found on the Facebook event page. I hope you will consider coming.

Tomorrow the City will be launching its Citizen Budget survey. I hope you will take the time to fill it in and let us know what you think.

-Dylan