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Fixing Reckless City Finances

Winnipeg, Man. (October 14, 2022)

Mayoral candidate Gillingham acted as a member of the City Finance Committee for 8 years from 2014 to 2022 – and acted as Chair of the Finance Committee and councillor responsible for directing the City Budget for 6 years from 2016 to 2022.

The data below, complied directly from the City of Winnipeg Financial Annual Reports, shows (in millions of dollars) how the states of City finances have changed over time (as of December 31 of stated year).

Click image to expand size and see details. Data presented in millions of dollars. Data points are taken from the City of Winnipeg Financial Annual Reports on December 31 of stated year.

While Councillor Gillingham was on the finance committee, property tax alone (excluding other taxes such as frontage fees and water rates) increased almost 20% - 2.33% a year for 8 years. Added up over time, from 2014 to 2023, Winnipeg residents will have paid a full extra year of property taxes with most residents unaware that such significant out of pocket expenses had occurred. When they only talk about 2.33% percent it sounds small, unless one realized that the rates add up year after year.

And now Councillor Gillingham, as Mayor wants to increase property taxes at an even larger annual rate of 3.7% PLUS additional frontage fees – which combined add up to a 7.5% annual increase (CBC News October 11 2022).

You would hope that the Mayor of Winnipeg has the ability to effectively manage the City’s existing financial resources before begging the residents for more money through a variety of higher taxes.

As a resident rate payer, you should expect that a tax increase would be directly proportional to an increase in city services – improved community safety, less homelessness issues, reduction in crime, increased access to libraries, pools, hockey rinks, better transit, infrastructure improvements, less sewage in the rivers, more parks and greenspace, and much more.

Unfortunately, under reckless financial management the City debt almost doubled from $800 million in 2013 to $1.55 billion by the end of 2020 – with Councillor Gillingham (as an 8 year member and 6 year chair of the Finance Committee) responsible for arranging and voting in favour of the issuance of $500 million in new sinking fund debt in addition to various other debt mechanisms.

Simultaneously, while Councillor Gillingham was Chair of the Finance Committee, the City has emptied it’s financial stabilization reserve (FSR) account by $100 million. As of December 31 2020, the City’s Financial Stabilization Reserve fund was at $120 million and is now forecasted to be at $20.1 million by the end of 2022 – that’s an 85% drop, and $57 million below the City’s legal limits.

Under Councillor Gillingham’s financial oversight and his predecessors, the City’s Net Financial Position has dropped from POSITIVE $76 million in 2008 to almost NEGATIVE $1 billion (a drop of $1.1 billion) in 2022. Net Financial Position is the difference between financial assets and liabilities. This means the City liabilities are too high – the City owes too much to lenders compared with its available assets.

With excessive City debt approaching $1.6 billion, the City’s emergency savings account drained by $100 million in only 2 years – almost to zero, a Net Financial Position of almost NEGATIVE $1 billion - all while residents have cumulatively paid a full extra year of property taxes due to progressive increases over the past 8 years – it can only be assumed that the end purpose of additional taxation will be used to keep the City solvent on its existing interest payments (over $70 million a year), debt payouts, legally required payments to reserve fund balancing, keeping up with the inflation of supplies, wage inflation as the various unions renew their collective agreements, and the doubling or tripling of fuel prices (25 million Liters a year consumed by City vehicles).

So to say that an annual 7.5% tax increase will go to improving City services or large infrastructure projects is less than believable.

It’s no wonder that Councillor Gillingham’s platform is also relying on over $500 million in additional debt.

Councillor Gillingham’s plan for roadway expansion projects, such as the Chief Peguis extension, is “estimated at approximately $400m in additional debt if the projects begin as planned in 2026.” – Councillor Gillingham’s Platform

Councillor Gillingham’s plan for recreation infrastructure “projects that these projects may add up to $75m in additional capital debt by 2026". – Councillor Gillingham’s platform

Councillor Gillingham also plans to finance other large capital projects, such as the purchase of electric buses using debt.

It’s financial ineptitude for Councillor Gillingham to state that he has developed a “fully-costed, fully-funded platform”, without acknowledging or accounting for the big wreck of a financial disaster he has contributed to building as an 8 year member of the Finance Committee and 6 year Finance Committee Chair. Without taking any consideration for repayment of the $1.6 billion City debt, repayment of the almost empty emergency savings account, the almost NEGATIVE $1 billion net financial position, inflation and other factors.

Councillor Gillingham wants higher taxes and more debt - is this what residents want?

Although Councillor Gillingham has claimed the following on his Mayoral Campaign Page, he has been far from collaborative or democratic in the management of the City’s finances.

According to his campaign website, Councillor Gillingham's "collaborative, responsible approach has been the hallmark of his time on City Council." This is collaboration included denying other councillors access to participation in budget development, and voting againstmultiple motions to allow councillors on the budget working group.
According to his campaign website, Councillor Gillingham's "collaborative, responsible approach has been the hallmark of his time on City Council." This is collaboration included denying other councillors access to participation in budget development, and voting against multiple motions to allow all councillors on the budget working group.

The Council Colleagues which he repeatively excluded from participating with the budget development think otherwise:

Seven council members — Vivian Santos, Janice Lukes, Kevin Klein, Ross Eadie, Devi Sharma, Shawn Nason and Jason Schreyer - signed on to a motion criticizing the fact they were not included in the budget working group, and seeking to add a list of items they wanted to see in the budget.” - CBC News December 15 2021

Here are two examples of motions which were raised requesting for all members of Council to have participation in budget development - which Councillor Gillingham voted against on each occasion:

The point is simple. Councillor Gillingham does not know how to budget or manage finances effectively for the City of Winnipeg. His 8 years on the Finance Committee, with 6 as Chair has left city residents with excessive debt, almost empty emergency savings, and a very unhealthy net financial position, all while residents paid a cumulative extra year of property taxes. On multiple occasions he voted against collaboration, open transparency, and democratic participation of all councilors in the budget process. This is not someone who should be Mayor of Winnipeg – his past fiscal performance and undemocratic management style does not deliver best value for the resident’s tax dollars.

With Kevin Klein as Mayor, there are 5 easy steps the City can follow to reverse its trends with excessive debt and excessive taxation:

Kevin Klein’s Easy 5 Steps to Improve City Finances (to which no other candidates have committed):

  1. Give all councillors unimpeded access to the financials – not currently occurring.

  2. Allow all councillors, especially those with executive experience, to participate as members on the budget working group starting day 1.

  3. Commence Zero Based Budget Processes, with every dollar traced and accounted for each year.

  4. Establish a standardized Cost Benefit Analysis process (voted to be removed by Gillingham) for Council decision making, assigning value to economic, societal, and environmental factors. Require all projects to be ranked and prioritized by value, with the highest return on investment projects proceeding with highest priority.

  5. Initiate a business like culture to improving efficiency, reducing waste, and improving the worth of the tax dollar including:

i. Introduce new policies which make it acceptable and respectable for City employees and for residents to locate and admit mistakes without fear of punishment/repercussions or subject to being ignored by the establishment.

ii. Establishing a performance pay or bonus system for employees who achieve new efficiencies, or find solutions, rewarding improved service and cost reduction.

iii. Establishing increased employee accountability, such as conducting executive performance reviews.

iv. Removing management who are unable to demonstrate value for their salary.

List of Cuts to Community Services which Finance Chair Gillingham attempted:

Finance Chair Gillingham successfully cut the purchase of 70 transit buses (250 down to 180):

For more detailed information on the plan to address City Finances, please read the previously published platform article on Fiscal Sustainability, City Finances, Budgets


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