Brampton staff suddenly blame COVID for financial mess, ignore years of tax freezes under Patrick Brown
The bill is coming due in Brampton.
City staff are supposed to be completely independent from the mayor, tasked with protecting the taxpayers they work for, not the whims of politicians.
In Brampton, it’s painfully clear Patrick Brown, not the taxpayers, is the master who bureaucrats serve.
A series of recent reports have laid bare the combined consequences of tax freezes forced by Brown and approved by the rest of council since he was elected on a populist political pledge in 2018.
Since then, to give Brown what he wants, years of delayed capital spending have crippled the city, and an overreliance on reserves have depleted accounts meant to serve as a safety net. The financial mess Brampton now faces because of Brown has been compounded by the COVID-19 pandemic.
The financial reality has forced CAO David Barrick and finance staff to recognize — for the first time — the impacts of COVID-19, and the troubled state of the City’s budget, which will make for some difficult council decisions for 2022.
After ignoring the impacts of the pandemic in last year’s budget, unlike most Canadian cities which acknowledged the financial hit and began budgeting accordingly (Brampton inexplicably claimed the pandemic would have no lingering financial impact) now, suddenly, staff have done a U-turn.
Because of the looming financial crunch after Brown’s irresponsible tax freezes, two of which were passed before the pandemic, the City is increasingly reliant on its rainy day accounts and help from higher levels of government for major projects.
“It seems some of my colleagues think we can do everything,” said Councillor Martin Medeiros, after the release of the sobering reports. “Our future looks challenging if you consider we are dependent on other levels of government for funding or we’re going to issue debt. It’s always a danger to rely on external funding for council priorities.”
Council will have to make difficult decisions around the budget, he said, reiterating if they aren’t made now, it “may be too difficult later.”
Council has approved three consecutive tax freezes starting in 2019, using reserves as blank cheques, postponing badly needed projects to timelines that never arrive and hiding the growing list of critical projects that are currently unfunded.
Brown oversaw Barrick’s hiring to head the entire municipal operation despite his complete lack of experience. The CAO job of a large city is usually given to someone with decades of professional experience in municipal government. Barrick had none. He was a former Port Colborne councillor and was connected to Brown through Conservative political circles including some of the insiders who gave him a job at Niagara’s conservation authority.
Barrick has no experience in finance and the one budget he oversaw for the conservation authority was so badly managed, with large amounts of money unaccounted for, that he was fired shortly after, as he was also implicated in the ‘Inside Job’ corruption scandal.
It didn’t stop Brown from hand-picking his man, who has since run City Hall as if he were following the mayor’s election playbook.
Staff continues to stand by its financial decision making, despite the troubling consequences. Reading the City’s recent staff report ahead of the 2022 budget, blame for the mess ignores decisions since Brown was elected to accommodate his unsustainable tax freezes, but now suddenly claims the pandemic is the reason for the “considerable economic uncertainty and challenges facing residents and businesses, as a result of COVID-19.”
Barrick and his staff said the exact opposite when the 2021 budget was put together, completely ignoring the impact of COVID.
During deliberations in November, Barrick claimed the pandemic was temporary and didn’t play a role in the 2021 budget development. “We did not budget for the emergency. We did not budget municipally as we didn’t for 2020… instead we’ll be focusing on our tax impacts.”
Now, with nothing else to cut to achieve Brown’s latest demand for a tax freeze, and infrastructure crumbling, while other large investments go unfunded, the pandemic has become a convenient scapegoat for three years of financial malpractice.
Brown chose his tax freeze last year instead of putting money toward Brampton’s recovery from the pandemic. Staff, clearly working to give the mayor what he demanded, brushed aside the obvious financial needs caused by shortfalls, as revenues plummeted, and Brown called on provincial and federal taxpayers to bail out his city, unlike other municipalities that budgeted for their share of losses.
Brown has also cut crucial spending for needed projects such as the badly needed downtown revitalization plan, which would have been completed this year had he not scrapped it to achieve his first tax freeze immediately after election.
Other transformative city building projects planned before his arrival in Brampton, have gone unfunded under Brown, as residents wonder how the local share for flood mitigation will be paid for, where City Hall will get money for its share of the proposed LRT (the Province has not committed funding and would only cover capital for the line itself) and how Brampton will fund the local portion for the Phase 2 expansion of Peel Memorial into a full-service hospital. The mayor has bragged about plans for a Brampton University and medical school, but he has not set aside one cent for the capital costs of these hypothetical projects.
There are a number of other key projects Brown has ignored, as the city loses ground to other nearby municipalities investing in major transit infrastructure, post-secondary education and jobs, while he trumpets the tax freezes he uses in his election campaigns.
In 2022, with three years of tax freezes already in place, and an unpredictable pandemic still looming, Brampton’s dire financial reality means a fourth tax freeze will only happen if Brown takes more money from needed infrastructure work or rainy day reserve accounts. Staff noted a 3 percent increase could be required for 2022 just to maintain basic services.
Staff’s first report on the 2022 budget, presented to Committee of Council last week, blames the financial challenges on the impacts of COVID, failing to recognize the contributions of previous financial mismanagement.
CAO David Barrick never prepared a municipal budget prior to leading the work in Brampton. (Screenshot of Council meeting)
“They’re preparing for a pandemic. It’s not happening anymore,” Brampton resident Sylvia Roberts told The Pointer, citing the lowering case count and impressive inoculation rate. Last year, when Barrick and finance staff said the pandemic was not a significant issue for the City’s finances, Brampton was being battered by the virus.
Barrick’s incoherent stance highlights both the City’s questionable budgeting practices and his lack of experience. Prior to Brampton, the only other budget Barrick had a role in preparing was for the Niagara Peninsula Conservation Authority when he served briefly as interim chair in January 2019, a role he filled for three months. The relatively small departmental budget didn’t account for millions in spending and included unauthorized car allowances worth tens of thousands doled out by Barrick to senior staff. Niagara councillors, responsible for the agency’s budget, were outraged, and demanded Barrick answer for all the money that couldn’t be accounted for. But media reports indicate he did not show up to present his shoddy budget, and he was fired soon after.
Now, Brampton residents are relying on a man with next to no budget experience, preparing the guiding financial plan for an almost one-billion-dollar budget in Canada’s ninth largest city.
Barrick prepared the 2020 budget alongside former City treasurer David Sutton, a long-time City employee who had been filling the role since January 2017. Sutton was not present at the 2021 deliberations and his absence was never explained. Sources told The Pointer Sutton was let go from his position and acting treasurer Mark Medeiros filled the role.
“The 2021 budget document was a mess,” Roberts, an urban planning student who actively follows City Council and posts frequently about Brampton governance on social media, told council. She pointed to the 2019 State of Local Infrastructure report which shows the City needed to spend $2.56 billion over the next 10 years to address critical upgrades for its assets. The 2021 budget states the City expects to spend $1.4 billion over the next decade. How were more than a billion dollars of needed infrastructure costs wiped out of the budget when the work was never done?
The 2019 budget document outlines a $246 million infrastructure gap for unfunded projects that was projected to grow to $743 million by 2027 if left unaddressed. The 2020 budget document states the infrastructure gap grew to $364 million by the end of 2019. The City’s 2 percent infrastructure levy and stormwater charge, both put in place to try and stabilize this growing deficit, would allow the gap to stabilize by 2025 at $629 million. This information was omitted from the 2021 budget without explanation, making it unclear how the critical infrastructure needs will be addressed.
“Finance (staff) always assures us that the levy of 2 percent each year will assist in closing the gap,” Councillor Jeff Bowman told The Pointer. “This gap was always reported under the former Director of Finance.” It remains unclear why it was omitted from last year’s budget document.
Councillor Medeiros expressed concern over the budget’s management and asked last week for an update on the City’s long-term financial plan. He believes the continuous tax freezes have created a number of financial uncertainties and the budget reports reveal concerning shortcomings around how Barrick is handling the taxpayers’ money. The budget document approved in 2017 under former mayor Linda Jeffrey, recommended tax increases of 3 to 5 percent to meet the City’s basic needs for programs, services and infrastructure maintenance. Brown has gutted plans to meet the city’s needs.
“I was concerned I wasn’t being presented the full financial picture, especially with the amount of initiatives and priorities and we don’t have any money earmarked to those initiatives. I wanted to understand the full picture,” Medeiros said, noting he feels frustrated for “not getting full and transparent information.”
Councillor Martin Medeiros. (Photo from The Pointer files)
Omitted from budget reports are forecasted financial scenarios for the next three years. Right after Barrick was hired, the 2020 budget was the first to stop including future budget projections in a three-year running financial plan. It’s a standard practice for large municipalities, where budgeting has to be based on required spending to keep cities running smoothly. Not doing so, is akin to a household having no idea that it will have to pay for a new roof in a year, a new furnace in two years and a new car in three years.
The Pointer tried to get an explanation for why Barrick dropped the future budget projections.
Brown said at the time the decision was crucial to keep unsubstantiated data from scaring potential investors. Other municipalities told The Pointer they had never heard of such a thing and that future planning was crucial to their year-to-year budget planning.
Medeiros told The Pointer he’s concerned that financial shortfalls are not being presented. “Staff need to answer for this.”
The latest staff report dealt with last week indicates property tax funding that pays for basic operations and growth in the city decreased 1.4 percent between 2018 and 2021. Roberts argues this number is much higher, and sits at 12.5 percent, accounting for inflation and population increase.
The budget needs to grow on a per capita basis, she said. Failing to do so will lead the City to underfund itself in the same way the Province failed to fund Brampton’s crumbling healthcare system over the years.
Brown campaigned in 2018 on providing tax freezes to residents. He forced a freeze for 2019, then in 2020 again, after council agreed to reduce the amount going into reserves by $5 million. In 2021, Brown justified pulling $10 million from reserves just to get another tax freeze due to the impact of COVID-19 on residents and businesses and not wanting to put further financial pressure on them. It’s ironic that City staff recognized the impact COVID-19 had on the finances of businesses and residents, but not their own municipal budget.
Moves like this have left the City in a difficult position.
The 2019 budget projected 2020’s capital investment would be $431 million; the actual approved capital budget was $222 million, about half what was needed to meet previously reported capital costs.
Key infrastructure projects were put off for future years, including $135 million for a transit maintenance and storage facility (now supported by other levels of government, but because of delays could cause significant additional costs); $22 million for the Howden Recreation Centre was pushed off to 2021. The recent budget only allocated $1 million toward the project, and pushed $21 million to the 2022 budget. The 2020 budget also forecasted the 2021 capital would be $593 million, but only $476 million was approved. It’s unclear how the City will cover the additional $117 million that is needed.
The report presented Wednesday states staff will come up with numerous tax options, including a fourth consecutive tax freeze. To accomplish this, staff note that any financial losses would have to be covered through funding from the federal and provincial government (neither has committed any money for this) or the general rate stabilization (GRS) reserve, known as a “rainy day fund”.
The City has been depending on reserves to fund services for the past three years. The goal is to have 10 percent of the operating budget available in the GRS reserve at the beginning of every year. This year’s approved operating budget meant $76.7 million was needed in the reserve. It was revealed during budget deliberations only $69.5 million was available. A clear indication the City of Brampton has been relying too heavily on its reserve funds — an unsustainable financial practice.
A second staff report included on Wednesday’s agenda outlined the current state of reserves and shows the GRS reserve has $80.8 million as of March 31, $8.7 million of this came from funding from higher levels of government through the safe restart agreement. Without the extra funding from upper levels of government, the City would fall short of its 10 percent allocation target by $4.6 million.
Other reserves are also struggling. The Land Proceeds Reserve, which supports real estate purchases for the City, has a negative $30.1 million balance. “In future, subject to Council approval, a permanent source of funding will be required to replenish the Land Proceeds Reserve.”
The Interest Rate Stabilization Reserve Fund is also in trouble. The staff report states there’s just $3 million in the account at this time, but it will be completely “exhausted” by the end of the year.
It’s unclear if the two senior levels of government will offer municipalities more money. Brampton secured $79 million over the last year-and-a-half from the Safe Restart Agreement last year and the Recovery Funding for Municipalities; $55.5 million was dedicated to transit and $23.4 million to other municipal pressures.
The report states money from the sale of Brampton Hydro in 2002 was supposed to be used to generate investment income, but constant depletion of reserve accounts has resulted “in a funding pressure for the 2022 budget.”
Staff are now trying to come up with the latest Band-Aid solution to pay for the City’s needs, while Brown has made clear he doesn’t care about Brampton’s crumbling infrastructure, flood mitigation, the lack of transit investment, downtown redevelopment, healthcare, post-secondary education or any of the other badly needed investments.
He might be long gone by the time Brampton property owners have to pay dearly for large tax freezes they can’t afford.
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