City gets low score in transparency from group
Calgary ranks near the bottom among Canadian cities for the transparency of its budget reporting, states the C. D. Howe Institute.
The city, whose lawmakers will release a four-year draft budget Wednesday, scored a D-, higher than only six other centres which rated an F for how they publicly report their fiscal blueprints.
The report Show Us the Numbers: Grading the Financial Reports of Canadian Municipalities gives an F to Kitchener, Quebec City, Longueuil, Montreal, Toronto and Durham Region for their “use of inconsistent accounting in their budget, financial statements, mix gross and net figures, compare their results with numbers that don’t appear in their budgets and are late with both their budgets and financial statements.”
“Calgary, London and Saskatoon are guilty of those same charges as those with an F, but their slightly earlier publication dates and/or more prominent presentation of operating and capital totals on the same page kept them out of the bottom category.”
In its number grading system for expressing budget entries clearly, Calgary scored no better than a two out of four, except for a three in its “six weeks early” budgetapproval date.
The city netted a zero for practices such as comparing budget projections to previous year’s totals and presenting budgets as a citywide gross expenditure.
Surrey scored highest with an A+ by exclusively presenting “its headline budgetary revenue and expense totals on the same accounting basis as its financial statements,” states the think tank’s report.
The report fails to take into account the questionable timing of the release of the coming budget, said Ward 11 Coun. Jeromy Farkas.
“Why on earth are we keeping the four-year budget a secret until after the Olympic plebiscite,” he said of Tuesday’s public vote.
“Broadly, municipalities overstate revenues and understate how much they’re spending.”
While Calgary’s budgeting process itself is executed properly, “in the information display, we probably could use some improvement,” said Ward 12 Coun. Shane Keating.
He said council, not just the public, are sometimes left in the dark when it comes to numbers, citing the lack of historical data that sometimes occurs.
“We have raised a couple of things in the past (with administration) of ‘What did we spend on that department last year?’” he said. “It’d be nice if we got three or four years running on those things.
“On service levels and programs, we don’t have an idea of what each program is and what it costs.”
The C.D. Howe report also states spending listed in Calgary’s 2017 budget was given as $6.75 billion, but in the annual report, reported as only $3.82 billion — a 43.4 per cent difference.
“This gap is so large that, although an expert would hesitate to attribute it to under-spending relative to budget targets, a nonexpert, working from financial reports that overall merited a grade of D -, might indeed draw that conclusion,” states the report.
Keating said that larger number likely includes capital spending that wasn’t also used up in that one year, but that it could be explained to the public in a more “user-friendly way.”
And while the report suggests cities are increasingly hoarding assets while insisting they can’t afford to build infrastructure, Keating wouldn’t apologize for what he calls fiscal prudence.
“Yes, we end up with a surplus, but it’s less than one per cent of the entire budget … every household budget should end up with a surplus,” he said.
At the end of 2016, the city’s rainy-day fund was $557 million, up from $295 million in 2012.
Some of that money has recently been used to offset tax increases.
Last April, council approved a 2018 budget with a $57 hike in property taxes on a median-priced home of $480,000.
Coun. Jyoti Gondek agreed the city could probably improve its public budget reporting and that it would be willing to use best practices.
But she said city officials haven’t wilfully kept taxpayers in the dark or confused them.
“Sometimes the public’s given the notion things are being withheld with intention, but more often than not it’s a case of not considering how it’ll appear,” said Gondek, adding that comes partly from operating a large organization.
“We’re ready to improve on meeting citizens’ expectation, and I think we’ve proven that with our zero-based budgeting.”