City council faces high legal cost of more lawsuits
Legal department’s proposed budget would rise 44% as payouts increase
Suing city hall is becoming increasingly popular, fuelling a proposed 44 per cent budget increase for its legal department in 2018.
“We seem to be living in an ever more litigious society. We used to be different from the States but it’s fast catching up, it appears,” City of Windsor chief executive officer Onorio Colucci said Friday as he explained the dramatic budget hike proposed for 2018 that stands in stark contrast to other city departments.
They are proposing budgets that, when lumped together and including the legal department budget, will add just 1.4 per cent to the tax levy.
The big culprit for the ballooning legal budget is the claims being paid out, which have increased significantly, according to Colucci. The city self-insures for claims under $250,000. They totalled $2.9 million in 2013, dropped to $2.1 million in 2014, but then increased to $2.7 million in 2015, $4.1 million in 2016, and they’re projected to total $3.5 million in 2017. These include an array of claims, such as slip and falls on city property.
Though he didn’t have specific numbers available (he was speaking from home), the CEO said at any given time the city has “dozens of claims on the go.”
The city commissioned an actuarial study last year that looked at the city’s claim history, its budget, and all the existing claims that haven’t been paid out and projected rising costs into the future, according to Colucci.
“It’s not just what’s happening, you have to take into account what’s in the pipeline.”
The actuaries recommended adding $6.1 million to the city ’s Self Insurance Reserve Fund, which helps pay for claims when the total amount in a year runs higher than what’s budgeted. In 2017, for example the amount budgeted was $2.3 million or $1.2 million less than what was paid out. But administration felt adding $6.1 million in one year was too big a hit for taxpayers so they are proposing to instead add $610,000 per year for a decade, Colucci said. In addition, administration wants to add $2 million to the claims budget in 2018, bringing it to $4.3 million.
Without these two measures — costing an additional $2.6 million this year — the reserve (which had $4.6 million at the end of 2016) would be depleted to zero in a couple of years, Colucci said.
“The idea is to bring the annual operating budget (for claims), which is grossly underfunded to the tune of almost 50 per cent, to a more reasonable level and to fund the reserve.”
The legal department’s total budget is proposed to rise from $6 million to $8.7 million, a 44 per cent increase. Administration is also recommending a big hike in the amount budgeted for outside lawyers. Legal fees are projected to rise from $540,000 in 2017 to $840,000 in 2018, said Colucci, to pay for the “major cases on the go,” including legal disputes with the owner of the Ambassador Bridge and the bingo litigation in which the city and the Town of Tecumseh are fighting a lawsuit seeking many millions in bingo fees paid to the city going back to 1993.
“Those are two of many,” Colucci said.
He explained that the city selfinsures for all but the very big claims because it works out to be cheaper.