The Impact of High Taxes in Owen Sound

Those of us who were around in the 60s and 70s remember that Owen Sound once had a thriving industrial base. We can see some of the remnants of these industries today in the abandoned properties, like the empty lots where the Black Clawson Kennedy foundry once stood on the west and Russel-Hipwell’s on the east side. There was also the Keenan’s Toothpick factory, RCA, Goodyear and Pittsburg glass to name just a few.

During the time when these jobs were disappearing Owen Sound’s population was at times stagnant and often shrinking. One would think that a shrinking population would result in city expenses at least remaining the same. Yet when we examine city expenses during this period and beyond we see that expenses were growing at times at twice the rate of inflation. This link shows expense growth during a ten year period. Expense Growth. Much of this expense growth was caused by the city’s propensity to hire more staff in spite of a stagnate population.

The Solution - to Ease the Pressure on Families

There is no question we are facing a crisis in housing and homelessness throughout Ontario. Housing affordability is a reality facing many families. Some are forced to rent inadequate accommodations that just don’t meet their family needs while those dreaming of home ownership are just priced out of the market. Canadian Urban Institute’s report released in 2019 cited the housing supply as the main cause of the housing crisis. This was echoed by Ontario’s Affordability Task Force Report in 2022. However, in many areas, Owen Sound for example, housing supply is not the only driving force.

Figure 4; Comparing Salary-Benefit Expense for Sized Municipalities Delivering Similar Services

The average salary expense for these municipalities, excluding protective services salaries, was about $9 million in 2021. Huntsville, Amherstburg and Owen Sound all had a Salary Expense greater than the average. Owen Sound spent $13 million on Salaries & Benefits, excluding Protective Services salaries. To reduce Owen Sound’s expense to the average of $9 million, an expense reduction of $4 million would be required.

The only question that remains is; how did we get to our current situation where our municipal workforce is grossly over staffed in comparison to other similarly sized municipalities? My initial belief was that this disparity was created by Councils over the past 20 years or so by approving excessively high annual increases in expenses. However when I examined the changes in Salaries and Benefits expenses over a ten year period for Owen Sound and two other municipalities, I found that I was mistaken. Owen Sound’s problem has existed for a much longer time period.

Owen Sound’s Salaries & Benefits expense in 2011 was more than twice that of either Strathroy or Springwater as shown in the chart below. By 2021 this difference had reduced somewhat. What this tells us is that, although the Councils over the last ten years added to the problem, they did not create the problem. This disparity likely originated as much as 40 to 50 years ago and each Council over this period added a little to the problem until we got to where we are today. I suspect that each of these Councils failed to ask the critical questions at budget time; such as, if our population is not growing why do you need hire more staff to run the city?

Figure 5; Historical Changes in Salaries & Benefits Expense for Three Similarly Sized Municipalities

As you can see from the above, Owen Sound actually had 87 residents fewer residents in 2021 than it had in 2011. Yet, Owen Sound’s Salaries & Benefits expense grew by $1.6 million. This suggests that there were at least some additions to the workforce during this period. However, it’s quite clear, a preponderance of the problem originated prior to 2011.

Prior to the 2023 budget I requested Council to address this problem in the 2023 budget. My Request. As well I showed them that we needed a two-percent tax reduction in order to close the tax-game with Georgian Bluffs. My Budget Paper. Unfortunately not one member of Council voted to address this problem in the 2023 budget. Sadly they took the draft budget that staff proposed that had a 0.57% tax increase and actually added spending to it, to raise the increase to 0.80%.

If council were to be persuaded to “right size” the city workforce so that the city’s salaries and benefits expense matched the average of the eight municipalities in the study group we would have $4 million in surplus tax revenue each and every year. With this we could begin to address the many social problems we have in our community as well as significantly reduce taxes for all residents. For example in the past I advocated for the city to spend money on temporary winter housing for the homeless. My Homeless Appeal. Some of this surplus could be used to ensure warm winter housing for those in need each and every winter.