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Ottawa city councillors have finally gotten a proper breakdown of the so-called user fee you pay for water and sewer service, and it isn’t pretty. The idea is that users pay only the direct costs of the service, but the city has larded the bill with $41 million in costs transferred from the general bureaucracy. That’s 43 per cent of the department’s total operating budget. Water users are getting hosed and councillors, led by Peter Hume, are determined to do something about it.
When a city department is asking for a nine-per-cent fee boost four years in a row, it would be nice to feel that the money is really required. The tap-and-toilet bureaucrats who appeared at this week’s planning committee session failed to create that assurance. It wasn’t for lack of numbers. Five tap-and-toilet bosses were on hand, backed up by apparently endless bench strength to handle the fine points.
The basic thing to understand here is that it’s attractive to bury costs in the water and sewer rates, because the user fee doesn’t count against the valiant efforts of councillors and staff to keep your taxes down.
Dixon Weir, director of the department, explained that “high-level corporate guidance” is what the water and sewer people get in return for the healthy administrative fee the city charges them. Most of what one might call the actual work is done by the department itself.
Water users are saddled with onerous bureaucratic costs. For example, nearly half the direct costs of the planning department are charged to water and sewer. Water users are also whacked $10.4 million for ill-defined “general services.” That’s on top of information technology, legal, accounting and financial planning.
The city’s water and sewer operations actually pay property taxes, charged back to you. As utilities, they are subject to the kind of payments in lieu of taxes that are applied to buildings owned by other governments. The city could end this $2.6-million take, but it has never bothered.
The tap-and-toilet department has 89 people who fall under the customer-service group, but the department also pays the city to reroute calls from the city’s general 311 customer service number. Despite all the customer service people, all the billing is done by the city tax department, another charge to your water rate.
The water and sewer staff’s grasp of their direct costs wasn’t strong, as they struggled to explain how many people actually work for them. At times, they seemed uncertain themselves. It was explained to councillors that city budget documents indicating “actual” numbers of staff, as compared to budget projections, don’t mean the city actually has those people on staff. If the position is approved, but not filled, it still counts as actual. Very odd.
Most of the higher water and sewer fee will go toward capital improvements, which is supposed to make the big rate increase a no-brainer. But then one sees that the capital reserves will keep on building until they total $72 million a decade from now. The department’s policy is to maintain a $20-million reserve. Why do they need so much of our money in the city’s bank account? All of this is on top of a two-per-cent tax increase specifically to fix crumbling infrastructure.
This whole thing illustrates the underlying problem with the “business model” the city was saddled with by the transition board at its inception. It’s one of those faux business setups where departments pretend other departments are clients and provide them with “expertise.” Centres of excellence, it’s optimistically called. It might even make sense, if departments had the option to buy their expertise elsewhere if their colleagues were too costly or too inefficient. Of course, they don’t. There are supposed to be service-level agreements, but the ones for the water and sewer departments are mostly out of date and there is no way to enforce them anyway.
What Peter Hume would like to see is an accounting that charges water users only for what the service really costs. One way to achieve that would be to make the utility a separate commission and allow it to buy only the administrative services it requires, not what the city chooses to bill it for. That would push costs back to your tax bill, but it would also pose an interesting challenge to those city departments now claiming to do such a vast amount of work on water and sewer. Without the work, surely they wouldn’t need the people.
Councillors will dig deeper into the administrative charges later this year, and have asked the city’s auditor general for his assessment. It’s scrutiny that’s long overdue.
Contact Randall Denley at 596-3756 or by e-mail, rdenley@thecitizen.canwest.com
© The Ottawa Citizen 2008