March 31, 2004 Report

Part 1

COW Budget Meeting, March 31/04 10 a.m. - 12:30 p.m.

Scheduled start time 10 am. Actual start time: 10:20 Quorum present - late starting because some people attending other meetings.

Mayor DiIanni calls meeting to order and asks Clerk for changes to Agenda

Kevin Christenson (City Clerk) : "Art Leitch, CEO (Chief Executive Officer) of HUC (Hamilton Utilities Corporation) has requested an opportunity to make a presentation with respect to a business opportunity. Mr. Leitch is scheduled to attend the COW (Committee of the Whole) today at 3 p.m. for this reason."

Mayor DiIanni : Deal with this a.m. 4.2 will serve as a working document and it references the book items that have been circulated and have been in your possession for some time now. To give you a reference item 4.2 is a report that we're dealing with. It references book 2, apx 2-9, and I suggest we begin there.

In terms of process, and I'm looking for recommendations to approve various parts of the budget. Staff will take and compile all of these, present them to us in a report that will then need to be voted on and approved by council as well. So if we approve it now doesn't mean final approval until we give it final approval.

Question of process?

Merulla With respect to the BTR [Business Tax Reduction] my understanding was that we were going to receive a report today?

Joe Rinaldo (General Manager, Finance and Corporate Services) : responds that they are developing a BTR plan. "The legislation got changed just about a week or so ago, so we're trying to incorporate that." Suggests they wait until the new report is ready.

Mayor DiIanni : That's fine. ." we try to expedite it to keep it within the window of the next week or so, so that we can get on with making any changes and approving the budget".

McHattie states he has been meeting with McMaster University students re universal bus passes. He thinks there's an agreement that can be made today to pass the fee structure. Would like to speak to this, at appropriate time, maybe in afternoon when HSR (Hamilton Street Railway) discussion comes up.

Mayor DiIanni : "Excellent".

Approval of Agenda moved by Kelly , seconded by Ferguson , as amended. CARRIED .

Declarations of conflict : None

Motion for approval of minutes of March 26 COW

Moved by Bruckler , Seconded by Ferguson . CARRIED

Mayor DiIanni : "Let's begin with item 4.2 1 on the agenda Corporate Financial's non program revenues and you can reference specifics on p.330 of book 2, apx 2-9"

Questions or comments on that report

Merulla : "For clarification on HFF (Hamilton Future Fund) item 4"

Joe Rinaldo : "You may recall when I presented a capital budget presentation what we've done is reduce the interest by $715,000 because we are recommending that we utilizing some of the funds for capital and it's been offset by the reduction in the capital contribution so they cancel each other out. So it's a non-impact on the budget of 0."

Mayor DiIanni asks for a Motion on "item 4.2"

Collins asks about seniors tax credit and says that previously, policies were changed regarding eligibility, and the corporation saved a substantial amount of money, which was incorporated towards the seniors tax credit. This year's savings is $100,000 and it is going to the general levy. "Joe: You've utilized those funds as part of the original initiative to get us from $83 to $65 million. Is that correct?"

Joe Rinaldo : "It has been incorporated as a reduction in the budget. That is correct."

Collins then asks for this item ($100,000) to be "parked" as there are other items coming forward to connect with this. One is the whole issue of seniors bus pass and the costs associated with increasing those fares. The second one is DARTS (Disabled and Aged Regional Transportation System) eligibility criteria. "This may be a funding source for those issues."

Mayor DiIanni : "Are you moving that?"

Collins : "I would if I have a seconder."

Mayor DiIanni : "Seconded by Morelli. Questions or comments on simply 'parking' it?"

CARRIED .

Kelly : "I was going to move 4.2.1 with the amendment from Councillor Collins ."

Mayor DiIanni : "Seconded by Ferguson , question from Braden "

Braden : .would have a Motion on 4.2.

Mayor DiIanni : "You caught me, I was trying to rush thing along."

Braden : ".Even if I'm being repetitive here, if I look at the first page, anything that goes up above 10% draws my attention. Since there are 3 things on p. 330 that are going up by over 50% I need some explanation."

Joe Rinaldo : "Those are in the base budget however you got to take into account 4.2.1 has made a number of adjustments which has brought those down significantly. If you look at the recommendation we've reduced the Capital by $3 million, we've reduced the Contingency by another million, the Community Reinvestment Fund went up by a million, so a lot of those reductions/increases have now been adjusted downward significantly."

(someone speaking on tape - voice very faint - probably Braden w/o mic on.)

Joe Rinaldo : "Instead of being $15 million it would be down less than 10. Likely be more like 7 or 8, I don't have the actual number. I can get if for you."

(another comment by ? maybe Braden , but tape does not pick up - no mic used)

Joe Rinaldo : "Less than 10, sorry. "

(another comment by ?)

Joe Rinaldo : " . $3 million you see in the corporate restructuring.is offset in other budgets by restructuring savings in the departmental budget so it's truly an in and out. $3 million of the Seconded line for $3.3 million is for restructuring is actually an adjustment here, which is offset in the departmental budget with the restructuring so in actual fact, the true budgetary impact on this page is less than $5 million."

(another question but unable to hear on tape)

Joe Rinaldo : "The big increase is for the pensions. I highlighted the fact that HWRF (Hamilton-Wentworth Retirement Fund) has a pension deficiency and we have to kick in $4 million for the pensions so as a result of that - that's the most significant increase on this page in terms of the budgetary increases that we're facing. It's meeting our statutory or legal obligation to fund the shortfall in HWRF pension fund of $4.1 million."

McCarthy : Joe, our "payments in lieu" are being reduced. What's the reason behind that?

Joe Rinaldo explains that "payments in lieu of taxes" are going down because the province has changed the regulations and as a result we've lost $400,000 in revenue. He says that at one time municipalities were able to collect both the education and the municipal component of the levy and the major difference is that some of the properties have had their education levy reduced, e.g. Sopinka Court House.

Ferguson : "P. 331, the employer related costs of $5 million I assume some of that is to do with corporate restructuring?"

Joe Rinaldo : "The bulk of that is relating to the HWRF pension shortfall of $4.1 million."

Ferguson : P. 24 book 1, that recap indicates a $36 ½ million increase. $24 million of that is employee related and that's across the whole corporation. Can somebody give me a sense of if we do what we did last year, it's going to cost $24 million employee expenses. How can we sell that?"

Joe Rinaldo : "The bulk of the increases in employee related expenses are a couple factors. One is the shortfall in the pension for HWRF, the re introduction of the full contribution for OMERS (Ontario Municipal Employee Retirement System) which is in excess of $5 million and then there's the annualization of the contracts that we've actually approved last year. In fact the amount that was budgeted was short, some of the contracts that have come in in excess of what was budgeted in the past years. That is generally making a provision of only 3%, so in fact that's what they are. Unfortunately, some of the budget predictions last year were short and the big ones on the $10 million on pension contributions has had to be added for the first time in the 2004 budget.."

Ferguson : "In the budget contributions, are one to one employer/employee?"

Joe Rinaldo : "Yes, OMERS is a matching contribution on a one to one basis.. It's same for all employees except for police and fire..Their contribution rate is around 8% max. and other employees is around 7% max.."

Ferguson : "Is it a generally accepted principal that COLA (Cost of Living Allowance) remuneration is incorporated or not incorporated into benefits? In other words if you gave everybody a 2 ½% increase, are benefits over and above that."

Joe Rinaldo : "The adjustment has been made as to the statutory contributions.if there is a 3% adjustment or 2% adjustment, we know that CPP (Canada Pension Plan), EI (Employment Insurance), may go up as well as OMERS will have a matching contribution. That's all we've provided for. There's no enhanced benefits for that, except for the contracts where we have contractual obligations already in place for police and fire."

Ferguson : "That effects 22% of the work force and the police have a reserve set aside for OMERS, but CPP, UI (Employment Insurance used to be called Unemployment Insurance), and Workman's Comp are a percentage of the payroll. If the payroll goes up then the contribution goes up. Is OMERS part of the full rumination or not?"

Joe Rinaldo : "Usually the remuneration is factored in when we do our costing, but as in negotiations. but Glen's ( Peace ) been involved in negotiations and he may want to add something."

Glen Peace (Acting City Manager) : "Generally what happens it's an adjunct to the negotiations, it's not included."

Ferguson : "ok How long have we had an OMERS holiday?"

Joe Rinaldo : "A partial holiday started in 1998.on a partial basis and then it went to a full contribution holiday in around mid 1999. In 2003 they brought in about 2% of it, about 1/3 of it, and the balance was brought in at higher rates than was before in 2004 for the first time. The effect was about a 5% contribution on our employee related costs for us as well the employee has to make a matching contribution to OMERS."

Ferguson : "When employees make the one to one contribution to OMERS, will that in effect negate their COLA?"

Joe Rinaldo : "It really has nothing to do with COLA. It has" (interrupted by)

Ferguson : "I know, but this 03 vs. 02, or 04 vs. 02, we're going to contribute more to OMERS because of holidays ??? to them too. So will that increase contributions to OMERS negate any COLA?"

Joe Rinaldo : ".the only difference is that OMERS is tax deductible and as such they will get a net pay that is smaller than if they wouldn't be making contributions.

( Mayor DiIanni interrupts Ferguson who is about to ask another question.)

Mayor DiIanni says Ferguson is straying and should focus.

Ferguson : "It has to do with employer related expenses across the whole corporation and it's 69% incorporated admin. just jumps off the page at you. $24 million in total increase in the budget is employer (or employee?) related."

Bruckler : "p. 331, perhaps Joe could help me with that Materials and Supplies line?"

Joe Rinaldo : "The major increase in there is the elimination of the savings that we were including in for Print Shop. We instituted all that because Council never proceeded with the Print Shop."

McHattie : (to Joe) "I understand the pension shortage in the OMERS situation, but the renegotiations of the contracts, the amount employees are getting paid, is also going up significantly. Could you comment on what the cost of living increase would be percentage wise vs. the actual increase we're seeing come in."

Joe Rinaldo : The provision that's included in the budget is about 3% provision based on information we relied on from Human Resources (HR). I believe the COLA index is going up in the area of 2%.. It varies month to month. What we tried to do is put a provision in there that is consistent with other similar groups and in some cases where the contracts have already been signed, for police and fire. we went to the obligations of the policing contract which provided a lump sum payment for a retention payment for police and fire which has increased our costs significantly over the last little while. The contractual arrangements and where there isn't contractual arrangements, we made a jump provision of 3% and that's what we were advised by HR to put in based on information they know about contract settlements.

McHattie asks what would be the difference between 2% increase and 3% increase and gets a sense that "our hands are tied. It's an extremely frustrating situation here at council. I'd like to know the difference."

Joe Rinaldo : "I don't have that information in front of me, but I can get it. I should point out to you that where we have contracts in police and fire the settlement was 3-½% plus the retention bonus, so we're contractually obligated to those. In terms of the other unions, where we haven't got a settlement, we can calculate what that number would be and provide it to you, probably this afternoon."

McHattie : " I'd appreciate that.I realize we already have the contracts in place for police and fire but it would be nice to know what the increase would look like if we were going forward on a reasonable basis vs. what we're forced to accept. Thanks."

Collins : "Corporate Financials under Restructuring & Other. Can I get a breakdown on terms of what "Other" represents?"

Joe Rinaldo : "In there is some Print Shop related costs where we made some adjustments, but it's 99% restructuring."

Collins : "In regards to restructuring, I know we had a discussion in camera last week about some possible savings.we have a vacancy with the Fleet Director position.I would ask that staff report back. on the cost savings associated with the vacancy of that position, the cost savings associated with the office costs for that position, the admin. support for that position, and as a supplementary, the ?BA? position that would exist infleet, if there is one. I would like to look at that for a possible budget reduction for restructuring."

Still Collins : "The Corporate Financial Operating was approved last year $3.2 million and it came in at $2.8 million. The base budget request is $5 million. It's not double but its several million dollar increase. Can I get a refresher on what that represents."

Joe Rinaldo : " The Corporate Financial Operating that you're referring to includes the employee retiring benefits, it includes the pension payments, the employer related costs of past employees pensions, and the HWRF was the largest component."

Collins : "Are there any opportunities for savings unrelated to pension?"

Joe Rinaldo : ".all we got in there is those 2 items.The retiree benefits have gone up over last year and we made provisions to provide for the cost of the increase."

Collins : "And that's apart from - "

Joe Rinaldo : "A reminder, we've already reduced all of this by $1 million as part of the strategy for the contingency. If you look at the front page.there's a whole bunch of recommendations which have reduced this whole page by about $4-5 million."

Collins : ".The whole issue related of supervisor to frontline staff ratio, we had a lengthy debate last year in that regard on what's the appropriate number of supervisors to those people who are on the frontline. What's our corporate goal right now, and maybe that's more a HR question than anything else. Is it 1 - 10, is it 1-7, is 1-12?"

Glen Peace : "Certainly as council's aware, the restructuring that's equating to $4 million generally came out of the director and manger level. $3.2 million was accomplished in 2003. $800,000 is imbedded in this budget. What that really equates to if you just did a comparison in 2001, we had 45 directors, in 2003 we had 35 which was about a 26% reduction at that level. One of the issues that we're having is turnover at that level. The average is around 6%. We're suffering somewhere around 25% and up at that level of turnover. In regards to the ratio, 2002 we were at 1 -29, 2003 we're at 1-18. That works out to 60% reduction. We're substantially lower than the municipal benchmarking networks. Those are our comparatives.."

Collins : "Just before you move on from those stats that you just quoted. Would it surprise anyone that there are some departments that have a 1-5 , 1-7 ratio?"

Glen Peace : ".I think you would have to ask most specific to the area and we could probably respond by the department. That might bring some clarity to why they have those ratios."

Collins : "There was an all posting listed a couple weeks ago about a temporary foreman's position. .When I inquired at the dept., it came back the ratio was 1 - 5 ½ and when people went on vacation, it's 1-7. If you look at the corporate numbers that the Chief ( Glen Peace ) just relayed to us, double and triple that amount. You look at these numbers: 1-5 and 1-7. I really believe that those are the areas we need to look at for staff and managerial reductions.. This one in particular I don't want to let pass. It's a small number in relation to the entire budget, but it's symptomatic of what's going on in some areas on the frontlines, and it's an easy budget savings for me personally. So I'd ask you to come back to Public Works as well."

Mayor DiIanni : "Noted"

McCarthy : "To Finance Dept: 59.3% increase for Capital Financing. Is that the Red Hill Creek Expressway and Waste Management proposal, primarily?"

Joe Rinaldo : ". It's about 1% increase overall to sustain all of the overall program. The Red Hill is not in here, it's in the Public Works side of the budget. And so is the Waste Management. These are more of the generic, the general kind of contributions. But overall we've already reduced this contribution by $3 million as part of the amendment that the Mayor put forward in order to help reduce the impact of the tax levy on residents."

Braden : "Our Investment Income p. 330, #5, are we investing solely for income and not for gain? "

Joe Rinaldo : ".Our first sort of priorities is protecting our capital investment. Our second is to get a reasonable return on our investments. We do also get gain as well."

Braden : "Given the markets today, aren't we being real, real conservative here? Markets are doing well."

Joe Rinaldo : " Interest rates are falling. ..We only invest in interest bearing bonds, usually Gov. of Canada, Municipalities and so on."

Braden : "I'm no expert, but in times where this seems to be low and the market is not quite on fire but doing well and people are earning 30% per year, maybe that policy needs to be adjusted depending where the market is."

Mayor DiIanni : "I think we're regulated in what we can do."

Braden : ".we didn't contract out print.What's it going to take for us to reconsider that?"

Joe Rinaldo : "There's a report coming forward in the next CAC Com. dealing with the print operations."

Mayor DiIanni : ".C. Ferguson ?"

Ferguson: "At the risk of spilling the beans, we voted 250, 000 net effect on 04 budget for print, in the report next week."

Braden : "If I went to Book 1 , p.24 where it says $36 million is being driven by employee type costs, it says Hamilton-Wentworth Retirement Fund $4.1. Joe (Rinaldo): where is that number on p. 330 or is it not there?"

Joe Rinaldo : "On the first line of 330, the $5 million increase, $4.1 million of that is on that first line. The HWRF Retirement Fund increase."

Braden : " I think we were talking about police and I think we were talking about legally we don't have to pay them this pension fund, but we always have in the past, maybe their the civilian police, or they predated something, and so we're being good corporate citizens. Where is that on this page?"

Joe Rinaldo : "It's part of the $4.1 that I'm referring to in the HWRF pension fund. I would like to point out to you those employees that we are providing the same benefit as we are for the police which are under contract, those are the ones actually have the actuarial surplus, the actuarial deficit of the $4 million is the police, so think to withhold them on the employees which don't have a deficit because they don't contractually have the obligation, I think we can get ourselves in real trouble. If you analyze it between the police and non police, I've been told that they would have a surplus and not to give them that benefit would create a significant problem for us."

Braden : I was listening attentively to C. Ferguson 's thing on the whole concept of salaries driving this budget. Mr. Mayor you can provide some time during the debate so that we can look salaries as a line, or as a concept. I would ask you that somewhere along the debate.we look at salaries because salaries and COLA and pensions - we might say for one year we could do this, but if we presume cost of living is going to go up quite a bit, mostly because of energy and taxes, I think that some things are going to become less affordable, and it would always be better to act now rather than later. We need to be able to get at this.I want to air the idea that salaries are now uncontrollable, just like police."

Mayor DiIanni : ".is that something that we need to do "in camera" or not?"

Christenson : "I would suggest it would be more appropriate "in camera". I understand with the salary freezes that was on the initial supplementary agenda that was referred to Strategic Budget and Planning. "

Mayor DiIanni : ". I think you wanted to have some discussion that might impact this budget."

(Discussion here about going "in camera" between Mayor DiIanni and Clerk Christenson and Glen Peace and Braden )

McHattie : " While we are talking about employee costs. there was an article last week in The Spectator that talked about frontline staff. about savings that they feel could be brought forward. It said that this had been shared with C. a number of times in the past..Some C. may have received that information but I haven't . I don't know whether it's fair around this table to request that information from CUPE or from whichever union feels they got useful information to bring forward to save us money in this budget. Whether we can make that request to the front line staff or"

Mayor DiIanni : "I can tell you that I met with the unions a couple times including CUPE and we talked about ideas coming forward that might create some efficiencies and find some savings and the suggestion was that the details would be worked out in discussions with some of the general managers.."

Glen Peace suggests some of the comments made in the paper would be better discussed "in camera"with Mr. Logan.

Mayor DiIanni agrees. "We got a report 4.21. If there's some questions on it I'll take them. If not it's been moved by C. Kelly , he's not here so I need another mover, 4.21 I need a mover for this. Moved by C. Ferguson , Seconded by C. Merulla , 4.21 as amended."

Whitehead : ".we need to lead by example..

Mayor DiIanni (mic not on at beginning) .so moved by C. Ferguson , Seconded by C. Merulla , question on 4.2.1

Horwath : Can I understand what's in the "parking lot?"

Mayor DiIanni asks Collins for reminder.

Collins : "$100,000 savings that were attributed to the seniors tax credit from 2003, apparently there wasn't the take-up we had anticipated, and I had asked that that be set aside for the debates in other senior citizens related issues, that we'll be dealing with. One being Darts, the other being the seniors bus pass program for the HSR."

Mayor DiIanni : "And did we park anything else? That was it, Councillor Horwath. And we did ask for some information back, as well."

Whitehead : "Just for clarification. There were some discussions about B.A.s [Business Administrators - ed. note] and that on the Finance Side. I believe there's a report coming back and I have some other things to suggest. Is that impacted by us approving this, here today."

Mayor DiIanni : "No, there's a report coming back and I've already alluded to your issue with staff and it can be incorporated with that, as well."

Whitehead : "Great. Thank you"

Mayor DiIanni : "All right, Moved, seconded all in favour of 4.2.1 as amended then; against - that's CARRIED. Thank you very much." 4.22 A additional ??? reports for consideration

We've got Staff Response to CAC request, IT division, Some ????? questions around Municipal Service Centres Budget questions, Customer Contact Centres, and Reduction and Lottery Licensing Bingo ?????? Administration Revenues

So on item A any questions?

Collins : " I have asked for staff to come back in regards to possible savings for Municipal Service Centres, and we had the recommendation last year to close the center and Council decided at that time we would keep all our centres open with the existing hours that were in place. So my initiative looks to see what kind of support there is to reducing the hours whether its to 3 days a week or 4 days a week or 2 days a week. .what kind of savings we're looking at for 3 day service, 2 day service. Can I get an understanding before we get into the discussion related to that as to what kind of dollars we're looking at."

Jane Lee (Director, Customer Service) : "It would be approximately $150,000 - 160,000. In the report we analyzed the 2 day week version and the 3 day week version. What that would mean with the walk-in traffic which we would still be expected to serve on a limited number of days that there would be not sufficient time to do the current processing work and therefore departments would end up adding back additional staff. So in the end in either option we believe the maximum we could save would be 3 FTE's, which is roughly equivalent to $150,000 - $160,000."

Collins : "That was for 16 employees?"

Jane Lee : "That's what our current complement is, yes."

Collins : "The $150,000 was a 2-day opening or a 3-day opening?"

Jane Lee : In our opinion, whether open 2 days a week or 3 days a week, it would still be a savings of only the equivalent of 3 FTE's because of the amount of staff that would have to be added back in other areas to do the processing work. In 2003 there was a budget reduction for the equivalent of 1 centre, but we were given the direction to see if we could accommodate that savings some other way without closing the center. We were able to do that and the reduction was just under $170,000. It doesn't appear in the municipal service centre line now. There are other adjustments to the contact centre line where we made other reductions to compensate for that. But the bottom line that money did come out in 2003 for the 2004 budget."

Collins : "Getting into delivery of service, if we were to say again as we did last year that we wanted $150,000 out of this area are there other means other than closing some of the buildings to find those savings?"

Jane Lee : "We were creative as we could be to address the issue in 2003. We would either have to convert to either the 2 or 3 day option or we would have to close one of the centers to achieve that."

Collins : "How many employees would you need to operate on the 2-3 day basis?"

Jane Lee : "We'd need 10 to operate 3 days a week and 7 to operate 2 days a week. But we believe that 3 employees would be required to be added to other sections if we were to operate 3 days a week, 6 if we were to operate 2 days a week."

Collins : "If we were to ask those operating departments to live without the extra bodies, what are the savings associated with that?"

Jane Lee : "I don't have it calculated, but it "(interrupted by Collins )

Collins : "It would be between 6 & 9 employees, it looks like."

Jane Lee : "For every 3 employees approximately $150,000."

Collins : "So almost. half a million. Mr. Mayor. I'd like to know what support there is, I'd like to put a motion."

Mayor DiIanni says he will take a motion.

Collins : "I would like to move - well first I'll see if we can go down to 3 days."

Mayor DiIanni again asks what is the motion.

Collins : "for 3 day unless there's support to go further than that, down to 2 day service."

Mayor DiIanni : "Your motion's 3 days? A seconder for that?"

Mayor DiIanni : C. Bruckler

Bruckler : It's not so much to that motion, but to begin discussing the Service Centres which I think are providing a valuable service to some of the outlying areas. The question I have is in a couple of the Centres where we have lesser visitors coming through the doors, is there an opportunity perhaps to reduce those from 3 to 2, recognizing that you do have a floater that could fill in."

Jane Lee : "That isn't a scenario we've looked at yet. We could look at that particularly with the floater. Our concern is with coverage, not leaving one person in a centre on their own. With vacations, lunches and breaks, our obligations in that respect, we really feel that 3 is the preferable number to use."

Bruckler : I should point out to you that Centres that don't have the same higher volumes. they are in fact being utilized to process information..Recognizing that perhaps opportunities for cutting without cutting too severely within those services that are provided to some of the outlying areas, perhaps it might be something that staff might want to consider over and above the reduction to 2 days or 3 days service."

Mitchell : Speaking as the C. for one of those lower transaction centres no doubt getting looked at to be closed, .decreasing that service is not the way I profess to go. I would profess to go back to more geographical multi-tasking.. I want to see those staff that are out there do more work in those geographical areas. I will stay as the ward C. open-minded to leasing some space out, revenue to the city.I cannot support C. Collins motion."

Braden : ".I would be generally interested to area-rate those buildings, if in fact they were costing more... We were in the very beginning going to reduce some of those services temporarily, and I remember the example that was given by staff was to do some documentations, so we gutted the building inspection function.. Now the people in my area have to come here. The number of commercial enterprises right now trying to get permits from this institution are basically getting no, or maybe, or show me your money first. While I understand the idea there is a potential here maybe to save money.Our arenas used to almost break even, now they cost $100,000. . I think we're chasing the wrong numbers.I normally don't speak emotionally and personally."

Horwath : "Question about the report. On p.2 of 3, just above the chart, it indicates that additional staff will be needed in operating departments or in divisions of departments to accomplish the work. That's why you can't get more FTE reductions because that work will go back to the department. Is there a charge-back system in place, does the work being done at the municipal service centre get charged-back to the operating departments - the value of that work?"

Jane Lee : "No, there is no charge-backs. The expenses are all in our divisional budget, but the revenues are also not shown in our divisional budget, they are shown in the operating departments budget. Payments taken in 2003 in those 5 centres were in excess of $28 million, but those revenues appear in the appropriate department in either taxes or parking or animal control payments and things like that."

Horwath : "Can I get her understanding of why that's like that."

Joe Rinaldo : "When we started the municipal service centres back in 2001, the intent was each department would have their own little group.and it was a decision made during 2001 that didn't make any sense. There is probably more efficiencies if in fact municipal service centre provided all of these services so that 2 staff for each municipal service from the tax department were transferred to the municipal service centre to do that. In reality if we're doing a true activity based cost, we should in fact allocate it back to those departments, but in fact the resources are not in, for example in the tax department and the parking area to do that, doing the charge-back probably should have been done, but we never bothered doing it at that time."

Horwath : ".which departments do have to do tax-back and which don't and why it's not consistent corporately, if it's our corporate model that charge-backs are the way we do things then who decides which department/divisions have to do charge-backs or have to account for everything they do to charge-backs and which don't?"

Joe Rinaldo : "It was done more on an historical basis where they were there before. We talked at CMT about rationalizing charge-backs. It was just one of those priorities but we just never got to, but we've got it on our plate.."

Horwath : "Can we actually get a report through C. Ferguson 's committee, I have a real lack of understanding how these systems are working and whether they're worth the trouble."

Mayor DiIanni : "Can I suggest that we ask for a report on this through C. Ferguson 's committee, so that we can get information and then make some policy decisions to guide staff."

Horwath : "I'd like to actually have a historical perspective on that, because I know quite clearly and specifically that there are departments that are now doing charge-backs that never did that before."

( Mayor DiIanni apologizes for interrupting.)

Whitehead : ".When we talk about the salaries, we talk about FTE's, we talk about the cost, and I need an understanding because I'm looking at everything at a value added perspective. I don't see facility cost incorporated into the service centres. If we were to cost out the maintenance, the facilities, the loss of potential real estate revenue that we would get if we put it on the open market.." So if I can put that question to staff, what are the costs, how are they incorporated. I'm looking at FTE's and cost of the operation. It doesn't reflect the true cost of the buildings relative to these services.

Joe Rinaldo : "We can get you that information.during the budget process."

Mayor DiIanni asks for Motion from C. Horwath

Horwath : "Moved by myself, and seconded by C. Ferguson that staff report back in regards to the history charge-back systems and the current system that we have in place and what we expect to be seeing in the future re charge-backs."

Mayor DiIanni : "All in favour.. CARRIED "

Continue to Part 2