A service review that examined the City of Powell River’s general operations, service delivery and organizational structure contains major errors in the percentage of operating expense and revenue increases.
The report, authored by Sean Baird, a partner in the Helios Group, stated that in the last three years, the city’s operating expenses grew by a combined total of 22 per cent, while revenues have grown by only six per cent.
However, since the report was made public on March 8, questions have been raised about what the 22 per cent is based on. Mayor Dave Formosa and Councillor Chris McNaughton have been communicating with Baird to obtain the answers to these questions, a process that led to numerous emails back and forth. Eventually, Baird wrote in an email dated March 22 that after he had gone over the financial information, he concluded that the city’s operating expenses grew by 13. 2 per cent from 2007 to 2010, while operating revenues grew by 8.6 per cent. The identified gap between operating revenue and operating expense is no longer shrinking year-over-year, Baird wrote. Rather, it grew steadily from $1.5 million in 2004 to a high of $5.2 million in 2008 and 2009 and dropped to $3.6 million in 2010.
In another email also dated March 22, Baird acknowledged that there had been a calculation error in comparing management compensation in Powell River with peer benchmarking communities. The actual average in Powell River is $109,670, Baird wrote, which is still within 1.9 per cent of other municipalities.
McNaughton tabled Baird’s emails, as well as others, at the March 22 committee-of-the-whole budget meeting. Formosa, and councillors Debbie Dee and Jim Palm, were absent from the meeting.
McNaughton said that only council and Stan Westby, chief administrative officer, were involved in the process when the report was first presented to the city. “At that point in time, back in October, we recognized that it was important that all of the details of this service review be complete and accurate,” he said. Council did raise a question about the 22 per cent increase in expenditures, McNaughton said, and directed Westby to resolve that question.
The reason why it took five months to release the document to the public was to ensure the information was accurate and to have confidence in the numbers, McNaughton said. “I’d like to point out, just for the benefit of council and for the management team that’s here, we did ask for these matters to be addressed before the document became public,” he said. “I’m just going to express real concern, because now we’ve got Sean’s email.”
McNaughton stressed that he had been asking for the details of the 22 per cent increase long before the report was released. “I had asked at least on four or five occasions to have the 22 per cent question resolved before the document went out,” he said. “That didn’t happen, obviously. Now what we’ve got instead of a 16 per cent spread, we have a 4.6 per cent spread. That’s huge.”
What council had asked of Westby was for certainty with respect to the accuracy of the information contained in the report, McNaughton said, “to the point that we went from October to March to allow the process of consultation among all of the players to occur.”
McNaughton asked Westby why the information wasn’t resolved before the report was released, when it was asked for. “Now we determine that it is significant in terms of the consequence,” he said.
Westby said he would like to reserve comment until he could look into what happened. “It seems to me that we hired a consultant,” Westby said. “He prepared a report. He had some inaccurate information and he reported incorrectly. I don’t really have much more comment than that at this point in time. Thank you.”
Councillor Maggie Hathaway said she thought the question should be directed at Baird. “We paid the money for that report and these are huge inaccuracies,” she said. “I hear your point about staff should have followed up, but first and foremost, I’d like to ask Sean, what happened?”
Councillor Myrna Leishman agreed with Hathaway. “The result of this to me, which I was questioning earlier already, are some of the assumptions that Sean has made in this report,” she said. “I think it’s getting less credible.”
Councillor Russell Brewer said he had concerns about the process going forward. “It seems like the credibility of the entire report is in question,” he said. He also said council should ask Baird for an addendum to the report to correct the errors.
McNaughton reiterated that council gave Westby an opportunity over five months to address the 22 per cent. “The only reason this wasn’t resolved was because the question wasn’t asked specifically of Sean,” he said. “Otherwise we would have had this dealt with and we wouldn’t be having this conversation.”
After Hathaway said she thought McNaughton was headed into personnel issues, councillors agreed to receive the documents McNaughton had distributed and discuss the issue more in a closed meeting.
McNaughton told the Peak the issue is now in-camera, but he has asked Baird to revise the report.