Newsletter April 12, 2024: Oak Bay is in a "State of Financial Uncertainty"
Predictably, Oak Bay Council has used the usual method of making it appear the District is being financial responsible, and has reduced this year’s property tax increase from almost 10% to almost 9%.
Notwithstanding, that this property tax reduction could have been achieved before announcing this year’s tax increase, is it possible Council thinks residents, after giving a sigh of relief, would break out the champagne and celebrate.
If Council hasn’t noticed taxpayers are the only economic “sector” that cannot download costs to other sources. They are at the end of the economic ladder. If taxpayers consistently go way over budget, for instance like oak Bay Councils, they face serious consequences. Such as taking on substantial debt. Debt that could result their not being unable to pay their property taxes and, the municipality may put their home up for sale.
The reason that the Provincial Government does not allow municipal annual budget deficits is to keep Council’s spending in check. A main reason for having a budget in the first place. However, based on past, current, and projected property tax increases, keeping budgets in check is not something Oak Bay residents have been able to expect from their Councils.
Budgeting practices refer to the methods and strategies used by municipalities to plan, control, and manage their finances. It involves various activities such as, monitoring expenses, and evaluating performance.
The new Oak Bay Financial Plans states that one of the main drivers of forced growth is new staffing. There is no doubt since 2015 council have been carefree and easy, catering to a series of Chief Administrative Officer’s requests for new administration staff. This was as well as hiring a lot of consultants to assist the administration staff to do their work.
Th 2024 Financial Plan defines Forced growth as keeping services at the same levels however, it is not clear how this objective has been accomplished by spending millions of dollars allocated for new senior staff and consultants since 2015 and, all of the associated costs: benefit packages, salary increases, support staff, new furniture and equipment, and a considerable amount of new office space at municipal hall and elsewhere.
What is clear however, is most of this funding could have been prioritized for infrastructure renewal. After all, it has been well known for many years now that Oak Bay's infrastructure was at "the end of its life". This was reported in the 2014 Official Community Plan and in an excellent, comprehensive consultant Opus report. The report was completed 2015 but, held back until 2016. The Opus report explained most of the District’s infrastructure was in “poor and very poor” condition and recommended prioritizing municipal funding for infrastructure renewal.
The report also provided a wealth of information and clearly laid out what needed to be done.
The recently departed director of engineering, on more than one occasion during his six-year tenure, reported to Council that his department did not have the staffing or funding to complete the necessary infrastructure replacement work.
Since 2015 Oak Bay administration staffing now includes:
- An Executive Assistant for the Mayor and Chief Administrative Officer, an Administration Program Assistant, 2 Legislative Assistants, 2 Communication Specialists, a Director of Human Resources, an Occupational Health and Safety Specialist, a $100, 000 Facilities Maintenance Staff Member, 2 part-time Audio\ Video Technicians and, a new Payroll Clerk, Tax Clerk and Financial Analyst.
- A Director of Planning and a Manager of Planning (two senior staff positions) to supervise one planner and a planning technician. Why a manager planning position was necessary in 2018 was not announced, However, it was announced that the Building and Planning budget for 2024 is to be increased by 35.9%, an increase of well over half a million dollars.
- In 2018 a new strategic initiatives department and director position was created. Why this was necessary and whose job responsibility strategic initiatives was previously was also not announced. Recently, a new strategic initiatives deputy position was added. The newly created Strategic Planning Department ‘s two senior staff are costing taxpayers over $300,000 annually and counting.
It also appears hiring new administrative staff may be on the horizon even though Corporate Administration has increased $150, 000 in 2024 and, the Financial Plan reports new staff in 2023 cost the District $816, 800,
The Planning and Building Department as indicated, is to be inflated this year by $532, 300, a 35.9% increase. If this large budget increase is to meet senior government imposed legislated housing targets perhaps Council is not aware that this year's Planning Institute of BC’s quarterly newsletter has reported that:
“Canadian local governments have pointed out the private sector is required to build most of the housing under this new Federal Government scheme, and current market conditions have resulted in the housing not being built to meet provincially imposed targets. Housing targets are not being met by 38 of 50 local governments (76%) being tracked by the Ontario government.”
“As market conditions are similar in BC, the outcome is likely to be the same. The missing middle legislative changes may be deemed a success in perhaps 10-15 years, and they will not be able to address the current affordable housing crisis.”
Businesses in Canada and the United States have cut staff in 2023 with more cuts planned in 2024 (Appendix #2). Oak Bay Council has been going in the opposite, unsustainable direction.
Oak Bay Watch Perspective
To put things into perspective the District of Oak Bay is clearly not a business and therefore is not expected to make a profit. However, residents do expect the District to be financially responsible and, apply our resources so they are not continually operating in the red. If homeowners financially managed their finances the same way as Oak Bay Councils have, are currently and intend to, homeowners would not have enough money to pay their living expenses.
The median household income in British Columbia is reported to be $80.000. If medium household budgets in Oak Bay equalled Council’s 2024, 8.67% tax increase and projected 2025,12.28% and the 2026,11.7% tax increases, that's a 36% tax increase in 3-years. Unless homeowners had substantial cash reserves on hand to pay all of their other expenses, they would have to incur unmanageable financial debt.
Council seems to be unaware that a BC medium annual $80.000 income has to cover not only Oak Bay's inflated property taxes but, the all other living expenses: food, gas, electric, transportation, clothing, footwear, household operations, furnishings, health and personal care, recreation, education, and entertainment etc.
Municipal taxpayers having to maintain large municipal administrations are costly. These coats reduce the amount of funding that can be used to hire staff to do the work that needs to be done. There is plenty of information available that explains there better be sound reasoning for having a large administrative staff in the first place.
Council’s projected 8.65% 2024 tax increase
This years Oak Bay News reporting that Oak Bay’s 2024 annual tax increase is almost 9%, much more if the water tax increase is included. This was apparently not that newsworthy. Especially when compared to the Oak Bay News May 1, 2015, big letter, front-page article headline (eight years ago): “Oak Bay on course for 5.1% tax hike.”
The 2015 tax hike, considered disproportionate at the time, is blamed on past councils. The Mayor stated, “We are investing in necessities that have been deferred for many years”. The Oak Bay News called the 2015 tax increase, “playing catchup” although the local newspaper fails to report the Mayor and other Council members were on some these previous councils.
Fast forward to March 28, 2024
Oak Bay News March 28, 2024, was only a A5 page article item. “Forced Growth” is now blamed for the almost 8.65% tax increase. The front page of the Oak Bay News March 28th edition was reserved for a good-news “Happy Trails” article.
The 2024 annual tax increase is reported as a $365 tax increase for a “medium residential property, almost 50% more than the front-page May 1, 2015, announced $155 “average home” annual tax increase.
The 2024 tax increase, “forced growth” culprit is defined in the Oak Bay News article as “keeping services at the same level”. Predictably, inflation is also mentioned as “a concern” along with the staff’s “collective bargaining agreement”. In the past the District’s wage increases were anticipated and provided for ahead of the next budget.
Senior staff receive the same pay percentage increases as the unionized workers who provide most of the community’s services. However, because their salaries are far higher than the District’s unionized workers and now with so many more senior administrative staff, the cost of corporate services have increased substantially over the years. This has eaten up a lot of the Oak Bay’s annual budgets.
What service levels all of the new administrative staff are maintaining is not clear.
The District’s position has been the lack of untaxed, multi-tenant basement suites and infill development has meant some residents will not be able to stay in Oak Bay. However, Council needs to understand excessive tax increases are just as, or perhaps more likely to force residents to have to leave our municipality.
Oak Bay Watch recommendation: The District hire a cost benefit (consultant) analyst. They are widely used in business and, established companies and public-sector decision-making. They could help the District determine budget realities, for example:
- What expenditures can be cut that least impact services and, help Council stop spending money they don’t have, that has resulted in excessive tax increases.
- Do the costs of adding so many new senior staff, purchasing technology, equipment and, expanding facilities outweigh the benefits to the Community.
Appendix #1: Oak Bay Watch’s Last Newsletter
The Provincial Government has inappropriately adopted a supply-side development policy before adequately addressing the root causes of the affordable housing crisis – that is, allowing housing to become a very profitable speculative and business commodity. The Province intends to dictate the types and amount of development that must be built in municipalities and, is passing legislation to ensure compliance. In doing so the Province has made local Council’s all but redundant and, has shut down community input.
To their credit there has been a lot of pushback from BC mayors about what has been described as, “the Province meddling in the operation of local government.” However, there has been little Provincial recognition that it is municipal residents that will have to deal with the realities and impacts of all this imposed new development.
If many BC mayor’s and the BC Union of Municipalities have not been able to reason with the Provincial Government and it’s Premier about the new “one size fits all” imposed, development legislation, what are the chances of a local resident advocacy group having any success. Oak Bay Watch members therefore have decided to consider other advocacy approaches.
We suspect that Victoria’s excellent, advocacy Focus magazine may have stopped publishing, like Oak Bay Watch, because governments have not responded to their years of evidence-based information.
Oak Bay Watch members will continue to support other community groups. Oak Bay Watch’s donations and Oak Bay members funds and time, have been used exclusively for our very successful community meetings and to support and advertise our website, and to help raise community awareness.
Oak Bay Watch has over 300 subscribers and has had as many as 2,500 hits on our website in one seven-day period. We will be maintaining our website for another year and post credible articles of interest, and other local group input to Oak Bay Residents. Our remaining funds will be divided equally between to the Friends of Oak Bay Neighbourhoods and the Hampshire Hill Community Group.
Please vote in the next civic election for candidates who are committed to: balancing Oak Bay’s annual budget, ensuring expenses don’t exceed income; and prioritizing residents, not Council’s priorities.
Appendix #2: 2023 /2024 - Businesses Are Cutting Staff
Business News
The lean organizational (Business) concept, has intensified, prompting companies to scrutinize organizational charts. The phenomenon transcends industries, with giants like Meta, United Parcel Service, and Citigroup announcing substantial cuts to management positions as part of broader cost-saving strategies.
CTV News: These companies have laid off staff in Canada in 2024: Published Jan. 24, 2024)
After 2023 saw widespread layoffs across several sectors such as retail, banking and technology, 2024 has kicked off on a similar note. Just weeks into the new year, hundreds of staff have already been laid off at major Canadians retailers such as Indigo and Rona. Global tech giants like eBay, Google, Twitch and Unity have also laid of thousands of workers worldwide this year.
Although many of these companies have some employees based in Canada, it's unclear how many Canadian employees have been affected by these layoffs. But as the economy slows, it's not just the tech giants that have been shrinking their work forces, as small startups in Canada have also done the same.
Here are some of the companies that have laid off Canadian workers in 2024:
Rona
Rona announced on Jan. 24 it would be cutting 300 jobs across Canada and closing two distribution centres in Quebec and Alberta.
More than half of the layoffs were of Quebec employees. The company said the job cuts were part of its plan to adjust its operating model and eliminate inefficiencies.
The cuts also came after Lowe's sold Rona and all Canadian Lowe's stores private equity firm Sycamore Partners in late 2022. Sycamore had already cut 500 jobs in Canada last summer, citing "new market realities," and all Lowe's stores in the country have either closed or converted to the Rona+ brand.
Indigo
Indigo Books & Music told The Canadian Press on Jan. 11 it had laid off an unspecified number of staff as a part of its strategic plan to return to profitability.
"While it is a difficult decision to part ways with valued and talented employees, it is the right decision for our company and all those we serve," the company had said.
The company experienced a challenging year in 2023, including a major cyberattack that saw the departure of four of its 10 directors, several quarters of losses, as well as turmoil in its executive leadership. CEO Healthier Reisman had retired last April and passed on the reins to Peter Ruis, only to return to the company in less than a month after Ruis abruptly resignation.
Mastermind
Mastermind Toys announced it would be cutting 232 permanent employees and 40 temporary employees after the retailer's acquisition by Unity Acquisitions Inc. closed.
Prior to the deal, the retailer had about 800 employees. Last November, citing increased competition, disruptions from the COVID-19, and economic challenges.
In December, Unity announced it would be acquiring the retailer and closing 18 out of its 66 stores.
Wayfair
Wayfair announced on Jan. 19 that it would be cutting 13 per cent of its global workforce, and this includes 50 employees based in Ontario(opens in a new tab).
Wayfair CEO Niraj Shah said the job cuts, expected to deliver annual cost savings of more than $280 million, were necessary because the company "went overboard" in hiring during a strong economy period and now needs to "get efficient."
7shifts
In early January, the website Betakit reported that Saskatoon-based startup 7shifts, which sells employee scheduling software for restaurants, laid off 68 employees representing 19 per cent of its workforce.
"Last week we made the incredibly difficult decision to reduce 7shifts’ workforce, saying goodbye to several talented people who have helped build 7shifts into what it is today," 7shifts CEO Jordan Boesch wrote on LinkedIn on Jan. 17.
Betakit reported that 7shifts cited "increasingly challenging market conditions" as a reason for the job cuts.
BenchSci
BenchSci, a Toronto-based AI and biomedical startup, laid off 70 employees making up 17 per cent of its workforce in early January, according to reporting from BetaKit.
On LinkedIn, the company said the job cuts were made due to "company-wide workforce changes."
"The decision is a result of shifts in the economic environment, operational efficiencies, and adaptation to technological advancements, specifically Generative AI," BenchSci said.
Microsoft
Microsoft laid off 1,900 employees at Activision Blizzard and Xbox on Jan. 25, representing an eight per cent reduction in staff at its gaming division. These layoffs come three months after the Xbox-maker finalized a deal to acquire Activision Blizzard for US$69 billion in October 2023.
It's unclear how many Canadian employees were affected. Although Activision Blizzard and Xbox both have several development studios based in Canada, a spokesperson for Xbox declined to confirm if the layoffs affected any of these studios.
However, the website Mobile Syrup reported that employees at Beenox, the Quebec-based subsidiary of Activision that helped develop several games in the "Call of Duty" series, were affected by these layoffs. One Beenox employee also tweeted that "quite a few" Beenox employees lost their jobs.
Enbridge
Enbridge said on Jan. 30 it plans to cut 650 jobs, citing "increasingly challenging business conditions."
A spokesperson for the Calgary-based energy company, which employees around 12,000 people primarily across Canada and the U.S., said the layoffs were necessary due to higher interest rates and economic uncertainty. The company did not specify which business units or geographic regions would be affected by the job cuts.