Since the depression of the 1930’s there’s been a prevailing economic philosophy amongst western democracies thatadvocates for managed growth through regulated free market economies. Simply put, to avoid the historic boom and bust of free unregulated markets, governments should seek to manage inflation and growth during the good times, as well as cushioning losses of economic productivity in the bad times.
“Save in the good times, stimulate in the bad times!”
From my perspective, even at the municipal level, governments can (and should) practice this general philosophy. Because if it is an expectation that governments intervene to cushion economic impacts during recessions, it should also be understood that governments must commit to stockpiling surpluses and restraining spending during strong economic times in order to avoid continuous debt being loaded onto the next generation. While a number of western democracies have seemingly departed from this general philosophy in recent years, the fundamental principle still holds true, and is something our city can take pride in when looking back on recent years of local government in Guelph.
The citizens of Guelph have the right to know how the city has managed public resources over the past number of years, and how this culture has set us on a firm foundation to respond to this public health and economic crisis. Case in point, since 2014 the city’s tax rate stabilization reserve (the key tool council can use to mitigate unforeseen increases in operating costs), has been completely rebuilt from a dangerously low balance of $2.1M, to a projectedbalance of over $13M in 2020; a six-fold increase. Further, over this same period the city’s total contingency reserves have also been rebuilt, from a balance of $10.8M (2014), to a projected balance of over $23.4M (2020).
How was this accomplished?
It was accomplished through the city’s executive, outside boards, staff and council diligently turning a -$1.1Mbudgetary shortfall in 2014, into five consecutive surplus budgets of $1.14M (2015); $3.08M (2016); $3.5M (2017); $3.25M (2018); and just announced for 2019 ($5.47M). These surpluses (coupled with disciplined spending), have been central in rebuilding these critical reserve funds during strong economic times, and have prepared our finances for responding to the public health and economic crisis we find ourselves in today. Armed with healthy reserves, it is now council’s opportunity to support our community through this years (and future years) operational and capital budget.
So while many large municipalities today are calling on upper levels of government for emergency financial aid to sustain services, our community should be reassured that today, Guelph’s core city services are strong, funded, and will continue to be there during this crisis. On a personal note, I am proud to acknowledge the good work of our City’s executive team and staff over the past six years for helping put us in the position we are in today. Moreover, I include in my thanks the near 1,000 city staff members who are currently at home on emergency leave, as well as the residents of Guelph who are at home, helping to prevent the spread of COVID-19. You are all helping to ensure a strong local government and a strong, resilient city when we get back on our feet. We are all in this together.