Nanaimo taxpayers need a deeper audit of city spending
1128 - To paraphrase Kurtz in “Heart of Darkness”, “The questions! The questions!” In Nanaimo's current financial morass, where do we even start assessing our city's fiscal management?
City Hall is now claiming taxpayers need to pony up an additional 2.6% in property taxes, 7.6% more for water, 24% for garbage, 5% for sewer to cover a projected operating shortfall. According to our CFO, Victor Mema, the increases are necessary because our tax base hasn't grown enough to cover increased costs.
Does Mema mean Nanaimo's tax base hasn't grown enough in the eight months since the Event Centre fiasco in February, 2017? That's when the majority of this Council - along with Mema and CAO, Tracy Samra - claimed no tax increases were needed to cover a $5.4M annual payment on the $80-million arena mortgage this council wanted you to cosign.
In fact, Council's actual spending appears to have decreased in the interim. (More on that in just a minute). So what happened to the money they claimed would service our annual payments for the arena loan for 20 years without a property tax increase?
These are only some of many unanswered questions about financial matters in our city. Not to suggest there is any actual wrongdoing, but a council that embraces non-disclosure as an operating principle will always face suspicion from the voters.
This council spent close to a million dollars attempting to sell its citizens a hockey rink the voters had said they didn't want. Were these expenses part of a previous budget? If not, where did the money come from? What services had their funding reallocated to pay the associated costs?
The recent review by Deloitte LLP states many budgeted projects in the city didn't progress as expected in 2017, and underspending on planned projects is a pattern of this administration. One example of many: drivers are still navigating the hazardous Northfield-Island Highway intersection. Deloitte claimed “Inadequate workforce planning causes departments to over-commit in terms of their capacity to deliver projects, resulting in frequent budget carry-forwards.”
Last year, these carry-fowards amounted to about $24 million, a record even for this council. While it is true that these funds remain on the books, at least in theory, it is fair to ask if any part was, in fact, actually spent elsewhere? In the run up to March's referendum, this administration showed an uncomfortable willingness to move funds from one pot to another, then claim we had costs covered.
With the recent flood of staff departing, does Council imagine they'll get back on track with both the delayed and new projects in 2018? Or will they opt to play what may be a version of the Event Centre shell game? The CAO plans to contract out and pay retainers for managers to replace those who left us in her tenure. Does she believe management-by-contract will be more cost effective? Is this where the proposed $2.6 milion from increased property taxes will go?
For that matter, why did all those managers and staff leave their employment with our city? Their reasons for departure have direct consequences for our city's spending. Does not having to pay their salaries represent a savings? Will any potential benefit be more than obliterated by the cost of severance packages? Where is the budget line that covers the liabilities for any pending lawsuits for wrongful dismissal? Do such lawsuits even exist? We are not told.
While we are discussing salaries, what is the story behind our CAO receiving a $24,175 salary increase and receiving the same amount again as a bonus in 2017? She accepted the job on the condition of no salary hikes for four years. Now, instead of the contracted salary of $180,000 she is appears to receive close to $230,000. To my knowledge, the five Council members who authorized these payments have never revealed their reasoning.
And what about those expense accounts and credit card charges recently reported in NewsNanaimo.Com? Were any items charged actually for personal use? Such charges are strictly prohibited by law or charter. Why was the decision made in camera to spend $8 million on automated garbage trucks? What other financial matters and/or spending have been decided in camera that we don't know about?
I could go on, and so could you. But the point is clear: How can taxpayers judge whether any current increases in taxes and service fees are warranted when this city council embraces non-transparency and non-accountability as operating practices? The CFO and majority on Council claim the increases are justified. Perhaps that's true, but we don't know. When citizens can't follow the money, suspicions are an inevitable result.
Nanaimo taxpayers have too many unanswered questions for Council to proceed unchallenged. We also have too few reasons to believe in their assertions. We've had more communication spin than substance coming out of City Hall. The pattern of this Council and administration has been to launch a hard sell, then question the motives of anyone who asks questions.
We need a trusted source to help us navigate this quandary. If we can't trust statements coming out of City Hall, we need an independent agency to document and verify the state of our city's finances. The annual audit by KPMG won't delve down to the depth needed by taxpayers.
We need a audit that will follow the money through the spending history of this administration and tell us what has happened. Only an in-depth, forensic audit will provide the answers that we need. No criminality is implied in the call for its commission. A forensic audit is called for because it is designed to examine spending on everything from budgeted and non-budgeted projects to credit card expenses and to determine the accuracy of the various fiscal claims.
Even if Council and managers suddenly discover other ways to address the operating shortfall, even if they decide the proposed tax and fee increases shouldn't happen, the voters' questions will remain unless we conduct a full examination. Cancelling the proposed property tax increase and that of other fees won't erase the multitude of questions about this Council's fiscal practices. Voters need a full accounting.
None of us would accept our bank accounts being drained without a detailed accounting of what happened. Nor would we simply accept how our bank chose to spin the explanation. We'd want complete financial statements. We'd want dollar and cents details. We need to insist on having the same level of accounting of past municipal costs and spending. We owe it to ourselves.
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'It was always the other guys who got us into this mess'
1121 - For a while Monday night, watching the Nanaimo Council meeting while CFO Victor Mema plodded painfully through the Deloitte LLP evaluation in a style more suited to captive students than a City Council (or the public), I wondered why we were even the audience for this. The hour-long torture seemed designed for senior managers.
However, when CAO Tracy Samra added her comments at the end of Mema's presentation, the purpose became clear. For those fortunate enough to be doing something else last night, here is what I understood to be the take-aways.
According to Samra:
Nanaimo is in perilous shape on almost every front you care to imagine, thanks to past administrations and departed city managers.
But I shouldn't be concerned about the impending disaster because Samra is here to head it off. She has already begun to implement the needed fixes, as has our CFO, Victor Memo.
For one, Samra apparently intends to contract out for the services of knowledgeable, competent planners and managerial types to actualize the corrective steps needed in our City. Presumably, they will fill the holes left by the many senior (and inferred incompetent) managers who have left Nanaimo recently. Samra will be there to make sure we get the best, most knowledgable, most effective people, much, much more qualified (inferred) than the ones sent packing.
Mema's junket to Orlando, recently the subject of questions in social media, was for training to get him up to speed in using some hugely-underused planning software for which Nanaimo pays a phenomenal annual fee. (So dismiss media questions about those expenses or this trip!)
Samra and Mema will act as the main saviours to remove the chaos they inherited from past administrations (no mention of their own contributions to existing chaos.) And we are darned fortunate to have them. Our rebirth begins immediately (although accomplishment may not be imminent.)
Finally, eerily similar to the chorus line in a play by Bertolt Brecht, the majority five on Council periodically pronounced, “Alarming!” and then followed it up by singing different versions of “Thank you. You are wonderful. You can save us. We are so fortunate.”
Okay, that's done. Take-away messages disposed of. Now, for a bit of analysis.
First, there really isn't a whole lot that's new in the report by Deloitte LLP. Anyone who has done project management in a functioning organization will recognize many of the managerial tools and strategies suggested. To suggest the report is ground breaking seems a bit disingenuous.
Second, no reference was made to the recently failed event centre proposal. This omission is significant, since the project was also largely managed by Samra and Mema, yet possessed little of the cross checking, due diligence, and consultation that Deloitte LLP said we need at our City Hall.
Third, another omission in Samra's account concerned the comment in Deloitte's report stating that many, if not most, City departments were actually functioning quite well. Kudos to Councillor Thorpe for helping our CAO out with that one.
Fourth, Monday night's meeting appears to have been mainly about drawing a line between the majority on this council along with their senior managers and the citizens of Nanaimo. The tone, the demeanour, the lecturing inferences did more to widen the existing divide than bridge it. But that all seemed fine to the majority sitting around the table. The message between the lines seemed to be that City business is not the public's business. It's theirs. Only their perceptions, their agendas, their concerns, and their voices have importance and a place in deliberations.
In this respect, voters in Nanaimo owe a debt of gratitude to Coun. Diane Brennan who is the most vocal defender of the public's rights. Brennan argued long and successfully Monday night to have meetings of the Committee of the Whole moved back to the Shaw Theatre. Her stated wish was to help members of the public participate in and access a useful record of the meetings. Staff had prepared a simple cost comparison demonstrating why meetings at the VICC were more expensive. In one of his occasional departures from the majority playbook, Coun. Bestwick sided with Brennan to point out that payments to the VICC were just payments to ourselves. Room rental rates mean nothing since the City must subsidize the VICC annually to keep its doors open. It comes out to the same amount in total. And Brennan's motion passed.
All this was going on as Dominic Jones's latest article describing what he calls a "kangaroo court” at City Hall went online. As I'm writing this, censure meetings are being held in City Hall allegedly to condemn McKay and Brennan for creating a hostile environment for our CAO. Which begs the question: what about Tracy Samra? After receiving a leaked copy of the Goldner report, the Globe and Mail stated Goldner found that Samra and McKay were engaged in a classic power struggle and both responsible for the atmosphere at City Hall. Is Samra also the subject of the hearings? Will we ever hear the outcome? Don't hold your breath.
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A lot of questions remain unanswered on Wallace Street
1118 - The great unravelling may actually be starting. Dominic Jones’ recent piece on NewsNanaimo.ca documenting what appear to be flagrant abuses of public office expense claims by Nanaimo's CAO and CFO quickly produced two significant reactions.
One: Public condemnation of the spending was swift
and almost unanimous on social media. That's no small thing, given that social media are arguably our city's best information channel now that we lack anything resembling a balanced, investigative printed press.
Two: In what appears to be a phenomenal breakdown of cortical functioning, CAO Tracey Samra sent a memo to City staff accusing them of leaking personal information and warning them of consequences should it reoccur.
In fact, staff appear not to have been the “leak”. Jones obtained the information for his article through a FOI request. Furthermore, City staff expense claims are part of the public record. But as a consequence of Samra's memo, Jones published a second article ironically containing a complete copy of Samra's warning, a move that could have done little to soothe the CAO.
Fun stuff, alright, but let's think about the larger issue. What's happening on Wallace Street involves more than just the alleged improprieties involving Samra and Victor Mema. An equally important issue concerns questions of their being propped up and shielded from the consequences of perceived fiscal and constitutional abuses. And of who is doing the shielding.
When you get right down to it, at least some of the documented expense claims seem a little suspect. A $44 breakfast and a $56 steak on a $6360 junket to Orlando, Florida, by the CFO; taxpayers ponying up for coffee when the CAO stops at Starbucks.
Equally questionable is the CAO's recent, apparent blind-siding of Council with her unilateral decision to change the procedure for question period in the council meetings. Then ordering City staff out of the council chamber making them unavailable to answer the public's questions. So why haven't formal investigations and hearings into these matters been announced?
On several occasions in the last 10 months, Council has failed to act effectively when effective actions appeared needed. Even putting aside the shenanigans associated with the event centre, there's the leaking of in-camera meeting minutes, the distribution of confidential reports to the media, astonishingly questionable public behaviour by the CAO, several leaves of absence - yet not one offence resulted in even formal censure.
Now, however, the most recently elected Councillor, Sheryl Armstrong, has signalled her intention to move for an adoption of formal expense guidelines. In an email, long-time Councillor Jim Kipp disclosed he is waiting for reports on the credit card charges, cell phones and vehicle use. If there were a formal coalition on Council supporting Samra, is it beginning to fall apart?
Responsibility for financial matters - including credit card spending - rests with the Finance and Audit Committee, chaired by Councillor Bill Bestwick. He is the rumoured head of the group of five Nanaimo councillors who hired the CAO over objections by Mayor McKay and Councillors Brennan, Thorpe, and Pratt. To this point, Bestwick has not publicly questioned these actions.
Of course it’s understandable that Councillors Kipp, Fuller, Hong, and Yoachim might not wish to endorse any action against the same manager that they installed. Who wants to investigate and bring charges in a situation they, themselves, created? Hey, it could be construed as an admission of guilt. Not good optics. Not good at all.
But maybe at least one member of the Council majority has seen the writing on the wall. Anyone thinking of running again in 2018 must be asking him/herself: What’s the chance of getting re-elected if the current situation at City Hall is allowed to continue unchecked?
An admission of error need not spell the end to a political career. Everybody makes mistakes, even voters. (We elected them, didn't we?) It's amazing what voters can forgive when they believe they are seeing honest regret for past actions and a desire to correct the fallout. But to keep on pretending there is nothing wrong and continue shoring up what is clearly a preposterous situation at City Hall, that's another matter.
Nanaimo is growing. Even if the old factions that elected the current council mix remain loyal, they are being increasingly diluted by the growing group of recently-arrived new voters. To newcomers, the Colliery Dam feud is water under the bridge. Who did what to whom in the past is unimportant. Past “betrayals” are history. But the more recent event centre manipulations, not to mention the continuing string of new embarrassments in the Victoria Times Colonist and Globe and Mail, are more than just germane.
So maybe, just maybe, with the next municipal election less than a year away, at least one of the five councillors who formed the de facto majority of the past is now realizing that it's time to start serving the interests of the voters. Maybe just one of the five is recognizing that the best way to serve his own interests is to opt to manage the current madness on Wallace Street instead of supporting its continuance. If that is happening, the centre really will not hold.
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Dealing with the fallout from City Hall's dysfunction
I've lived in a lot of communities, large and small, both in and outside Canada, but I don't think I have ever experienced one as divided as Nanaimo is right now.
Once again, the citizens of our city are polarized. There seems no middle ground concerning the actions/inaction of our Council, the status/actions of the CAO, the flood of departing managers and staff, violence, racism, and a spate of other issues. Both sides are digging in.
Yet the visible divisions are based almost entirely on speculation. Almost every accusation is founded, at best, on only partial information. These unknowns, not the knowns, are what are tearing our community apart.
Our ignorance is almost entirely attributable to Council. The impenetrable barriers to getting information, the stonewalling in the Q&A during open council meetings, the innumerable in-camera meetings, the select leaks by one or two Council members, are major contributors to what's happening in Nanaimo.
The lack of full disclosure produces the rampant speculation, the unfounded accusations and disagreements we see among Nanaimo citizens. The real legacy of the current council's dysfunction is the polarization of our community. Council and management at City Hall have forgotten that their function is to serve taxpayers and voters, not themselves. A major part of serving the electorate is revealing what's going on and why key decisions are being made.
We need to know the full story of what's has happened in our City Hall back to the beginning of this council. Regardless of which side of the divide you occupy, regardless of who you believe to be right or wrong, we all need the complete history of what has taken place on each contentious issue. For any allegation to actually have substance, we need an accurate accounting of facts.
Getting this information is the shared need of everyone living in Nanaimo, and it should be our common goal. None of us will ever know where responsibility really lies on any issue involving City Hall unless we break through the barriers to information this council has created. Nor can we assume that redacted disclosures are more than just self-serving. Secrecy and spin are all too familiar hallmarks of the current administration. We need full, independent, disinterested, and formal investigations of every aspect of City Hall since the beginning of the current term.
We need a complete forensic audit telling us where money has been spent, transferred, reallocated, used, i.e. the true state of Nanaimo finances. As became obvious during the run up to the arena referendum, tracking the ins and outs of Nanaimo finances is anything but straightforward. Only a forensic audit will provide all the needed detailed information, without necessarily implying the existence of any criminality.
We also need a full investigation of all actions and decisions made by council and senior managers, along with individual voting records. We need a complete and factual account of the hiring of the CAO and the ensuing protests. We need to know the reasons behind the censuring of the Mayor and full details of any legal actions contemplated, initiated, and/or abandoned.
Because our community is so divided over interpretations of the Pratt-Samra video, the full video needs to be released along with the findings and assessed remedies of the police investigation and subsequent legal hearings. The same for the Goldner report - especially since it was sent to the Globe and Mail and is now the stuff of the media at large.
If the Goldner investigation did not extend back in time to the hiring of the CAO and also if it did not investigate other aspects of City Hall that could be racist, violent, or abusive it needs to be expanded. The public record concerning the reality of an abusive/violent/racist environment at City Hall needs to be complete.
We also need to know the full details of Council, managers, and staff relationships, terminations and exit interviews of the individuals involved. We need to know the reasons for each departure, as well as the substance and sources of any staff complaints.
We need these several investigations to be conducted now. Not later. And we need to be relentless in their pursuit. When you get right down to it, the ignorance of Nanaimo voters is appalling. Let's stop telling ourselves that we can wait until the next election in 2018. Further waiting may well prove to be disastrous.
We must increase our presence in the Q&A of open council meetings. Let's put blame aside for now and simply demand disclosure and investigation. Let's send letters and emails to the Mayor and Council and request they be added as official correspondence to the meetings so anyone can speak to the topic regardless of whether council and staff include it in the agenda.
At the same time, let's assume this Council will not act. Whether for self-protection, lack of courage, or simply because they're hamstrung, the record of this Council is to do nothing unless they're forced. We need to take it to them.
We need every councillor to know that continuing to withhold the information will significantly impact their chances of re-election. Even more: let's examine the possibilities of taking legal action. If voters can sue individual councillors for damages arising from their actions/inaction (and there's every indication that they can), let Council know we intend to take this action.
The same for the needed, independent investigations of everything that's gone on since this council was elected. If council won't commission the investigations and reports we need, let's find out how we can initiate them, ourselves.
Whatever we do, let's do it all together. Let's stop fighting with each other. We've allowed ourselves to be distracted by the behaviour of various members of this Council and by the background noise. We need to refocus and get down to business.
Consider this to be a call for unified action by the full Nanaimo electorate. If we can unite on anything, it should be on obtaining a full accounting of our City Hall right from the beginning. Armed with that information, we can make assessments of responsibility based on fact, not speculation. Even more important, we can begin to bridge the rifts created by the lack of information provided by this council, and get back to building the community we want.
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- Mar. 19, 2017
Don White on Nanaimonet.com
Don moved to Nanaimo three years ago. Don saw an opportunity for continuing to inform and engage Nanaimo voters. He considers the operational nature of our local governments to be a crucial factor in our efforts to protect and responsibly develop this beautiful but vulnerable setting we live in. To comment on any of Don's opinions, please go to the bottom of this page.