Cutting expenses

If all expenses could be cut by five per cent, the municipality would be able to add to its reserves without raising taxes.

At first glance, a recommendation from the municipality’s finance committee makes a lot of sense in its simplicity.

The recommendation calls for department heads to find a five per cent reduction in their operating budgets for next year.

If all expenses could be cut by five per cent, the municipality would be able to add to its reserves without raising taxes. A slight tax reduction might even be possible.

The difficulties show themselves if such a budget-cutting recommendation is put into practice. It becomes much more challenging than it first appears.

For some departments, the bulk of the budget is staffing costs. Cutting the budget must then result in cutting staff, which in turn means less work can be done.

Other departments have costs associated with the facilities or equipment — costs which cannot be reduced.

Governments in Canada at all levels, particularly municipal governments, are highly scrutinized by the public. Since governments function using tax dollars, taxpayers will speak out if the money is being spent inefficiently.

If there are areas where cuts could and should be made, these areas will not go unnoticed.

Furthermore, the 2008 Helios report, conducted for the municipality, examined municipal operations and did not find wasteful or inefficient spending.

This does not mean there  is no room for improvement.  However, the best way to make municipal operations more efficient is through a careful study of the various departmental operations.

Financial reviews are important, whether for an individual, a business or a government.

A blanket decision to cut expenses by a set percentage may not be the wisest response.

 

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