If you’ve felt like municipal finances were a bit hard to follow, it’s not just you: According to a new report from an independent think tank, the City of Windsor gets a “F” grade on financial and fiscal transparency.
But the City of Windsor’s treasurer says she takes issue with the failing score and the way it was determined.
The report from the C.D. Howe Institute, released Thursday, looks at the financial transparency of 32 major Canadian municipalities.
Windsor, along with Hamilton, Ont. and London, Ont. got a failing grade. And that’s a downgrade for Windsor: The previous year’s score was a C.
The report measures how transparent a city’s financial documents are — how easy it is to compare spending to budget, how accessible the numbers are, and how quickly they’re presented, said Institute CEO William Robson.
“All of this is motivated by the idea that a person who cares about city finances, but not necessarily expert, really ought to be able to get a fair way in and find that basic information without struggling.”
Topping the list with an “A” grade — no municipalities received an “A+” this year — are Richmond, B.C. and Quebec City.
Much of it is in the way cities present their budgets and when — sometimes budgets aren’t approved until after the fiscal year has started and spending has begun.
But it’s not all on municipalities, Robson says — Provincial guidelines and legislation outline how and when budgets are presented and approved are part of the problem.
“It’s not uncommon to hear cities in various provinces, including Ontario, say, ‘well, the province says we have to do this or that in a certain way’,” Robson said. “That doesn’t prevent you from presenting the alternative numbers as well in a way that’s more informative.”
The issue is going to get more serious in the coming years, Robson and co-author Nicholas Dahir warn in their report, because of “a slowing economy, demands for housing … and constrained finances of senior governments.”
Better information “would help raise the financial management and fiscal accountability of Canada’s cities to a level more in line with their importance in Canadians’ lives,” the report says.
Where Windsor did well — and where there’s room to improve
Like many municipalities, Robson said Windsor did well on its year-end financial reporting, and in turning in a clear audit.
Where the city did less well, he said, was in the timeliness and organization of the budget.
“What you really want to see in a budget is the numbers presented the same way [as in year-end financial reports]: Same categories of revenue, same categories of spending, same accounting principles. And in Windsor and in too many other cities, you don’t get that — you actually can’t compare the budget to the results.”
“Along with things like not being timely and putting the numbers too deep in instead of upfront, those are the areas where the cities that did badly typically did the worst.”
But Robson says they’re not judging the quality of the budget, the spending report or tax rate.
“This isn’t a super deep exercise. It’s just about the clarity of the numbers, the timeliness of the numbers, and so simply doing something as easy as putting the main budget presentation on page 10 that would make a difference.”
City argues report methodology flawed
Janice Guthrie is the city’s commissioner of finance and city treasurer. She acknowledged that Windsor’s score was downgraded this year and says they’re “very disappointed” with the result.
But there are reasons the city fared poorly, she says.
“We disagree with it, largely feeling that this report is flawed in many ways,” Guthrie said.
“It does not deal with content. It does not recognize limitations of municipalities by provincial guidelines and regulations and it does not look in to the substance of what’s being reported. It just looks at the format.”
Guthrie says the city produces quarterly variance reports that outline what’s been spent and how it varies from the budget.
Guthrie said the city also didn’t meet the Institute’s timeline for approving a budget by the end of January— because of the 2022 municipal election.
“We took the time to meet with our councillors to walk them through the budget document so that they would have an ability to have a fulsome debate on the issues and establish a budget,” she said.
Guthrie says the city’s budget is available online at any time, as are audited financial statements. The city’s 2023 year-end financials will be available later this summer, she said.
“We feel that what we provide does provide more accountability and more transparency to our residents and our taxpayers,” she said. “I just want to be clear that we will not make changes because of the grade.
“We will make changes so that we are improving our accountability and transparency to the residents and the taxpayers. If it makes sense and it helps to improve our grade, then that’s what we will do.
“But we really don’t place a lot of attention onto the grade that they provided.”