Across the River from Bankrupt Detroit, Windsor Boasts 5 Years Without a Tax Hike

Tuesday, December 3, 2013

National Post/Tristin Hopper

As Detroit finalizes the terms of the largest public bankruptcy in U.S. history this week, its across-the-river Canadian neighbour is boasting a fiscal record the envy of any city its size on the continent: five years without a tax hike, an eight-figure paydown of municipal debt, all while weathering the effects of Ontario manufacturing’s collapse.

“We’ve broken with political tradition, obviously,” said Eddie Francis, mayor of the city of Windsor, population 210,000.

On Monday, for the sixth consecutive year, Windsor City Council approved a budget that contained zero tax increases.

Meanwhile, the city has reduced its debt from a 2002 high of $230-million to $110-million. City reserves have also swelled to $114-million from $42-million.

Uncharacteristic for a city undergoing deep austerity, Windsor has also embarked on a $1.5-billion infrastructure campaign: bike paths, upgraded libraries, a new aquatics centre and the new WFCU Centre, home of the Windsor Spitfires, all paid for with cash upfront.

“We used [the economic crisis] as a way to reposition the city, and we paid for it all with cash,” said Mr. Francis, who ran Windsor’s Royal Pita Baking Company before his 2003 election to the mayor’s office at the age of 29.

Candice Malcolm, the Ontario director of the Canadian Taxpayers Federation, said she could think of no other cities that could come close to Windsor’s record. Calgary has averaged a 4.8% tax increase over the past 10 years. Toronto just proposed a 2.4% residential tax hike and even in nearby Guelph, administrators are mulling an above-inflation hike of 2.37%.

“To all the other governments that continue to raise taxes and say it’s not possible to do otherwise, here’s a great example of a city that managed to do just that,” said Ms. Malcolm.

Windsor, of course, is no boomtown. As recently as last spring, the city had Canada’s highest unemployment rate, at 10.1%.  A November Statistics Canada report also named Windsor one of Canada’s poorest cities, with 40% of its resident living in low-income neighbourhoods.

But it was this economic pain, according to Windsor’s chief financial officer Onorio Colucci, that helped to spur public support for what he called “the culture that’s permeated everything.”

Every year, city departments submit a “menu” of savings ideas, preferably ones that have no impact on services, and then city planners perform the slow process of moving through the menu. “It’s everybody around the table, it’s a five-month process, but it starts with that vision that this is something that needs to be done,” said Mr. Colucci.

As opposed to the more dramatic budget-slashing measures recently seen in Toronto, where every city department was asked to decimate its budget by 10%, Windsor insists it is more nuanced. “We have enough suggestions to ensure that we might take three or four [menu items] in one department, and maybe none in another,” said Mr. Colucci.

Some savings have arrived via outsourcing. Parking enforcement and garbage collection is now done by private contractors, paring down 160 city positions in the process.

The city’s aggressive debt paydown has yielded some dividends, shaving off $11- to $12-million in annual interest payments.

Mr. Colucci also credited an ongoing suite of little changes, such as a recent move to pare down electricity bills by rigging up Windsor street lights with low-power LED bulbs.

All the while, said the CFO, the idea has been to avoid what he called “Washington Monuments” — a reference to the highly visible and much-criticized closure of the Washington Monument during the recent U.S. federal government shutdown.

“No slashing, no burning,” as Mayor Francis said in media comments this week.

So far, the most visible impact of the spending reduction has been a 101-day strike by city workers in 2009. In the end, the city bowed to modest wage increases, but denied pension benefits to new hires — a key motivator of the strike.

The city also made liberal use of lump-sum payments rather than permanent salary increases, ensuring that wage increases do not compound over time.