More than $550,000 in overspending in the recreation budget is forcing Woolwich to juggle funds from other departments to cover the cost overruns. Along with moving money around, the township has cut spending elsewhere to keep the 2011 tax increase at 2.3 per cent.
Much of the excess spending in the 2010 budget was due to higher-than-expected costs at the Woolwich Memorial Centre.
That development is an extra hurdle in this year’s budget process, more onerous than usual as new councillors challenge many of the items, asking staff for explanations. The scrutiny led to some fireworks at a budget meeting Mar. 3 as council dissected the recreation and facilities budget, but was more subdued Tuesday night, when the rec. budget was put aside in favour of tackling items from other departments.
The others, including fire, finance and planning departments, passed with relative ease. That said, most have been subjected to cuts to deal with the shortfall, the only increases coming in the form of pay increases for councillors. The raise amounts to a total addition of $7,000 for the mayor and four councillors. Last year, the mayor earned, $23,692, councillors $11,846 each.
Even with the small increase for council, the cuts made thus far – including reductions in paving and the treatment of gravel roads – bring the jump in spending from a proposed eight per cent to the 2.3 per cent figure approved by the previous council at the target tax increase for 2011. The cuts help offset a jump in the recreation budget.
Chief administrative officer David Brenneman said council and staff are still working to get a handle on expenses in the rec. department, particularly at the WMC.
Overall in 2010, the recreation and facilities department overspent by 14.6 per cent, or $553,976, on an original budget of $3.78 million. The largest factor in that was the Woolwich Memorial Centre, where expenses were up $384,965, 20.2 per cent higher than budgeted for.
Staff puts much of the blame on low estimated operating costs for the $23-million facility, which opened in September 2009. Having only a few months of operations under its belt while compiling the 2010 budget, staff guessed at costs over a full 12-month period, underestimating the expenditures, said Brenneman, adding much of the focus was on building the facility and getting it operational, so not enough emphasis was put on what it would actually cost to run the place.
“Bottom line, the fact remains that we missed the mark.”
Those revelations in the past week’s budget talks proved especially irksome to Coun. Allan Poffenroth, who said the operating deficits should have been caught sooner.
“What annoys me is that whoever’s in charge let things go, and 15 months later you find out they’re $500,000 in the red,” he said in an interview, adding in an understatement, “To lose such a huge amount of money is not the best way to operate.”
He, like Mayor Todd Cowan, suggested staff look at cost-cutting measures and new sources of revenue. Both pointed to the money-losing fitness centre and food concessions as options for better revenues.
In the case of the fitness centre, the township opted to pay an outside company, Personal Best Health and Performance Inc. $11,000 a month to operate the centre, which was equipped at Woolwich’s expense, rather than simply lease the space to a gym operator for a guaranteed revenue stream. The goal was to finance the deal through the sale of memberships, but the numbers haven’t been enough to as much as break even. The township lost $34,000 last year.
“It sounds like a hell of a deal,” Poffenroth said of the fitness centre arrangement, arguing a straight rental deal would stop the bleeding and bring in revenues.
As for the concessions, an outside operator could provide a wider choice and better operating hours, for instance, while generating more revenue for the township.
Those two components of the WMC will certainly be on the list when staff looks at ways to deal with the budget shortfalls, said Brenneman.
A detailed study of the facility will look at ways to do things more efficiently, including how best to operate individual components. An energy audit should help with utility bills tens of thousands of dollars higher than budgeted for. To tackle the big money issues, however, the township will have to look at service levels, including staffing and programming.
The recreation budget is expected to undergo more scrutiny at the next meeting, set for Mar. 22.