Immediate action taken to reverse losses and ensure unit delivers value for Guelph
Guelph, Ont., November 4, 2016 – Operating losses in the most recent budget year have led senior City officials to direct that Solid Waste Services will undergo a full service and business review. In addition, division management has already started work to bring a projected $3 million negative year-end variance closer to zero, including launching an independent, external financial audit.
A staff report, to be presented to Council as Committee of the Whole November 7, outlines specific work underway to correct the existing divisional budget, build an accurate budget for 2017, and mitigate the current year’s variance.
“We’re taking decisive action to turn the corner on the performance of this business operation,” said Scott Stewart, Deputy CAO of Infrastructure, Development and Enterprise. “This has been unacceptable performance, but we’re confident that with the new leadership in place, this budget will be managed with precision, accuracy, and transparency going forward.”
In January of this year, new management began closely examining this budget’s complicated expense and revenue codes and discovered inaccuracies, including incorrect budget assumptions, lower than forecast materials processing capacity, and unrealistic revenue and cost projections, which contributed to the budget imbalance.
The 2016 variance was made worse by a number of external factors, including: lower-than-expected commodity prices, and a fire at the materials recovery facility (MRF) that shut down operations for four months and caused about $750,000 in damage.
New management began turning things around as budget errors came to light. That team, along with a dedicated taskforce of senior leaders from across the organization, is behind a host of mitigation efforts already in effect. Among them are:
- new agreements for the sale of carbon credits;
- discontinuation of one of two shifts in the MRF that was related to processing recyclables from Michigan; and,
- in-year spending reductions.
A full list of mitigation measures is detailed in the staff report.
In addition, the service review will explore the financial viability of the operation, so the City can make the best decisions about long-term sustainability for Guelph residents and businesses.
“We are committed to correcting this budget, operating this business unit efficiently, and offsetting the current variance,” says Stewart. “We’ll do this through oversight and rigorous variance monitoring, and we’ll keep Council fully informed along the way. The historic financial performance of this operation has not been to Council’s or this community’s expectations. Concrete work is underway now to change that.”
For more information
Tara Sprigg, General Manager
Corporate Communications and Customer Service
City of Guelph
519-822-1260 extension 2610