Interest Arbitration - Municipal Experiences

City of Windsor decisions demonstrate lack of accountability to local taxpayers

Taxpayers in the City of Windsor are on the hook for an 11.7% increase, over four years, to police wages. The increase was awarded by a provincial arbitrator in January 2013 and is retroactive to January 1, 2011.

This isn’t the first time that Windsor’s emergency services staff were awarded increases in the midst of the City’s clear and well-documented economic challenges. In 2010, firefighters were awarded pay increases of just over 3% per year, despite the local unemployment rate of 10.9% and a marked decline in property values.

In both 2010 and 2013, Windsor made detailed submissions to the arbitrator to demonstrate poor fiscal health and diminished capacity to pay. In the 2010 case, the City provided more than 15 indicators, including the fact that more than half of Windsor’s revenue is generated from residential taxes and that local residents pay among the highest costs of firefighting per household in Ontario. Local private sector data pointed to the fact that 11 companies had recently closed down or laid off employees. Between 30 and 1,400 employees, per company, were affected.

In both 2010 and 2013, an arbitrator decided that replicating wage and benefit increases within and outside the City was more important than the local municipality’s capacity to pay those wage and benefit increases.

Lack of efficiency, accountability and transparency: arbitration in Niagara Region

In 2010, Niagara Region’s Police Association was awarded a 10% wage increase over three years and substantial increases in benefits. The increase was awarded despite the Region’s poor economic state.

Residents of Niagara Region spend a higher percentage of their income on property taxes due to a lower standard of living than that of many other Ontario communities. As a result, Council adopted a strategy to increase property taxes at a lower rate than taxpayer household income growth.

The Niagara Police Services Board presented economic indicators to the arbitrator to prove a diminished capacity to pay, compared with other municipalities, including an average household income that was 16% lower than the provincial average for 2010 and lower than average household income growth.

Further, the Board’s data proved that Niagara’s average household income is 60% of the average household income of Halton, a main comparator advanced by the Police Association. The Board also presented comparative information of high unemployment, low labour force participation rates, manufacturing job loss and increasing welfare caseloads.

The award appears to be based solely on comparator police salary and benefit information. This arbitrated award for police required more than half of all of the funding for all groups funded by Niagara Regional Council.

Accountability in action in the City of St. Thomas

In 2011, the St. Thomas Police Association proposed wage increases of 4% per year for 2011, 2012 and 2013. The St. Thomas’ Police Services Board proposed wage increases of 2% per year.
The Police Association argued that the 4% per year increase would put the City’s wages at the same level as those paid to police in the comparator municipalities of Woodstock and Stratford. The City presented data to prove that St. Thomas, as compared to Woodstock and Stratford, had a diminished capacity to pay for wage increases.

St. Thomas presented the arbitrator with numerous economic indicators including:

• Between 2006 and 2010, property values in St. Thomas increased 15.43%. In Woodstock they increased 33.52% and in Stratford the increase was 22.37%.
• $3 million in unpaid taxes in 2010 – a 79% increase from 2006.
• 9.7% unemployment rate.
• 2010 operating deficit ratio of 6.2%. To “break even” the City would have to increase taxes by 6.2%.

The Association also presented data including:

• St. Thomas ranked number one in reserves per household, among its comparators.
• St. Thomas’ population is growing faster than that of Woodstock or Stratford.
• Senior officers, including the Chief, received raises.

This case was a breakthrough in that the arbitrator explicitly considered the municipality’s capacity to pay, in writing, and reflected that in awarding the Association a 2.5% increase, per year, for 2011, 2012 and 2013.

Sources:

• Emergency Services Steering Committee, Position Paper, Escalating Emergency Services Labour Costs and the Ontario Taxpayers’ Ability to Pay, 2011
• Interest Arbitration Between The Windsor Police Services Board and The Windsor Police Association, January 12, 2013
• Emergency Services Steering Committee, Ability to Pay: A relevant factor at interest arbitration for emergency services in Ontario? 2012
• Interest Arbitration Between The St. Thomas Police Association and The St. Thomas Police Services Board