This is a quick look at the issues facing municipal governments across Canada.

1. GOVERNMENT POLICIES AND
ISSUES – PUBLIC SECTOR –
MUNICIPAL GOVERNMENT
BY: PAUL YOUNG, CPA, CGA
DATE: AUGUST 7, 2017

2. PAUL YOUNG - BIO
• CPA, CGA (1996)
• Financial Solutions (FOPM/FPM)
• SME – Risk Management
• SME – Close, Consolidate and
Reporting
• SME – Public Policy
• SME – Financial Solutions
• SME – Advance Technology and
Market Entry
• SME – Supply Chain Management
• SME – Business Strategy and
Restructuring
Contact information:
Paul_Young_CGA@Hotmail.com

3. AGENDA
• Accounting and Reporting Challenges
• Issues facing Municipalities and Cities
• Capital Spending
• Revenue sources
• Funding/Infrastructure
• Compensation
• Pensions
• Water Act (Regulation)
• Green act
• Downloading
• Arbitration issues

4. REPORTING CHALLENGES / PUBLIC SECTOR

5. FINANCIAL REPORTING / CHALLENGES
• Public Sector Accounting Reporting
• Financial Statements
• Keeping up-to-date with the standards
• Internal Audit and Controls
• SORP Reporting
• Fixed Assets
• Cash Flow
• Debt
• Effectiveness of program spending

6. HOTTEST TECHNOLOGY
Source – Next big Future – March 6, 2017

7. HOTTEST TECHNOLOGY
Source – Next big Future – March 6, 2017

8. MARKET SIZE / POTENTIAL
Source – Next big Future – March 6, 2017

9. CAN AI REALLY CREATE 800,000+ JOBS BY 2021?
THIS REPORT SAYS YES
• http://www.techrepublic.com/article/can-ai-really-create-800000-jobs-by-2021-this-report-says-
yes/?ftag=TREe01923b&bhid=23321323188161054569322732153870
New research from IDC, released by Salesforce, claims that
artificial intelligence (AI) will create 823,734 jobs by the year
2021, surpassing the number of jobs lost to AI technologies
such as machine learning and automation. Additionally, the
report predicted that AI will increase global business
revenues by $1.1 trillion in the same time frame.
The two statistics mentioned above will both come about as
a result of "efficiencies driven by AI in CRM," the report
found. And, if one includes indirect obs, the number of jobs
added by AI jumps to 2 million. "This is a net-positive figure
in that it includes an estimate of jobs lost to automation
from AI," according to the report.

10. ACCOUNTING SYSTEMS – AI AND REPORTING
Tools/Financial
• ETL (Datawatch)
• Analytics (OLAP,
add-ins, data
warehouse,
Microsoft Excel
AI and Finance
• Analysis Credit Reporting and Accounts
Receivable
• Analysis Inventory reporting (trends)
• Liabilities/asset testing (pensions,
environmental, drug trials, capital asset
utilization, supply chain (risk analytics,
financial stress testing, automation internal
audit procedures (test/analysis)
• Key market trends/Sales
• Assessing program spending
• Internal Controls / Procurement

11. AI AND OFFICE OF FINANCE
• Office of Finance is part of business decisions (finance and cost)
• Many business process could be automated (Big Data => analyzed
=> Management Reports)
• Accounting Systems have over time reduced the need for manual
input (automation of processes)
• Storing the rules (accounting, tax, pricing, etc.) and then crunch the
big data as part of analyzing the business
• Cost controls (Internal Audit, cybersecurity, approval processes)

12. OTHER SOURCES
• Close, Consolidate and Reporting Process -
https://www.slideshare.net/paulyoungcga/close-consolidate-and-
reporting-cfo-and-office-of-finance
• Internal Audit - https://www.slideshare.net/paulyoungcga/artificial-
intelligence-ai-with-value-for-money-auditing
• Internal audit/Automation -
https://www.slideshare.net/paulyoungcga/internal-audits-automated-
solutions-office-of-finance-and-cfo
• IBM and AI - https://www.ibm.com/watson/
• Reporting Challenges for Business -
https://www.slideshare.net/paulyoungcga/reporting-challenges-for-
accounting-and-finance-january-2017

13. OPERATIONAL ISSUES

14. • Here are key issues facing the cities
• Development fees are drying up due to lack of land available for development
• Arbitration – OPP settlements have put pressure on municipal budgets due to matching of
those settlements. OPP Costs - http://www.durhamregion.com/news-story/4414447-
municipalities-pushing-back-against-opp-costs/ or Arbitration -
http://www.thestar.com/opinion/editorialopinion/2012/02/28/ontario_municipalities_struggl
e_with_cost_of_essential_services.html or http://www.parrysound.com/news-story/5447183-
new-opp-billing-model-angers-municipalities/ or
https://ca.news.yahoo.com/blogs/dailybrew/are-police-officers-getting-paid-too-much-
174554130.html
• OMERS – OMERS is underfunded as such the municipalities will be part of the pension solution
http://www.omers.com/corporate/news_article.aspx?newsid=7000
• Transportation – Why are you not pushing Ontario Government for an integrated solution for
transit including using GO with TTC as well as other Transit systems to help move people
around the city?
http://www.metrolinx.com/en/docs/pdf/board_agenda/20140905/20140905_BoardMtg_PPI_
Report_EN.pdf
• Size of Government – You increased your staff budget when other parts of the economy have
either cut or reduced their costs. You have asked other departments to cut, but you grew your

15. • Here are key issues facing the cities
• Build Canada and Gas Tax Funds link Municipalities: http://www.slideshare.net/paulyoungcga/municipalities-canada
• Economic Development - Key Market Indicators KPIs for January 2015 - http://www.slideshare.net/paulyoungcga/key-
market-and-industry-indicators-for-canada-january-2015
• Hydro Rates/Rental - http://www.slideshare.net/paulyoungcga/power-generation-canada
• Housing Prices - http://www.cbc.ca/news2/interactives/housing-canada/
• Property Taxes - http://c.ymcdn.com/sites/www.realpac.ca/resource/resmgr/research/2013_realpac_-_altus_propert.pdf
• Greenbelt Legislation - http://www.mah.gov.on.ca/Page195.aspx.
• CPPIB Proposal - http://news.nationalpost.com/2015/01/23/kelly-mcparland-justin-trudeaus-hidden-agenda/
• OPP Costs - http://www.durhamregion.com/news-story/4414447-municipalities-pushing-back-against-opp-costs/
• Arbitration -
http://www.thestar.com/opinion/editorialopinion/2012/02/28/ontario_municipalities_struggle_with_cost_of_essential_servi
ces.html.
• Private Sector –vs- Public Sector - http://www.cfib-fcei.ca/english/article/6301-a-closer-look-at-private-public-sector-
wage-gaps.html.
• P3 Failures http://www.auditor.on.ca/en/reports_en/en14/305en14.pdf
• Corporation taxation http://www.slideshare.net/paulyoungcga/corporation-taxation-canada-44675640.
• Internal trade barriers - http://www.slideshare.net/paulyoungcga/internal-trade-canada. Wynne will not budge on union
contracts - http://www.theglobeandmail.com/news/politics/saskatchewan-premier-wall-threatens-retaliation-over-

16. CAPITAL SPENDING
https://www.fraserinstitute.org/sites/default/files/myths-of-
infrastructure-spending-in-canada.pdf
Commentary
• 1993-2006 the
liberals were the
ruling government
• 2006-2015 the CPC
were the ruling
Government
• CPC introduced both
the Gas Tax and
Build Canada Funds

17. GOVERNMENT SPENDING

18. GAS TAX FUND

19. BUILD CANADA FUND

20. FEDERAL GOVERNMENT SPENDING ON
INFRASTRUCTURE

21. FEDERAL GOVERNMENT SPENDING ON
INFRASTRUCTURE

22. COMPENSATION
http://www.cfib-fcei.ca/english/article/7114-
public-sector-workers-earn-more-work-less.html

23. DOWNLOADING
T here are a range of ways this happens, but some of the most common forms of
senior government downloading include:
• Direct offloading of federal or provincial programs and/or responsibilities without
adequate funding or revenue tools;
• Regulatory changes that require spending by municipalities.
• Enforcement of federal and provincial regulations;
• Cancellation of programs and services that are needed or expected by the public;
• Reduction or cancellation of senior government transfers or program funding;
• Programs that are paid for municipally, but where municipalities have little control
over costs;
• Grant-based or 'one time only' funding of downloaded or new programs
encouraged by senior governments;
• Underinvestment by senior governments in infrastructure maintenance, renewal
and replacement; and Failure to adequately address issues or problems that should
fall under provincial or federal jurisdiction
Source: http://thetyee.ca/Opinion/2014/09/24/Downloading-Steamrolls-Cities/ or
http://rabble.ca/blogs/bloggers/municipal-matters/2014/09/municipalities-
struggle-to-cover-costs-federal-and-provinci

24. PENSION FUNDING
Funding of pensions is becoming an issue for many cities/municipalities. The latest to come forward has been the city of Houston
- http://www.click2houston.com/news/mayor-turner-to-announce-historic-pension-reform-plan.
The issue has been market returns a pension funds have a portion tied money market investments. Money market investments
are driven by interest rates.
Shortfall in pensions are the responsibility of the municipalities. Municipalities are under pressure as such dealing with shortfalls
in pension plan will be put pressure on taxation as well as delivery of program spending.
Pensions plans also driven by contributions/matching by various municipalities. The problem is that public sector has not moved
enough when it comes to salary/pension reforms - http://www.cfib-fcei.ca/english/article/7114-public-sector-workers-earn-
more-work-less.html
Here are key plans in Canada
• OMERS - http://www.theglobeandmail.com/report-on-business/omers-posts-67-return-in-2015-bolstered-by-
infrastructure-real-estate-assets/article28925778/. OMERS is underfunded by about 10%. OMERS is investing heavily into
infrastructure projects, like transportation systems.
• British Colombia - http://www.fic.gov.bc.ca/pdf/pensionplans/ReportOnPensionPlans2016.pdf - Issues with unfunded
liabilities - https://www.moodys.com/research/Moodys-US-government-pension-shortfall-overshadowed-by-Social-
Security-Medicare--PR_346878 http://business.financialpost.com/news/fp-street/inside-the-risky-strategy-that-made-
canadas-biggest-pension-plans-the-new-masters-of-the-universe
What needs to happen:
• More regulations over pension funding including risk testing as well as ensure there are plans to make the plans including
solvent.
• Pension/Salaries reforms to close the gap between private and public sector payroll gaps
• Fixing a broken arbitration systems

25. ARBITRATION ISSUES
• OPP Costs - http://www.durhamregion.com/news-
story/4414447-municipalities-pushing-back-against-opp-
costs/
• Arbitration -
http://www.thestar.com/opinion/editorialopinion/2012/02/28
/ontario_municipalities_struggle_with_cost_of_essential_service
s.html

26. WATER ACT
• http://www.thestar.com/news/queenspark/2014/12/09/public
private_financing_cost_ontario_taxpayers_8_billion_auditor_say
s.html

27. MUNICIPAL PENSIONS

28. REVENUE

29. GREEN ACT
• http://www.lfpress.com/2014/12/02/pov-rural-urban-divide-
blowing-in-the-wind
• http://www.windconcernsontario.ca/ontario-rural-citizens-no-
say-in-wind-farm-development/

30. JUSTIN TRUDEAU /FUNDING – MARCH 2017
• Fiscal Monitor

31. LPC/ INFRASTRUCTURE FUNDING
Source - http://www.cbc.ca/news/politics/infrastructure-pbo-delays-
CBC News – February 2, 2017

32. INFRASTRUCTURE BANK
Source - http://www.financialpost.com/m/wp/news/blog.html?b=business.financialpost.com/fp-
comment/jack-m-mintz-beware-a-new-infrastructure-bank-canadas-had-enough-of-these-failures-
already&pubdate=2017-05-19

33. VALUE FOR MONEY
Source - https://www.hamiltonnews.com/news-story/7044004-ontario-minister-brushes-off-
municipalities-demand-for-audit-on-npca/