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HomeMy WebLinkAbout04/07/2004 Special Cli1lmglOn SPECIAL GENERAL PURPOSE AND ADMINISTRATION COMMITTEE DATE: APRIL 7, 2004 9:30 A.M. TIME: PLACE: COUNCIL CHAMBERS 1 . ROLL CALL 2. DISCLOSURES OF PECUNIARY INTEREST 3. DELEGATIONS (a) Representative of Clarington Public Library Board Re: 2004 Budget Requests (b) David Climenhage, Clarington Museums and Archives Board Re: 2004 Budget Requests 4. FINANCE DEPARTMENT (a) FND-009-04 - 5. ADJOURNMENT 2004 Current and Capital Budgets CORPORATION OF THE MUNICIPALITY OF ClARINGTON 40 TEMPERANCE STREET, BOWMANV!LLE, ONTARIO L1C 3A6 T (905) 623-3379 \, CJ~il1gtDn REPORT FINANCE DEPARTMENT Meeting: SPECIAL GENERAL PURPOSE AND ADMINISTRATION COMMITTEE Date: WEDNESDAY APRIL 7, 2004 Resolution #: Report #: FND-009-04 File #: By-law #: Subject: 2004 CURRENT AND ~APIT AL BUDGET Recommendations: It is respectfully recommended that the Special General Purpose and Administration Committee recommend to Council the following: 1. THAT Report FND-009-04 be received; 2. THAT Council approve the 2004 Operating and Capital Budgets as outlined, at. an estimated total tax levy of $22,737,460 (exclusive of tax policy impacts), as directed in FND-009-04; .' . 3. THAT the Schedules of the Draft Current Budget document outlining Reserve and Reserve Fund Contributions be approved; 4. THAT approximately $1,000,000 be drawn from the accumulated surplus to offset the tax rate impact; 5. THAT the financing of capital projects, as outlined in the attached document be approved; . I 6. THAT the capital forecast be received for information; 7. THAT the external agencies, referred to in this report be advised of Council's decision regarding their grant request; 8. THAT 2004 staffing changes be approved, as identified in this report; REPORT NO.: FND-009-D4 PAGE 2 9. THAT this report satisfy the requirementsof,Section 300(1) of the Municipal Act, S.O. 2001, c.25; and ' , 1 O. THAT the appropriate 'By-laws to levy the 2004 tax requirements for Municipal, Regional and Education purposes be forwarded to Council for approval, once final tax policy information is,available. Reviewed Cl~~, Franklin Wu Chief Administrative Officer NMT/hjl . J . REPORT NO.: FND-009-D4 PAGE 3 OVERVIEW: 1.0 2004 has been a particularly difficult budget year due to a variety of significant uncontrollable impacts. The most significant uncontrollable impacts include CUPE and non-affiliated staff wage settlements, Fire Association three year arbitration award and 2004 wage settlement, OMERS full reintroduction and rate increase, uncontrollable staffing increases, snow clearing cost increases and increased debt costs for both the indoor soccer facility and the new main branch library/municipal administration centre expansion. Also, the final phase-out of the former Fire Primary Response funds that were subsidizing the fire suppression salary costs occurs this year as those funds have been depleted. 1.1 Due to the significant uncontrollable impacts, the Chief Administrative Officer and the Director of Finance have worked diligently with all departments to ensure we do not take on new programs or services, in order to prevent a double digit tax impact. In addition, certain non-core services/programs (such as the Backyard Festival), are being eliminated. 1.2 The approximate impact for 2004 is as follows: Emergency Services (Fire) 4.6% Municipal Uncontrollable 3.4% Municipal Priority #1 1.2% 9.2% 1.3 This impact is after assessment growth, which is estimated at 2.94%. The impact of a 9.2% increase on a typical residential taxpayer in Clarington is approximately an additional $63 annually. Every 1 % increase in the budget generally results in a tax increase of approximately $7 for the average residential taxpayer for the local portion of the tax bill. This does not include any reassessment impact or impact of tax policy changes determined by the Region of Durham. 1.4 Clarington continues to rely strongly on reserves and reserve funds to alleviate tax levy impacts. For 2004, the net annual draw on reserves and reserve funds is an almost unprecedented $10.7 million and this does not include $1,000,000 drawn from surplus to offset the tax levy. 1.5 Consistent with prior years, interest revenue from the Port Granby Trust monies and Provincial Offences revenue were factored in so as to mitigate the tax levy impact. The budget for supplementary taxation revenue has also been increased for 2004. The estimated value for OPG assessments has been included. At the time of writing this report, the necessary Provincial regulation has not yet been signed by the Minister. However, indications are that there are not significant obstacles identified. REPORT NO.: FND-009-D4 PAGE 4 1.6 The Community Reinvestment Funding, from the Province, is anticipated to be the same as the prior year at $116,000 and has been used to offset tax levy impacts to taxpayers as was done in previous years. 1.7 As indicated in the March 29, 2004 report to Council, FND-007-04, right-of-way linear taxation for railways has been included at the 2004 rate but some uncertainty still exists as to how this will be treated in 2004 by the Province. 1.8 2004 is again a reassessment year. Property valuations are based on a June 2003 valuation date. This will result in some shifting of tax burden for those property owners whose assessment changed beyond the overall averages for each class. TAX RATE STABILIZATION: 2.0 Historically, Clarington has drawn on our Accumulated SurpluslWorking Funds Reserve approximately $1 ,000,000 per year, on average. This is proposed to continue for 2004 due to the significant other uncontrollable impacts mentioned above. However, ideally, the Municipality should start to reduce it's reliance on these funds as they are becoming depleted and are not being replenished. There are only enough funds at this point to provide approximately two more years of stability to the tax base (to 2006). After that, the impact will be transferred entirely to the tax base. It should be a priority in the 2005 budget to make some inroads into our reliance on this surplus or begin replenishing the balance in the Working Funds/Rate Stabilization Reserve. TAX POLICY CHANGES: 3.0 A long term strategic tax policy plan was approved in 2002 by the Region of Durham that will have an impact on the final tax rates. The 2004 update of the plan was presented to Regional Council in February 2004. The tax ratio changes impact upon the relative share of the total taxes that each property class pays. A particular additional impact to Clarington relates to the education retained portion of payment-in-Iieu properties such as Ontario Power Generation. As a result of reductions in the Large Industrial tax ratio, as well as the provincially mandated reduction in the industrial education rate, Clarington will continue to experience a , loss of revenue in this area. For 2004, the estimated reduction in revenue will be included as a tax policy adjustment in the calculation of the final tax rates. STAFFING REQUESTS: 4.0 The staffing request for the 2004 budget year is a very modest one and is premised on the need to maintain the current level of services only. They are categorized as follows: a) The "must" category 'REPORT NO.: FND-009-D4 PAGE 5 This includes the addition of four (4) fire fighters in order to augment the existing crews. The Emergency and Fire Services Department has experienced staff shortage over this past year due to a number of factors such as injuries and sickness. In order to overcome the periodic staff coverage, it is essential that the Municipality exercises its due diligence by taking a proactive step towards meeting the 10 & 10 guidelines of the Office of the Fire Marshall, In order to lessen the budgetary impact for this year, the cost of the additional firefighters would be approximately $125,000 (equivalent to a half year cost), , The Bowmanville Indoor Soccer facility is anticipated to be operational by the end of 2004. The Brian McFarlane Hockey Museum will not be open for 2004 but will require start-up staffing. At a minimum, these new facilities require two (2) facility operators and twelve (12) part-time employees at a total cost of $280,000. Recognizing that the staffing would not be needed until later on in the year, we have allocated one-third of the staffing cost of $98,000 for this budget year and defer the balance to 2005. b) Priority Staffing As the Municipality grows, so are the needs to ensure we have sufficient human resources to sustain the level of services our residents are accustomed to. We have attempted to minimize the expenditures required to service growth. The staffing request under this category is a modest request of a total of $212,000 plus $36,000 for library services. It is just slightly over one percent of our tax base, and is considerably below our assessment growth of $600,000. The staffing changes requested below have been built into the staff recommendation for the approval of the 2004 budget. Positions Financial Impact HR payroll clerk (part-time) $19,000 Reclassify Clerk 2 to Marketing Coordinator 3,000 Accountant (part-time to full time) 20,000 Planner . 54,000 By-Law student 8,000 Operations Supervisor 68,000 Facility Supervisor (Community Services) 20,000 ** Recreation Co-Ordinator 20,000 ** Animal Services Officer (from contract to 0 full time) 4-Labourers (convert 8 temps to 4 full time) 0 Total $212,000 Library services 36,000 Grand total $248,000 ** One-third of annual salary REPORT NO.: FND-D09-04 PAGE 6 CAPITAL BUDGET COMMENTARY: 5.0 The recommended impact on the tax base of the proposed Capital Budget is an approximate reduction of 0.4% (excluding the effect of the elimination of the GST). Details of capital projects, by department, are included in the Draft Capital Budget. 5.1 Included in the 2004 draft Capital Budget under the Operations Department. is the roof repairs for the Newcastle Fire Station totaling $17,600. This will increase the expected occupancy of the building for several more years and defers an annual debenture impact of $190,000 that would have otherwise been required for a new station. 5.2 The Capital Budget is presented to Council for consideration and approval. The financing for most of the projects is a combination of Reserve, Reserve Funds, Development Charges and tax levy. TRANSIT: 6.0 Council passed a resolution on January 12, 2004 to transfer the provision of conventional and specialized transit services to the upper tier. The intent, should there be sufficient support across the Region, would be to transfer the service effective July 1, 2004. At the time of writing of this report, final determinations had not yet been made. As a result, for budget purposes, the full annual cost has been included, to be funded from the Clarington Transit Reserve Fund. Also included in the budget is the full year funding to be received from the Region from the former GO Transit funding. Therefore, there is no impact on the tax levy. 6.1 In the event that the transfer of responsibility does not take place, there is a significant concern for 2005 relating to the use of the former GO Transit funding. Prior to the transfer of service resolution, the issue of the funding mechanism was referred to the area treasurers. 6.2 Due to the potential for the service to be transferred, as an interim measure, the Region has not given authority for the area municipalities to retain the former GO Transit funding from levy proceeds. As a result, the operational costs for Clarington Transit from January 2004 until such time a decision has been made must be funded from the existing balance in the Clarington Transit Reserve Fund. This will substantially deplete the funds remaining in that reserve fund. . REPORT NO.: FND-009-D4 PAGE 7 DEBT STATUS: 7.0 Current annual debt repayment obligations for 2004 budget purposes total $2,191,338. This is comprised of debentures issued for the CourticeBranch Library, the South Courtice Arena, and the MAC/Main Library. The total principal amount outstanding at January 1, 2004 is $18,983,500. The Courtice Library and the South Courtice Arena debt payments are funded from development charges and the MAC/Main Library is funded from tax levy. 7.1 In addition, a debenture for $2,700,000 was authorized in 2003 for the Indoor Soccer Facility/Lacrosse Bowl. The estimated annual repayment will be an additional $278,000 annually. Due to timing issues with a 2004 debenture issue, 50% of the cost ($139,000) has been built into the 2004 budget with the balance to be included in 2005 budget requirements. GST: 8.0 On February 3, 2004, the Federal Minister of Finance announced that, subject to parliamentary approval, municipalities will be eligible for a 100% rebate of the Goods and Services Tax. The planned effective date would be February 1, 2004. The enabling legislation has not yet been put into place. For 2004 budget purposes, GST is still incorporated into the line by line details provided in the draft Current and Capital budget documents. However, in arriving at the net tax levy required, an estimated GST savings of $429,000 has been applied in order to reduce the tax levy. The value was determined by estimating the total savings and prorating for 11 months for 2004. 8.1 Adjustments will be made for the value indicated above to the itemized capital budget and detailed current budgets prior to printing the approved final budget document. MUNICIPAL ACT, 2001 s.300 (1): 9.0 The Municipal Act, 2001 has a new section that reads as follows: 300(1). Notice re: improvements in service - A municipality shall, at least once each calendar year, provide notice to the public of, (a) improvements in the efficiency and effectiveness of the delivery of services by the municipality and its local boards; and' (b) barriers identified by the municipality and its local boards to achieving improvements in the efficiency and effectiveness of the delivery of services by them. The Minister may designate the manner of the notice, but has not yet done so even though this is a mandatory notice provision in the Act. Therefore, in the absence of any direction, Council is requested to designate the draft budget REPORT NO.: FND-D09-Q4 PAGE 8 documents as the notice to the public of improvements in efficiency and effectiveness as well as barriers to achieving improvements. INSURANCE: 10.0 Insurance costs for 2004 are particularly unpredictable at this point, beyond a certainty that they will increase. A budget increase of $64,000 has been incorporated into the draft current budget. However, it is anticipated that this will not be sufficient. Should this be the case, the 2004 shortfall will be funded from the Self-Insured Losses Reserve and the 2005 budget will be adjusted to then accommodate any further changes. SENIORS SNOW CLEARING PROGRAM: 11.0 At the time of writing this report, Council had not yet had the opportunity to consider any changes to the existing seniors snow clearing program. As a result, it has been included in the draft budget documents at a 2004 cost of $90,000. If an alternative service delivery option is selected, any budget savings will reduce the total tax levy requirement indicated in recommendation #2. As will be indicated in the Operations Department report, approximately $60,000 has already been incurred in January and February, so the full effect of any changes to the program will primarily impact the 2005 budget. RESERVE AND RESERVE FUND CONTRIBUTIONS: 12.0 Consistent with past practice, as a matter of housekeeping, some Reserve Funds are recommended for closing to other funds as projects are complete or the funds are more appropriately consolidated. Also, transfers between reserve funds are at times deemed appropriate to bolster balances in depleting reserve funds. All proposed changes are included on the Reserve and Reserve Fund summaries in the Draft Current Budget. EXTERNAL AGENCIES: 13.0 The requests from the external agencies, including the Museum, Library, Visual Arts Centre, etc. are detailed in the Community Services- Grants section of the Draft Current Budget for Council to consider their requests on an individual basis. The additional items included under priority #1 that are not included in the grant section are the $36,000 for library services priority #1 staffing and a request from the Orono Cemetery Co. for an increase in their annual grant of $2,500. This was separately identified because Council has already approved a one-time grant of $15,000 for the Orono Cemetery Co. for 2004. If approved by Council, these amounts will be included in the Final Budget document. The external agencies tab in the Draft Current Budget also provides additional background information pertaining to the requests by the external agencies. FUTURE YEARS' BUDGETS: . REPORT NO.: FND-009-D4 PAGE 9 14.0 There are certain known impacts for the 2005 budget year such as staffing, wage settlements, fire master plan implications, insurance costs, normal inflationary impacts, and increased debenture requirements for proposed new facilities. As mentioned above, consideration must be given in 2005 to the Working Funds/Rate Stabilization Reserve as these funds are rapidly depleting. Also of concern for 2005, will be the need for additional tax support to capital for road and sidewalk repairs and reconstruction in order to address the deteriorating condition of the road network. CORPORATION OF THE MUNICIPALITY OF CLARINGTON 40 TEMPERANCE STREET, BOWMANVILLE, ONTARIO L 1C 3A6 T (905)623-3379F (905)623-4169 .; ... ....