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HomeMy WebLinkAboutFSD-003-25Staff Report If this information is required in an alternate accessible format, please contact the Accessibility Coordinator at 905-623-3379 ext. 2131. Report To: General Government Committee Date of Meeting: January 13, 2025 Report Number: FSD-003-25 Authored by: Paul Davidson, Manager of Financial Planning / Deputy Treasurer Submitted By: Trevor Pinn, Deputy CAO/Treasurer, Finance and Technology Reviewed By: Mary-Anne Dempster, CAO By-law Number: Resolution Number: File Number: Report Subject: 2025 Budget Update Implementation Recommendations: 1.That Report FSD-003-25, and any related delegations or communication items, be received; 2.That the Deputy CAO/Treasurer be authorized to make an application to the Region of Durham for the necessary debentures, with the term being at the discretion of the Deputy CAO/Treasurer, for the projects identified in the 2025 Budget Update; 3.That Report FSD-003-25 be adopted by resolution in accordance with provisions of Ontario Regulation 284/09 of the Municipal Act, 2001 for the 2025 fiscal year; 4.That the Public Works vehicles identified in Report FSD-003-25, and included in the reserve fund contributions during the years 2025-27, be authorized to be ordered with delivery dates in the applicable fiscal year; 5.That the Deputy CAO/Treasurer is authorized to fund projects which have been previously approved in the 2022 to 2024 budgets and not completed with funding to be provided from the appropriate reserve or reserve fund; 6.That the appropriate by-laws to levy the 2025 tax requirement for Municipal, Region of Durham and Education purposes be forwarded to Council for approval, once final tax policy information is available; and 7.That all interested parties listed in Report FSD-003-25, and any delegations be advised of Council’s decision. Municipality of Clarington Page 2 Report FSD-003-25 Report Overview This report seeks authority for certain actions required to implement the 2025 Budget Update, once adopted. The report seeks authority to carry out the steps necessary for interim financing, long-term financing, purchasing of Public Works vehicles with significant lead-times, and setting the property tax rate by-law. The report also provides the required statutory information on the difference between budgeted numbers and PSAB treatment as required by O.Reg 284/09. This report does not seek to change the budget or comment on the budget itself. The steps recommended in this report will facilitate the steps necessary to fulfill the adopted budgeted. 1. Background 1.1 The Plan for Growth: Clarington’s 2024-27 Multi-Year Budget was deemed adopted by Council on December 5, 2023. This document provided a multi-year operating budget for the years 2024-27, along with a one-year capital budget for 2024. 1.2 Although Council adopted an Operating Budget for 2024-27, the Municipal Act requires that the budget for the second year of a multi-year budget, along with each successive year, be reviewed or updated annually, and then subsequently readopted. 1.3 On December 13, 2025, the Mayor presented the proposed 2025 Budget Update to members of Council. Staff also provided an overview of the budget update at the December 16, 2024 Council meeting. 2. Cash Flow Authorization 2.1 The 2025 Budget Update includes capital expenditures funded by development charges (DC’s) as well as DC eligible debenture payments. The timing of DC receipts is based on legislation and may vary based on economic factors outside of the Municipality’s control. 2.2 In the past, it was necessary to temporarily borrow from another reserve fund to meet the funding obligations of a DC Reserve Fund because of the timing of DC collections. Over the past number of years, a resolution of Council has provided authority for the Treasurer to temporarily borrow internally to fund any cash flow shortfalls. 3. Requirement for Debt Issuance 3.1 The 2025 Budget Update includes capital investments which are funded through debentures. The proposed debentures are within the regulated Annual Repayment Limit Municipality of Clarington Page 3 Report FSD-003-25 of the Municipality and are for proposed capital works; therefore, the proposed debt meets the criteria set out within the Municipal Act, 2001. 3.2 Council needs to provide authorization to staff to seek debenture funding for the capital works identified as requiring debenture financing. The recommendation in this report is to provide such authorization for the capital works identified in the budget as requiring a debenture issuance in 2025. 4. 2025 Accrual Based Budget for PSAB per Ontario Regulation 284/09 4.1 Since 2011, Public Sector Accounting Board annual reporting requirements for municipal Budgets require that certain accrual-based items be reported to Council in conjunction with the Budget. 4.2 Accrual-based expenses that are excluded from the 2025 tax-based budget include post-employment benefits and amortization of capital assets. Other items to transfer to a PSAB Budget include tangible capital asset acquisitions and accounting treatment of debt principal payments. 4.3 There is no immediate financial impact of these PSAB additions or reductions since the tax-based Budget approves the necessary funds to provide municipal services for 2025. However, longer-term implications exist. Municipality of Clarington Page 4 Report FSD-003-25 4.4 The estimated change to the accumulated surplus at the end of 2025 resulting from the above items is as follows: PSAB Additions to the 2025 Budget Adjustment 2025 Dollar Amount Tangible capital asset amortization $22,736,952 Post-employment benefit estimate 901,923 Total PSAB Additions $23,638,875 PSAB Reductions to the 2025 Budget Adjustment 2025 Dollar Amount Tangible capital asset acquisitions $(126,435,156) Debt principal payments (3,794,826) Total PSAB Reductions $(130,229,982) Total PSAB Impact Adjustment 2025 Dollar Amount (Increase) / Decrease in Accumulated Surplus ($106,591,107) Municipality of Clarington Page 5 Report FSD-003-25 5. Vehicles Funded in Future Years 5.1 The 2025 Budget Update includes annual contributions (2025-27) to the Corporate Fleet Capital Reserve Fund. These annual contributions are to fund future year purchases of replacement vehicles and equipment. 5.2 Many large, heavy-duty vehicles, such as snowplows and fire trucks, require a large lead-time for ordering the vehicle to ensure the replacement is received at the time it is required. 5.3 The Public Works division is proposing to order a number of heavy-duty vehicles and equipment in 2025 for future delivery. The request to order now is because of the lead- time required to prepare the vehicle. The estimated cost of the vehicles and the year they are required for delivery is provided in the table below. 5.4 Funding for these vehicles will be budgeted in the year the vehicle is expected to be delivered and will be funded out of the annual contribution to the Corporate Fleet Capital reserve fund. There is no immediate budget impact for ordering now. The benefit to ordering now is price stability, as well as known delivery time which could result in improved service reliability. Vehicle Type Vehicle being Replaced Estimated Cost Year of Delivery Snow Plow 2012 International Single Dump – Single Combo plow $341,700 2027 Snow Plow 2013 International Single Dump – Single Combo plow; $341,700 2027 Snow Plow 2014 International – Single Combo Plow; $341,700 2027 Snow Plow 2014 International 7500 – Single Combo Plow; $341,700 2027 Snow Plow 2 net new plows to service growth (funded through DCs) $683,400 2027 Excavator 2010 Gradall XL4100-III $1,110,500 2026 Total $3,160,700 Municipality of Clarington Page 6 Report FSD-003-25 6. Tax By-law 6.1 Direction is being sought to bring back the tax by-law to set the rates once information from the Region of Durham and the Province of Ontario are received, as well as the final tax roll from MPAC. 6.2 The tax rate by-law is a mathematical calculation based on the levy and the tax assessment to apportion the taxes to taxpayers. The tax ratios are set by the Region of Durham and are used for weighing the assessment between tax classes; this is not within the control of the Council. The Province of Ontario sets education tax rates across the Province, these rates are expected in the new year. 7. Financial Considerations 7.1 The financial considerations of this report have all been included in the 2025 Budget Update. 8. Strategic Plan Not Applicable 9. Concurrence Not Applicable. 10. Conclusion It is respectfully recommended that Council provide the necessary resolutions to facilitate the implementation of the 2025 Budget Update and authorize staff to proceed with the procurement of the Public Works vehicles identified in the report. Staff Contact: Paul Davidson, M.Sc, Manager of Financial Planning/Deputy Treasurer, 905- 623-3379 x2607 or pdavidson@clarington.net. Attachments: Not Applicable Interested Parties: There are no interested parties to be notified of Council's decision.