HomeMy WebLinkAboutFND-009-04
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ClfJ!iggton
REPORT
FINANCE DEPARTMENT
Meeting:
SPECIAL GENERAL PURPOSE AND ADMINISTRATiON COMMITTEE
WEDNESDAY APRIL 7,2004 Resolution #: ~P/l ~O(-C'-f
Date:
Report #: FND-009-04
File#:
By-law #:
Subject:
2004 CURRENT AND CAPITAL 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;
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-009-04
PAGE 2
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9. THAT this report satisfy the requirements of 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.
Submitted by:
Nancy . Ta~ r, .BA, CA
Director of Finance
Reviewed ~ ~.~~,
Franklin Wu
Chief Administrative Officer
NMT/hjl
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. REPORT NO.: FND-009-04
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. Atthe
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-Q09-04
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 Surplus/Working 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-lieu 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-009-04
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. I n 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
Librarv services 36,000
Grand total $248,000
.. One-third of annual salary
"' "REPORT NO.: FND-009-04
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-009-04
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 Courtice Branch
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 5.300 (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-009-04
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-009-04
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, BOW MANVILLE, ONTARIO L 1C 3A6 T (905)623-3379 F (905)623-4169