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HomeMy WebLinkAboutTM-23-80 TAK23-80 TO: Chairua.n and M(vibers of the Finance and Administration 01111)i 1,kv FROM: A. C. Guiler, Town Mannger K. DeGroot, Treasurer "A DATI : June 18th, 1980 (; SU13.TLC1': Resolution F--130-80 � Resr olution F-130-80 requests a report regarding the 1979 deficit. To relate to this effectively some thought must be given to the type of operation and the outside activities which influence the municipality butcannot be controlled by it. Tie municipal operation is canposed of a number of independent units. That is, we have a number of extxnditure units which do not react to the same stimulae and have practically no relationship with the revenue which supports these activities, which is dramatically opposed -to the private sector where various parts of an operation are closely alligned and move together in concert in their reaction to various types of stiirntlae. I point out this canpari_son only to emphasis the lack of relationship between the ❑o veinent of revenues and exj)endi.tures. We operate in a situation where the major portion of our revenues are static, that is, they do not change regardless of what happens, they are taxes and government grants. However, a large portion of expenditures are dynamic in nature and respond to various stimulae. For example, fires must be put out, holes in roads fixed and grass in parrs cut, etc. These VAMP work constantly in different ways which is one of the reasons that in the past there have been overall surpluses when individual areas have been over budgeted. In 1979 these stlmMe have largely worked in the same way effecting a sizeable deficit which was compounded by the error in estimating the 1978 year end position for 1979 budget purposes. This particular error was brought to Council's attention when the 1978 Financial Statements were presented to Council's attention in 1979 by the auditors, Deloitte, Haskins and Sells, on September 4th, 1980 and were received for information by Resolution A-327-79 on Sep-t:c-nber 4th, 1979.- In describing the stimulae that affects the municipal operation, I note that they are mainly generated outside the organization, and on some we have no influence, but must react accordingly, these typically are the changes in interest rates and the court of revision action on reducing taxes. Other activities such as the deterioration of a . section of road, sane influence can be had as to the timing of repair, but one must respond to the problem. _2_ having described the activities that affect budget performance one can see that some ai-o conti,ol.lable and that others are not. Nineteen Seventy--Nine was a particularLy volatile year as it relates to interesl. WAnn. The si tuM(mi is now rettnrning to nx)re reasonable levels but even the Country's Lop economists are at; odds as to which direction that interest rates should move, and we mast resign ourselves Lo being spectators. It should also be noted that the majority of bugetary interest expenses reflect in higher earnings for the various reserve funds as the part: of borrowings is from these reserve funds. The high level of assessment losses experienced at the assessment review court in 1979 was both unexpected and unpredictable, but because of the Unique circumstances which caused it we do not expect a. recurrence of this situation. The short fall in the dog ILcenee revenue was created by unique ci_reunsLances and the department involved has embarked on a new collection procedure in 1980 which it is hoped will prevent this short .Fall. The area of livestock damage is a largely uncontrollable i teal and is _unposed on the municipality by the province. I would note that the 1980 claims already exceed the 1979 level and in fact, exceed the 1980 budget allocation. In the area of road maintenance and park maintenance, which I believe are affected somewhat by climatic conditions, in order to ensure that expenditures remain within budget the departments cannot freely respond to such conditions but mast consider the re- allocation of priorities and if necessary reduce the planned program in another area to accommodate the new priority. Timing would affect this since late in the year it may be impractical to switch resources from one activity to another. The cost of consultants and legal counsel in the area of planning is related to the level and type of representation required with respect to O.M.B. hearings. In these cases council must evaluate the future benefit to be derived from the current expenditures to defend these actions at the O.M.B. A factor to be considered in relating to budgetary control is information and knowledge, in this respect I believe the financial reports being received by the various departments are the best information relating to budgets that they have received in the history of the Town of Newcastle, but they are not perfect. They are the best; possible, given the resources available for that area and the operating methods of the municipality. A totally centralized purchasing system would allow the develolxment of an encumbrance accounting system, however, I do not feel that the benefits outweigh the expenditures required. Reflecting on the previous financial statements I find that in the past there, have been si ea.ble vari-ances from the budget which have all been favourable,but nonetheless a.re variances from the planned program and this constant favourable variance may have caused all of us to relalti our concern with the budgetary control, _3- In conclusion, I would note that the 1979 operation deficit is $347,852.00 compounded by the unrecognized 1978 deficit of $96, 150.00. The A Niched anal ys i s ;shows the areas o C over- exlx mdi.tu_l'e wh i ch account I'or this di r Cerence. V � 1979 1979 S ITLUS BUDCE'T WIM (DEFICIT) Taxation 10,024,174 10,207,603 1S3,429 Unconditional Grants 434,360 454,283 19,923 Revenue (Specific Functions) 1,220,700 1,2367226 15,526 Gather Revenue 670,026 671,200 1,174 12,349,260 12,569,312 EVIENDITURES General Government 660,080 782,721 (122,641) Protection to Persons & Property 455,611 468,180 ( 12,569) Transportation Services 2,603,745 2,859;884 (256,139) Environmental Services 337,725 303,017 34,708 Health Services 16,924 14,376 2,548 Social & Family Services 19Dc 17,958 1,024 Recreation & Cultural Services 659,767 6867992 ( 27,225) Planning and Development 290,350 389,811 ( 99,461) Levies 7,441,834 7,394,225 47,609 12,485,036 12,917,164 3477852 1979 Deficit 96.150 1978 Deficit 444,002 carried forward Analysis 1978 Estimates & Actual Budgets Estimates Actual Difference General Government 579 880 579 044 60 000 ( 29 , 956 ) Protection to Persons & Property 457, 180 465 160 478; 790 ( 13 , 630 > Transportation Services 2 , 399 , 180 2 , 212 , 198 2 , 343 , 689 ( 131 , 491 ) Environmental Services 196, 974 213 , 556 214, 670 ( 1 , 314 ) Health Services 14 ; 495 13 , 244 13 244 - Social & Family Services 15, 000 17, 149 17 , 149 - Recreation €. Cultural Services 633 , 150 628 , 243 627 , 360 883 Planning & Developement 228 ,730 156, 218 156 , 218 - 41524, 583 4, 284 , 812 4'_ , 510 , 120 (225, 308 ) Levies 6 , 729, 888 6, 818, 018 6 , 818 ,018 - 11 , 254 ,477 11 , 102 , 830 11 , 328 , 138 - Revenues 11 , 254, 477 11, 255, 057 11, 255, 057 - - 152 , 227 ( 73 , 081 ) (225 , 308 ) 1979 DEFICIT A�?4LVSIS ACTUAL BLDGET GEN­ERAL GOt`ER.IQ= $736,422 '$620,450 Contribution f ran Reserves 11,571 30,000 724,551 590,480 Difference 134,071 Interest Costs 106,693 Over Budget _I NALY S= AS FOLLOWS Changes in Interest Rates fran 917c to 1711c during year $ 25,000 Creation of Courtice O.H.A.P. Reserve 22,000 Reduction in Taxes collected 10,000 (Due to Econaric Conditions) Financing Charges Due to Deficit 30,000 Carrying Charges Capital 30,000 (Arenas over Anticipated Amount) $117,000 TABS S17RI=i OFF 30,950 50,950 20,000 Due to unanticipated large number of successful appeals after implementation of section 86 re-assessment, especially as related to vacant residential land. 1979 DEFICIT ANALYSIS Actual Budget PROTECTION TO PERSONS & PROPERTY. $468,180 $468,511 REtiT-7L ES Building Permits 54,4 4-6 55,000 Plumbing Permits 3,887 7,000 Dog Licences 29,859 40,000 Fines 8, 183 9,000 96,375 111,000 371,805 357,511 Differences 14,294 This difference can be attributed to large livestock damage claims especially mink claims. Claims Total 11,093 Budget 3,000 $ 8,093 Dog Licences were $10,141 Below budget largely due to not being able to implement past collection procedures due to the individual involved being incapacitated and no adequate replacement being found. 1 t i i 1979 DEFICIT '\?ALYSIS Actual Budget PUBLIC WORKS 7202- Administration $144,906 8138,100 7203- Overhead 245,384 212,015 a - 7204- Construction Bridgers & Culverts -028 Lots 30 & 31, Cone. 2 12,021 3,750 -036 Various Locations 70.D/19 50,000 -044 Lot 30, Cone. 4 6,121 5,000 _ 1 -049 Lot 31,Conc. 4 & 5 119,587 120,000 -058 202 ' -072 2,114 -115 Lot 29, Cone. 3 4,808 -185 Lot 18, Cone. 5 5,000 Sub-Total Construction Bridges & Culverts $214,902 $183,750 7205- Construction Roads & Streets -007 King & Simpson Traffic Signals 2,355 25,000 -008 hots 30 & 31, Cone 1 Railway Signals 4-90 -010 Hot Mix Re-surfacing 118,329 -014 Waverly Road (2,407) -026 Mearns Ave. R.R. Crossing 5,644 8,000 -056 Lots 30 & 31, Cone. 2 7,583 8,000 -084 Lot 33, Cone. 3 99,643 125,000 -085 Lots 30 & 31, Cone. 3 4,780 22,000 -088 Lots 30 & 31, Cone. 5,000 -127 Lots 21 & 24, Cone. 6 99,447 70,000 -226 Solina Road 5,383 16,000 -285 Lots 29-32, Cone. 3 45,129 68,000 Page 2 1979 DEFICIT ANALYSIS PUBLIC VURKS Actual Budget 7205- Construction Roads & Streets -290 Lots 21 & 22, Cone. 2 9,374 5.000 -331 440 -388 Lots 32 & 33, Cone. 8 6,125 32,000 -561 Baseline 7,358 5,000 -596 King Street 92,751 100,000 -630 Concession Street, Liberty-Mearns 7,952 -663 Mearns Ave. 40,652 30,000 Sub-Total Construction Roads & Streets $551,048 5519,000 7206- Maintenance Bridges & Culverts -332 Bridge & Culvert Mtnce. 31,239 17,000 -353 Entrance Culverts 5,287 $ 36,526 S 17,000 7207- Roadside Maintenance 95,000 -312 Brushing 38,518 -313 Ditching 69,468 -325 Weed Cutting 15,256 -341 Catch Basin Maintenance 24,866 -343 Storm Sewer Maintenance 15,243 -345 Sidewalk Maintenance 27,273 $190,624 S 95,000 7208- Hardtop Maintenance 191,000 -319 PavEment Patching 105,450 -350 Pavanent Working 5,869 -351 Surface Treatment 96,799 $208,118 $191,000 Page 3 1979 DEFICIT ANALYSIS Actual Budget PUBLIC WORKS 7209- Loose Top Mai_nrenance S600,000 -314 Dust Control 323,949 -316 Gravel Patching 64,555 -317 Gravel Resurfacing 263,793 -351 Maintenance 3,739 -352 Dragging 70,28 726,323 600,000 7210- Winter Control 360,000 -326 Sncrx; Plming 108,893 -327 Sanding & Salting 152,124 -328 Snav, Removal 14,076 -329 Snow Fence 18,4E -346 Spring & Fall Clean up 19,802 313,307 360,000 7211- Safety Devices 51,000 -318 Guide Rails 5,668 -321 Signs New & Repair 24,807 _ -330 Traffic Signals 347 -340 Railway Crossing 15 ,523 46,345 51,800 Page 4 I 1979 DEFICIT ANALYSIS YUBLIC WORKS Actual Budget 7212- Miscellaneous 1 80,000 -320 Patrol & Radio Rental 13,729 -353 Boundary Roads (2,250) -500 Bldg. Maintenance 29.84-0 -501 Fencing 3,461 -502 Walkway Mtnce. 243 -503 Blvd. Dance. 329 -900 DTisc• 15,952 7213 Connecting Link 6,508 67,812 80,000 Total Expenditure 2,745,295 2,446,865 Revenues 6300- Road Improvanent Grants 1,142,000 1,142,000 -207 Entrance Culverts 7,570 1,000 6400- -033 Mearns Ave. 40,652 30,000 -034 Solina Road 13,917 16,000 -030 Debenture 37,668 36,215 1,241,807 1,225,215 1,503,488 1,221,650 1979 DEFICIT ANALYSIS Actual Budget Recreational & Cultural Services Expenditures $733,716 5678,842 Revenues Recreation Grant 9,000 9,000 Reserve - Park Equipment 46,621 33,000 Reserve - Library Books 25,000 - 80,000 42,000 Difference 16,253 $653,095 5636,842 This difference is attributed to greater manpower and material requirements in Parks Maintenance. Planning Expenditures 53881394 S300,000 Revenues Business Improvement Areas 24,999 - Rezoning Applications 8,555 6,000 Carymittee of Adjustment 3,520 5,000 Subdivision Control 1,500 8,000 Sale of Publications 4,498 2,000 Service Charges 1,968 6,000 Reserve - Courtice Costs 49,793 75,000 Recoveries frcn Developers 62,648 - 40,316 50,000 197,797 152,000 Difference 42,497 $190,597 S148,000 Related to the costs incurred for consultants and and solicitors in relation to Ontario Municipal Board Hearings.