2014 Budget Budget Sub-Committee #1 October 8 th , 2013 Building Markham’s Future Together Journey to Excellence Markham Pan Am Centre
Building Markham’s Future Together Journey to Excellence Agenda 2014 Budget Process and Communication Plan Economic Trends and Fiscal Scan 2014 Budget Overview Operating Capital Planning & Design Engineering Building Waterworks 2014 Budget Summary 2014 Capital Budget Highlights Next Steps Slide 2
Building Markham’s Future Together Journey to Excellence 2014 Budget Process Development Integrated Diversity Official Community Reserve Sustainability Councillor Fiscal Business Charge Leisure Action Plan Engagement Plans Studies Background Plan Requests Scan Plan Master Plan Study • Preliminary Budget • Staff, Commissioner and CAO Review Staff Review • Budget Sub-Committee meetings • Budget Consultation meeting Deliberation Process • General Committee • Council Decision Council Decision Slide 3
Building Markham’s Future Together Journey to Excellence 2014 Budget Process (cont’d) Each Business Unit identified proposed objectives for the year ahead, in alignment with Council’s priorities and the City’s corporate goals, and developed its proposed operating budget and capital budget within the available funding envelope In 2014 Markham introduced “Capacity Budgeting” , setting realistic operating (revenue and expense ) and capital budgets that are achievable within underlying operational capabilities or capacity constraints (defined by skill set and available time) Slide 4
Building Markham’s Future Together Journey to Excellence 2014 Budget Process (cont’d) Step 1: Identify Business as Usual (“BAU”) versus Strategic Projects/ Initiatives (“SPs”) a) BAU - a set of services, activities or processes that are routine and re-occurring in nature, with an established set of formal or informal expectations, that are necessary to deliver a product and/ or service that is considered regular, core, base business type work b) SP - projects that do not have one operational goal but focus on the organisations overall direction and address specific strategic goals. These projects are considered to be of significant importance to the Mayor and Council and are typically unique (transformational, major impact), complex (high risk) and involve large organizational change Step 2: Identify timelines within which BAU and SPs must be delivered Step 3: Identify available capacity, primary drivers of which are time available and skill set, to meet BAU Step 4: Identify excess capacity to address SPs Slide 5
Building Markham’s Future Together Journey to Excellence 2014 Budget Process (cont’d) Seven Budget Sub-Committee meetings are scheduled in October on the 8 th , 11 th , 15 th , 18 th , 23 rd , 25 th and 28 th Public Budget Consultation Meeting is scheduled to take place on: October 24 th from 7 p.m. to 9 p.m. at the Civic Centre Once the Budget Sub-Committee and Budget Consultation meetings are complete, the following process will take place to finalize the budget: December 2 nd , 2013 General Committee - recommends budget to Council December 9 th , 2013 Council Decision December 10 th , 2013 Press Conference Slide 6
Building Markham’s Future Together Journey to Excellence 2014 Budget Process (cont’d) Communication Plan All Budget Sub-committee meetings are open to public and audio streamed through Markham’s website. Notices of the Budget Sub-Committee meetings are advertised in the local newspapers, through social media and on Markham’s webpage. This year, the City is taking an additional innovative step to engage Markham residents in the budget process, through the Citizen Budget Tool. This online tool will help residents better understand how their tax dollars are used for Markham’s programs and services. It also provides an opportunity to express their views on how residential tax dollars are used. Slide 7
Building Markham’s Future Together Journey to Excellence 2014 Proposed Budget Slide 8
Building Markham’s Future Together Journey to Excellence 2014 Budget Engineering Planning & Design Building Services Waterworks Capital $120.46M Operating $187.36M Slide 9
Building Markham’s Future Together Journey to Excellence Economic Trends Inflation 1.1% CPI, Canada, All Items (Aug. 2012 to Aug. 2013) 1.3% CPI, Ontario, All Items (Aug. 2012 to Aug. 2013) 1.6% CPI, Toronto, All Items (Aug. 2012 to Aug. 2013) 2.4% Energy Index (Aug. 2012 to Aug. 2013) 0.9% Construction Index (Jun. 2012 to Jun. 2013) 2.02% average CUPE settlements (Markham primary comparators) 2.93% average Fire settlements The Ontario forecast for real GDP (Gross Domestic Product): 1.8% in 2013 and 2.5% in 2014, which are below the historical average of 2.6% (1) Stock market indexes TSX – 6.7% increase (Sept. 2012 to Sept. 2013) Dow – 13.8% increase (Sept. 2012 to Sept. 2013) Housing Markham housing sales are down 0.9% and the average price is up 3.8% to $629,211 GTA housing sales are expected to decline by 4.1% in 2013 and prices are expected to increase by 1.4% GTA housing sales for 2014 are expected to increase by 5.9% with prices increasing by 1.6% (2) Sources: (1) TD Economics – “Provincial Economic Forecast” July 10, 2013 (2) Canadian Mortgage and Housing Corporation – “Housing Market Outlook” GTA – Spring 2013 release Slide 10
Building Markham’s Future Together Journey to Excellence Economic Trends (cont’d) Unemployment rate in Ontario is 7.9% for August 2013 as compared to 8.0% in August 2012 The Bank of Canada is not expected to raise interest rates until late 2014. The current Bank of Canada interest rate is 1%. (1) The pace of Canadian consumer borrowing has moderated in 2013, and the household debt-to-income ratio has stabilized over the past year at a very high level. (1) Global growth is expected to be 2.9% in 2013 and 3.6% in 2014 . Europe is projected to see negative growth (contraction) of (0.5%) in 2013. The U.S. is forecasted to see 1.9% growth in 2013 with 2014-2017 expected to be 2.8% per year. The above potential pace of growth will lower the current U.S. unemployment rate of 7.6% to an average of 5.7% by 2017. (1) (2) China’s forecast for growth is 7.6% in 2013 which is 0.3 percentage points lower than previous forecasts. (2) While the global market and Canada’s economic growth has started off slow in 2013, momentum will pick up in the second half of this year, as the global economy regains confidence from a stronger US recovery (2) Sources: (1) TD Economics – “Long Term Economic Forecast” June 18, 2013 (2) TD Economics – “Economic & Financial Outlook: A 10,000 Foot View” – June 26, 2013 Slide 11
Building Markham’s Future Together Journey to Excellence Economic Trends Indexes Impacting Markham 10.00% 5.30% 5.00% 4.10% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 2.40% 2.90% 2.10% 2.00% 1.70% 1.20% 1.30% 2.40% 1.10% 1.00% 0.80% 0.80% 1.00%0.40% 0.50% 1.20% 1.20% 1.20% 0.90% 1.10% 0.70% 0.00% 0.30% -0.20% -0.50% -1.70% -1.90% -5.00% Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Canada CPI Energy Construction Wage Settlements Slide 12
Building Markham’s Future Together Journey to Excellence Municipal Personnel Provincial Growth Service Infrastructure Costs Legislation Contracts Fiscal Scan Slide 13
Building Markham’s Future Together Journey to Excellence Fiscal Scan Canadian Union of Public Employees (CUPE) collective agreement expired on March 31, 2013 Markham Professional Fire Fighters Association (MPFFA) collective agreement expired on December 31, 2012 Full-time, part-time grid movements Firefighter grid progression and service pay Personnel New staffing requests Costs Includes benefit costs such as health, dental, paramedical and other costs Net Total: $2.63M Slide 14
Building Markham’s Future Together Journey to Excellence Fiscal Scan (cont’d) Personnel ramp-up related to new facilities: Cornell Fire Station 2 nd crew at the Cornell Fire Station Southeast Community Centre Markham Pan Am Centre Regional Sports Park Growth Operations Works Yard Milliken Mills Library Expansion Markham Centre Fire Station (new ramp-up) Slide 15
Building Markham’s Future Together Journey to Excellence Fiscal Scan (cont’d) Increase in costs related to: 3,200 tonnes or 1.8% increase in tonnage – waste collection 30 additional kms of road – maintenance, street & catchbasin cleaning 800 new streetlights to power, maintain & repair 12 additional hectares of parks – park maintenance 30 hectares of park maintenance related to window streets, valleys & natural areas and stormwater management ponds Growth 5,000 litres increase for fleet gasoline volume and 25,000 litres in (cont’d) diesel volume Winter maintenance Contribution to capital program Ramp-up for Operations Works Yard Total: $3.12M Slide 16
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