[PPT] - 2018 Budget Operating Budget November 2017 November 2017 1 PowerPoint Presentation

SLIDE 1

2018 Budget

Operating Budget November 2017

November 2017 1

SLIDE 2

 Budget Process  Budget Objective  Fiscal Principles, Practices and Policies  Significant Growth Revenue Financial Policy/Plan  Key Assumptions  Consolidated Budget Overview  Tax Allocation  Budget Impacts & Challenges  Budget Highlights  Budget Comparisons  Corporate Budget Tax Effect  Corporate Budget Utilities  Corporate Budget Closing & Summary

Agenda

November 2017 2

SLIDE 3

Corporate Budget Overview

Budget Process

Budgetary process has focused on containing costs and

implementing best practices.

Management and stewardship of public funds is taken very

seriously

Due to the effects of the economic environment the

County’s approach to the annual operating budget has retained a focus on financial constraint and maintaining service.

November 2017 3

SLIDE 4

Corporate Budget Overview

Budget Process

This budget is coming from prior Council’s direction.
Budgets are completed by Managers, reviewed by their GM,

and finally reviewed by Senior Management for alignment with corporate business plan and Council direction.

During the budget review meeting with Senior Management

managers must provide detailed information regarding:

 2016 Results  Projected 2017 Budget Targets  Impact on the 2018 budget emerging from previous two items  Service enhancements brought forward for 2018

November 2017 4

SLIDE 5

Corporate Budget Overview

Budget Objective

Reinforce strategic priorities through corporate planning.

Align budgets & business plan to the Strategic Plan.
Identify & allocate resources to respond to and

meet service requirements – within the budget parameters Council provides.

Continue to position the County for a sustainable

future.

November 2017 5

SLIDE 6

Corporate Budget Overview

Fiscal Sustainability

Predictable and stable taxation in current & future years.
Future taxpayers will not face declines in services or

unreasonable tax increases to deal with deferred needs.

Future Refinery Revenue
Current taxpayers do not bear all the burden of funding

items that will benefit future taxpayers.

Capital leveraged with low cost debt.
Council’s highest priority programs can be maintained.
Align budgets and business plan to the vision and strategic plan.

November 2017 6

SLIDE 7

Corporate Budget Overview

Budget Consistent with:

Federal legislative requirements.
Provincial legislative requirements.
Community Vision and Strategic Plan.
Council’s approved bylaws, policies and plans.
Council’s 2018 budget direction/priorities
Council Workshop April 2017
Approval of the 2018 Capital Infrastructure Program Sept. 2017
Acknowledges feedback during election campaign

(Roads; Road Project Communications; Public Consultation; Efficiency)

November 2017 7

SLIDE 8

Corporate Budget Overview

Council Guidance and Direction

Ensure Administration is equipped to do the work

and meet Council’s expectations for service delivery to stakeholders.

Support for utility rate action based on the Utility

Cost of Service Study completed in 2016.

Support for debenturing capital assets that provide

a service to future generations.

Caution regarding the use of unallocated reserve

funds.

November 2017 8

SLIDE 9

Review – Fiscal Principles, Practices and Policies

November 2017 9

SLIDE 10

Operating Budget

Budget Requirement

Council must adopt an operating and capital budget for each calendar
year. Administration prepares the County’s initial budget based on

Council approved corporate business plan and priorities.

Balanced Budget

The County’s operating budget must have revenues equal to or greater

than expenditures.

Conservative Revenue Estimates

Sturgeon County estimates its annual revenues by an objective, analytical

approach utilizing trend, judgemental and statistical analysis as appropriate.

Review – Fiscal Principles, Practices and Policies

November 2017 10

SLIDE 11

Revenue

User Fees

The County charges user fees for services. User fees will be reviewed and

adjusted annually to recover the full cost of services provided, except when Council determines that a subsidy from general revenue is in the public interest.

User fees will be based on full cost recovery where it is applicable and

cost effective to do so.

One-time Revenues

Revenues that are not expected to be of an ongoing nature will not be used to

fund ongoing expenditures. The County will avoid budgetary and accounting procedures, which will balance the current budget at the expense of future budgets.

Review – Fiscal Principles, Practices and Policies

November 2017 11

SLIDE 12

Utility Financial Policy

Utilities Self Balancing

The County sets fees and user charges for each utility fund at a level that

fully supports the direct and indirect costs of the utility. Water and Wastewater Funds

Any surpluses from the County’s utility operation will be transferred to the

utility reserve at year-end as part of the County’s effort to establish funding for the ongoing replacement and addition of utility infrastructure.

If a utility function experiences a deficit, it will be funded by a transfer

from the utility reserve.

Review – Fiscal Principles, Practices and Policies

November 2017 12

SLIDE 13

Growth

Off-site levies will be used to recover the costs of growth to

minimize the financial burden of the growth on existing ratepayers.

Certain projects may proceed in the advance of collection of off-

site levies subject to the availability of funds/financing.

The County has limited resources and cannot meet all offsite

front-end needs.

The County will need to prioritize residential or non-residential

areas for front-ending.

Reserves

The County has established specific reserves to provide for emergent

financial needs, to stabilize tax rates, to set aside funds for the replacement of existing equipment, facilities, and future projects.

The County recognizes that the ongoing commitment of funds to

specific reserves provides for property tax stabilization, contingency funding and reduces the need for debt financing.

Review – Fiscal Principles, Practices and Policies

November 2017 13

SLIDE 14

Review – Fiscal Principles, Practices and Policies

November 2017 14

International Government Finance Officers Association General Operating Reserve Recommendation:  20-25% of regular operating revenues  PLY_Reserve_Policy_2016

“To provide funds to stabilize tax rates for non-recurring, emergency, one-time expenditures, losses of revenue or cash flow timing issues that will not be built into the base operating budget in future years. Target 20% of the annual municipal

perating revenue; no maximum.”

SLIDE 15

Significant Growth Revenue Journey

November 2017 15

Significant Growth Revenue Journey Early 2014 During 2015 Late 2015, Early 2016 May 6, 2016 March 28, 2017 August 26, 2016

SLIDE 16

Significant Growth Revenue - 2018

16

PRIORITY #1 – Reserve & Debt

$5,742,381

PRIORITY #2 – Infrastructure Rehabilitation

$5,202,128

PRIORITY #3 – Infrastructure New

$0

PRIORITY #4 – Community Building

$2,453,083

PRIORITY #5 – Potential Service Level Increase

$530,833

PRIORITY #6 – Heartland Mitigation Strategy

$530,833

PRIORITY #7 – Tax Stabilization

$583,333

$15,042,592

SLIDE 17

Significant Growth Revenue – 5 Year Outlook

November 2017 17

SLIDE 18

Review – Fiscal Principles, Practices and Policies

November 2017 18

Budget Equation

Expenses Revenues

Existing Service Levels
Inflation
Staff & Material Costs
Growth
Debenture servicing
Existing Tax Base
New Assessment Growth
User Fees and Charges
Grants
Other

EXPENSES = REVENUES

SLIDE 19

Corporate Budget Overview

Key Assumptions – Baseline

Assessment growth
Economic growth
Inflation
Maintain current service levels ‘Keep the lights on’
Based on Council priorities and policy direction
Continuous service improvement
Identify challenges and opportunities:

Transitioning to Focused Growth

November 2017 19

Conservative revenue estimates

SLIDE 20

BREAK

November 2017 20

SLIDE 21

Corporate Budget Overview

2018 CONSOLIDATED BUDGET $80,529,581 CAPITAL *$26,728,659 OPERATING $53,800,922

November 2017 21

* Pending Refinery Revenue

SLIDE 22

Corporate Budget Overview

Consolidated Overview

Tax funded capital $ 7,512,625 $ 7,442,125

November 2017 22

OPERATING EXPENDITURES

2018 2017 % Change Tax Funded Operations $45,056,000 $41,809,297 7.8% Utility Funded Operations $5,989,240 $6,736,064

11.1%

Debenture Repayment $2,755,682 $2,684,876 2.6% $53,800,922 $50,483,413

SLIDE 23

Corporate Budget Overview

Transportation 47.6% County Governance 4.6% Corporate Support 19.6% Agriculture & Solid Waste 4.6% Community Services 5.0% Protective Services 6.6% Planning, Economic Development, CARP 7.9% Engineering 4.0%

2018 Tax Allocation by Function

November 2017 23

SLIDE 24

Corporate Budget Overview

PROJECTED ASSESSMENT GROWTH 2017 2016

Residential 2.05% 1.37% Machinery & Equip 19.78% 24.46% Non-residential 2.73%

0.51%

Linear

6.23%

15.95%

November 2017 24

Budget Impacts & Challenges

SLIDE 25

Corporate Budget Overview

Budget Impacts

*Information above is gross expense not net impact on tax.

November 2017 25

Inflation $ 1,146,597 Salaries, Wages, & Benefits $ 753,000 FTE Enhancements for 2018 $ 220,964 Other Enhancements $ 1,001,500 Debenture Servicing $ 70,806 $ 3,192,867

SLIDE 26

Corporate Budget Overview

Operating Budget Impacts and Challenges

Expenditure Revenue

Residential $298,704 Non-residential $2,329,306 Assessment Growth

Unant. Rev $564,857

2017 Unanticipated Revenue

November 2017 26

0.0% Proposed Increase Base Budget Inflation, and Net Service Growth $2,569,303 Service Enhancements $623,564

SLIDE 27

Corporate Budget Overview

Budget Impacts and Challenges

Debentures $70,806 - 0.15%

Final Draw on RR241 Reconstruction
Pilon Creek Projects

November 2017 27

SLIDE 28

Corporate Budget Overview

Budget Impacts

Capital $0 - 0.0%

 Multi year plan  No borrowing required for equipment  Further details in November 3rd capital presentation

November 2017 28

SLIDE 29

Corporate Budget Overview

Capital Drainage 0.00%

 Not included in capital presentation or current budget Dollars available annually in the base: $1,192,132 (2015/16/17 1% contributions)

November 2017 29

SLIDE 30

Corporate Budget Overview

Budget Tax Impacts

Operating impact

$(70,806) - (0.15)%

Debentures

$70,806 - 0.15%

Capital

$0 - 0.00%

Drainage

$0 - 0.00%

Recommended Budget 0.0%

November 2017 30

SLIDE 31

2018 operating revenue ratio:

Taxes 77.9% - User fees 17.7% - Grants 2.4% - Other 2.0% Revenue highlights:

Core operating transfers from senior governments stable

Budget Highlights - Revenue

November 2017 31

SLIDE 32

Budget Highlights - Revenue

November 2017 32

Increase $177,305

 Utility Fees (volume & rate)  Protective Services Revenue (volume)  Planning & Development (volume)  Solid Waste (Roseridge)  Community Services

Sales and User Charges

SLIDE 33

Budget Highlights - Revenue

November 2017 33

Family & Community Support Services $485,091
Agriculture Service Board $183,359
Rural Transportation $550,000 (now included in MSI)
Adult Learning $123,180
Municipal Sustainability Initiative Grant

(MSI Operating) $170,000

Finance Intern Funding $27,000
Summer Temporary Employment Program STEP $2,500

Total $1.541 million

Operating Grant Projections

SLIDE 34

Budget Highlights - Revenue

November 2017 34

Local Improvement Taxes
St. Albert Annexation
Return on Investment
Penalties on Taxes
2nd Year of CN Line Closure Contribution

 Transferred to Reserve

Other Revenue

SLIDE 35

Budget Highlights - Expense

35

Merit adjustments $204,008
Benefit Increases

$369,390

Cost of Living Adjustments $323,441
New Positions (approved in 2017)

$240,017

Abolished Positions

($305,707)

Service Enhancements $220,964
OT reduction

($78,149)

Total increase

$973,964

Salaries, Wages & Benefits

November 2017

SLIDE 36

Workforce

FTE Growth as of June 13, 2017

145 150 155 160 165 170 175 180 185 2013 2014 2015 2016 2017 159.95 166.5 169.6 177.6 184.46

Perm-Full Time

SLIDE 37

Workforce

Staff Cost Comparisons

SLIDE 38

Workforce

Staff Cost Comparisons

SLIDE 39

Workforce

Factors

72 78 83 66 68 70 72 74 76 78 80 82 84 2012 2014 2015

Employee Engagement Index

Employee Engagement

SLIDE 40

Workforce

Sturgeon County Employee Tenure Less than 1 year 16% 1 year to 2 years 11% 2 years to 5 years 24% 5 years to 10 years 27% 10 years to 20 years 12% Over 20 years 10%

Employee Tenure

SLIDE 41

Budget Highlights - Expense

November 2017 41

Training & Professional Development
Contracted Engineering
Hired Equipment
Gravel Haul
Planning Projects
Economic Development
Community & Regional Planning

Contracted Services

SLIDE 42

Budget Highlights - Expense

November 2017 42

Gravel
Volume of Agriculture Chemical Supplies
Volume of Emulsion & Crack Filling Material
Protective Services Equipment
Fuel
Water Purchases
Wastewater Treatment

Materials, Goods, and Utilities

SLIDE 43

Budget Highlights - Expense

November 2017 43

West Sturgeon Aging in Place
Community Grants

Grants

SLIDE 44

Budget Highlights – Debt Service

November 2017 44

Summary of Debenture Servicing

21 Transportation Debentures
6 Water Utility Debentures
4 Wastewater Debentures
2 Fleet & Building Services Debentures
1 Non-Profit Foundation Loan

SLIDE 45

Budget Highlights – Debt

November 2017

Debt Limit 2018 @ 1.5 x Revenue = $94,615,059 @ 1.2 x Revenue = $75,692,047

5,000.00

10,000.00 15,000.00 20,000.00 25,000.00 30,000.00 35,000.00 40,000.00 45,000.00 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Thousands

Buildings & Land West Sturgeon Aging in Place Equipment Utilities Roads

SLIDE 46

Budget Highlights – Reserves

November 2017 46

 Overall actual reserve balance at October 2017 is $25.25 million

f which $9.74 million is committed to projects.

 The projected uncommitted balance in reserves at December 31, 2017 is $15.51 million.  Budget 2018 proposes to contribute approximately $2.88 million to reserves and withdraw approximately $1.46 million.  Projected General Operating Reserve at December 31st, 2017 ~ $3.13 million.

SLIDE 47

Corporate Budget Comparison

November 2017 47

SLIDE 48

Corporate Budget Comparison

1.22

2.01 8.55 5.08 5.89 5.93 6.20 2.65 2.48 4.90 6.48

2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007

Annual Municipal Property Tax Rate Increase (with 2018 proposed)

November 2017 48

SLIDE 49

Corporate Budget Comparison

* Municipal taxes based

n a median home value
f $445,765

November 2017 49

One Percent Residential Annual Tax Increase by Municipality – 2017

16.57 16.91 19.19 19.56 20.89 22.28 24.81 25.59 26.31 26.78 30.74 33.39

SLIDE 50

Corporate Budget Comparison

2017 Municipal taxes based on an median home value of $445,765

November 2017 50

Sturgeon County $1,657 Strathcona County $1,919 Town of Morinville $3,074 City of St. Albert $3,339

SLIDE 51

Corporate Budget Tax Effect

1% increase to municipal taxes ~ $489,420

Broken down by assessment category:

1% residential tax increase median home ~ $16.57
1% farmland tax increase average quarter section ~ $3.77
1% non-residential increase per million assessment ~$104.99
1% vacant residential increase per $100k assessment ~ $5.97

November 2017 51

SLIDE 52

Corporate Budget Tax Effect

Residential Municipal Levy Increase

$445,765 Median Home

Projected Increase: 0.0%

Assessment Tax Rate Levy Year

445,765 @ .0037182 = $1,657 2017 445,765 @ .0037182 = $1,657 2018 $ 0 Increase in municipal taxes

November 2017 52

SLIDE 53

Corporate Budget Tax Effect

2018 Municipal/Education/Seniors Levy Split*

MEDIAN HOME $445,765

2018 Municipal Levy $1,657 2017 Municipal Levy $1,657 2018 Education Levy $1,183 2017 Education Levy $1,105 2018 Senior’s Levy $ 41 2017 Senior’s Levy $ 40 2018 Total Levy $2,881 2017 Total Levy $2,802 Total projected increase $ 79

November 2017 53

Municipal Levy 58% Education Levy 41% Seniors Levy 1%

*Est 7% Education Levy Increase Est 3% Seniors Levy Increase

SLIDE 54

Corporate Budget Tax Effect

Farmland Municipal Levy

Average assessment $40,000

Projected Increase: 0.0%

Assessment Tax Rate Levy Year

$40,000 @ .0094238 = $377 2017 $40,000 @ .0094238 = $377 2018 $ 0 Increase in municipal taxes

November 2017 54

SLIDE 55

Corporate Budget Tax Effect

Non-Residential Municipal Levy

$1,000,000 property

Projected Increase: 0.0%

Assessment Tax Rate Levy Year

1,000,000 @ .0104986 = $10,499 2017 1,000,000 @ .0104986 = $10,499 2018 $ 0 Increase in municipal taxes

November 2017 55

SLIDE 56 Millier Dickinson Blais 56 MDB Insight 56 MDB Insight 56 MDB Insight and Watson & Associates 56

SLIDE 57 Millier Dickinson Blais 57 MDB Insight 57 MDB Insight 57 MDB Insight and Watson & Associates 57

SLIDE 58

Corporate Budget Tax Effect

Vacant Residential Municipal Levy

$100,000 property

Projected Increase: 0.0%

Assessment Tax Rate Levy Year

100,000 @ .0059711 = $597 2017 100,000 @ .0059711 = $597 2018 $ 0 Increase in municipal taxes

November 2017 58

SLIDE 59

Corporate Budget Overview

Utility Services – 2018 Proposed Billing

Sturgeon County $ Increase Supplier $ Increase Total $ Rate Increase

Water - EPCOR ($0.03/m3) $0.05/m3 $0.08/m3 Water - CRNWSC $0.01/m3 $0.07/m3 $0.08/m3 Wastewater - Gravity $0.02/m3 $0.05/m3 $0.07/m3 Wastewater – Low Pressure $0.02/m3 $0.05/m3 $0.07/m3

November 2017 59

SLIDE 60

Corporate Budget Closing

2018 Municipal/Utility impact

MEDIAN HOME VALUE $445,765

Municipal taxes $0 *Requisitions $79 Utilities $57 2018 Estimated total change $136

*Estimated increase

November 2017 60

SLIDE 61

Corporate Budget Summary

 Responsible Fiscal Framework  Addresses Key Service Areas  2017 Growth Projections Modest  Keep Taxes Affordable

November 2017 61