2020 2020 Bu Budget t Directi ction ons Report ort - - PowerPoint PPT Presentation

www.centrewellington.ca

2020 2020 Bu Budget t Directi ction

• ns

Report

• rt

Report COR2019-44 June 3, 2019

1

www.centrewellington.ca

Purp rpose of t this M Meeting

• Budget Schedule approved by Council in May 2019.
• The 2020 Draft Budget preparation will start this summer.
• The purpose of this meeting is for Council to provide direction to staff

in the initial development of the Draft Budget.

• 8 discussion sections have been provided.
• Staff proposed resolutions for each section.

2

www.centrewellington.ca

Discussion Sections

• 1. Inflation
• 2. Assessment Growth
• 3. Fees and Charges
• 4. OMPF Funding
• 5. Dedicated Capital Levy and OCIF Funding
• 6. Development Charges
• 7. Capital Funding
• 8. OLG Funds

3

www.centrewellington.ca

Section 1: Inflation

• Township operating budget has a blend of costs that are affected by

increases that are:

• More operational in nature.
• More capital in nature.
• Some operating budget costs do not increase with inflation.
• Provided the following information (source: Statistics Canada):
• Consumer Price Index (CPI) – operating inflation index.
• Non-Residential Building Construction Price Index (NRBCPI) – capital

inflation index.

4

www.centrewellington.ca

Section 1: Inflation

5

www.centrewellington.ca

Section 1: Inflation

6

www.centrewellington.ca

Section 1: Inflation

Was 3.1% when the 2019 Budget was passed (3rd qtr. 2018 stats) 7

www.centrewellington.ca

Section 1: Inflation

Proposed Resolution: That staff be directed to maintain a tax rate increase equal to or less than the calculated Township index (currently 2.7%) before adding on Dedicated Capital Levy impacts.

8

www.centrewellington.ca

Section 2: Assessment Growth

• Growth within the Township results in increases in costs to provide

services:

• More roads, sidewalks, water/wastewater mains, stormwater management

facilities.

• Expansions to wastewater treatment facilities.
• More sports fields and playgrounds.
• Increase demand for programs (i.e. seniors, swimming) and by-law

enforcement.

• More processing of tax bills, administration, and customer service

requirements.

• In addition, Provincial downloading of services and regulated

reporting continues to increase.

9

www.centrewellington.ca

Section 2: Assessment Growth

• Township approach: Growth pays for growth.
• Taxation Assessment Growth: Additional taxation revenue received

due to new property owners.

• Capital: Development Charges (to be discussed later)

10

www.centrewellington.ca

Section 2: Assessment Growth

Proposed Resolution: That staff be directed to assume assessment growth equal to 2.5%, to be used to fund budget increases considered to be growth in nature, with assessment growth figures to be updated when actuals are provided in November.

11

www.centrewellington.ca

Section 3: Fees and Charges

• The Township passes a by-law annually to set fees and charges for the

year.

• Current approach is to pass this by-law in conjunction with the annual

budget.

• Fees and charges revenue significantly impacts the budget.
• Many fees and charges are partially subsidized by taxation.
• Increasing the fees and charges annually by inflationary levels ensures

that the taxation subsidization does not increase.

12

www.centrewellington.ca

Section 3: Fees and Charges

Proposed Resolution: That staff be directed to increase fees and charges for 2020 by the calculated Township index (currently 2.7%), other than where pressure

• n rates indicates an alternate rate increase.

13

www.centrewellington.ca

Section 4: OMPF Funding

• Ontario Municipal Partnership Fund (OMPF).
• Received annually from the Province.
• Has decreased significantly since 2009.
• In recent years, the Township has experienced 15 to 20% decreases

annually.

• The Province is currently reviewing the program and ensures 2020

allocations will be communicated by the end of 2019.

14

www.centrewellington.ca

Section 4: OMPF Funding

15

www.centrewellington.ca

Section 4: OMPF Funding

Proposed Resolution: That staff be directed to use an estimated OMPF allocation of $255,680, representing a 20% reduction from 2019, until actual allocation amounts are released by the Province.

16

www.centrewellington.ca

Section 5: Dedicated Capital Levy & OCIF

• Two sources of funding for bridge and major culvert rehabilitation

and replacement:

• Dedicated Capital Levy
• OCIF Funding
• Ontario Community Infrastructure Fund (OCIF) :
• Was anticipated to increase slightly for 2020, but that has been put on hold.
• Currently under review by the Province.

17

www.centrewellington.ca

Dedicated Capital Levy (DCL)

• How the DCL works:
• 2% increase in Township’s base taxation levy, compounding annually.
• Average assessed residential property:

Annual DCL Impact Year Impact Y1 Y2 Y3 Y4 Y5 Total

• 2015

2% increase in taxation $17 = $17

• 2016

2% increase in taxation $17 + $18 = $35

• 2017

2% increase in taxation $17 + $18 + $19 = $54

• 2018

2% increase in taxation $17 + $18 + $19 + $20 = $74

• 2019

2% increase in taxation $17 + $18 + $19 + $20 + $21 = $95

18

www.centrewellington.ca

Section 5: Dedicated Capital Levy & OCIF

19

www.centrewellington.ca

Section 5: Dedicated Capital Levy & OCIF

Proposed Resolution: That staff be directed to increase the Dedicated Capital Levy by a 2% increase of the base taxation levy for 2020 and that preliminary estimates for 2020 OCIF funding be maintained at 2019 funding levels.

20

www.centrewellington.ca

Section 6: Development Charges

• Significant source of funding in the Capital Budget.
• 7% of capital funding in 2019
• In the 2019 Budget and 10 Year Forecast, assumed funding of

$1,500,000 per year available from DCs.

• Used to determine timing of growth related projects.
• DC Cash Flow:
• DC proceeds not being collected as estimated in the DC Background Study
• Choice: Delay growth related projects or incur growth related debt
• Impacts of Bill 108 – removing parks, recreation and studies from

projects that can be funded from DCs.

21

www.centrewellington.ca

Section 6: Development Charges

Proposed Resolution: That staff be directed to include approximately $1,500,000 in growth related capital projects to be funded by development charges within each year of the Draft Ten Year Capital Forecast.

22

www.centrewellington.ca

Section 7: Capital Funding

• Primary funding for the tax supported capital budget (excl.

bridges/major culverts):

• Equipment/Vehicle Replacement Reserves
• General Capital Reserve
• Federal Gas Tax
• OLG Funds
• Equipment/Vehicle Replacement Reserves:
• Per 2019 Budget, require a $158,000 increase in funding for 2020.

23

www.centrewellington.ca

Section 7: Capital Funding

• General Capital Reserve
• Have approximately $510,000 currently in the reserve that can be used in

funding the 2020 Budget

• 2018 surplus and closed capital projects
• Proposing an increase in “minimum balance” from $1,000,000 to $1,100,000
• Net of loan to the Dedicated Capital Levy ($765,000)
• Proposing increasing the contribution from operating to the General Capital

Reserve from $825,000 in 2019 to $850,000 for 2020.

• Total available for 2020 Budget: approx. $1,260,000

24

www.centrewellington.ca

Section 7: Capital Funding

• Federal Gas Tax
• 2020 allocation to the Township: $855,209
• Additional allocation received in 2019: $850,197
• Council approved directing this to the 2020 Budget process.
• Unused allocations from previous years: $220,000
• Total available for 2020 Budget: approx. $1,925,000
• OLG Funds
• Draft policy to be considered in “Section 8”
• Allocations received in 2019 become available for the 2020 Budget
• Total available for 2020 Budget: approx. $2,185,000

25

www.centrewellington.ca

Section 7: Capital Funding

2020 2019 Increase/ Reserve/Reserve Fund Proposed Actual (Decrease) General Capital Reserve 1,260,000 795,800 464,200 Gas Tax Reserve Fund 1,925,000 855,200 1,069,800 OLG Reserve Fund 2,185,000 2,350,000 165,000

• Total

5,370,000 4,001,000 1,369,000

26

www.centrewellington.ca

Section 7: Capital Funding

Proposed Resolution: That staff be directed to allocate the following funding to the Draft Budget as per Section 7 of report COR2019-44 dated June 3, 2019:

• $5,370,000 in combined General Capital Reserve, Federal Gas Tax, and OLG

Funds.

• An increase in funding of $158,000 to the Equipment and Vehicle Replacement

Reserves

• Allocations to the WSIB Reserve, Insurance Claims Reserve, Contingency

Reserve, and Legal Matters Reserve as per the Township's funding targets in the Reserve Policy.

27

www.centrewellington.ca

Section 8: OLG Funds

• An OLG Funding Allocation Policy has been developed for Council’s

consideration. Significant Policy Sections

• Funds received in a calendar year are to be used to fund costs in the following

year (same as existing practice).

• Funds are to be kept in interest bearing Reserve Funds (same as existing

practice).

• Use of funds are to be determined through the budget process, with staff

reports to Council used to allocated unused amounts (same as existing practice).

28

www.centrewellington.ca

Section 8: OLG Funds

Significant Policy Sections

• Funds are to be used to fund capital costs only, with the exception of

economic development related operating costs.

• Current practice is capital costs only.
• Funds are to be allocated as follows:
• 88% OLG Capital Reserve
• To fund Township capital projects
• 7.5% Economic Development Reserve Fund
• To fund economic development related costs of the Township
• 4.5% Arts, Culture & Heritage Reserve Fund
• To fund arts, culture, and heritage related capital within the Township

29

www.centrewellington.ca

Section 8: OLG Funds

30

www.centrewellington.ca

Section 8: OLG Funds

Proposed Resolution: That Council pass a By-law to approve the new OLG Funding Allocation Policy, to be used in allocating OLG funding starting with the 2020 Budget.

31

www.centrewellington.ca

Questions & Comments?

32