2020 Budget Presentation January 13, 2020 Overview Working Session - - PowerPoint PPT Presentation

2020 Budget Presentation January 13, 2020

Overview – Working Session Presentation

I. Context II. 2020 Op-Ex and Cap-Ex Budget Review

• III. Strategic Reserve Planning & Debt Management
• IV. The Path Forward for 2020

January 13, 2020 The Corporation of the Township of King 2

Integrated Community Sustainability Plan (ICSP)

Environmental Economic Socio-Cultural Financial

Context, as established in 2012

January 13, 2020 The Corporation of the Township of King 3

Investment in Public Infrastructure (1961 vs. 2005)

Context: The significant shift in funding to support investment in public infrastructure has and continues to change …

January 13, 2020 The Corporation of the Township of King 4

Consumer Price Index vs. Non-Residential Building Index

2.5% 1.5% 2.1% 2.1% 2.5% 1.9% 1.5% 1.8% 3.2% 3.1% 5.3% 3.3%

0% 2% 4% 6% 2014 2015 2016 2017 2018 2019

CPI (Toronto) All Items Non-Res Building Index

CPI (“All Items”) vs. Non-Res Building Index

January 13, 2020 The Corporation of the Township of King 5

Consumer Price Index vs. Non-Residential Building Index

 Consumer Price Index (CPI)

2.5% 1.5% 2.1% 2.1% 2.5% 1.9% 1.5% 1.8% 3.2% 3.1% 5.3% 3.3%

0% 2% 4% 6% 2014 2015 2016 2017 2018 2019

CPI (Toronto) All Items Non-Res Building Index

CPI (“All Items”) vs. Non-Res Building Index

 60% of Township Operating Costs align with Non-Res CPI measure

January 13, 2020 The Corporation of the Township of King 6

Context - Annual Budget Process (2017-2020)

2017 2018 2019 2020 2020

2017-18 Budgets

• Q4-2016 Public

Consultation

• Approved 2017 Op-Ex

+2.98% Change in Levy

• 2018 Op-Ex Forecast

+3.99%

• Approved 2-Year

Capital Plan (2017-2018) @ $71.4M

Evolution of Budget Processes 2017-2022

January 13, 2020 The Corporation of the Township of King 7

2017 2018 2019 2020 2020

2017-18 Budgets

• Q4-2016 Public

Consultation

• Approved 2017 Op-Ex

+2.98% Change in Levy

• 2018 Op-Ex Forecast

+3.99%

• Approved 2-Year

Capital Plan (2017-2018) @ $71.4M

2018 Budgets

• Q4-2017 Public

Consultation

• Approved 2018 Op-Ex

+0.00% Change in Levy

• Approved 2018 amended

Capital Plan @ $26.9M

Evolution of Budget Processes 2017-2022

Context - Annual Budget Process (2017-2020)

January 13, 2020 The Corporation of the Township of King 8

2017 2018 2019 2020 2020

2017-18 Budgets

• Q4-2016 Public

Consultation

• Approved 2017 Op-Ex

+2.98% Change in Levy

• 2018 Op-Ex Forecast

+3.99%

• Approved 2-Year

Capital Plan (2017-2018) @ $71.4M

2018 Budgets 2019-2022 Budgets

• Q4-2017 Public

Consultation

• Approved 2018 Op-Ex

+0.00% Change in Levy

• Approved 2018 amended

Capital Plan @ $26.9M

• Q4-2018 Public Consultation
• 1st Multi-Year (2019-2022)

Term of Council Op-Ex Budget

• Approved 2019 Op-Ex

+2.30% Change in Levy

• Forecast Op-Ex Levy Increase
• 2020 @ 2.60%
• 2021 @ 2.65%
• 2022 @ 2.75%
• Approved 4-Year Capital Plan

($125.8M) through 2022

Evolution of Budget Processes 2017-2022

Context - Annual Budget Process (2017-2020)

January 13, 2020 The Corporation of the Township of King 9

2017 2018 2019 2020 2020

2017-18 Budgets

• Q4-2016 Public

Consultation

• Approved 2017 Op-Ex

+2.98% Change in Levy

• 2018 Op-Ex Forecast

+3.99%

• Approved 2-Year

Capital Plan (2017-2018) @ $71.4M

2018 Budgets 2019-2022 Budgets

2020-2022 Budgets

• Q4-2017 Public

Consultation

• Approved 2018 Op-Ex

+0.00% Change in Levy

• Approved 2018 amended

Capital Plan @ $26.9M

• Q4-2018 Public Consultation
• 1st Multi-Year (2019-2022)

Term of Council Op-Ex Budget

• Approved 2019 Op-Ex

+2.30% Change in Levy

• Forecast Op-Ex Levy Increase
• 2020 @ 2.60%
• 2021 @ 2.65%
• 2022 @ 2.75%
• Approved 4-Year Capital Plan

($125.8M) through 2022

Evolution of Budget Processes 2017-2022

• Q3-2019 Directions Report (+2.9%)
• Q4-2019 Public Consultation
• 2nd Year of Multi-Year (2019-2022)

Term of Council Op-Ex Budget

• Proposed 2020 Op-Ex

+2.89% Change in Levy

• Forecast Op-Ex Levy Increase
• 2021 @ 2.88%
• 2022 @ 2.85%
• Amended 4-Year Capital Plan

($120.4M) through 2022

Context - Annual Budget Process (2017-2020)

January 13, 2020 The Corporation of the Township of King 10

How we got to this point for the 2020 Budget Cycle ?

2019-2022 Council Priorities

 Adoption of Township’s new Official Plan  Road & related improvements  Traffic calming

• Rural Area Broadband
• Train Whistle Cessation
• Tree By-law
• Capital Projects – “On time and On budget”

 Strategic Land Acquisition

• Rural Dumping

 Customer Service  Communication Strategy

• Township-wide Recreation Centre

January 13, 2020 The Corporation of the Township of King 11

How we got to this point for the 2020 Budget Cycle ?

2020-2022 Budget Directions Report

September 9, 2019

 Tax Levy Increase </= 2.9%  Maintain service level standards  Identify incremental sources and uses of funds  Program Change requests  Robust Business Case Justification  Amended 2020-2022 Capital Plan  deferred $5.5M beyond 2022 re: construction timing

January 13, 2020 The Corporation of the Township of King 12

2020 Budget Overview

Township’s 2020 Operating Budget includes:

• $44.8 million in tax supported operating costs

 Including a Tax levy increase of $899,748

• r 2.89%

Township’s planned Capital Investments over the four-year Term of Council (2019-2022) include:

• $29.3 million in 2019
• $34.8 million in 2020 (revised from $40.3 million)
• $28.8 million in 2021 (revised from $29.1 million)
• $27.4 million in 2022 (revised from $27.0 million)

2020 Operating and 2020-2022 Capital Budgets

Integrated Community Sustainability Plan (ICSP)

Environmental Economic Socio-Cultural Financial

January 13, 2020 The Corporation of the Township of King 13

2020 Budgets (Operating & Capital)

$79.6 million

$44.8 million Operating expenses $34.8 million Capital expenses

+ =

$0.4 $1.0 $1.5 $1.6 $1.8 $2.9 $3.1 $8.9 $10.7 $12.9

$- $3 $6 $9 $12 $15

$ in Millions

2020 Operating Costs ($44.8 M) are allocated as follows:

72.5% of Total Op-Expenses

28.7% 28.7% 19.7% 7.0% 6.4% 4.1% 3.6% 3.3% 2.3% 0.9%

January 13, 2020 The Corporation of the Township of King 14

Township’s 2020 Operating Budget @ $44,823,806

$17.9 $8.3 $6.8 $5.7 $3.4 $1.5 $1.2

$- $2 $4 $6 $8 $10 $12 $14 $16 $18 $20

Salaries & Benefits Transfer to Reserves (Net) Contractual Services General Operations Other Expenditures Utilities Minor Capital (Repairs & Maint.)

$ in Millions

39.8% 16.6% 15.1% 12.8% 9.6% 3.3% 2.8%

2020 Gross Operating Costs by Expenditure Category

Expenditure Categories aligned w ith “Non-Res Building Index”

January 13, 2020 The Corporation of the Township of King 15

Township’s 2020 Operating Budget @ $44,823,806

$33.8 $4.4 $3.6 $2.6 $0.4

$- $5 $10 $15 $20 $25 $30 $35 $40

Property Taxation User Charges Transfers from Reserves Other Revenues Grants

$ in Millions

75.4% 9.8% 8.1% 5.8% 1.0%

2020 Sources of Funding

January 13, 2020 The Corporation of the Township of King 16

2020 Budgets (Operating & Capital)

$79.6 million + =

$44.8 million Operating expenses $34.8 million Capital expenses

$- $5 $10 $15 $20 $25 $30

Residential & Farm Payments in Lieu (PILs)

• f Taxation

Commercial Industrial

$ in Millions

$33.8M

• r

88.9% 4.7% 5.2% 1.2%

Total Non-Residential Property Taxation Sum < 6% Distribution of Property Taxation Revenue by Assessment Type

January 13, 2020 The Corporation of the Township of King 17

Annual % Increase in Levy Requirements (2019-2022) Multi-Year Term of Council Budgets (2019-2022)

Focus on Operational Efficiency Excellence in Customer Service

2.30% 2.89% 2.88% 2.85% 1% 2% 3%

2019 (Approved) 2020 Proposed 2021 Forecast 2022 Forecast

January 13, 2020 The Corporation of the Township of King 18

Township’s Operating Budget vs. Actual Costs (2016-2022)

$0 $10 $20 $30

2016 2017 2018 2019 2020 2021 2022 Planne d Cost vs. Ac tual Cost

Proposed Forecast Forecast

$ in Millions

(Excluding Corporate Costs)

Examples of operational drivers that may influence variances betw een Planned and Actual Costs include:

• Seasonal weather conditions
• Severe winter events

 Increased winter maintenance costs

• Rainy spring

 Increased gravel road maintenance

• Summer Heat Wave

 Increased energy costs relating to facility cooling

• Participation rates for recreation programs

(e.g. Day Camps)

• Fluctuating commodity rates
• Fuel, Hydro-Electricity, Natural Gas

January 13, 2020 The Corporation of the Township of King 19

2020 Operating and 2019-2022 Capital Budgets 2020 Operating Budget

$ in Millions Gross Expenditures

$ 44.8

Gross Revenues

$ 43.9

Proposed 2020 Increase in Tax Levy

+ $ 0.9

Proposed Net Tax Levy Increase

(Township portion only)

2.89% Estimated Impact – Residential “Blended Tax Levy Increase” Assessment @ $850,000

Assumptions: Region @ 2.96% and Education @ 2.00%

+ $179.77

• r 2.6%

Capital Budgets

(2019-2022)

$ in Millions

2019 Capital Budget

Approved funding from Taxation >

$ 29.3 M

$ 4.6 M or 15.8%

2020 Capital Budget

Proposed funding from Taxation >

$ 34.8 M

$ 4.4 M or 12.6%

2021 Capital Budget

Proposed funding from Taxation >

$ 28.8 M

$ 4.1 M or 14.4%

2022 Capital Budget

Proposed funding from Taxation >

$ 27.4 M

$ 4.1 M or 15.1%

Summary of sources of Funding

Reserve & Reserve Funds Taxation Debenture Financing (2019-2022) $ 92.1 M or 76.6% $ 17.4 M or 14.4% $ 10.8 M or 9.0%

January 13, 2020 The Corporation of the Township of King 20

Capital Budgets (2020-2022)

Updates to the Multi-Year Capital Budgets (2019-2022)

January 13, 2020 The Corporation of the Township of King 21

Capital Budgets (2019-2022)

$29.3 $34.8 $28.8 $27.4

$0 $10 $20 $30 $40

2019 2020 2021 2022

Value ($) of Planned Capital Projects

Amended for Consideration

Approved

January 13, 2020 The Corporation of the Township of King 22

Capital Budgets (2019-2022)

$8.4 $8.1 $8.8 $10.5

$29.3 $34.8 $28.8 $27.4

$- $5 $10 $15 $20 $25 $30 $35 $40 $0 $10 $20 $30 $40

2019 2020 2021 2022

Forecast Balance in Infrastructure Reserve Value ($) of Planned Capital Projects

Stability of Infrastructure Reserves while supporting a $120M capital program (2019-2022) Approved

Amended for Consideration

January 13, 2020 The Corporation of the Township of King 23

2020 Budgets (Operating & Capital)

$79.6 million + =

$0.2 $1.2 $2.5 $4.3 $12.3 $14.2

$- $4 $8 $12 $16 $20 Other Parks, Recreation & Culture Fleet & Equipment Water & Wastewater Roads, Bridges & Culverts Municipal Buildings

$ in Millions

2020 Capital Costs ($34.8 M) are allocated as follows:

76.2% of Total Cap-Expenses

$44.8 million Operating expenses $34.8 million Capital expenses

January 13, 2020 The Corporation of the Township of King 24

Strategic Reserve Planning & Debt Management Multi-Year Budgets and Business Plans

The Path to Fiscal Sustainability

Managing Growth

Strategic Allocation of Resources

January 13, 2020 The Corporation of the Township of King 25

Financial Sustainability

• Expanded Investment in Capital Infrastructure to

serve the needs of this growing municipality

• Growth & Stability of Infrastructure Reserves
• Property Tax Rates will continue to decline as

incremental assessment comes online

5 10 15 Growth in Infrastructure Reserves “Planning for Future Needs”

$ in millions

$7.1 $13.5 $21.1 $20.4 $29.3 $34.8 $28.8 $27.4

10 20 30 40

Capital Spend by Year

Responsible Financial Planning Predictability in Tax Rates Infrastructure Reserve Planning

$ in millions

January 13, 2020 The Corporation of the Township of King 26

Reserve Management

Strategic Allocation

• f Resources

Effective Financial Planning

• Annual Op-Ex Infrastructure Reserve Contributions
• $7.6M (2020) and $7.4M (2021 and 2022)
• Asset Management Plan (Approved in 2016)
• Policy (Approved in 2019)
• Implementation (Ongoing)

1 2 3 4 5

2015 2016 2017 2018 2019 2020 2021 2022

Annual Op-Ex Tax Capital Reserve Contributions “Pay-as-you-Go” Capital

$ in millions

1 2 3 4

2015 2016 2017 2018 2019 2020 2021 2022

Annual Op-Ex “Asset Management” Reserve Contributions

$ in millions

January 13, 2020 The Corporation of the Township of King 27

Annual Op-Ex Contributions to Infrastructure Reserves (2013-2022)

$1.5 $1.5 $1.8 $3.9 $4.3 $4.6 $4.6 $4.4 $4.1 $4.1

$0.6 $0.8 $1.5 $0.3 $3.6 $3.2 $3.2 $3.2 $3.2 $3.2

$0.0 $2.0 $4.0 $6.0 $8.0

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Tax Supported Capital (TSC) Infrastructure (“Pay-as-you-Go” Capital) (Asset Management)

January 13, 2020 The Corporation of the Township of King 28

Debt Management

Responsible Financial Planning

$20 $18 $15 $20 $17 $14 $11 $8 $6 $3 $0 $5 $10 $15 $20 $25 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 $ in Millions

Forecast: Total Debt (2020-2029)

Net Debt Owing at Year End

January 13, 2020 The Corporation of the Township of King 29

Debt Management

Responsible Financial Planning

$20 $18 $15 $20 $17 $14 $11 $8 $6 $3 $0 $10 $20 $30 $40 $50 $60 $70 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 $ in Millions

Forecast: Total Debt (2020-2029)

Net Debt Owing at Year End Estimated Additional L-T Borrowing

Additional Borrowing Capacity

January 13, 2020 The Corporation of the Township of King 30

2019-2022 Capital Budgets

Context: The significant shift in funding to support investment in public infrastructure has and continues to change …

January 13, 2020 The Corporation of the Township of King 31

2020 Preliminary Estimate of Levy Increases

1.45% 1.00% 1.80% 2.85% 2.89% 1.96% 1.99% 1.90% 2.94% 0.5% 1.0% 1.0% 1.0% 1.0% 1.5% 1.0%

0.0% 1.0% 2.0% 3.0% 4.0% Markham Richmond Hill East Gwillimbury Vaughan King York Region Newmarket Aurora Georgina Whitchurch Stouffville

2020 Base Levy Increase % Added for Capital / Infrastructure

Not Yet Available

January 13, 2020 The Corporation of the Township of King 32

The Path Forward for 2020

2021- 2022 Dr aft Budge ts to Counc il 2021 Budge ts – Dir e c tions Re por t Mid- Ye ar Op- E x & Cap- E x Re por t Car ds 2020- 2022 Str ate gic Plan De ve lopme nt Appr

• val of

2020 Budge ts by Counc il

Q2 Q1 Ja n 2020 Q2 Q3 Q4

Se t 2020 T ax Rate s by Asse ssme nt Class

January 13, 2020 The Corporation of the Township of King 33

CONCLUSION

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January 13, 2020 The Corporation of the Township of King 34