Long Range Financial Plan Presented by: Ken Nix Commissioner of - - PowerPoint PPT Presentation

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Long Range Financial Plan Presented by: Ken Nix Commissioner of - - PowerPoint PPT Presentation

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Long Range Financial Plan Presented by: Ken Nix Commissioner of Corporate Services and Treasurer January 14, 2019 Context/Current State 2019 Budget Road Map Builds on Dec. 10, 2018 Council Orientation May, 2018 Jan 14 Feb 19 Jan 21 Feb

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January 14, 2019

Long Range Financial Plan

Presented by: Ken Nix Commissioner of Corporate Services and Treasurer

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Context/Current State

May, 2018 Budget Preparation and Review Feb 19 Budget Deliberation s and Approval Feb 11 Budget Overview and Public Input Jan 21 2019 Budget Target Jan 14 Long Range Financial Plan Feb 4 Proposed Budget Released – Budget Book

Builds on Dec. 10, 2018 Council Orientation

Context for Council

2019 Budget Road Map

and Budget Highlights Deliberations

Page 2

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Page 3

  • 10 year planning horizon and update each year
  • Considers proposed service delivery and

affordability

  • Significant Strategic Priorities not known/fully

developed when budget prepared: Council Goals, strategic plan, organizational design

Long Range Financial Forecast

Context/Current State

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Page 4

  • Translate Council’s Goals, strategic

priorities in terms of services, and service levels into $$ and ability to deliver

  • Identifies challenges based on proposed

service delivery

  • Allows Council to strategically balance

current budget decisions while preparing for the future

LRFP and Budgets - more than taxes

Context/Current State

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SLIDE 5

LRFP and Financial Policies Economic and Environmental Factors Infrastructure, Services and Quality Levels Financial Condition/Sustainability

Council Goals Strategic Plan Community Input Strategic Tools /Guidance Business planning Long Term Perspective External Influences Outside of Council’s Control Page 5 Context/Current State

Financial Condition & Sustainability

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SLIDE 6

Page 6 Source 2018 BMA Study

Financial Condition Good Now

Many unknowns

Sustainability Vulnerability Flexibility

Context/Current State

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  • Asset Management
  • Significant Growth – growth does not pay for growth
  • Costs increasing more than inflation
  • Reliance on taxes as revenue source, other revenues not keeping

pace and decreasing non-residential share of taxes

  • Focus on modernizing service delivery – SDR, CITSP, Succession

Planning etc to meet expectations

  • Staff capacity to deliver
  • Provincial support ?– transfer payments primarily regional

implications but will effect Whitby taxpayers; no new revenue tools; Development Charge Revenue risks

  • Many unknowns outside of Council’s control (economy, tariffs, GM,

climate change…)

Ongoing Challenges

Page 7 Context/Current State

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SLIDE 8

2018 Long Range Financial Plan

Long Range Financial Plan Page 8

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Page 9

Long Range Financial Forecast

Impacts of Inflation, Growth, Services and Capital Programs into Tax Impacts. Long Range Financial Plan

Note: Council’s Goals and Corporate Strategic Plan will impact future forecasts

0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028

2019 Model Average Tax Increase for Council term – 2019-2011 2019 Average – 10 Year 2019 Long Range Financial Plan 2018 Average – 10 Year

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  • How was this achieved?
  • SLT Participation/Input/Agreement
  • Focus on Capital requirements and impacts
  • Reduced/deferred capital growth program
  • Limited new projects or resources
  • Re-scoped, phased projects
  • Changed policy assumptions

Long Range Financial Forecast

Long Range Financial Plan Page 10

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Asset Type 2018 Capital Growth Forecast ($000’s) Draft 2019 Capital Growth Forecast ($000’s) Change ($000’s) Roads and Related 182,270 144,313 (37,597) Parks 49,155 29,723 (19,432) Facilities 95,051 94,270 (781) Studies 14,508 12,545 (1,963) Fleet and Equipment 27,369 27,081 (288) Total 368,353 307,933 (60,420)

Ten Year Growth Forecast Reduction

Long Range Financial Plan Page 11

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Highlights of Significant Project Changes

Long Range Financial Plan

Project/Change $ Various Road Projects – pushed out of ten year forecast eg Columbus Rd

Widening/Extension $7.9M, Ashburn Rd Reconstruction $5.6M, Cochrane Reconstruction $5.8M

<$48M> Various Facility Projects - pushed out of ten year forecast eg Station Gallery

Expansion $1.5M, Fire Training Complex $2.8M

<$4.8M> Library Branch Expansion – project removed and incorporated in Whitby Civic

Centre Project

<$4.6M> Whitby North Sports Complex – project scope/budget reduced to $26.6M

and timing shifted to 2022-2024

<$19.2M> Whitby Civic Centre Project – project scope/budget increased to $50M $28.3M Various Waterfront Parks Projects – pushed out of ten year forecast eg

Victoria Fields Urban Park $7.8M, Dupont Lands Development $3.8M

<$11.6M>

Page 12

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Long Range Financial Forecast

Long Range Financial Plan

Component 2018 Model 10 Yr avg 2019 Model 10 Yr avg Asset Management Contribution 1.6% 1.0% Asset Management due to Growth - New Infrastructure 0.7% 0.5% Growth Reserve Contribution 1.8% 1.0% Operating Cost Increase for Growth 1.4% 1.1% Operating Cost Increase for Inflation 2.1% 2.4% Other 0.1% 0.2% Revenue from Growth (2.5%) (2.2%) Overall Tax Increase 5.2% 4.0%

Page 13

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Page 14 Assumptions/Risk

Future – Cautious….

Many unknowns

Sustainability Vulnerability Flexibility

Not at inflationary tax increases Very Limited Many unknowns

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  • Assumptions/Risks: Development Charge Collections Shortfall
  • Development Charge Background Study vs Actual Rate of Growth

DC Revenues vs. Projections

Assumptions/Risk

$- $2 $4 $6 $8 $10 $12 $14 $16 2016 2017 2018 Millions

Residential DC Collections

DC Study Actuals $- $1 $1 $2 $2 $3 $3 $4 2016 2017 2018 Millions

Non-Residential DC Collections

DC Study Actuals

Page 15

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  • One-Time Reserve Fund Overcommitted
  • Actual non-statutory DC Exemption Costs for the Town greater than estimate in

the DC Background Study

DC Exemptions vs. Projections

Assumptions/Risk

$- $1 $2 $3 $4 $5 Residential - DC Study (16-25) Residential - Actual Cost (16-18) Non-Residential - DC Study (16-25) Non-Residential - Actual Cost (16- 18) Millions DC Study Non-Stat Exemptions (2016-2025) 2016 Actual Cost 2017 Actual Cost 2018 Actual Cost

Page 16

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  • Growing Asset Management Infrastructure Gap
  • 10 year MAMP Requirement vs Current 10 year Capital Asset Management

Budget Forecast

Long Range Financial Forecast

Assumptions/Risk

$- $50 $100 $150 $200 $250 $300 $350 $400 $450 2019-2028 Millions Current 10 Year capital budget asset management investment 2017 MAMP 10 year requirement (inflated)

Page 17

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  • No funds-Limited Flexibility
  • Given Community Improvement Plan (CIP) upfront funding and
  • ther community and economic initiative funding in 2018, the

projected 2018 year end uncommitted reserve fund balance $0.5M.

  • The only ongoing funding source for this reserve fund are loan

repayments (Library DC portion and Building Permit) which are scheduled to end in 2022.

  • Any future balance is considered committed for future community

and economic initiatives in the form of DC by-law discretionary exemptions (office, industrial, special care)

One time reserves fully committed

Assumptions/Risk Page 18

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  • Long Term Debt

Debt Capacity within policy

Assumptions/Risk The dark blue line is the forecasted 12% internal net revenue threshold, based on assumed growth

$- $5 $10 $15 $20 $25 $30 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028

Millions

Debt Capacity: Total Annual Debt Payment to not Exceed 12% of Net Revenues (FIR)

Total Debt Payments including Internal Debt 12% of Net Revenues (Policy)

Page 19

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  • DC revenue shortfalls affect debt capacity

DC Debt within policy

Assumptions/Risk

$- $1 $2 $3 $4 $5 $6 $7 $8 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028

Millions

Debt Capacity: Total Annual Debt Payment Funded from Development Charges to not Exceed 25% of Forecasted DC Collections

Total DC Funded Debt 25% of Average as per Policy

Page 20

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  • Residents say quality of life in Town is good and

are satisfied

  • Value services for tax dollars –comfortable with

taxation levels

  • Most would not reduce service levels
  • Focus on services not taxes
  • Results of community survey provided in more

detail in Report CAO 02-19

Town Provides Value

Affordability/Expectations Page 21

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Affordability 3% of Total Tax Dollars Goes to Town of Whitby

The Town is responsible for collecting property taxes on behalf of the Region of Durham and the School Boards. *Source: AMO Share of Property Tax Bill Region of Durham 53% of 9% = 5% Town of Whitby 33% of 9% = 3% School Board 14% of 9% = 1% Affordability/Expectations Page 22

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Durham Lakeshore 2018 Property Tax

Affordability/Expectations

$- $1,000.00 $2,000.00 $3,000.00 $4,000.00 $5,000.00 $6,000.00 $7,000.00 Pickering Ajax Whitby Oshawa Clarington Lower Tier Education Region

Based on the 2018 average assessment value of $437,000 Page 23 Property Taxes

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Total Taxes as % of Household Income

Affordability/Expectations 2014 and 2018 BMA Municipal Study: Average Residential Taxes as a % of Household Income Page 24

3.87% 3.64% 4.60% 4.05% 3.68%

  • 1.00%

0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% Whitby GTA Oshawa Pickering Clarington 2018 2014

3.95% 4.78% 3.82% 4.26% 3.64%

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GTA Comparable Property Tax

Affordability/Expectations

$- $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000

2018 Municipal Study: Senior Executive Home GTA Comparison (2 Storey 4 or 5 bedroom home 3 bathrooms main floor family room plus atrium. Full unfinished basement, attached 2 car garage approx 3000 square feet) Page 25 Property Taxes

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Many Municipalities recognizing new reality for sustainability

Affordability/Expectations Page 26

Municipality 2019 Budget Increases Burlington N/A - Overview Jan 24, 2019 Oakville 5.3% before assessment growth, 3.1% net of assessment growth Milton 7.61% (including service level reductions of 2.29%) Caledon 5.79% Mississauga 4.8% Richmond Hill Not known Pickering Draft at 2.2% Ajax Draft Range 3.75% - 4% Oshawa Not known Clarington Draft Range 3.8% - 5%

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  • Requires long term planning
  • Strategic choices about services, levels of service and infrastructure
  • Service/service level and infrastructure decisions impact both
  • perating and capital costs
  • Need to balance both the short and long-term needs and risks
  • Financial Sustainability needed in order to achieve Community’s

Vision

  • Good financial planning aligns budget with Corporate Strategy to

achieve Council’s goals

  • Financial sustainability is not cheap in a growth environment

Financial Sustainability

Sustainability/Choices Page 27

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  • 1st year of new Council term – Strategic

Priorities (Council Goals, Corporate Strategic Plan, Community Input, Restructuring)

  • Balance affordability with services/infrastructure

in both the short and long term while addressing imminent growth pressures

2019

Sustainability/Choices Page 28

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  • Starting pressures
  • Inflation, asset management, growth
  • Annualization of previous decisions and

impacts

  • Resources – Staffing - capacity gap
  • Modernized Technology and service delivery
  • Legislation (prompt payment, cannabis, DC

charges)

2019 Immediate Challenges

Sustainability/Choices Page 29

  • Unknowns & External influences
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  • Pause Year
  • Plan and evaluate options:
  • Services/Service Levels, Revenues/Fees
  • Business plans to meet Council’s Goals and

strategic priorities

  • Reorganize structure
  • Create some flexibility to deal with

unknown and future

2019 Approach

Page 30 Sustainability/Choices

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January 14, 2019

Questions?

Page 31