Operating Budget - February 26, 2013 1 Overview Budget Process - - PowerPoint PPT Presentation

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Operating Budget - February 26, 2013

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Overview

Budget Process 2013 Operating Budget Summary New Assessment Grants Recommendations Utilities Next Steps

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Budget Process

February 26, 2013

– 2013 operating budget presentation and approval

March 5, 2013

– 2014-2015 operating budget

March 8, 2013

– Greater Victoria Public Library Budget Presentation – 2013 capital budget presentation and approval

April 2013

– Financial Plan and Tax Rate Bylaws preparation and adoption

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2013 Operating Budget

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Budget Direction

Council direction for a 3 year operating budget with a maximum annual tax increase of 3.25% To achieve a 3.25% annual tax increase, the operating budget must be reduced by a minimum of $4.3 million over the next 3 years On average $1.5 million of unanticipated costs are added to the budget each year; assuming this trend continues an additional $4.5 million in cuts may be required. These cuts must be ongoing permanent reductions, not one-time cuts.

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Steps Taken

• 1. Principles for budget containment developed
• 2. Council provided list of ideas for staff to review for

potential budget reductions.

• 3. 5% net operating budget reduction exercise conducted

with Departments

• 4. Public consultation
• 5. Organizational review commenced

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Budget Balancing Principles

A. Share of Budget Cuts

a. Consider existing assets before adding new. b. Split the tax increase between Capital and Operating as follows:

a. Capital budget property tax levy increase 1.25% b. Operating budget property tax levy increase max 2.0%

c. The City’s share of Police and Library budgets will be capped at 2% annually

B. Service Delivery – Least impact on the community

a. Changes to service delivery methods b. Reduction in service levels c. Elimination of services

• C. Salary and Benefits

a. Compensation budgets will be capped at affordable levels

• D. New Revenue

a. Implement new revenues with realistic estimates and timelines

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2013 Budget Balancing

2% Target Reduction Budget Request Change Amount Over Target Police (564,300) (503,600) 60,700 Library (including operating costs) (38,600) 64,400 103,000 October 11, 2012 Presentation Changes February 26, 2013 2013 Reduction Needed as per the 2012-2016 Financial Plan 1,684,700 1,684,700 Forced Growth (Hydro, postage, fleet costs, insurance, WCB, LTD) 620,000 620,000 Increased insurance and claims 101,500 101,500 Departmental reductions (650,000) (650,000) Vacancy management (500,000)

• (500,000)

Council meeting webcasting 40,000

• 40,000

Governance funding 15,000

• 15,000

Increased lease revenues (95,000) (95,000) Increased payments in lieu of taxes (293,000) (293,000) Library additional increase (including operating costs) 64,400 64,400 Police Department net budget reduction (503,600) (503,600) Capital property tax levy increase reduction to 1.25% (275,000) (275,000) No salary increases for Exempt (200,000) (200,000) No salary increases for Council (9,000) (9,000) 1,209,700 (1,209,700)

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2013 Operating Budget Summary

2012 2013 Change Percen t General 78,059,478 79,307,961 1,248,483 1.60% Police 45,851,151 46,778,120 926,969 2.02% Corporate 15,635,509 15,206,556 (428,953)

• 2.74%

Greater Victoria Public Library 4,090,345 4,275,183 184,838 4.52% Debt principal, interes t and reserve transfer 7,827,583 7,827,583 0.00% Self-financed Programs 32,794,348 33,731,170 936,822 2.86% Funding T ransfer to Capital * 10,501,592 10,894,852 393,260 3.74% 194,760,007 198,021,425 3,261,418 1.67% Non-Tax 26,045,576 25,623,251 (422,325)

• 1.62%

Corporate 17,903,343 16,825,243 (1,078,100)

• 6.02%

Police 9,650,012 9,792,281 142,269 1.47% Self-financed Programs 32,794,348 33,731,170 936,822 2.86% 86,393,279 85,971,945 (421,334)

• 0.49%

Property Tax Levy 108,041,728 108,366,728 325,000 0.30% New As ses sment R evenue 325,000 165,000 (160,000)

• 49.23%

108,366,728 108,531,728 165,000 0.15% 194,760,007 194,503,673 (256,334)

• 0.13%

Pro perty Tax Increase (0) 3,517,752 3,517,752 3.25%

* Some capital b udgets ($9 62,00 0) were m oved to the o perating bu dget to conform with ne w acco unting rules. Those bud gets were funde d throu gh the capital p ro perty ta x levy. Th at portion h as been mo ved back to th e ope ra tin g bud get.

REVEN UES Op erating and Capital Prop erty Tax Increase EXPENDITU RES

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2013 Increase Explanation

Police Department 784,700 Library 184,838 Capital Pro perty T ax Levy 1,355,000 CUPE 2013 salary increase 650,000 Property tax p enalty revenue decrease 120,000 Property tax write-off increase 200,000 Coun cil meetin g web casting 40,000 Governan ce fund ing 15,000 Various other ad justments 168,214 3,517,752

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Revenues by Type

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Revenues by Type – Excluding Utilities

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Expenditures by Type

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Expenditures by Type – Excluding Utilities

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Salaries and Benefits

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New Assessment Revenue

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New Assessment Revenue

New assessment revenue is composed of:

– New construction and renovations – Demolitions – Property class changes (i.e. a commercial property is redeveloped as residential or a property has been rezoned)

Assessed values are based on:

physical condition of the land and improvements as at October 31 of the previous year market values as at July 31 of the previous year

As per the Financial Sustainability Policy, new assessment revenue is transferred into infrastructure reserves

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Historical New Assessment

The 2013 “preliminary” new assessment revenue is low ($165,000) for the following reasons: – Fortis moved from Victoria to Langford (the property was re-classed from utility to business; the Utility Class tax ratio in 2012 was 8.335 compared to 3.3663 for Business) – Very little new commercial development included in the 2013 assessment roll

2013 2012 2011 2010 2009 2008 New Assessment Values 68,035,000 100,661,885 228,503,298 379,406,312 389,924,566 248,863,858 New Assessment Revenue 165,000 328,110 1,659,979 1,878,834 1,958,697 1,376,425

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New Assessment Values by Class

• 20%

0% 20% 40% 60% 80% 100% 2013 2012 2011 2010 2009 2008

New Assessment Values

Residential Utilities Light Industry Major Industry Commercial Recreation/Non-profit

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Grants

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2013 Grants

Grants have been held at 2012 budget level

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2013 Grants

2013 2012 Budg et Budg et C orporate Budg et Corpo rate G rants C om munity Socia l P lanning Co uncil 16,590 16,590 G reater Victoria V o lunteer Society 11,439 11,439 C risis Intervention & Pu blic Inform ation S ociety of G rea ter V ictoria 20,103 20,103 S t John A mbulance 2,221 2,221 Integrated Recreation 28,943 28,943 V ictoria Y outh C ouncil 20,000 20,000 G reater Victoria F ilm C om m ission 45,000 45,000 S portHost 7,500 7,500 M iscellaneou s

• T ourism V ictoria

47,500 47,500 V IA TeC 22,500 22,500 G reater Victoria C ham ber of Comm erce 50,000 50,000 Arts and Culture M aritim e M useu m 20,000 20,000 Com m u nity Develop m ent Pro gram G rants C oa lition to E nd Hom elessness 100,000 10 0,000 391,796 39 1,796 E ngineering Departm e nt Bu dget Transp ortation and D ev elop m en t G rants A dult S chool C rossing G uards 30,000 30,000 Civic S ervices G rants V ictoria Com post E ducation Cen tre 13,530 13,530 43,530 43,530

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2013 Grants

continued

2013 2012 Budget Budget Planning and Development Department Budget Planning and Development Grants Victoria Civic Heritage Trust - Building Incentive Grant 420,000 420,000 Victoria Civic Heritage Trust 103,470 103,470 Victoria Heritage Foundation 189,368 189,368 Brochure - This Old House, Licence Fees 7,257 7,257 720,095 720,095 Sustainability Department Budget Community Development Program Grants Special Project 86,739 86,739 Program Grants - Greater Victoria Bike to Work Society 2,500 2,500 Program Grants - Youth Empowerment Society 2,000 2,000 Program Grants - Victoria AM Society 2,000 2,000 Program Grants - Victoria Attractions Association 15,000 15,000 Youth Outreach - Youth Empowerment Society 15,000 15,000 Youth Outreach - Fairfield Community Association 15,000 15,000 Youth Outreach - Burnside Gorge Community Association 10,000 10,000 Youth Outreach - James Bay Community Project 10,000 10,000 Youth Outreach 10,000 10,000 Downtown Community Association - One-time

• Adult Outreach (Our Place)

25,000 25,000 193,239 193,239

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2013 Grants

continued

20 1 3 2 01 2 B u d g et B u d g et P a rks , R e cre a tio n a n d C u lt u re D ep art m en t B u d g et A rts an d C u ltu re F e s tiv a l In v es tm en t G ra nts 15 6 ,00 0 15 6 ,00 0 C om m u n ity Ar t G r an ts 3 0 ,00 0 3 0 ,00 0 C o m m u n ity D e v elo p m en t Pro g ram G ra n ts N ei gh bo u rh o od D e v el op m en t 11 1 ,22 5 11 1 ,22 5 29 7 ,22 5 29 7 ,22 5 C o m m u n ity/S e n io r C e n tre G ran t s 1 F a irfie ld N e w H o riz o n s O pe ra tin g G ra n t 36 ,6 67 36 ,6 67 2 J am e s Ba y N e w H o riz o n s O pe ra tin g G r an t 36 ,6 67 36 ,6 67 3 Vi c tor ia S il v er T h re ad s O pe ra tin g G r an t 36 ,6 67 36 ,6 67 4 Vi c W es t C o m m u n ity A s s o c ia tio n O p e ra ting G ra n t 36 ,6 67 36 ,6 67 Vi c W es t C o m m u n ity A s s o c ia tio n Y o uth G ra nt 8 ,0 63 8 ,0 63 5 Bl an s h a rd C om m u n ity C e ntr e O p er ati ng G ra nt 36 ,6 67 36 ,6 67 Bl an s h a rd C om m u n ity C e ntr e Y o uth G r a nt 8 ,0 63 8 ,0 63 6 Bu rn s id e G or ge C o m m u nity C e n tre O p e ra tin g G ra n t 36 ,6 67 36 ,6 67 Bu rn s id e G or ge C o m m u nity C e n tre Yo u th G ra n t 8 ,0 63 8 ,0 63 7 F a irfie ld C o m m un ity P la c e O p e ra ting G ra n t 36 ,6 67 36 ,6 67 F a irfie ld C o m m un ity P la c e Y o uth G ra nt 8 ,0 63 8 ,0 63 8 F e rn w oo d C o m m un ity C e n tre O p e ra tin g G ra n t 36 ,6 67 36 ,6 67 F e rn w oo d C o m m un ity C e n tre Y o uth G ra n t 8 ,0 63 8 ,0 63 9 J am e s Ba y C o m m u ni ty S c h oo l C en tre O pe ra tin g G ra n t 36 ,6 67 36 ,6 67 J am e s Ba y C o m m u ni ty S c h oo l C en tre Yo u th G ra n t 8 ,0 63 8 ,0 63 1 0 O ak l an d s C o m m un ity C e n tr e O p e ra ti ng G ra nt 36 ,6 67 36 ,6 67 O ak l an d s C o m m un ity C e n tr e Y o uth G ra nt 8 ,0 63 8 ,0 63 4 23 ,1 11 4 23 ,1 11 2 ,0 68 ,9 96 2,0 68 ,9 96

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Additional Grant Requests

2013 Additional Tax Current Organization Requests Impact Grant Planning and Development Victoria Heritage Foundation (Core) 3,787 189,368 Arts and Culture Maritime Museum 5,000 20,000 8,787

8,787 0.01%

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Recommendations

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Recommendations

• That the 2013 Operating Budget be approved as

presented

• That Additional Grant Requests be denied
• That 2012 surplus be transferred to infrastructure

reserves as outlined in the Financial Sustainability Policy

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Water and Sewer Utilities

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Water and Sewer Utilities Background

• Our municipal infrastructure is vital in sustaining the

economic, environmental, social and cultural life of the community.

• The quality of life enjoyed by City’s citizens is directly

related to the condition of the infrastructure, such as quality of drinking water.

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Water and Sewer Utilities Challenges

Water Infrastructure

• A moderate percentage of water infrastructure is reaching the end of

its useful service life.

• Some material types are not performing as expected and are

experiencing premature failure.

• Increased development densities are resulting in capacity demand.

Sewer Infrastructure

• The majority of sewer infrastructure is at, or approaching the end of

its useful service life.

• A high percentage of extraneous water is entering the sewer system

(inflow and infiltration.)

• Increased development densities are resulting in capacity demand.

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Water and Sewer Utility Budgets and Rates

• Utilities must be self-financing and utility user fees can only be used

for the purpose of the utility.

• To calculate utility rates, the consumption revenue necessary to

fund the annual utility budget is divided by the estimated annual consumption.

• The majority of the costs within the City’s two utilities are allocated

to the maintenance and upgrade of aging systems.

• The largest portion of rate increases over the last five years has

been as a result of decreased consumption. To collect the same amount of revenue to cover the same level of costs, rates have needed to increase. In addition to this, expenditure budgets, and in turn rates, have increased to address infrastructure needs.

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Utility Rate Increase Drivers

Sewer Utility

• Decreased consumption of water (lowest consumption level in 30

years)

• Increased capital spending to address an aging system, including

increasing the capacity of the sewer system and reducing inflow and infiltration

• Inflationary costs for both operating and capital budgets –

approximately 2% annually Water Utility

• Decreased consumption (lowest consumption level in 30 years)
• Increase in the CRD bulk water rate
• Increased capital spending to address an aging system
• Inflationary costs for both operating and capital budgets –

approximately 2% annually

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Sewer Utility User Fee Rates and Revenue Budgets 2008 - 2013

The large increase in 2009 is due to significant investment in infrastructure upgrades to start addressing inflow and infiltration. Average impact of 2013 increase:

• Residential $18
• Commercial $432

2013 2012 2011 2010 2009 2008 Sewer User Fee (per unit) 1.92 1.74 1.58 1.45 1.35 1.08 Rate increases 10.34% 10.13% 8.97% 7.41% 25.00% Sewer consumption revenue budget 6,832,000 6,540,000 6,484,000 6,264,000 6,221,000 5,005,000 Revenue budget increases 4.46% 0.86% 3.51% 0.69% 24.30%

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Water Utility User Fee Rates and Revenue Budgets 2008 - 2013

The large increases in 2009 and 2010 are due to large increases in the CRD bulk water rate, and investment in infrastructure upgrades Average impact of 2013 increase:

• Residential $25
• Commercial $600

2013 2012 2011 2010 2009 2008 Water User Fee (per unit) 3.25 3.00 2.74 2.56 2.18 1.98 Rate increases 8.33% 9.49% 7.03% 17.43% 10.10% Water consumption revenue budget 14,452,000 14,094,000 14,056,000 13,824,000 13,952,000 11,432,000 Revenue budget increases 2.54% 0.27% 1.68%

• 0.92%

22.04%

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Revenues by Type - Utilities

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Expenditures by Type - Utilities

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CRD Sewer and Sewage Treatment Plant

• The CRD establishes the annual budget for both the existing CRD sewer

infrastructure and the upcoming Sewage Treatment Plant

• The City collects the amounts required on behalf of the CRD
• Over a three-year period starting in 2009, the collection shifted from

taxes to a utility fee

• These rates will increase as costs for the Sewage Treatment Plant come
• n line

20 13 2012 2011 2010 20 09 C RD S ew er Us er F ee (per unit)

• 1. 57
• 1. 48

1 .28 0.7 7

• 0. 3862

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CRD Sewage Treatment Plant Additional 2013 Invoicing

• The CRD recently approved an annual budget increase of $5M to

fund debt servicing costs for the new sewage treatment plant commencing in 2013. The purpose is to reduce overall interest expense, reduce the ongoing annual debt servicing costs, and to have orderly annual predictable increases.

• Since the CRD Sewer rate had already been set for 2013, an

additional rate increase will be required to fund Victoria’s share of the 2013 $5M increase ($1.8M). Since the increased rate will be implemented part way through the year, the rate will be higher than it would be if it had been implemented January 1st.

• The rate increase will be $0.68 per unit, an estimated impact of $68

per single family residence.

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Recommendations

1. That the City’s Water and Sewer Utility budgets be approved for 2013.

The City’s water and sewer rates have already been approved for 2013, and no change in rates are required.

2. That the CRD sewer rate be increased to $2.25 per unit effective April 1, 2013

A bylaw will be prepared and presented to Council for approval

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Next Steps

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Next Steps

Budget Consultation Summary Review 2014-2015 Operating Budget – March 5th Review of 2013 Capital Budget – March 8th Adoption of Financial Plan and Tax Rate Bylaws – April

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