HomeMy WebLinkAboutCS 16-06
Ciú¡ o~
REPORT TO
COUNCIL
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Report Number: CS 16-06
Date: April 3, 2006
From:
Gillis A. Paterson
Director, Corporate Services & Treasurer
Subject:
2006 Current and Capital Budgets
Recommendation:
1. That Report CS 16-06 from the Director, Corporate Services & Treasurer be
approved and:
2.
a) That the 2006 Current (Operating) Budget expenditure for salaries &
wages (Account 1100) in the amount of $25,939,177 be approved;
b) That the 2006 Current (Operating) Budget expenditure for employer
_ contributions (Account 1400) in the amount of $6,481,800 be approved;
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c) That the 2006 Gross Current (Operating) Budget for City purposes in the
amount of $26,088,916 (which excludes employer contributions, salaries
and wages) and includes capital expenditures from current revenues in
the amount of $2,469,128; less estimated current operating revenues of
$21,479,836 and transfers from the following reserves: Rate Stabilization
Reserve of $1,320,000, Easement Settlement Agreement Reserve of
$1,280,113 and funds from previous years capital projects funded from
property taxes of $386,000 which results in a net overall levy for City
Operations of $33,943,944 which is approximately a 5.79 percent
increase over 2005, be approved;
d) That the Treasurer be authorized to fund Pickering's share of any over
expenditure or shortfall in revenue related to APT A's operations or capital
expenditures by a transfer from the Transit Reserve and that if there are
any funds left in this Reserve they be transferred to general revenue to be
used to offset any outstanding liability associated with the transfer of
transit to the Region of Durham; and, if funds remain, to reduce the City's
cost of transit in prior years;
3.
That the Director, Corporate Services & Treasurer present the 2006 final tax
rates for adoption by Council when further information regarding 2006 (Non
Residential Education Tax Rates) from the Province of Ontario and Region of
Durham is available;
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Report CS 16-06
April 3, 2006
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Subject: 2006 Current and Capital Budgets
Page 2
4.
a)
b)
That the 2006 Capital Budget for the City of Pickering with a Gross
Expenditure of $12,824,103 be adopted as presented;
That the following capital financing sources be approved as presented in
the 2006 Capital Budget:
Transfer from Current Fund to Capital Fund
$2,469,128
Transfers from Reserves:
- Surcharge Program Reserve (7031)
- Dunbarton Pool Reserve (7032)
- Don Beer Arena (7033)
- Rec Complex Core Reserve (7034)
- Rec Complex Arena Reserve (7036)
- Vehicle Replacement Reserve (7040)
56,000
20,000
25,000
36,000
47,000
70,000
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Transfers from Reserve Funds
- Development Charges
- Community Facilities (4225)
- Parkland Development (4230)
- Federal Gas Tax Funds
- City Share Dev. Charges Projects
- Third Party Contribution (4235)
Debt - 5 yr
Debt - 1 0 yr
Debt - 20 yr
Internal Loans - 4 yr.
Internal Loans - 5 yr.
676,550
130,000
920,000
1 ,698,000
264,550
50,000
637,000
1,318,335
2,910,000
596,000
90,000
Provincial Grants (1623)
Donations (4905)
733,540
77,000
$12,824,103
TOTAL
c) That total external debt financing of $4,865,335 for the projects identified
in the 2006 Capital Budget, and as indicated in this report, in the amount
of $637,000 for a period not to exceed 5 years and; $ 1,318,335 for a
period not to exceed 10 years and $2,910,000 for a period not to exceed
20 years be approved;
d) That projects identified in the 2006 Capital Budget as being financed
through the issuance of debt be subject to additional, specific approval by
Council of the expenditure and the financing before proceeding;
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Report CS 16-06
April 3, 2006
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Subject: 2006 Current and Capital Budgets
Page 3
e) That internal loans or dealer financing as indicated in this budget in the
amount of $686,000 may be undertaken at the discretion of the Director,
Corporate Services & Treasurer be approved;
f) That any debt repayment, interest or financing provisions contained in the
annual Current Operating Budget not used in the current year's payments
requirements may, at the discretion of the Director, Corporate Services &
Treasurer, be used to apply towards principal amounts remaining to be
financed;
g) That all Capital expenditures or portions thereof, approved in the 2006
and future Capital Budgets to be financed through the issuance of debt,
may, at the discretion of the Director, Corporate Services & Treasurer, be
financed through internal loans, dealer financing, current funds or a
combination thereof;
5. That the Director, Corporate Services & Treasurer be authorized to transfer:
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6.
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a) Any surplus current operating funds at any year-end in excess of
$110,000 to the Rate Stabilization Reserve;
b) Any funds necessary from the Rate Stabilization Reserve in order to
ensure that in any year the Current Budget results in a year end surplus of
no less than $110,000;
c) Any revenue resulting from the disposition of land or other assets in
excess of $100,000 to the Reserve for Replacement of Capital Equipment;
a)
That the Director, Corporate Services & Treasurer be authorized to make
any changes or undertake any actions necessary, in order to ensure that
the budget plan including any re-allocation of 2006 current operating
expenditures and revenues resulting from any reorganization and
including any adjustment in taxes or tax rates due to Provincial and
Regional tax policy changes to ensure that the tax billing process is proper
and complete;
b) That the recently announced "Move Ontario" Provincial Government
funding in the amount of $1,851,578 be transferred to the "Move Ontario"
Reserve to be used to fund roads and bridges expenditures;
c)
That, if permitted under the "Move Ontario" funding program guidelines
and or regulations, those 2006 road and bridge projects, with an
estimated total debt financing requirement of $1,018,335 (excluding the
401 Pedestrian Bridge) currently to be financed by debt as indicated in the
2006 Capital Budget, be now financed by this program (as listed in this
report) ;
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Report CS 16-06
April 3, 2006
Subject: 2006 Current and Capital Budgets
Page 4
d) That any new additional Provincial and Federal Government funding
announcements for municipal government in the form of grants or new
taxing authority/powers be deemed where applicable to be new revenue
sources for the lower tier municipality and to be applied to future Current
and Capital budgets;
e) That the 2006 Current Fire Services Division Operating Budget for
Accounts 1100 (Salaries & Wages) and 1400 (Employer Contributions) be
restated for the 2006 Budget once contract negotiations have been
completed;
7. That the Director, Corporate Services & Treasurer be authorized at his discretion
to close any prior year's capital expenditure accounts, and to first apply any
excess funding to any overexpenditure in accounts utilizing the same source of
funds and to secondly transfer any remaining excess funding back to the original
source of the funds;
8.
That the provisions of the Municipal Act, 2001 (s.299 and s.300), that require
municipalities to provide public notice regarding the improvements and barriers
to improvements in the efficiency and effectiveness of municipally delivered
services, be fulfilled by the service level standards provided in the detailed
program budget sections of the 2006 City Budgets; by compliance with the
Municipal Performance Measurement Program and by the reporting to the public
as required under the Act, later this year;
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9. That Council enact the attached General Municipal Fees and Charges By-law
which provides for the fees and charges that are incorporated into the 2006
Current Budget;
10. That Council approve the revised financing for the 2005 Capital financing for the
401 Pedestrian Bridge (Capital project code (05-232-001-01» by reducing the
transfer from the Easement Settlement Agreement Reserve from $270,000 to
$85,000 and this reduction be offset by a transfer from the Federal Gas Tax
Reserve Fund from the 2005 Federal Gas Tax Funds in the amount of $185,000;
11. That Council authorize and approve the establishment of the Building Permit
Stabilization Reserve Fund and that the attached By-law be read three times and
passed;
12. That the Director, Corporate Services & Treasurer be authorized to adjust, where
appropriate the per kilometre travel expense re-imbursement rate at any time in
order to maintain the appropriate level of re-imbursement with any increase in
cost being met from under expenditures in other accounts;
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Report CS 16-06
April 3, 2006
Subject: 2006 Current and Capital Budgets
Page 5
13. That Council adopt the following 2007 Budget Guidelines for the development
and presentation of the budget to the 2007 Council Budget committee meeting
as follows:
a) That there be no new full or part-time positions, or increase in part-time
hours unless these additional costs are offset by additional program
revenues, reduced expenditures or is mandated by Federal or Provincial
legislation;
b) That debt financing for capital projects only be permitted either for health
and safety reasons or to participate in financial cost sharing programs;
c) That there may be no new, enhanced or expanded current or capital
budget programs;
d) That the 2007 budget be developed based on a reduced reliance on one-
time funds and reserves;
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14. That the Director, Corporate Services & Treasurer be authorized to transfer
funds from the Assessment Appeal Reserve to fund any successful appeals
resulting in write-offs in excess of the budget provision; and,
15. That the appropriate staff of the City of Pickering be given authority to give effect
thereto.
Executive Summary:
Not applicable
Financial Implications:
At the Budget Committee meetings on March 13 and 14, 2006, the following changes
were made to the draft budgets:
Draft Current Operating Budget reductions $42,375
Increase in Capital from Current
PXO Conversion (45,000)
($2,625)
Town Centre West Project $211,200 0
Deferral (no effect on 2006 Budgets)
Reallocation of 401 Pedestrian Bridge 185,000
2005 approved financing
Staff review natural gas charges at the Dunbarton Pool. 76,820
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Report CS 16-06
April 3, 2006
Subject: 2006 Current and Capital Budgets
Page 6
As a result of the foregoing the tax levy impact of the 2006
Current (Operating) Budget has been reduced from 6.6% to
5.79% over 2005.
Total Chanqe to 2006 Budaets $259,195
These adjustments have been reflected in the Revised 2006 Current and Capital
Budgets submitted for Council approval.
The 2006 Current (Operating) & Capital Budgets, if adopted as presented, will result in
a tax levy increase of 5.79 percent over last year's average property tax bill
(excluding any Provincial tax policy changes). On a single detached home assessed at
$296,200, the total tax levy proposed increase equates to $1.21 per week. The
proposed increase is estimated to be approximately 1.54% on the Total
Residential Tax Bill.
Adoption of the 2006 Capital Budget includes the use, or draw down, of Reserves and
Reserve Funds of approximately $3,993,100, an all time high in the use of these funds.
Capital Budget financing also necessitates the use of $5,551 ,335 in debt that will result
in a 2.25% increase in the 2007 Current (Operating) Budget for 'debt charges'.
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Background:
The Recommendations put forth are those necessary to adopt the 2006 Current
(Operating) and Capital Budgets of the City of Pickering and to provide direction
regarding the 2007 Budgets.
This year's budget review exercise by the CAO and senior management was one of the
most difficult to date given the City's financial position. In the Current Operating Budget
every line item of every Section, Division and Department was reviewed, debated, and
increases justified in an attempt to reduce discretionary expenditures to the lowest
possible. This measure was adopted in order to assist in offsetting mandatory or non-
discretionary increases such as inflation, utilities, salaries and benefits. Low
assessment growth and fixed mandatory costs translate into budgetary increases which
we recognize are not popular with the general public.
,.,-...,
Over the last 34 years, Provincial and Federal Governments have withheld vast parcels
of prime land from economic development which has created a unique financial burden
and challenge for the City. As Members of Council are aware, the limited or low
assessment growth is mainly due to the two Senior levels of Government (Federal and
Provincial) holding and controlling these vast parcels of land from economic
development. In previous years, the City was able to offset low assessment growth by
using "one-time funds." Unfortunately, the availability of one-time funds is almost at an
end. From an economic perspective, these two senior levels of Government have
enjoyed watching the value of these lands substantially increase over time. However,
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Report CS 16-06
April 3, 2006
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Subject: 2006 Current and Capital Budgets
Page 7
the lack of development for these lands has translated into a "back door" property tax
increase to Pickering residents
Use of One Time Fundinq
Proposed Budgetary Increase Before
The Use of One Time Funds
11 .98%
Less: Return of Cap. From Taxes
Rate Stab. Draw
Ease. Settle. Agree. Res.
$386,000
1 ,320,000
1,280,113
6.19
Proposed Budgetary Increase
5.79%
As shown above, one time funding is artificially lowering the tax rate by 6.19%. The
one time funds are equivalent 51.6% of the original tax levy increase. Next year, the
City will have to find another $2.98 million in one-time funds in order to replace this
funding in the current budget.
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Reserves and Reserve Funds
The 2006 Budgets contain continuing reliance upon draws from Reserves and Reserve
Funds especially for the Parkland Reserve Fund (Account 4230) as reflected in the
graph below.
$5,250,000
$4,250,000
$3,250,000
$2,250,000
$1,250,000
$250,000
*$~::¡ 0'"'" Š'i\§
'.;mi&"_~~\I'-"" *,,1_1'1i'~!~
"',.
1999 2000 2001 2002 2003 2004 2005 2006
Year
The 2005 projected year-end balance for the Parkland Reserve Fund is $1.7 million.
However, the 2006 capital budget will use approximately $920,000 to fund various
capital projects such as playground equipment and therefore, the estimated 2006
yearend position for this account would be approximately $765,000. (In 1999 the
Parkland Reserve Fund's balance was $4.250 million).
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Report CS 16-06
April 3, 2006
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Subject: 2006 Current and Capital Budgets
Page 8
The External Subdivision portion of the 2006 Capital Budget is funded primarily from
two sources: Developer contributions and a City Share Developer Contributions
(Reserve Account 4620). The City's cost for its share of 2006 capital projects is
$264,550. The preliminary 2007 & 2008 capital budgets project a requirement for the
City to fund approximately $5.9 million in City share DC projects. These large future
dollar commitments and the City's ability to fund these costs most likely means the City
will have to debt finance its contribution of approximately $5.0 million which in-turn will
add to the financial pressures on the organization.
Last year, the City entered into an agreement with the Federal Government regarding
the Federal Gas Tax revenues. The basic premise of this important new revenue
source is that municipalities are required to make investments with the
"environmentally, sustainable municipal infrastructure" as established under this
agreement. The City will receive $7,078,927.80 over five years as outlined in the table
below.
Schedule of FundinQ Payments
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Year July November
2005 $849,577.58
2006 $424,788.79 424,788.79
2007 566,321.81 566,321.81
2008 707,854.83 707,854.83
2009 1,415,709.67 1,415,709.67
TOTAL (For Five Years) $7,078,927.80
This year the City is using $1,698,000 in Federal Gas Tax funding for several projects
as outlined in the Capital Budget.
The City is using approximately $3.9 million in reserve and reserve funds to finance
2006 capital expenditures. As indicated in the annual reports filed by the Treasurer, the
majority of the City's reserve and reserve funds can be classified as non-discretionary.
In other words, there is either a specific purpose, intent or condition on the use of the
funds. The projected estimated draft, December 31, 2006 non-discretionary balance is
$25.7 million with the Development Charges reserve fund having a projected balance of
$17.6 million. Other non-discretionary reserve or reserve fund balances include: Third
Party Subdivision Agreements, Parkland Reserve Fund, Worker's Compensation, OPG
Appeal and Self Insurance. The projected December 31, 2006 discretionary reserve
and reserve fund balance is estimated to be $2.7 million. In 1998 the balance of these
same funds totaled approximately $13.6 million.
Debt and Debt CharQes
The current level of debt, and the resultant annual debt charges, is at a relatively high
level, especially considering this means of financing was not used before 1998. The
additional 2006 debt of $5.5 million is higher than the 2005 debt of $4.2 million. The
()
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Report CS 16-06
April 3, 2006
Subject: 2006 Current and Capital Budgets
Page 9
2006 debt will translate into additional debt charges and will necessitate a 2.25 percent
increase in the 2007 Current (Operating) Budget.
For 2006, the City is planning on issuing $4,865,335 of external debt for various
projects listed in Table One.
Table One
External Debt and Internal FinancinQ of Capital Projects
City of Pickering
5 & 10 Year Debt Financing
2006 Capital Budget
Capital Project Code Debt - 5 Description
Years ($)
06-2320-001-03 175,000 Four ton dump truck
06-2718-002-03 110,000 Haul all garbaae packer
06-2320-004-02 240,000 Street sweeper
06-2240-005-04 112,000 Roof replacement - Stations #2 and #5
Total Five Year Debt $637,000
Capital Project Code Debt -10 Description
Years ($)
06-2132-005-02 100,000 Pine Creek Bridae Replacement
06-2320-009-03 333,335 COMRIF (Intake Two)- Sandy Beach Road
(Parkham Crescent) Bridge Replacement-
(Gross Cost $1,000,000 partially offset by
Government funding (Provincial & Federal)
of $666,665)
06-2572-005-03 200,000 Eastshore Seniors Activity Centre - parking
lot
06-2320-008-02 100,000 Finch Ave-Brock Road easterly 450 metres.
06-2320-008-06 180,000 Brands Court - storm sewer and road
im provements.
06-2320-008-09 130,000 Helen Crescent - storm sewer and road
improvements.
06-2320-008-11 275,000 Old Brock Road (Wellington St. to Reg.
Road #1). Road resurfacing & drainage
improvements in conjunction with sidewalk
construction including storm sewers. (Gross
cost $350,000 partially offset by $75,000 in
Federal Gas Tax fundina.)
Total Ten Year Debt $1,318,335
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Report CS 16-06
April 3, 2006
Subject: 2006 Current and Capital Budgets
Page 10
City of Pickering
20 Year Debt Financing
2006 Capital Budget
Capital Project Code Debt - 20 Description
Years ($)
06-2240-005-05 1,100,000 Additions & renovations to station #5.
06-2321-002-27 1,810,000 401 Pedestrian Bridge Project. Total
estimated cost is $4.5 million.
Total $2,910,000
City of Pickering
Internal Loan/Dealer Financing
2006 Capital Budget
Capital Project Code Internal Description
Loan/
Dealer
Financing
($)
06-2220-001-01 90,000 Four year financing term - (3) Vehicles for
replacement - Bylaw.
06-2240-001-03 70,000 Four year financing term - Vehicle -
Replacement for unit #525 - First response
vehicle (Fire)
06-2320-001-02 38,000 Four year financing term - Replacement for
unit #023 - 1999 (4x4) with western plow
06-2718-002-01 46,000 Four year financing term - Vehicle -
Replacement for unit #722 - 1997, one ton
dump truck.
06-2718-002-04 35,000 Four year financing term - Replacement for
unit #729 - 1995 Cube van.
06-2718-002-06 35,000 Four year financinq term - New vehicle
06-2718-002-07 35,000 Four year financing term - New vehicle
06-2718-004-03 90,000 Four year financing term - Misc. equipment
- Trackless sidewalk plow
06-2719-005-02 90,000 Five year financing term - Replacement of
parking lot - Petticoat creek community
center.
06-2196-003-05 157,000 Four year financinq term - Network Switch
Total $686,000
2006 Budqet Based on Estimates
As in previous years, the City's budget includes a component that is based on
estimates or best known information when the budget is developed. The 2006
La
Report CS 16-06
April 3, 2006
:.:0.
Subject: 2006 Current and Capital Budgets
Page 11
operating budget for building permit fees has been reduced to reflect 2005 actual
revenues and anticipated activity for 2006. Presented below is the summary of activity
for building permit fees.
2006 Draft Current Budaet Buildina Permit Revenue ($1
1 ,306,323
734,460
1,000,000
(200,000)
800,000
When you compare the 2004 actual to the 2006 draft budget, there is a significant
reduction of approximately $506,323. In addition, you will notice the building permit
revenue for 2005 was under budget by $265,540. This year the budget has been
reduced, and there is a possibility that 2006 building permit revenue may be lower than
the budgeted amount. Unfortunately, the decrease in buildina permit revenue is a
future indicator of assessment arowth for 2007 and 2008.
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As stated in last year's report, the 2006 budget for education PIL revenues is an
estimate due to the fact the 2006 education rates for commercial and industrial
assessment will not be known until spring of this year. Members of Council may recall
that the City retains the education portion of the property taxes for "pay-in-lieu"
properties.
On March 13th, 2006, City staff received the interim 2005 net POA cheque in the
amount of $89,111 which represents 90% of the City's share of the actual payment.
The estimated total payment for 2005 should be approximately $99,000, which is
$116,111 less than the 2005 budgeted revenue of $215, 111.
1 998 to 2006 PO ARe v en u e s
$330,000
$280,000
$230,000
$180,000
$130,000
$80,000
1998 1999 2000 2001 2002 2003 2004 2005 2006
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Report CS 16-06
April 3, 2006
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Subject: 2006 Current and Capital Budgets
Page 12
As per Durham Region Report No. 2005-A-62, the 2005 projection was prepared on the
basis that the Durham Region Police Services (DRPS) Traffic Management Unit was
going to be expanded in 2005. POA revenue projections assumed that the expansion
would result in increased charges under the Highway Traffic Act. (It is staff's
understanding that these police officers were re-allocated to other more pressing duties
in 2005.) The report concludes by stating that Regional staff have been given
assurances by DRPS that the Traffic Management Unit will be at full complement by
January 2006 which will hopefully, result in a significant increase in 2006 charge
volume.
Tax Rates
As has been the case for the last few years, the 2006 Property Tax Rates and Levy By-
law will be presented at a later date when more information is available from the
Province regarding the education tax rates for the large industrial tax class.
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Several years ago, the City was able to absorb on a short-term basis the loss of
revenue due to Provincial and Regional Governments taxation policy changes.
Unfortunately, this year, the City has limited financial flexibility and is therefore unable
to offset any anticipated revenue losses due to higher level government decisions
regarding tax rates and tax policy decisions. With the City being in a limited
assessment growth scenario, our ability to absorb these revenue losses through
supplementary property taxes does not exist. Therefore, Recommendation 6 a) will
allow the Treasurer to make any adjustments to the 2006 proposed Total Tax Levy to
reflect senior government tax policy decisions.
2007/2008 Capital Forecast Budqet
The 2007/2008 capital forecast budget projects a total expenditure in the amount of
$68.3 million. The high capital forecast is a result of projects and capital expenditures
being deferred to future years due to affordability limitations. As Members of Council
are aware, the City cannot afford these types of expenditures during the next two years.
Over the next few months the capital forecast budget will be reviewed from the
perspective of afford ab ility, maintenance and safety. A revised capital budget forecast
will be presented to Council later this year.
2006 User Fees & Charqes Schedule
Every year, the City increases its user fees for various recreational and cultural
programs to partially reflect the cost of delivering the various programs. As in previous
years the budget reflects the revised user fees to be approved by Council.
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Under the Municipal Act, 2001, Section 391, user fee changes have to be established
by By-law and the municipality must maintain a list of its fees and charges for public
inspection. Last year Council approved By-law 6519/05 as part of the 2005 Budget and
Council Report CS-30-05 revised the user fees to reflect the 2005 budget.
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Report CS 16-06
April 3, 2006
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Subject: 2006 Current and Capital Budgets
Page 13
Recommendation 9, seeks Council approval to approve the attached By-law and
corresponding User Fee Schedule. The additional revenue from the user fee increases
are already reflected in the 2006 budget.
2006 Budaet Summary Paqes
Attachment 2 includes the budget summary pages.
Section 299 & 300 of the Municipal Act, 2001
Section 299 & 300 of the Municipal Act, 2001 requires each municipality to provide
notice to the public on the improvements in the efficiency and effectiveness of the
delivery of services by the municipality and local boards and identify any barriers in
achieving improvements.
Barriers Encountered by the Municipality
In Achieving its Efficiency and Improvements
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The first significant barrier is that the City of Pickering's primary source of revenue is
property taxes. The City believes that municipalities do not have financial tools
available for generating revenue in order to meet the demands of its citizens and to
keep property tax increases at affordable levels.
Another barrier is the limitations to the projects eligible to be funded through
development charges. Municipalities are expected by their citizens to provide
recreational facilities, transit services, libraries etc. Municipalities feel that the current
statutory 10% discounts should be eliminated, and that the list of eligible costs be
expanded.
The City of Pickering is somewhat unique from the perspective that it basically has little
serviced land available for development. (The Federal and Provincial Governments
own or have control of lands in Central and Northern Pickering which currently blocks
any future development). Other municipalities are able to offset some portion of
budgetary increases through assessment growth. Unfortunately, the City has very
limited assessment growth due to its "landlocked" position.
Under the area of "Improvements in Efficiencies and Effectiveness," the City continues
to review and streamline its operations. As required under the Act, further information
will be reported later this year.
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Report CS 16-06
April 3, 2006
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Subject: 2006 Current and Capital Budgets
Page 14
2006 Budqet - Service Level Improvements for Pickerinq Residents
Eves on the Street
Three additional seasonal staff
103,000
Improved Winter Control
Additional staff
50,000
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The total cost of the above service level improvements is $453,000 which equates to
1.4% of the proposed property tax increase. The above cost does not include the cost
of Animal Services, mainly offset by removing PAW, where the public can readily see a
substantial increase in services. Over the course of the year, the general public will be
able to see the benefits and improvements in City services.
In addition to service level improvement costs, the City also experienced cost
increases due to changing Provincial legislation. In order for the City to comply with
Employment Standards Act regarding number of hours worked (winter control
operations), the City has to hire three additional equipment operators for a cost of
$95,200 (not included above).
The 2006 current budget is a "responsible" budget reflecting the City's current needs
and is based on the City's current and future financial resources. This budget improves
service levels from a resident safety perspective not only for today but for future years.
Establishment of the Buildinq Permit Stabilization Reserve Fund
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Last December, Council approved report PO 41-05, which enacted a new building
permit process and fees under the Provincial Building Code Statue Law Amendment
Act or Bill 124. The premise of Bill 124 was the requirement that municipalities will no
longer be able to subsidize planning services or other City areas through building
permit fees. C.N. Watson was retained to undertake a comprehensive analysis of all
Planning & Development service costs fees and legislative requirements. The results of
their study recommended a small increase in building permit fees to provide funding for
a building permit stabilization reserve fund. The purpose of this reserve fund is to
provide a source of funds during an economic downturn to offset lower building permit
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Report CS 16-06
April 3, 2006
Subject: 2006 Current and Capital Budgets
Page 15
revenues. Without such a reserve fund" reduced growth and permit volumes during a
downturn could result in severe budgetary pressures.
2007 to 2010 - Strateqic Planninq for the City's Sustainable Financial Health
The City of Pickering is entering a critical phase in its financial health due to
uncontrollable external factors which have negatively impacted on the financial health of
the corporation. Over the last seven years, Members of Council and the City's senior
management team have been able to either secure one time funding in the amount of
$27.5 million to offset limited assessment growth. Unfortunately, the City is depleting its
one time funding sources and now has to develop a dynamic financial strategy that will
financially sustain the City over the next four years until the new assessment growth
appears.
While it is recognized that there are major growth initiatives such as Seaton and Duffin
Heights, the timing of these events as it relates to assessment growth are not known
and therefore, the City will develop a flexible financial model that can accommodate
these uncertainties in the context of sustainable financial plan.
As mentioned earlier, the City currently find itself in a limited growth scenario due to
uncontrollable circumstances. Therefore, it is important that the property assessment
values be maximized whenever possible to ensure that organizations pay their fair
share of property taxes. This year, taxation staff will focus and review senior
government owned properties and crown corporations to ensure that these
organizations are assessed accurately. As part of this strategy, staff will focus on
bringing the Council approved crown corporation appeals to a conclusion as much as
possible within staff's control. As part of the long term strategy, budget development
guidelines as reflected in Recommendation 13 provides the City an opportunity to
reduce its need for one-time funds by reducing the growth of expenditures and
positioning the City in the long run to take advantage of major growth initiatives.
2006 Provincial Government Budqet Announcement
Last week, the Province announced as part of its budget initiative a new program
entitled "Move Ontario." The Province is providing a one-time investment of $400
million to help municipalities primarily outside the GT A, with specific emphasis on rural
and northern municipalities and to invest in municipal roads and bridges. As per the
Ontario Government website information, the City of Pickering is entitled to receive
$1,851,578. Recommendation 6 b), will transfer these funds to the "Move Reserve" to
be used for future capital expenditures once the rules and or regulations regarding the
use of these funds is known.
As of March 28th, the City has not received any of the details or "rules" as to how these
funds can be applied. However, Recommendation 6c) would allow those roads and
bridge projects (excluding the 401 pedestrian bridge) as listed below to be now financed
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Report CS 16-06
April 3, 2006
~
Subject: 2006 Current and Capital Budgets
Page 16
by the "Move Ontario" reserve in the amount of $1,018,335. The residual amount of
$833,243 would now be available for future year capital projects.
Table Two
Proposed Use of "Move Ontario" Fundinq
06-2320-009-03 1 0 Year
$333,335 COMRIF (Intake Two)- Sandy
Beach Road (Parkham Crescent)
Bridge Replacement
06-2320-008-06 1 0 Year
180,000 Brands Court - storm sewer and
road improvements.
130,000 Helen Crescent - storm sewer and
road improvements.
06-2320-008-09 1 0 Year
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By changing the proposing financing from debt to "Move Ontario" grant funding, the
2007 preliminary draft budgetary forecast can be reduced by 4/10's of one percent.
The additional benefit associated with reduced debt is the fact that the savings in debt
payments will be realized over ten years.
2006 Budqet Information on City's Website
This year, budget information was posted on the City's website to solicit opinions from
Pickering residents. In addition, a convenient email address entitled
"budget05 @ pickering" was provided to assist the web site visitor or user in providing
direct comments regarding the 2006 budget. Finance staff did not receive any budget
comments from this em ail address or in letters.
The web site statistics indicate that there~ were 891 "hits" or views regarding the 2006
budget web site pages. The statistics are silent as to whether the activity was from
Pickering residents or non-residents. In addition, the statistics do not indicate if the
activity was the result of "one visit" per individual or numerous "hits" by the same
individual. However, based on the volume of activity and the nature of the content, one
could assume that most likely the majority of the visitors were Pickering residents and
- therefore, it appears that providing this information is a benefit to the Pickering
community.
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Report CS 16-06
April 3, 2006
~
Subject: 2006 Current and Capital Budgets
Page 17
Attachments:
1. 2006 Budget Summary Pages
2. By-law to Confirm General Fees and Charges, 2006
3. Budget Slide Presentation, March 13, 2006
4. By-law for the Establishment of Building Permit Stabilization Reserve Fund
Prepared By:
Prepared I Approved I Endorsed By:
. ~-
Star(Karwowski
Manager, Finance & Taxation
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-.-... /' /' ", ........".-.......
Gillis A. Paterson
Director, Corporate Services & Treasurer
.-
GAP:vw
Attachments
Copy: Chief Administrative Officer
Recommended for the consideration of
Pickering CityCouncjJ·....·
If
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