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HomeMy WebLinkAboutCS 16-06 Ciú¡ o~ REPORT TO COUNCIL - 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; - 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; - 1 Report CS 16-06 April 3, 2006 .- 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 - 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; 2 Report CS 16-06 April 3, 2006 - 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: - 6. - 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) ; 3 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; - 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; 4 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; - 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 5 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'. - 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, 6 Report CS 16-06 April 3, 2006 -- 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. - 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). 7 Report CS 16-06 April 3, 2006 ~".. 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 - 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 () '" - 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 $1,318,335 9 .. - Report CS 16-06 April 3, 2006 Subject: 2006 Current and Capital Budgets Page 10 City of Pickering 20 Year Debt Financing 2006 Capital Budget Capital Project Code Debt - 20 Description Years ($) 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. - 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 11 Report CS 16-06 April 3, 2006 ,J/IA 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. - 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. ,- 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. 12 Report CS 16-06 April 3, 2006 > 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 - 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. - 13 Report CS 16-06 April 3, 2006 ,. 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 - 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 - 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 14 þ. - -- 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 15 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 - 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. 16 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 ~'~ ,/.. ).-) . . (.'~\:::::~-<~"-''''''-'''''''''''-r--- -.-... /' /' ", ........".-....... Gillis A. Paterson Director, Corporate Services & Treasurer .- GAP:vw Attachments Copy: Chief Administrative Officer Recommended for the consideration of Pickering CityCouncjJ·....· If 17