The URL can be used to link to this page

Home My WebLink AboutTR 25/98 1,-J - ~\'I OF PIC ,,0 +", Lu_~ IE :dt. ~ ~ REPORT TO COUNCIL FROM: Gillis A. Paterson Director of Finance & Treasurer DATE: June 16, 1998 Thomas J. Quinn General Manager REPORT NUMBER: TR 25/98 SUll.JECT: 1998 Current Budget RECOMMENDATION: That Report #TR 25/98 be received and that: I. (a) The 1998 Current Operating Budget for the Town of Pickering controlled portion, as amended, including Capital Expenditures from Current Revenues in the amount of $1,900,000, resulting in an estimated 3.1 per cent increase, be adopted by Council; .~ (b) The cost of Provincial Downloading, resulting in an estimated net 9.9 per cent increase after taking into consideration the residential education tax room as indicated by the Province, be acknowledged, pending further information from the Province prior to the selling of the 1998 Tax Rates; (c) The Director of Finance present the 1998 Tax Rates for adoption by Council when further information from the Region of Durham and the Province of Ontario is available; 2. Projects contained in the 1998 Capital Budget not proceed at this time with the following exceptions: (a) Those Capital Projects, or parts thereof, financed by other than Current Revenues (the Tax Rate) being those financed from Reserve Funds totalling $1,806, I 00, be approved as amended in the 1998 Capital Budget; (b) The purchase of 4 - 40' Orion buses, financed by Current Revenues in the amount of $408,983 and Provincial Grants totalling $1,226,949, be approved, as presented in the 1998 Capital Budget; (c) The 1998 Capital Budget for Information Systems in the amount of $349,434, be approved, as amended, with $120,000 to be funded from the Community Facilities Reserve Fund by transfer to General Government Revenues; (d) Those Capital Projects essential to the operations of the Town not to exceed $1,260,000 as to be determined by the General Manager be approved; 3. lhe financing of 1998 Capital Expenditures from Current Revenues be presented to Council at a future meeting when the Director of Finance reports on 1998 Tax Rates; - 4. The Four-Year Capital Forecast (1999-2002) be endorsed for planning purposes; 5. The appropriate officials of the Town of Pickering be given authority to give effect thereto. r/{ I~::' r( , I ;) ( ,. ~ \/ (,0 /'/1 ') Report to Council TR 25/98 June 16, 1998 Subject: 1998 Current Budget Page 2 - ORIGIN: Director of Finance and Treasurer AUTIIOIUTY: The Municipal Act FINANCIAL IMPLICATIONS: The recommendations provide for the adoption of the Current Budget and portions of the Capital Budget. The proposed Current Budget will resulrin a 1998 tax increase on the Town's portion of thc total tax bill of 3.1 per cent. The net effect of downloading, currently estimated at 9.9 per cent, will be reviewed in August when more information is available. EXECUTIVE SUMMARY: - Recommendation I provides for the adoption of the 1998 Current Operating Budget resulting in a projected 3.1 per cent increase in the town's share of the property tax bill. This, very roughly, equates to a 0.6 per cent increase in the total property tax bill. It also provides for a 9.9 per cent increase to provide for Provincial downloading, which equates to about a 1.7 per cent increase in the total tax bill. Reference is also made to the material presented to Councillors on various occasions over the last few 1110nths. Adoption of the 1998 Capital Budget includes potential debt financing, the actual amount of which will depend upon the level of capital expenditures adopted by Council and the increase in the tax levy which will provide for the specific amount of capital expenditures financed from currcnt (tax) revenues over the next two years. We understand that the legislation providing for the implementation of the Ontario Fair Assessment System (OF AS/CV A) has been referred to a Committee of the Legislature, with it to come back in June. We also understand revised Downloading (Who Does What) numbers will be released around the same time. BACKGROUND: The above recommendations provide for the approval of the Town's Current Operating Budget with an estimated 3.1 per cent increase in tax revenues. The 1.8 per cent reduction from the previous 4.'J pcr ccnt is the result of a t per ecnt budgct reduction found by Council and a furthcr .8 per cent attributed to the transfer [rom the Community Facilities Reserve Fund to finance a portion of the Infonnation Systems Capital Budget. This number will continue to be refined as more information, particularly in regards to the implementation of the Ontario Fair Assessment System, becomes available. Adoption of the rccommendations will allow Town staff to continue the day-to-day operations. . - The 1998 Capital Budget is also submitted for approval. The recommendations provide for approval of those projects financed from other than current tax revenue. Projects financed from current revenues will require some debt financing, under current budget conditions. However, over the next two months staff will be examining various options to reduce the amount financed this way. Possible other means include: internal financing; a two year financing scheme, depending upon cash flow needs; sharing of capital expenditures and therefore, the financing. In short, every means available will continue to be explored to reduce the need for debt financing. . Report to Council TR 25/98 - 3. - 4. 5. 6. 7. - June 16, 1998 Subject: 1998 Current Budget Page 3 In regards to the projected decrease in Payments-in-Lieu of Taxes, should continuing discussions with the Province be successful and result in the Town retaining more of the revenue, the need for debt financing will be reduced as, possibly, will the projected 9.9 per cent increase in taxes. In conclusion, approval of the Town's operating expenditure budget will allow operation to continue throughout 1998. Approval of capital projects, except most of those financed from current revenues, allows capital works to continue without hampering financial flexibility should it be needed, when setting the Tax Rates for the Current Operating Budget, most likely in August. At that time, a further refinement of Downloading and assessment information, together with a rcviscd financial plan for capital will enable Council to give final approval to the balance ur the capital projccts and set the Tax Ratcs. For ease of presentation and understanding, the following information is presented in point form. 1. The cust of Provincial Downloading or Who Does What is a direct result of Provincial reductions in income tax. In other words, some of the revenue lost by the Province through income tax reductions is made up by revenue decreases or expenditure increases lo municipalities. 2. Downloading on Upper Tier (Regional) municipalities usually results in increased costs whereas the effect on Lower Tier municipalities (Pickering) is usually decreased Provincial funding. In 1996 and 1997, approximately $1,346,000 in reduced Provincial funding (Roads and Unconditional Grants) was absorbed within the Town's budgets for those years without an increase in taxes. While reserves and reserve funds were never "plentiful", they have been reduced in prior years, thereby reducing financial flexibility in the 1998 Budget. The situation regarding the amount and sharing of Payments in Lieu of Taxes is still undefined and subject to estimates which may continue to change. Aging assets will continue to put increasing pressure on the Town's financial resources. The 1996 Council approved the purchase of eight low floor buses from Orion Bus Industries. This was a joint purchasing agreement entered into with the Town of Ajax. The 1997 budget funded the purchase of four of these buses. The remaining four are included in the 1998 Capital Budget. It should be no led that it appears that none of the eight buses will be received until 1999. However, progress payments to Orion Bus Industries will be required to be made once production commences. 8. The use of debt as a financial tool, while not advocated, must be considered as an alternative. It does have the benefit of spreading costs of long term assets over the life of that asset and paid for by the future users. 9. The Region of Durham has recently approved a 1.5 per cent increase for its operating and administrative departments; a 2.6 per cent increase for the Police Department and a 32 per cent increase in the Solid Waste tipping fee, which translates into a 1.7 per cent increase in the Region's tax levy. Property tax increases due to Provincial downloading are yet to be announced. 10. School Board tax rates are unknown at this time. II. Up to this point, all budget analysis has been based upon a comparison to 1997, as if the Ontario Fair Assessment System had not been implemented in 1998. Report to Council TR 25/98 June 16, 1998 Subject: 1998 Current Budget Page 4 - 12. The Ontario Fair Assessment System continues to be refined and adjusted making analysis of property tax increases impossible at this time. Implementation dates continue to be postponcd producing an addilional advcrse impact on the Town's finances. 13. Council should be aware that there is the possibility that meetings may have to be called on short notice in the summer months to discuss assessment, taxes and the 1998 Tax Rates. A TTACIIMENTS: Not applicable. :-- '\ GAP/llld --