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Home My WebLink About2001 Current & Capital Budgets 2001 CURRENT AND CAPITAL BUDGETS CifJ¡ o~ BUDGET OVERVIEW This presentation has been designed to provide you with a high level overview of the status of the draft budgets. Hopefully it will answer some of your questions and provide you with an understanding of the process to date. \ \ The Current Budget has been designed to provide a level of service consistent with the past in all services except fire. Fire is the one that will experience an increase in the level of service over the next few years. The Capital Budget should provide the minimum level of maintenance for the existing 'infrastructure within the current confines of affordability. " I I i The Bottom Line is that while choices can still be made the senior management do not feel that further reductions can or should be considered as the level of service will be adversely affected. ~ The challenge today, over the next few weeks and over the next few years will be to balance that level of affordability with the desires of Council and the need to operate and maintain the existing services and infrastructure. ) ¡ 1 . Where are we in the process? \ \ \ . What has taken so much time? I . Where are we financially? . How did we get there? . How have the budgets evolved over the last few months? I \\ . Where do we go from here? I, \ I . Timetable ¡ , I r I; , , 2 Lengthy Process , II Weare working with the 8th Draft submission of the Current and Capital Budget Presentations for your consideration í Ii Balancing relatively stable Financial Resources (mature tax base) with increasing costs and aging infrastructure ¡ ~ Preparation of City's first 3 year Current Budget and detailed 5 year Capital Budget' Capital Budget submission reduced from $24.5 million to $6.5 over last 6-8 weeks Current Budget submission reducr,d from $39.4 million to $38.56 million 3 I, I j ¡ .@.¡. ¡;.;'rr'ì~¡rJ)j¡~:~¡III.I¡íaliIJ...i~lijjflw~I~¡¡;~J[) C¿tq o~ " .,,~,'.'..~, ,,'~," :, ", '.'i,:, ',', "", ,;I,""',"',,,.',:,'.,','<,~:,' :,b,'¡:,.,Fr~r;,,',,:,", '-,"~', '<,~..',",.,{,.t".,.,.~,rY',.'.,!~,i', "',',r,:~~;;,.,.,:,.I\,.',.,.r,',c~ I,.~,", :i,i',,', ", ':'~,({""', ~;, .',',~',.1,'d;:-,',..",;.:J,>~7;i,:;.'., :.:,-,',"'?,',.:,.',,:,;~{.¿.,.", . ',r,'.",.,.".,:,.,-,.,.::",:, "..,..",\~.ft<".,.,:",;,f,~,',',',C,',..,',",';,.,',:~',:,'\~,','..,",'~', ,,1,'-',',.,:', T,.,.,',,:,:,.',';; ", .".':-;;"..~-:~','i~:"~'..'.;::~"'~":.,),..'.~~.',.,..'~ .,..e ",.,.,~:,,:i~~;~,,~fu(~l\~'~~~'~'-5.',';::P:',"', <<,:".,'.,r,,".'" ..'":':',':',.:,.",,,',,',. ',1 ",'" February 2$, ~~~i CORPORATE SERVICES DEPARTMENT INTERDEP ARTMENT AL MEMORANDUM TO: Mayor Wayne Arthurs Members of Council FROM: Gillis A. Paterson, Director, Corporate Services & Treasurer DATE: February 18, 2000 RE: 2000 - 2001 CAPITAL FINANCING OVERVIEW As you may recall we have had several discussions over the last few years regarding the increasing inability to finance certain projects in the annual Capital Budgets from current taxation revenues. During the 1998 and 1999 budget briefIng presentation by myself and again at the annual Council Retreat at the Briars, this problem and the use of debt as a temporary financint! tool. tot!ether with its inherent problems, was discussed. Additionally, at the last Retreat, the additional financial burden resulting from the new Development Charges Act and the adoption of the study recommendations was reviewed. The main purposes of this memo are to ensure your continued awareness of this situation that will have its full impact in the 2001 budgets. The attached pages contain the details while a summary may be found below. t To date, the capital expenditures and projects approved by Council for debt financing, both as part of the annual capital budget and as separate projects outside the budget, have been fInanced internally. This means that we have temporarily borrowed funds from internal sources such as reserves and reserve funds to pay the bills as the expenditures were made. The strategy was to temporarily employ the internal funds in this manner until the final total expenditures could be detennined. It was anticipated this would occur in the later half of 1999. There is an obligation on Council to ensure these funds are repaid hence, starting in 1999, the annual Current Budget contained such a provision in the amount of $256,000 and $586,000 in the 2000 Budget. The 1998 Budt!et approved in September of that year contained a provision for $2,435,000 of debt financing and East Shore in the amount of $782,000 was added during that year for a revised 1998 total of$3,217,000. Year end adjustments allowed this to be reduced by some $1,535,000 to approximately $1,682,000. Meanwhile, the 1999 Capital Bud2et approved by Council in May of that year contained a provision for an additional $2.303.000 of debt financint! which is anticipated to be required in 2000 as the expenditures are completed. Similar to 1998, year end adjustments and $100,000 in unconditional grants allowed this amount to be reduced by approximately $376,000 to $1,927,000. At this point total debt fInancing approved by 5 Council amounted to $5,520,000. However 1998 and 1999 year end adjustments together with a provision for debt charges in the 1999 Current Budget has allowed a reduction in this amount of approximately $1,911,000 to occur leaving some $3,609,000 to be financed. Additionally, the financing for a portion of the Western Branch and Community Centre in the amount of $1 ,307,900 remains to be identified. The revised total to be financed, assuming no other sources are identified for this latter item, is $4,917,000 in 2000. ' 1998 1999 2000 Approved Debt $1,682,000 $1,926,000 $4,488,000 Cumulative Total 3,608,000 8,096,000 Debt Charges 240,000 274,000 Cumulative Total 240,000 514,000 % offucrease in Taxes ,1.1 1.2 Cumulative Total % 2.3 2001 639,000 1,153,000 2.7 5.0 Additionally, the recently adopted 1999 Development Chan!es Study included the requirement that Council include the projects expenditures and financing in the budget at the appropriate time. The effect of this commitment is, as was indicated in the Development Charges Study and Report to Council and at the last Council Retreat, the City's share of capital projects is $61.7 million over the next 20 years. At an average of $3.2 million per year, $300,000 in new debt charges will be added each and every year for the next two decades. ,\ In addition to the foregoing, the third pa1!e attached illustrates the other major financial pressures that will have a serious effect on the 2001 Bud2ets. Our ability to continue to fmance through debt and/or draws from reserves and reserve funds is being quickly diminished. Please note this memo was prepared and is being sent to only the Members of Council. Gillis A. Paterson, Director, Corporate Services & Treasurer GAP/vw Attachments Copy: Thomas J. Quinn, Chief Administrative Officer Everett Buntsma, Director, Operations and Emergency Services Neil Carroll, Director, Planning and Development J. Tomlinson, Deputy Treasurer Stan Karwowski, Manager of Finance 6 I. ---- CITY OF PICKERING 2000 Budget Financial Position Revenues I t General Government Revenue Departmental Revenue peA Revenues Assessment Growth Insurance Premium Savings 1999 Surplus OMERS Savings Total Revenues $5,715,318 9,102,553 350,000 225,205 100,000 110,000 656,000 Expenditures Departmental Expenditures General Government Expenditures Capital Expenditures Total Expenditures $35,819,065 3,325,656 5.744.683 Revenues Over/(Under) Expenditures 1999 Taxation Revenues Current Operations To Be Financed Sources of Funds Debt Financing of Capital City (Internal) Market (External) One Time Transfer - Rate Stabilization Res. Proposed Tax Increase Percentage Increase over 1999 Tax Levy I !, 7 $16,259,076 44.889.404 ($28,630,328) 21.810.146 ($6,820,182) 4,488,088 0 2,332,094 íW 0.000/0 r CITY OF PICKERING 2000 Budget, Financiál;Position Revenues General Government Revenue Departmental Revenue peA Revenues Assessment Growth Insurance Premium Savings 1999 Surplus OMERS Savings Total Revenues $5,715.318 9,102,553 350,000 225.205 100,000 110,000 656.000 Expenditures Departmental Expenditures General Government Expenditures Capital Expenditures Total Expenditures $35.819,065 3,325.656 5.744.683 Revenues Over/(Under) Expenditures 1999 Taxation Revenues Current Operations To Be Financed Sources of Funds Debt Financing of Capital City (Internal) Market (External) One Time Transfer - Rate Stabilization Res. Proposed Tax Increase Percentage Increase over 1999 Tax Levy $16.259,076 44.889.404 ($28,630,328) 21,810.146 ($6,820,182) 4,488,088 0 Q $2.332.094 10.690/0 8 II II II II I I I II II r-r--- !I II I, I I I I I II I CITY OF PICKERING " , FINANCIAL PRESSURES The: 2001: Forecast, was, provided in 2000 'Current: Budget --1 I New Debt Charges $ 453,000 Loss of Transfer from Reserve 2,332,000 City Share of Projects funded in part from Development Charges 100,000 - 1,200,000 Total 2,950,000 - 4,005,000 I 12 - 17 I % Increase in Taxes Notes: 1. In addition, under current information, the OMERS savings reflected in the amount of $656,000 ceases at the end of 2001. 2. Assessment Growth of 1 - 2% is anticipated to cover inflationary pressures. March, 2000 9 CITY OF PICKERING FINAN CIN G STRA TEGIES 2001 - 2003 ! \ Council Retreat Waterfront Bistro June, 2000 10 WHA T HAS HAPPENED OVER THE LAST FEW YEARS . Draws on Reserve Funds have gone up while contributions have gone down. . Tax increases fuJ).ded by internal borrowing. . Development Charge Financing more refined. . Infrastructure, staffing and expenses have been cut for zero tax . Increase. ¡ } ¡ j 11 I } ! ¡ 5 MUTUALLY EXCLUSIVE GOALS . Infrastructure is aging. , . Understaffed in key areas. . Desire to undertake new projects. . Existing pro gram underfinanced. . Desire to keep tax increases down. 12 ~ c:".:) 21 cap2a.xls ---- CfTYOFPICKERING " Proforma'FinancialPO$ition' ($ Millions) Line 1t 1 2 3 4 5 6 Revenues General Government & Departmental Rev. Corporate Services Initiated Assessment Growth Surplus. POA, Assess Growth & Ins. OMERS Savings One Time Transfer from Rate Stab. Reserve Total Revenues 7 8 9 10 Expenditures Departmental Expenditures General Government Expenditures Debt Servicing Costs - Internal & External Total Non-Capital Expenditures Capital Funded From Tax Levy 11 Revenues Over/(Under) Expenditures 12 Projected Taxation Revenue$ 13 Current Operations To Be Financed % Tax Increase As projected in June 2000, excludes FIRE. 2000 $14.8 0.8 0.7 2.3 $18,6 2001 2002 2003 $15.5 0.9 0.7 0.3 0.0 $17.4 $15.5 0.9 0.7 0.0 0.0 lliJ. $15.5 0.9 0.7 0,0 0,0 lliJ. $35.8 $36.7 $37.7 $38.7 2.7 3.1 3.5 3.9 0.6 1& 3.0 4.8 $39.1 $41.1 $44.2 $47.4 1& 1.2 1.2 12 ($21.8) ($24.9) ($28,3) ($31,5) 21.8 22.0 22.2 22.4 1M ~ Lü4l tWl 13..30..% 25.73% 2.9..50.% 04/02/2001 , ) ¡ 2001 ',", CURRENT AND CAPITAL BUDGETS ¡ J } , 14 City of Pickering Residential Tax Rates j I j Tax Year 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 % Increase 7.5 0.5 0.0 0~5 0.0 0.0 0.0 0.0 2.9 0.0 0.0 1980s average annual increase 6.6% ) } ¡ 15 City of Pickering 2001 Current Bud~ New Revenues - Already in Bud~ Taxes $ Duffins Creek (Water 600,000 Pollution Control Plant) OPG (assessment appeal) 210,000 Non Shared PILs 400,000 Linear Properties (Hydro 326~000 One) Total New Revenue 1J~536~OOO Assumes City continues to retain Education share of taxes otherwise remitted to Province. Assessment Growth ~50~00O ) J } 1.6 '- --- --- --",--- -""'..,- '..--,,-", City of Pickering 2001 Current & Capital Budgets The Use of Debt For Capital Projections ~ -.J $35,000,000 $30,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 $- 1998 1999 2000 2001 2002 2003 .98 Debt. 99 Debt II 00 Debt. 01 Debt .02 Debt. 03 Debt -- ..'~.. --"-- ~ 00 ..__..~ --"-'~"'-' ,,-""".. -.._--.. $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 City of Pickering 2001 Current & Capital Budgets The Growth of Debt Payments $- 1999 2000 2001 2002 2003 I- Debt Charges I "-- -- ,._--- '-'-'--- ---- ,-~.,,-, '-~--- --'-'. $25,000,000 $20,000,000 $15,000,000 1'"""" c.c $10,000,000 $5,000,000 City of Pickering 2001 Current & Capital Budgets Reserves & Reserve Funds ", n $- . 2001 1990 1992 1994 1996 1998 2000 I- Legislated - Allocated I City of Pickering 2001 Capital Bud~ Expenditure Summar~ I \ 2000 Budget $ 8,894,835 First 2001 Departmental Draft Submission $24,524,971 Final Draft Submission $ 6,516,455 I ¡ I 20 I ) f j I City of Pickering Don Beer Arena Additional Ice Pad If approved: (not currently included) 1. Amount to be financed by City for first year $3.Sm 2. If Superbuild approved (approximately $lB in requests; $300 m in funds) Cost $3.5m Superbuild $1. Om Amount to be financed by City $2.5m Association financing $1.5m over 10 years which costs Pickering $2.8m Tax Increase years) 1 % Special Capital Levy (for 20 Every $1 million in debt is a 0.5% Tax Rate increase the following year for the next 20 years. 21 City of Pickering 2001 Preliminary Current Budget 2001 Fire Protection Current Budget Summary 2001 2002 2003 New Positions $288,388 $1,540,646 $1,820,443 Wage Settlement 482.867 810.751 1.107.716 Sub Total Staffing $771,255 $2,351,397 $2,928,159 Increase in Operating Expenditures 112.650 114.903 117.201 Sub Total Operating Expend. $883,905 $2,466,300 $3,045,360 Debt & Lease FinancinQ of Capital Capital Funded From Current $143,100 $220,000 $146,000 99 Budget - (10 yr) Tanker (160,000) 22,293 22,293 22,293 Dispatch Equip (175,000) 24,383 24,383 24,383 2000 Budget - (10 yr) Aerial Truck (400,000) 55,728 55,728 55,728 2001 Budget - (20 yr) New Fire Hall (500,000) 46,518 46,518 46,518 2001 Budget - (3) Vehicles Lease - new staff 9.000 18.000 18.000 Sub Total $301,022 $386,922 $312,922 New Additions 2002 Budget - (10 yr) Pumper ($450,000) $62,688 $62,688 2002 Budget - (5 yr) Hazat Unit ($220,000) 52,272 52,272 2002 Budget - (20yr) Construction of Brock Rd 279,108 279.108 I Sub Total 394,068 394,068 I Fire Dispatch Equipment 348.324 Total $1.184.927 $3.247.290 $4.100.674 I % Tax Increase 5.4% 14.7% 18.60/0 22 r II II II I' I , I I i, il I' " ! I I I II II II II LEVY Revenues Expenditures Capital Funded from Current Funded from Debt CITY OF PICKERING 2001 -2003 SUMMARY BUDGET 2000 BUDGET ($15,167,871 ) 39,144,722 1,256,595 4,488.088 (100.000) (656,000) (110,000) $28,855,534 (4,488.088) (2.332.094) $22,035,352 34.09% INCREASE DECREASE ($1,235,266) 4,100,384 (84,070) (2,712,628) 100,000 (228,000) (434,000) (1,892,000) (500,000) ($2,885,5801 2,712,628 2,332,094 $2,159,142 0 RAFT 0 2001 BUDGET ($16,403,137) 43,245,106 1.172.525 1,775,460 0 (884,000) (434,000) (1,892.000) (500,000) (110,000) $25.969,954 (1,775.460) $24,194,494 9.80% =r II !i 2002 BUDGET (16,490.661.2) 45.934,125 1,256.595 13,995,102 (656,000) (868,000) 0 (1,892,000) (110,000) $41,169,161 (13.995,102) 0 $27,174,059 12.32% 2003 BUDGET (16,554,483,6) 48,150,012 1 ,256.595 11,843.249 0 (1,302,000) 0 (1,892.000) (110,000) $41,391,372 (11.843,249) $29,548,123 8.74% Adjustments Insurance Premium Savings Revised OMERS Savings 2001 - Real Assessment Growth Veridan Interest Land Sales (SurpluS) Sub Total Debt Financing ONE TIME Transfer from Rate Stablization Reserve NET LEVY for Taxation Purposes Percentage Increase 2001 Projected Increase 2002 Projected Increase Over 2001 2003 Projected Increase Over 2002 Three Year Projected Increase 23 Conclusion Tax Increase = 9.8% = $75 per household per year = 1 Extra Large Tim Hortons coffee per family per week OR 50 cents per person per week 24 F n Ii II 'I II II II II Ii II I, II II " II Ii II ¡ I I II it II II II iI r i Ii II Ii II II II II I i I CITY OF PICKERING Comparative Analysis of Tax Rates Residential Taxes Paid Component of Per $200,000 Municipality Tax Rate Assessed Value Pickering Rate with Increase 0.003888 $777.60 Ajax 0.004797 $959.40 Oshawa 0.005921 $1,184.14 Whitby 0.004651 $93020 How Much Do YOU Still Save LivinQ in PickerinQ? Whitby Residents Pay $152 more. ($222) ¡,~'~,:_~~~7;; Ajax Residents Pay $182 more. ($251 ) ~tfj~~,~ Oshawa Residents Pay $406 more. ($475) ¡f,.~._i@.f,:,'~-,'..;~... -,-.~:7,~,'.:,-,',-,'_.,.-,r_..~~,...:,[,',.,~,',-,',jI ~i.tr~,' . ........'".. _. ...., .. L 25 ~~~1~~èf¡~f~~- -.j@...i~í@'h Q "-, ~ilil~,p<? ~~ij;¥1~ili'¡:' , ..,..'..... .." r-;~~'~:'J~i;..;~~.~'~~T. ';~íJ,r;@ì\7Q'\", -:-- ' ,,'," '.',',.' ZJ~i~~'W',L,.',".L-.{,'~.~'?,',>-~,',"..:..,'".~,..." ',."",:.' -.-.=..,;..-'j-,] I :1 II II II II II , iI II II " II II !I II II !I Ii II II I' ,I II !I :1 II II II 'i !I !I 11 I' 11 ,I 'I II II I II I' II I I , II City of Pickering LoneT erm Financing Goals and Objectives Goal: Minimize Tax Increases Objectives: Maximize New, Sustainable Tax and Non Tax Revenues 1. Development is the only option linked to economic activity that will assist in keeping up with inflation and growth in capital and operating expenditures. Development will provide growth in the assessment base, development charges and user fees. Industrial/Commercial Growth - Regional Airport is in Official Plan. Residential Growth - East Duffins 2. New ongoing, sustainable, non property tax revenues must be identified Only one identified to date: Veridian Use interest income as a source of revenue 26 Further Actions: I ! I I I I 1. No additional approvals of capital projects requiring debt financing beyond that contained in Budget 2. Approvals for "Development Charge" proj ects must be carefully considered pending DC funds and City Share of financing in the bank 3. No new or expanded capital or current expenditures to be introduced outside of annual Budget 4. From 2001 onwards Current & Capital Budgets will contain minimal flexibility \ } 27 ¡ J j Fiscal Responsibility & Financial Planning Cannot be Achieved by , Staff Alone We need your help to work as a T earn in addressing and solving these problems over the next few years. 28 I , ¡ I City of Pickering 2001 Current Briefing Bud2ets Distributed: Thursday, April 12/01 (or earlier) Qperational Review of Bud2ets: Council's preference? ¡ r ¡ ¡ I Bud2et Presentations: Budget Committee - Tuesday, May 3 or 4/01 Council- Monday, May 14/01 (Special Mtg) , 29