2020 2020 Bu Budget t Directi ction ons Report ort www.centrewellington.ca Report COR2019-44 June 3, 2019 1
Purp rpose of t this M Meeting • Budget Schedule approved by Council in May 2019. • The 2020 Draft Budget preparation will start this summer. • The purpose of this meeting is for Council to provide direction to staff in the initial development of the Draft Budget. www.centrewellington.ca • 8 discussion sections have been provided. • Staff proposed resolutions for each section. 2
Discussion Sections 1. Inflation 2. Assessment Growth 3. Fees and Charges 4. OMPF Funding www.centrewellington.ca 5. Dedicated Capital Levy and OCIF Funding 6. Development Charges 7. Capital Funding 8. OLG Funds 3
Section 1: Inflation • Township operating budget has a blend of costs that are affected by increases that are: • More operational in nature. • More capital in nature. • Some operating budget costs do not increase with inflation. www.centrewellington.ca • Provided the following information (source: Statistics Canada): • Consumer Price Index (CPI) – operating inflation index. • Non-Residential Building Construction Price Index (NRBCPI) – capital inflation index. 4
www.centrewellington.ca Section 1: Inflation 5
www.centrewellington.ca Section 1: Inflation 6
Section 1: Inflation www.centrewellington.ca Was 3.1% when the 2019 Budget was passed (3 rd qtr. 2018 stats) 7
Section 1: Inflation Proposed Resolution: That staff be directed to maintain a tax rate increase equal to or less than the calculated Township index (currently 2.7%) before adding on www.centrewellington.ca Dedicated Capital Levy impacts. 8
Section 2: Assessment Growth • Growth within the Township results in increases in costs to provide services: • More roads, sidewalks, water/wastewater mains, stormwater management facilities. • Expansions to wastewater treatment facilities. • More sports fields and playgrounds. www.centrewellington.ca • Increase demand for programs (i.e. seniors, swimming) and by-law enforcement. • More processing of tax bills, administration, and customer service requirements. • In addition, Provincial downloading of services and regulated reporting continues to increase. 9
Section 2: Assessment Growth • Township approach: Growth pays for growth . • Taxation Assessment Growth: Additional taxation revenue received due to new property owners. www.centrewellington.ca • Capital: Development Charges (to be discussed later) 10
Section 2: Assessment Growth Proposed Resolution: That staff be directed to assume assessment growth equal to 2.5%, to be used to fund budget increases considered to be growth in nature, www.centrewellington.ca with assessment growth figures to be updated when actuals are provided in November. 11
Section 3: Fees and Charges • The Township passes a by-law annually to set fees and charges for the year. • Current approach is to pass this by-law in conjunction with the annual budget. • Fees and charges revenue significantly impacts the budget. www.centrewellington.ca • Many fees and charges are partially subsidized by taxation. • Increasing the fees and charges annually by inflationary levels ensures that the taxation subsidization does not increase. 12
Section 3: Fees and Charges Proposed Resolution: That staff be directed to increase fees and charges for 2020 by the calculated Township index (currently 2.7%), other than where pressure www.centrewellington.ca on rates indicates an alternate rate increase. 13
Section 4: OMPF Funding • Ontario Municipal Partnership Fund (OMPF). • Received annually from the Province. • Has decreased significantly since 2009. • In recent years, the Township has experienced 15 to 20% decreases www.centrewellington.ca annually. • The Province is currently reviewing the program and ensures 2020 allocations will be communicated by the end of 2019. 14
Section 4: OMPF Funding www.centrewellington.ca 15
Section 4: OMPF Funding Proposed Resolution: That staff be directed to use an estimated OMPF allocation of $255,680, representing a 20% reduction from 2019, until actual www.centrewellington.ca allocation amounts are released by the Province. 16
Section 5: Dedicated Capital Levy & OCIF • Two sources of funding for bridge and major culvert rehabilitation and replacement: • Dedicated Capital Levy • OCIF Funding www.centrewellington.ca • Ontario Community Infrastructure Fund (OCIF) : • Was anticipated to increase slightly for 2020, but that has been put on hold. • Currently under review by the Province. 17
Dedicated Capital Levy (DCL) • How the DCL works: • 2% increase in Township’s base taxation levy, compounding annually. • Average assessed residential property: Annual DCL Impact Year Impact Y1 Y2 Y3 Y4 Y5 Total www.centrewellington.ca • 2015 2% increase in taxation $17 = $17 • 2016 2% increase in taxation $17 + $18 = $35 • 2017 2% increase in taxation $17 + $18 + $19 = $54 • 2018 2% increase in taxation $17 + $18 + $19 + $20 = $74 • 2019 2% increase in taxation $17 + $18 + $19 + $20 + $21 = $95 18
Section 5: Dedicated Capital Levy & OCIF www.centrewellington.ca 19
Section 5: Dedicated Capital Levy & OCIF Proposed Resolution: That staff be directed to increase the Dedicated Capital Levy by a 2% increase of the base taxation levy for 2020 www.centrewellington.ca and that preliminary estimates for 2020 OCIF funding be maintained at 2019 funding levels. 20
Section 6: Development Charges • Significant source of funding in the Capital Budget. • 7% of capital funding in 2019 • In the 2019 Budget and 10 Year Forecast, assumed funding of $1,500,000 per year available from DCs. • Used to determine timing of growth related projects. www.centrewellington.ca • DC Cash Flow: • DC proceeds not being collected as estimated in the DC Background Study • Choice: Delay growth related projects or incur growth related debt • Impacts of Bill 108 – removing parks, recreation and studies from projects that can be funded from DCs. 21
Section 6: Development Charges Proposed Resolution: That staff be directed to include approximately $1,500,000 in growth related capital projects to be funded by development charges within www.centrewellington.ca each year of the Draft Ten Year Capital Forecast. 22
Section 7: Capital Funding • Primary funding for the tax supported capital budget (excl. bridges/major culverts): • Equipment/Vehicle Replacement Reserves • General Capital Reserve • Federal Gas Tax www.centrewellington.ca • OLG Funds • Equipment/Vehicle Replacement Reserves: • Per 2019 Budget, require a $158,000 increase in funding for 2020. 23
Section 7: Capital Funding • General Capital Reserve • Have approximately $510,000 currently in the reserve that can be used in funding the 2020 Budget • 2018 surplus and closed capital projects • Proposing an increase in “minimum balance” from $1,000,000 to $1,100,000 www.centrewellington.ca • Net of loan to the Dedicated Capital Levy ($765,000) • Proposing increasing the contribution from operating to the General Capital Reserve from $825,000 in 2019 to $850,000 for 2020. • Total available for 2020 Budget: approx. $1,260,000 24
Section 7: Capital Funding • Federal Gas Tax • 2020 allocation to the Township: $855,209 • Additional allocation received in 2019: $850,197 • Council approved directing this to the 2020 Budget process. • Unused allocations from previous years: $220,000 www.centrewellington.ca • Total available for 2020 Budget: approx. $1,925,000 • OLG Funds • Draft policy to be considered in “Section 8” • Allocations received in 2019 become available for the 2020 Budget • Total available for 2020 Budget: approx. $2,185,000 25
Section 7: Capital Funding 2020 2019 Increase/ Reserve/Reserve Fund Proposed Actual (Decrease) General Capital Reserve 1,260,000 795,800 464,200 www.centrewellington.ca Gas Tax Reserve Fund 1,925,000 855,200 1,069,800 OLG Reserve Fund 2,185,000 2,350,000 - 165,000 Total 5,370,000 4,001,000 1,369,000 26
Section 7: Capital Funding Proposed Resolution: That staff be directed to allocate the following funding to the Draft Budget as per Section 7 of report COR2019-44 dated June 3, 2019: • $5,370,000 in combined General Capital Reserve, Federal Gas Tax, and OLG www.centrewellington.ca Funds. • An increase in funding of $158,000 to the Equipment and Vehicle Replacement Reserves • Allocations to the WSIB Reserve, Insurance Claims Reserve, Contingency Reserve, and Legal Matters Reserve as per the Township's funding targets in the Reserve Policy. 27
Section 8: OLG Funds • An OLG Funding Allocation Policy has been developed for Council’s consideration. Significant Policy Sections • Funds received in a calendar year are to be used to fund costs in the following year (same as existing practice). www.centrewellington.ca • Funds are to be kept in interest bearing Reserve Funds (same as existing practice). • Use of funds are to be determined through the budget process, with staff reports to Council used to allocated unused amounts (same as existing practice). 28
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