CITY OF LONDON Build a Budget Workshop 2015 1 Stay in Touch E-mail - PowerPoint PPT Presentation

CITY OF LONDON Build a Budget Workshop 2015 1

Stay in Touch E-mail budget@london.ca Tweet us @CityofLdnOnt or #LdnBudget15 Find us on www.Facebook.com/LondonCanada Call Financial Planning & Policy at 519-661-4638 www.buildabudget.ca Watch budget meetings streaming live at www.london.ca/livestreaming 2

Budget Terminology Operating Budget… The City’s plan for expected revenue and expenditures based on the City’s daily activities. Capital Budget… The City’s plan for long-term financing of fixed assets. 3

Budget Terminology Property Tax Levy… The tax bill paid by homeowners and businesses for owning real estate. This revenue is used to fund programs and services for the entire community . Funding from Assessment Growth… Additional revenue that is collected through property taxes due to a growing and expanding city. Tax Levy from Rates… Property taxes collected from existing homeowners and businesses. 4

Budget Terminology Development Charges… Fees collected from developers through building permits and used to fund new infrastructure (capital costs) related to growth. User Fee Revenue… Fees imposed on services intended to recover all or part of the cost associated with providing the service. Pay-as-you-go Financing… The principle of funding capital projects with current funds rather than relying on debt financing. 5

Budget Terminology Reserve Fund… A Reserve Fund is an amount set aside for a specific purpose by authority of a by-law (or as required by legislation) that is carried from year to year unless consumed or formally closed. Reserves… Reserves are also amounts carried from year to year, but reserves are set up by resolution of Council and are used mainly as cushions against operating budget contingencies or unforeseen events. 6

Focus For Today 7

Balanced Budget = Revenues Expenditures + Tax Levy=Property Non-Property Tax Taxes collected Revenues (User fees and Grants) From From Assessment Tax Rate Growth Increase 8

Reserves & Reserve Funds Reserves & Reserve funds are critical…  Cover short-term financing of capital projects, liabilities and emergencies  For effective asset management  Seed money for investment opportunities/partnerships What happens without Reserves and Reserve Funds?  Short term borrowing costs  Aaa credit rating may be affected  Reduction in capital works & investments  Could have liquidity problems 9

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Budget Overview 2014 Net Budget = $498.7 million 2015 Net Budget = $513.2 million Economic Economic Corporate, Prosperity, Prosperity, Corporate, Operational & 2.9% 2.9% Operational & Council Environmental Environmental Culture, 4.6% Culture, 4.6% Council Services, 5.2% Services, 3.5% Services, 3.4% Services, 5.3% Parks, Rec. & Parks, Rec. & Capital Neighbourhood Neighbourhood Capital Financing & Services, 5.9% Services, 6.0% Financing & Contingencies, , 0% Contingencies, 21.3% 22.6% Planning & Planning & Development Development Services, 1.1% Services, 1.1% Protective Protective Transportation Transportation Services, 29.8% Services, 30.4% Services, 11.6% Services, 11.7% Social & Health Social & Health Services, 13.4% Services, 12.7% Increase of 2.9% or $14.5 M 11

CPI (Consumer Price Index) Increase vs Tax Levy Increase 2014 Gap is $17.7M 12

What’s Happening with Tax Rates in Other Communities? London received $104 million less in revenue in How Does London Compare comparison to 2011 - 2014 other 3.0% $120 municipalities 2.7% $104 2.5% $100 2.0% $80 Millions 1.5% $60 1.0% 1.0% $40 0.5% $20 0.0% $- London Comparators Potential Lost Revenue NOTE: The municipal comparators include Barrie, Chatham-Kent, Greater Sudbury, Guelph, Hamilton, Kingston, Ottawa and Thunder Bay 13

2015 Budget Highlights Increase of $14 $14.5 Million or 2. 2.9% 9% Homeowner Impact $2,493 $2,565 2.9% $72/yr or $6/mo 2014 2015 NOTE: Average rate payer owning a home with an assessed value of $214,000. Municipal Property Tax Amount is subject to 2015 tax policy. Excludes the Education tax portion which is set by the Province (2014 - $434.42). 14

Avg. Residential Homeowner Impact Yearly Monthly $72 $6 Capital Financing ……………………………………………………………………………… $15 $1.25 • Pay As You Go ……………………………………………………………..……………….. $11 $0.92 • Reserve / Reserve Fund Contributions……. …………………………… $4 $0.33 Protective Services …………………………………………………………………………. $6 $0.50 • Police (Submitted at 0.7%)………………………………………………………….. $3 $0.25 • Fire (Submitted at 1.0%)……………………………………………………………….… $3 $0.25 Roadways (Submitted at 3.4%)………..…………....................................... $6 $0.50 London Transit Commission (Submitted at 2.9%)………..…………........ $4 $0.33 London & Middlesex Housing Corporation (Submitted at 7.4%)… $3 $0.25 Land Ambulance (Submitted at 3.6%)………………………………………........ $2 $0.17 London Public Library (Submitted at 2.1%)…….…………………….…........ $2 $0.17 Conservation Authorities …………………………………..………………………….. $1 $0.08 Remaining Service Areas ……………………………………………………………….. $4 $0.33 Net Ontario Works …………………………………..……………………………………… $(3) $(0.25) • Ontario Works (-8.0% primarily due to Provincial Uploading)….….. $(9) $(0.75) • Reduced Reliance On Stabilization Reserve …………..……………… $6 $0.50 Corp. Contingencies (for all service areas)…………………….………………… $32 $2.67 * Average rate payer owning a home with an assessed value of $214,000. Municipal Property Tax 15 Amount is subject to 2015 tax policy. Excludes the Education tax portion which is set by the Province.

Capital Budget Classification Categories The capital budget is broken down into the following categories: Service Improvement Reserve Funds 7.1 m Senior Government 6.9 m 16. 4 m Growth Development Charges 35.8 m 51.0 m Lifecycle Renewal Debt 6.6 m Capital Levy 27.7 m 62.5 m Total 2015 Capital Budget = $129.9 million 16

Debt Overview Property Tax Debt Levels $190.8M Issued Debt $95.3M Authorized Debt $286.1M Total Potential Debt Debt Servicing cost is $187.55 per year or $15.63 per month 17 (For a residential homeowner with a house valued at $214,000)

Reserves & Reserve Funds Total Obligatory $20.7 million Total City Owned (Excluding Obligatory) $191.8 million Projected Reserve Fund Balance For Capital Asset Renewal & Replacement = $53 million The estimated replacement value of City owned assets is approximately $4.2 billion 18

Assessment Growth Did You Know… Assessment growth funding comes from taxes levied on new homes and businesses . Requires Services; • Garbage pickup • Snow plowing • Road maintenance • Generates fund the Police and Fire new tax extension of services revenue municipal services 19

Assessment Growth Update Amount ($000’s) 2014 Carry Forward $0 1.17% 1.0% Projected (December 8, 2014 - SPPC) $4,987 $5,835 Summary of Requests Economic Prosperity $2,950 Environmental Services $351 Parks, Recreation & Neighbourhood Services $586 Planning & Development $177 Protective Services $110 Transportation Services LTC (26,700 annual service hours & 6 expansion buses, 1 funded through DC) $1,830 Roadways $1,094 Corporate, Operational & Council Services $379 Total Requests $7,477 Growth Costs Exceeding Available Funding $1,642 $2,490 20

The Future and Multi-year Budgets Annual Service Reviews 4-5 Services reviewed annually (including zero-based techniques) Are we doing the right things? Are we doing them in the right way? Set 5 year Approve Strategic 2016- plan 2019 Budget Annual Annual Reconfirm Approve Update Update 2019 2015 Budget Budget 2015 2016 2017 2018 2019 • 3.2% to maintain existing service levels (2016 to 2019) (rough estimate) Alignment of longer-term goals and objectives with longer-term funding plans; • • Greater certainty is provided to tax payers/residents about the future direction of the City and taxes; and • Improved accountability and transparency over spending plan changes. 21