Long Range Financial Plan Presented by: Ken Nix Commissioner of Corporate Services and Treasurer January 14, 2019
Context/Current State 2019 Budget Road Map Builds on Dec. 10, 2018 Council Orientation May, 2018 Jan 14 Feb 19 Jan 21 Feb 11 Budget Long Range Budget 2019 Budget Preparation Financial Deliberation Budget Overview and and Review Plan s and Target Public Input Approval Context for Feb 4 Proposed Budget Council Released – Budget Book Deliberations and Budget Highlights Page 2
Context/Current State Long Range Financial Forecast • 10 year planning horizon and update each year • Considers proposed service delivery and affordability • Significant Strategic Priorities not known/fully developed when budget prepared: Council Goals, strategic plan, organizational design Page 3
Context/Current State LRFP and Budgets - more than taxes • Translate Council’s Goals, strategic priorities in terms of services, and service levels into $$ and ability to deliver • Identifies challenges based on proposed service delivery • Allows Council to strategically balance current budget decisions while preparing for the future Page 4
Context/Current State Financial Condition & Sustainability Strategic Tools /Guidance Business planning Long Term Perspective LRFP and Financial Policies Financial Condition/Sustainability Infrastructure, Economic and Council Goals Strategic Plan Services and Environmental Community Input Quality Levels Factors External Influences Outside of Council’s Control Page 5
Context/Current State Financial Condition Good Now Sustainability Flexibility Vulnerability Many unknowns Source 2018 BMA Study Page 6
Context/Current State Ongoing Challenges • Asset Management • Significant Growth – growth does not pay for growth • Costs increasing more than inflation • Reliance on taxes as revenue source, other revenues not keeping pace and decreasing non-residential share of taxes • Focus on modernizing service delivery – SDR, CITSP, Succession Planning etc to meet expectations • Staff capacity to deliver • Provincial support ? – transfer payments primarily regional implications but will effect Whitby taxpayers; no new revenue tools; Development Charge Revenue risks • Many unknowns outside of Council’s control (economy, tariffs, GM, climate change…) Page 7
Long Range Financial Plan 2018 Long Range Financial Plan Page 8
Long Range Financial Plan Long Range Financial Forecast Impacts of Inflation, Growth, Services and Capital Programs into Tax Impacts. 7.0% 6.0% 2018 Average – 10 Year 5.0% 2019 Model Average Tax Increase for Council term – 2019-2011 2019 Average – 10 Year 4.0% 3.0% 2.0% 2019 Long Range 1.0% Financial Plan 0.0% 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Note : Council’s Goals and Corporate Strategic Plan will impact future forecasts Page 9
Long Range Financial Plan Long Range Financial Forecast • How was this achieved? • SLT Participation/Input/Agreement • Focus on Capital requirements and impacts • Reduced/deferred capital growth program • Limited new projects or resources • Re-scoped, phased projects • Changed policy assumptions Page 10
Long Range Financial Plan Ten Year Growth Forecast Reduction Asset Type 2018 Capital Draft 2019 Capital Change Growth Forecast Growth Forecast ($000’s) ($000’s) ($000’s) Roads and Related 182,270 144,313 (37,597) Parks 49,155 29,723 (19,432) Facilities 95,051 94,270 (781) Studies 14,508 12,545 (1,963) Fleet and 27,369 27,081 (288) Equipment Total 368,353 307,933 (60,420) Page 11
Long Range Financial Plan Highlights of Significant Project Changes Project/Change $ Various Road Projects – pushed out of ten year forecast eg Columbus Rd <$48M> Widening/Extension $7.9M, Ashburn Rd Reconstruction $5.6M, Cochrane Reconstruction $5.8M Various Facility Projects - pushed out of ten year forecast eg Station Gallery <$4.8M> Expansion $1.5M, Fire Training Complex $2.8M Library Branch Expansion – project removed and incorporated in Whitby Civic <$4.6M> Centre Project Whitby North Sports Complex – project scope/budget reduced to $26.6M <$19.2M> and timing shifted to 2022-2024 Whitby Civic Centre Project – project scope/budget increased to $50M $28.3M Various Waterfront Parks Projects – pushed out of ten year forecast eg <$11.6M> Victoria Fields Urban Park $7.8M, Dupont Lands Development $3.8M Page 12
Long Range Financial Plan Long Range Financial Forecast Component 2018 2019 Model Model 10 Yr avg 10 Yr avg Asset Management Contribution 1.6% 1.0% Asset Management due to Growth - New 0.7% 0.5% Infrastructure Growth Reserve Contribution 1.8% 1.0% Operating Cost Increase for Growth 1.4% 1.1% Operating Cost Increase for Inflation 2.1% 2.4% Other 0.1% 0.2% Revenue from Growth (2.5%) (2.2%) Overall Tax Increase 5.2% 4.0% Page 13
Assumptions/Risk Future – Cautious…. Not at inflationary Sustainability tax increases Many Very Limited unknowns Flexibility Vulnerability Many unknowns Page 14
Assumptions/Risk DC Revenues vs. Projections • Assumptions/Risks: Development Charge Collections Shortfall • Development Charge Background Study vs Actual Rate of Growth Residential DC Collections Non-Residential DC Collections $16 $4 $14 $3 $12 $3 $10 Millions Millions $2 $8 $2 $6 $1 $4 $1 $2 $- $- 2016 2017 2018 2016 2017 2018 DC Study Actuals DC Study Actuals Page 15
Assumptions/Risk DC Exemptions vs. Projections • One-Time Reserve Fund Overcommitted • Actual non-statutory DC Exemption Costs for the Town greater than estimate in the DC Background Study $5 $4 $3 Millions $2 $1 $- Residential - DC Study (16-25) Residential - Actual Cost (16-18) Non-Residential - DC Study (16-25) Non-Residential - Actual Cost (16- 18) DC Study Non-Stat Exemptions (2016-2025) 2016 Actual Cost 2017 Actual Cost 2018 Actual Cost Page 16
Assumptions/Risk Long Range Financial Forecast • Growing Asset Management Infrastructure Gap • 10 year MAMP Requirement vs Current 10 year Capital Asset Management Budget Forecast $450 $400 $350 $300 Millions $250 $200 $150 $100 $50 $- 2019-2028 Current 10 Year capital budget asset management investment 2017 MAMP 10 year requirement (inflated) Page 17
Assumptions/Risk One time reserves fully committed • No funds-Limited Flexibility • Given Community Improvement Plan (CIP) upfront funding and other community and economic initiative funding in 2018, the projected 2018 year end uncommitted reserve fund balance $0.5M. • The only ongoing funding source for this reserve fund are loan repayments (Library DC portion and Building Permit) which are scheduled to end in 2022. • Any future balance is considered committed for future community and economic initiatives in the form of DC by-law discretionary exemptions (office, industrial, special care) Page 18
Assumptions/Risk Debt Capacity within policy • Long Term Debt Debt Capacity: Total Annual Debt Payment to not Exceed 12% of Net Revenues (FIR) $30 $25 $20 Millions $15 $10 $5 $- 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Total Debt Payments including Internal Debt 12% of Net Revenues (Policy) The dark blue line is the forecasted 12% internal net revenue threshold, based on assumed growth Page 19
Assumptions/Risk DC Debt within policy • DC revenue shortfalls affect debt capacity Debt Capacity: Total Annual Debt Payment Funded from Development Charges to not Exceed 25% of Forecasted DC Collections $8 $7 $6 $5 Millions $4 $3 $2 $1 $- 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Total DC Funded Debt 25% of Average as per Policy Page 20
Affordability/Expectations Town Provides Value • Residents say quality of life in Town is good and are satisfied • Value services for tax dollars –comfortable with taxation levels • Most would not reduce service levels • Focus on services not taxes • Results of community survey provided in more detail in Report CAO 02-19 Page 21
Affordability/Expectations Affordability 3% of Total Tax Dollars Goes to Town of Whitby The Town is responsible for collecting property taxes on behalf of the Region of Durham and the School Boards. Share of Property Tax Bill Region of Durham 53% of 9% = 5% Town of Whitby 33% of 9% = 3% School Board 14% of 9% = 1% *Source: AMO Page 22
Affordability/Expectations Durham Lakeshore 2018 Property Tax $7,000.00 $6,000.00 Property Taxes $5,000.00 $4,000.00 Lower Tier Education $3,000.00 Region $2,000.00 $1,000.00 $- Pickering Ajax Whitby Oshawa Clarington Based on the 2018 average assessment value of $437,000 Page 23
Affordability/Expectations Total Taxes as % of Household Income 6.00% 4.78% 5.00% 4.26% 3.95% 3.82% 3.64% 4.00% 3.00% 2018 2014 4.60% 4.05% 2.00% 3.87% 3.68% 3.64% 1.00% 0.00% Whitby GTA Oshawa Pickering Clarington -1.00% 2014 and 2018 BMA Municipal Study: Average Residential Taxes as a % of Household Income Page 24
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