Multi-year Budget (2020 to 2023) Council Briefing October 18, 2019 - PowerPoint PPT Presentation

Multi-year Budget (2020 to 2023) Council Briefing October 18, 2019 1

Multi-year Budget (2020 to 2023) Agenda Multi-year Budget Context • Multi-year Budget Process • EPC Recommended Operating and Capital Targets to Balance • 2

Multi-year Budget (2020 to 2023) Multi-year Budget Context 3

The 1990s: A Challenging Decade Winnipeg’s current fiscal policies were custom tailored to the situation it faced in the 1990s • Population Decline • Negative experiences (Flood of 1997, Winnipeg Jets leaving) • Low Revenue Growth • High Dependence on property taxes • Among the highest property taxes in Canada 4

The 1990s: A Challenging Decade As a result, the City hoped to stop, or manage, the decline with: • Years of property tax freezes • Restricted Capital Investment • Expenditure Reductions • Reduced FTE’s • Reduced Debt • Withdrawals from reserves 5

The 2010s: A Decade of Growth Winnipeg’s economic challenges have reversed since the 1990s. One of main challenges now is meeting the demands of a growing city . • Fastest population growth since the 1950’s • Second fastest Real GDP in 2018 out of major cities • Lowest municipal property tax of any major Canadian city • Low reliance on property tax • Low debt payments 6

The 2010s: A Decade of Growth As a result, we are now experiencing growing pains that we have to address to keep our population moving forward. • There is a structural imbalance between revenues and the costs generated by growth (including new infrastructure) • Failure to meet this challenge could impede on future growth and the desirability of Winnipeg as a destination for prospective residents and businesses 7

Present: New Solutions are Needed The solutions the City adopted in the 1990s are no longer working • Low property tax revenue has led to deferred capital investment and constrained service delivery • Dedicated property tax increases (2.33%) has led to an improvement in street renewal and transit infrastructure • Options for closing the gap between operating revenues and expenditures with funding from reduced debt payments and drawing from reserves is limited and unreliable going forward 8

Present: New Solutions are Needed The City has hard fiscal choices to make. • Deferral of capital investment means the infrastructure gap will grow, and key community needs won’t be met – a civic competitiveness issue • Continued operating expenditure constraints, and FTE reductions mean making hard choices about service priorities and cuts 9

How does Winnipeg’s current growth compare to our past? 10

Is Winnipeg Growing? Yes , the fastest it has in recent history. 2010’s 2010-2018 2000’s +90k In the 2000’s, Winnipeg grew by 33,000 people, Over the past 9 years, equivalent to 9 people Winnipeg has grown per day 2000-2009 by over 90,000 people, +33k 1990’s or roughly 27 people per day. In the 1990’s, Winnipeg 1990-1999 grew by 14,000 people, equivalent to 4 people +14k per day 11

City of Winnipeg’s Population: 1871 to 2018 Source: Statistics Canada, Conference Board of Canada, Manitoba Bureau of Statistics. 12 Please note that prior to 1986, population values outside of census years are linearly interpolated and census undercount values are assumed to be 1.5% of the census population.

City of Winnipeg’s Population: 1980 to 2018 Population is growing at 3 times the rate this decade than in the previous decade Source: Statistics Canada, Conference Board of Canada, Manitoba Bureau of Statistics. 13 Please note that prior to 1986, population values outside of census years are linearly interpolated and census undercount values are assumed to be 1.5% of the census population.

Population Growth Across Canada Total Population Growth Total Population Growth Projections 2011 to 2016 (CY) 2018 to 2023 (CMA) 16% 14.8% Winnipeg was the fastest 16% growing non-energy based 13.0% 14% 14% city in Canada 10.2% 11.4% 10.6% 12% 12% 10.9% 10.3% 10.0% 9.3% 10% 10% 7.3% 7.3% 6.8% 6.5% 8% 8% 6.3% 5.8% 5.6% 6% 4.5% 3.9% 6% 4.6% 4.5% 4% 3.3% 3.3% 3.3% 3.0% 4% 2% 2% 0% 0% 14 Source: Statistics Canada, 2011 Census and 2016 Census, Conference Board of Canada Spring 2019 Metropolitan Outlook

What was our financial situation like in the 1990s? 15

Financial History – The 1990’s In the mid- 1990’s, residents and businesses were becoming increasingly concerned about 3 things within the City: 1. Winnipeg had high property taxes "Our taxes are among the highest in the country - moving out 2. Winnipeg had a higher proportion of it’s revenue coming from property taxes of the city to avoid those taxes has been a trend for years." City of Winnipeg Research Branch, December 1993 3. Winnipeg had high debt servicing costs - Winnipeg Sun, January 1997 Winnipeg 2000 Economic Development Corporation, Property Tax Review, February 1997 Real Estate News, October 1994 City of Winnipeg Committee on Tax Reform, “Rethinking Taxation: Making Winnipeg Competitive”, June 1998 Real Estate News, March 1997 City of Winnipeg 1999 Budget, Appendix 10 16

Third highest average municipal property tax in 1998 $3,000 $2,600 $2,500 $2,000 $1,759 $1,350 $1,281 $1,500 $1,017 $1,007 $910 $906 $1,000 $817 $722 $500 $0 Montreal Toronto Winnipeg Halifax Regina Victoria SaskatoonVancouver Edmonton Calgary 17 Source: City of Edmonton Property Tax Survey Data, 1985 to 2000

Sources of Revenue - Dependence on Property Tax - 1998 45% 40% 40% 35% 30% 25% 20% 15% 15% 11% 10% 10% 6% 6% 5% 5% 4% 5% 0% Property Water & Operating User Fees Business Interest, Transit Capital Other Taxes Taxes Sewer User Grants & Charges Tax Land Sales Fares Grants Fees & Other 18 Source: City of Winnipeg Annual Financial 1998 Report

Proportion of Budget toward Debt and Finance - 1998 Total Debt and Finance Charges $127,800,990 19% All Other Expenditures $546,999,816 81% 19 Source: City of Winnipeg 1998 Tax-supported Operating Budget

How did the City respond? 20

Reduced mill rates 21 Source: City of Winnipeg Assessment and Taxation Department

Stopped taking on debt, reduced debt payments Tax-Supported Funds Freed up from Expired Debt Payments $40 Millions Tax-supported Operating Budget Funds $35 Total operating funds that have been reallocated from debt $35 payments since 1995: $130 million $30 $25 $21 $20 $15 $12 $8 $8 $7 $10 $4 $5 $6 $7 $5 $4 $3 $5 $2 $1 $1 $1 $0 22 Source: City of Winnipeg Department of Corporate Finance

Reduced Cash to Capital Adopted Cash to Capital Cut Cash to Capital $100 Millions Tax-Supported Operating Budget Funds $90 $80 $70 $60 $50 $40 $30 $20 $10 $0 20002001200220032004200520062007200820092010201120122013201420152016201720182019 23 Source: City of Winnipeg Department of Corporate Finance

Reduced expenditures and reserve withdrawals Expenditure reductions and transfers from other funds and reserves vary in size and availability each year. They’ve averaged $88 million over the past 5 years. $120 Millions $107 $105 $105 Tax-Supported Operating Budget Funds $99 $95 $93 $100 $84 $83 $83 $76 $76 $75 $80 $60 $60 $40 $20 $0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 24 Source: City of Winnipeg Department of Corporate Finance

Started a Utility Dividend in 2011 $45 Utility Dividends used to help balance the tax-supported Millions operating budget have averaged $34 million in the last 5 $38 $40 Tax-Supported Operating Budget Funds years $36 $34 $35 $32 $31 $30 $25 $20 $19 $18 $20 $17 $15 $10 $5 $0 2011 2012 2013 2014 2015 2016 2017 2018 2019 25 Source: City of Winnipeg Department of Corporate Finance

Used additional revenue for capital projects $1,200 $1,125 Millions $1,000 $997 $768 $800 Revenue $600 Compared to 2008, revenues are up $357 million. $454 $400 36% of this increase, or $128 million in annual revenue, has been dedicated to public works, street renewal, and BRT. $200 $0 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 26 Source: City of Winnipeg Adopted Tax-Supported Operating Budget Documents, 1985 to 2018

Of the $431 million increase in the tax supported operating budget since 2004, $300 million, or 70% is due to Salary and Benefits. $1,200 $1,125 Millions $1,000 $694 $800 Revenue $600 $454 $400 $200 $0 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 27 Source: City of Winnipeg Adopted Tax-Supported Operating Budget Documents, 1985 to 2019

This is due, in part, to an increase in average salary and benefit expenditure per FTE by area Average per FTE by Area CAGR: 4.0% Emergency Services All Other Departments $129,095 $140,000 $120,000 $100,000 $71,825 $80,000 $78,313 $60,000 CAGR: 3.0% $40,000 $50,077 $20,000 $0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 28 Source: City of Winnipeg Adopted Tax-Supported Operating Budget Documents, 2004 to 2019