By Pepper Parr

July 28, 2014

BURLINGTON, ON.

Once City council had lopped  close to $400,000 off the payroll with the retirement of Kim Phillips and Tom Eichenbaum,  the significant seven did their usual non-debatable statements and then took a six week break – they will be back right after Labour Day.

 

Ward 2 Councillor Meed Ward is looking at the financial side of the city much more these days. As chair of the Community and Corporate Services committee she shepherds the budget review through the Standing Committee and has brought a much more feisty approach to that process.

Ward 2 Councillor Marianne Meed Ward said they were going to be away for a “short period of time” and the Mayor reminded Cogeco listeners that the members of council would be doing there door to door thing – given that this is an election year.  The Mayor said you could expect to see him at your door as well – even though he is running against himself – and on that basis a number of people think he could lose.

 

Director of Finance Joan Ford does a great job of providing the data and her department does a good job of collecting the taxes as well. It’s the spending side that is causing the long term financial stress. Ms Ford doesn’t do the spending.

In approving the reports from the Standing Committee on Community Services there was mention of a report that was “received as information only” in which the Finance department set out what the tax hit for 2015 might be.  There was no discussion about this at Council – but it’s something you might want to print out and stick under their noses when they come calling for your support.

In 2010 Council set the budget for 2011 and came up with a 0% increase, due in large measure to the first time citizens saw Councillor Sharman’s “bull in the china” shop approach to getting what he wanted.  At the beginning of the term that is coming to an end, Mayor Goldring spoke of a 10% increase over the four year term.  They came close. You won’t be so lucky in the next term – the projection is for a 4% increase each year for the four years.

Here is how Finance explained it all.  Council was being given the parameters on which staff will prepare the 2015 budget. The framework presented in the report outlined principles that have been recognized by Council as important policy decisions, as well as highlighting  budget drivers that will impact the 2015 budget.

By way of background, in November of 2012 Council approved a Long Term Financial Plan which outlined strategic objectives to ensure financial sustainability and responsible financial management; that is what Finance will be working from as they develop the 2015 budget.

On March 4, 2014, Council received the 20-Year Simulation of Forecasted Budget Drivers, which provided “a high level overview of major budget drivers and expected future tax rate impacts”. Inherent in the annual operating budget process are the normal pressures of inflation, growth, resources and fluctuating revenues, compounded by infrastructure renewal costs. This forecast as presented continues to recognize the anticipated drivers for the 2015 budget year resulting in;

 2.1% increase to maintain existing services

0.6% to address corporate pressures

1.3% to address increased infrastructure funding

 The above brings the forecasted increase to 4%.”

 

The significant seven – how many of the rascals will get re-elected. The Mayor appears to be on the way to acclamation, but there are at least three council members who are at some risk risk.

Finance was good enough to point out that this is an election year, and staff want to ensure that the framework includes the important policy decisions of this council while not pre-supposing any budget decisions for the incoming council.  What they are saying is that this bunch of rascals had a plan but the next bunch of rascals don’t have to live with it.

The 2015 budget will ensure the following;

• Base budget tax rate changes are aligned closely with inflation, represented by the three year annual rolling average of the Consumer Price Index (Toronto). The 2011-2013 annual CPI average was 1.92%
• Ensure debt in the capital budget is used in a fiscally responsible manner, following the parameters in the city’s debt policy
• Provisions to reserves are made to ensure adequate cash flow to meet defined current and future needs
• Continued emphasis on moving forward with infrastructure renewal projects and maintain approved levies dedicated to reduce the infrastructure deficit, which is short something around $49 million
• Transition to service based budgeting and recognize value for services through the reporting of public services.

The following are highlights of the key budget drivers as identified in the 20-year simulation presented in March:

Maintain current service levels (That shouldn’t be seen as a given.)

Address areas for revenue increases/ shortfalls ICI revenue has been consistently short, a negative number in 2013 and probably another negative for 2014 when all the numbers are in.

Match growth-related cost impacts with growth revenue (assessment growth)

Manage labour costs within a workforce planning strategy

No additional Joseph Brant Hospital levy for 2015 and beyond

Dedicated infrastructure renewal levy of 1.25% as per the approved asset management funding plan

There are many initiatives currently underway that will impact the presentation of the 2015 budget.  The City continues its transition to a service-based organization with a commitment to performance measurement, continuous improvement and accountability; but this is virgin territory for Burlington – expect some major hick-ups on this one.

The service portfolio currently has a total of 50 services (28 public services); this number may change as the service list is refined. Business plans summarizing the service strategy, existing service delivery, performance measures, and resources required to deliver the service at current service levels are in the review process. The 2015 current budget will be presented in both a service-based format and the traditional departmental-based format to ease the transition to a new budget presentation; that translates into close to two budgets which ramps up the staff time.

Staff continue to look for ways to improve the presentation for  the capital budget and forecast. A corporate team is currently underway developing changes to the capital budget to bring the focus to infrastructure renewal projects and growth projects. The capital budget will remain a 10-year program, broken down by asset categories. However, projects that are outside the scope of infrastructure renewal or the Development Charge program (growth) will be identified separately for Council’s consideration during the budget review process.

Sealing cracks on roads is one of the preventive maintenance tools before a road has to be rebuilt. Shave and pave has proven to be money well spent – and we are spending a lot of money on this tool.

This Council has been proactive in addressing the city’s infrastructure gap, over this council term. Most recently, council approved the asset management financing plan, a balanced approach to address renewal needs over the next 20 years. Council has identified infrastructure renewal as a key priority, through the approval of dedicated infrastructure levies and continued emphasis on infrastructure projects in the capital budget.

Below is a brief timeline of the 2015 budget process. -one might add there is a magic wand in there as well.  Somewhere in this time frame the city will be interviewing and hiring a new city manager who will undoubtedly want to put his finger prints on the budget documents.

Current and Capital budget overview – January 2015

Council Information Session – January 2015

Public Engagement – February 2015

Budget review – February 2015

Council budget approval – March 2015

Budget review and approval cannot occur until the New Year, after the new council has been inaugurated.  Council also has to realize that municipal funding pressures in the provincial budget may impact Burlington. The province has a huge deficit it wants to reduce by 2017 – and that is not going to be easy.  There is significant pressure on the province by the credit rating agencies (their ratings determine the interest rate the province has to pay) to reduce spending – some of those reductions might come out the hides of the municipal sector.

No one expects the near municipal rape of the Harris government, but those spending cuts have to come from somewhere.

Add to that the cost of the Official Plan and the costs it might create for the city.  The transportation master plan (get transit in there as well) and whatever the new council decides it wants in its Strategic Plan; none of these are likely to reduce costs

Don’t forget the expanded winter control service to parking lay-bys and plowing links to primary sidewalks. Then there is the Ontario One Call service that requires all Ontario municipalities to join On1Call by June 19, 2014.  Roads and Parks Maintenance annualized the cost to the city at $76,370 in 2015 plus a 25% contingency.

That comes perilously close to a $100,000 chunk out of the corporate apple and the city couldn’t register as much as a word in the way of complaint.

Cathy Robertson has the unenviable task of knowing just when to get the snow plows out on the road and organizing her fleet so that the snow is plowed before people head for work. The Windrow in the drive way – sorry about that.

The Burlington Economic Development Corporation managed to spend tens of thousands on report after report – now they will want funds to get into the game of actually doing some economic development.  During the lead up to the creation of the reformed EDC all kinds of expensive ideas were flying around the room.  This was an opportunity for the private sector to do what they like to do – take risks – with public money.

The Finance department adds that there might be upcoming reports from other sectors not yet brought to Council.

Mention was made of the opportunity to create a new strategic plan for 2015 and beyond, that can enable larger budget changes such as multi-year budgeting, which could shorten the review period and resource requirements, while maintaining the objectives of the Long Term Financial Plan.

That’s a little like the $60 million obligation the city took on to pay for the part of the Joseph Brant Hospital the city said we had to pay for – the requirement got laced into the budget and the taxpayers saw a new line on their tax bill.  Don’t expect that cash grab to disappear once the $60 million has been collected.

Income tax was introduced to Canada as a First World War measure – that one is still with us.  It is always wiser to have bureaucrats justify what they ask for every year – keeps them on their toes.

16% for the next four years eh! – and that’s the out of the gate number.  Will Councillor Sharman manage to get himself re-elected and do his 0% increase for 2015 the way he did in 2011?  He will want to be Mayor after that.