Background
Each year as part of its budget process, Council approves a one year operating budget. (Download the 09-10 Operating Budget here).
This involves:
• Calculating the total expenditures the Town requires to provide selected level of service to the ratepayers.
• From this expenditure total, all non tax levy revenues are identified and deducted to arrive at the “tax revenue requirement” for the year.
• It is this total that ultimately contributes to the tax rates selected.
In line with the Budget Work Plans developed last fall (and consistent with last year’s process), the goal for Staff was to provide a first draft working document to April COTW. That draft represents an accumulation of the work completed to that point in time, including
• staff work on departmental costs and revenues,
• COTW priority setting,
• COTW review and direction on prominent issues,
• On going discussions throughout the year that could impact budget.
As set out in the budget work plan, June Council is the potential last step in a process which began last fall. The tax rates proposed in the recommendation below are the one’s COTW agreed upon last month in directing staff to come back with a balanced budget. It should be noted that the original shortfall was $99,000.
Analysis/Discussion
The majority of the analysis is contained in the operating budget pdf document included with the Council agenda package. To assist in reconciling the final draft budget with the figures discussed at May COTW, I have highlighted in yellow the changes discussed and agreed upon at COTW (page 7 thru24 of the pdf document).
The decisions/direction provided by COTW in April and May did not quite balance the budget, and direction was given to staff to try and find the remaining $4,700 shortfall. Please note that the following 2 changes were made to alleviate the shortfall:
• Recreation Service Revenue (page 8 of draft budget) ~ this line item was increased $2,500 and this entire line relates to costs sharing with the County of Kings. Subsequent to our May COTW we reviewed this formula driven item, and discussed it with Kings County staff and the original estimate has been adjusted.
• Interest on Other Debt (page 24) was reduced by $2,200. This expenditure includes an estimate of interest charges that will accrue from the date of the Fire Hall debenture (issue to be received this month) to next March 31st. If interest rates on the debenture come in less than budget, then this savings may be possible.
You will also note figures highlighted in green. These represent figures changed based on discussions at April COTW and/or revisions to early budget estimates. One of the figures is a revenue figure (HST Offset) that was not confirmed until early this week. As with every budget year, there are estimates that depend on outside agencies, not all of which can be confirmed by the time we set the Town budget.
Rather than go over the details of the budget once again, the following is a summary of key direction given by COTW in an attempt to balance the budget:
• Limit to the extent possible any increase in tax burden to residents and businesses.
• Maintain existing service levels.
• Remove all new spending initiatives in an effort maintain existing services while at the same time limiting increase taxes.
• Try to spread any tax increase between both the residential and commercial sector, i.e. no one group should have to pick up the burden of increased costs.
The results of the direction provided by council have resulted in the attached balanced budget document. The proposed budget achieves the overriding goal of balancing what needs to be done with what taxpayers can afford to pay. To get to this point Council had to cut expenditures that would otherwise have been beneficial to the community. As is the case annually, the possibilities for spending outpace the dollars available to spend. Included in the expenditure adjustments are:
• Snow Removal costs not increased to reflect actual expenditures of past two years. This may be an area that we have to revisit in future years.
• Remove majority of requested new part time maintenance position.
• New requests for Grants to Organizations cut in order to reduce need to increase taxes.
• Capital program funding increased by about half of amount originally identified thru capital budget process. Again this was done to reduce need to increase taxes in the current year. Like snow removal this may be an area that is revisited in the future based on demand for dollars.
In total these cost reductions allowed Council to avoid adding an additional 3 to 4 cents to the residential and commercial tax rates in the short term, i.e. this year.
The total proposed budget represents an increase in expenditures (see page 7) of $128,000 over last year, of which half is recovered through non tax revenues. This leaves a net amount of $63,200 to be recovered through tax increases.
The recommended budget achieves the following:
• Existing service levels maintained.
• No change in residential tax rate.
• No change in sewer levy rate.
• Modest increase (2 cents) in the adjusted commercial tax rate. Represents an increase of ½ of 1%.
• Modest increases in tax burden to residential (3.29%) and commercial (2.6%) sectors (see pages 4 & 5). Achieves goal of distributing increases equitably to all taxpayers not just one group.
• Increased funding for long term capital investment in community infrastructure, including replacement of aging sewer infrastructure.
Recommendation for Council (passed June 11, 2009)
That Council approve the Town 2009/10 Operating Budget totaling $3,603,900 with the following levies
Residential Tax Levy $1.585 per hundred of assessment
Commercial Tax Levy $3.62 per hundred of assessment
Sewer Levy $0.110 per hundred of assessment (residential and commercial assessments)
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