Tiffany Farrell, CPA, CA Director of Corporate Servicesmc-egenda.middlesex.ca/files/agendas/300022/300297_Budgeting_101...2 To Begin the 2017 budget process, municipal staff created

Tiffany Farrell, CPA, CADirector of Corporate Services

November 02, 2016 Page 1 of 42

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To Begin the 2017 budget process, municipal staff created a budget survey to engage residents in the yearly budgeting process as we felt that our residents did not feel well informed….and we were right

Survey Says……


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The majority did feel that the survey provided useful information….let’s keep up this trend.

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Budget 101 – learning about Municipal budgetsRevenue SourcesExpendituresSurvey ResultsNext Steps this budget season

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Each year the Municipality is challenged with balancing the budget, as mandated for municipal governments by provincial legislation.

While a Municipality can incur debt to pay for large capital acquisitions, it cannot incur a deficit to fund day to day operations the same way senior levels of government can.

This is a key difference as it means that we must identify revenue sources to cover off all anticipated expenditures.

In order to balance the budget a careful analysis must be done regarding the level of services required to meet the expectations of the community balanced against realistic taxation and user fee levels.

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Ensure Adequate Funding for Services and Infrastructure

Access diversified sources of revenue Manage expenditures◦ Contain costs◦ Be efficient

Provide for contingencies◦ Manage business risks◦ Operate prudently

Maintain reserves for the future Use debt strategically


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Municipalities use a variety of revenue sources to pay for a wide range of services that residents and businesses depend on and use regularly. The major revenue sources that are typically used to pay for day to day service include:◦ Property tax◦ Utility user fees◦ Other user fees (recreation, rezoning application fees)◦ Permits and licencing fees


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Municipalities also have access to other forms of funding which are generally used for capital projects:◦ Grants from the Provincial or Federal Governments ◦ Proceeds from borrowing◦ Reserve Funds (funds saved up over a time for large

projects)

Part of Council’s decision making process each year is to determine what levels of funding for services should come from the various sources of revenue.


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Middlesex Centre’s Budget survey 2017 indicated that the participants feel that revenue sources should come firstly from government grants and property taxes, then from user fees, public/private partnerships, reserves and lastly from borrowing.


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Many residents feel that property taxes should cover all the costs needed to run the Municipality.

Total 2016 property taxes $14,653,522 Essential Costs (2016):Policing $2,008,284Fire Services $471,919 (operating)Insurance $579,983Hydro $620,087 (excluding fire, water/wastewater and

transportation)Transportation $5,302,902 (operating)Conservation authorities - $233,139


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◦ Remaining funding from Property Taxes

$5,437,208◦ To cover: Council Administration Parks Arenas Garbage/Enviro Depos Animal control Bylaw Enforcement Building Department Planning Medical Centre Economic Development And……..


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Capital

2016 Capital Budget $13,764,812

Capital budget is allocated to capital projects (new infrastructure, rehabilitation of assets, replacement of assets)


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Middlesex Centre applied for 14 grants from the Provincial and Federal governments in 2016 with a total ask of $2,879,352.◦ 1 successful $393,000◦ 5 unsuccessful $171,500◦ 8 unknown at this time $2,314,852

◦ Grants form other levels of government are usually targeted to very specific types of projects that may or may not align with the priorities of the community.


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Municipalities are service based organizations. Your local government provides a wide variety of services to an extremely varied client base. While not an exhaustive list, our customers include:◦ Youth, families, seniors, pet owners, farmers, home

owners, renters, workers, artists, walkers, drivers, developers, retirees, business owners, cyclists


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Our Challenge is striving to meet the needs of as many of our “customers” as possible in a fiscally responsible way. The process is further complicated where the needs and wants of our citizens are in conflict with one another.

There is frequently misperception about which services are under the control of the local governemnet and which services are provided by other levels of government.


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Road maintenance, repair and snow removal Garbage collection for residents Fire protection Recreation facilities Parks/trails maintenance and development Sidewalks, curbs and gutters Water and sewer systems Policing (OPP)


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o Education – Province and School Boardso Health Care – Provinceo Highways – Provinceo Library operations – County of Middlesexo Long Term Care Homes – County of Middlesexo EMS – County of Middlesex


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When considering if you feel you are getting good value for the services provided, it can be helpful to consider that many of our services are available 24/7. Many municipal employees are always on call to deal with a wide variety of emergencies, from fires and accidents to blocked drains and snow storms that are obstructing roadways.


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The cost to purchase one fire truck (Pumper/Tanker) for the fire department◦ $400,000

Policing for the 2017 year◦ $2,052,601

Annual Cost of Insurance for Municipality◦ $579,892

The cost to purchase a Tandem Truck for PWE◦ $293,000


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Each year Middlesex Centre must take into account “non-discretionary” increases in the cost of providing services. These are increases required to the budget for items we cannot directly control. Some of these are similar to what we experience in our own homes – the cost of hydro, gas, phone/internet.


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However, even with increasing costs each year, Municipal staff work hard to decrease costs and find savings where ever we can. Recent Initiatives:◦ Middlesex Centre joins Elgin Middlesex Oxford Purchasing Group

and the Vendor of Record Program◦ In 2015, the building division conducted a building permit fee

review. In 2016 the building department is running as a “full cost recovery” department.

◦ PWE recommended the cancellation of the Municipality’s Water and Wastewater Services Agreement with American Water Canada in an effort to stabilize our customers water and wastewater rates as of November 1, 2016.

◦ Community Services has taken on snow removal of Municipal Sites to control costs that would normally be contracted out.


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Middlesex Centre owns approximately $404million in assets. This infrastructure must be properly maintained and there is an additional ongoing cost to accomplish this.

In addition, capital spending levels need to be maintained to ensure the long term viability of our infrastructure. This will ensure that our extensive investment in infrastructure assets is sufficiently protected and that our transportation, parks, water, sewer and facilities will be appropriately maintained and replaced to support the current community and future generations.


Assets (such as roads, bridges, buildings, machinery and equipment) deteriorate over time and require ongoing maintenance. Regular maintenance is cost efficient and extends the life of the asset. The Municipality’s Asset Management Plan identified $404 million of infrastructure assets owned by the Municipality and a shortfall in the funds available for this maintenance. A total of $108.1 million in tax supported, $4.0 million in water capital and $16.5 million in wastewater capital replacement needs are identified over the next 20 year forecast period. This funding shortfall will need to be addressed in the current and future budgets. Would you support a 1% tax increase to provide incremental funding to maintain assets and address the funding shortfall?

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Residents of Middlesex Centre feel that a 1% increase (approx. $140K) is not reasonable to assist in funding the infrastructure gap.

The Municipality’s infrastructure gap is a major concern for Middlesex Centre and the majority of municipalities in Ontario.

This Municipality is looking for other funding opportunities; however, presently property taxes is one of municipalities only methods of raising revenue.

It is important to note that our current asset management plan directs a 3.94% tax levy increase to fund the municipality’s ever growing infrastructure gap.


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In addition to multiple choice questions, there were two open-ended questions asked in the 2017 budget survey.


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What do you believe is the most important issue facing our community?

58 responses receivedAll questions/concerns/comments have been

addressed. Answers will be posted on the Municipal website with this presentation October 20, 2016.


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Please provide any additional comments that you would like to be considered by Municipal staff and Council in preparation of the 2017 Budget. Let us know if we’ve missed something or if you want more information about a specific area of thebudget.34 responses receivedAll questions/concerns/comments have been

addressed. Answers will be posted on the Municipal website with this presentation October 20, 2016.


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Highlight of some responsesWe have the highest Taxes in Middlesex County.

This is incorrect, Middlesex Centre is the second lowest.Municipality 2016 Tax RateThames Centre 0.00456454Middlesex Centre 0.00556346Lucan Biddulph 0.00606900Strathroy 0.00691936Southwest Middlesex 0.00727997Adelaide Metcalfe 0.00729800North Middlesex 0.00791808Newbury 0.00995619


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Highlight of some responses

Development fees should cover all the costs of a new development. This should be managed to bring only benefits to the community.

New developments are serviced at the expense of the developer. With new construction, development charges are collected to support several categories of municipal interest including; major roads, servicing (sewer and water), libraries, fire protection, parks and recreation, public works and major development related studies. These development charges are reviewed at least every five years, if not more frequently to ensure their accuracy. It is important to note that the Development Charges Act only allows for a 90% cost recovery not 100%.

Development Charge rates may be viewed on Middlesex Centre’s website under the Building Division’s homepage. Middlesex Centre plans to review our Development Charges study in 2017.


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Middlesex Centre has very high water and wastewater rates, why?

Middlesex Centre is essentially comprised of subdivision developments with large residential lots; lacking any significant density, industrial, commercial or institutional customers to curb the significant expenses in servicing large residential lots.

At the recommendation of the Director, Public Works and Engineering and supporting approval by Council, the Municipality’s existing Water and Wastewater Services operating and maintenance contract with American Water Canada will be terminated over the balance of the existing contract effective November 1, 2016, in favour of an in-house service delivery model similar to that in other neighboring municipalities which will result in savings for our customers in staffs continued effort to identify efficiencies and ultimately reach rate sustainability for our customers.


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Why are some roads resurfaced while others are not?

The selection of roads for the Municipality’s Road Resurfacing Program is based upon the Municipality’s most recent Road Needs Study (2014) prepared by MMM Group Limited whom was retained to carry out an inventory and condition appraisal of the Municipality’s road network and at-grade railway crossings. Such report provides the Municipality with a prioritized 10 and 20 year rehabilitation inventory as one of several inputs to establishing its roads maintenance and capital expenditure program. Other contributing inputs include, traffic counts, geotechnical evaluation of the underlying road structure, etc.

The Municipality has elected to be proactive in its road maintenance which equates to less costly re-investments and minimizes its road safety liabilities.


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Why does Middlesex Centre not have a green bin program, large item curb side pickup or yard waste pickup?

Curb side waste pick up at the present time is simply cost prohibitive due to the Municipality’s small population. The Municipality’s Enviro Depot offers residents the ability to discard items which are otherwise unable to be picked up at the curb side for a minimal fee.


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Tonight – 6:00pm-7:00pm Budget Community Roundtable group session Coldstream Community Centre

November 30, 2016 – 6:00pm-7:00pm “After Council with the Municipal Directors in Ilderton”

December 7, 2016 – Budget Presentation to Council


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Finally, let’s keep residents engaged in the budget process for 2017 and future….


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[email protected]

www.facebook.com/Municipality-of-Middlesex-Centre

519-666-0190 ext. 224

www.middlesexcentre.on.ca


Documents

Tiffany Farrell, CPA, CA Director of Corporate Servicesmc-egenda.middlesex.ca/files/agendas/300022/300297_Budgeting_101...2 To Begin the 2017 budget process, municipal staff created