Committee of Council Budget December 6, 9 and 10, 2013

Transcription

1 2014 Budget Committee of Council Budget December 6, 9 and 10, 2013

2 AGENDA 1. Corporate Overview Budget Context Priorities, Opportunities and Challenges Development Outlook Budget Process 2. Financial Overview Current Operations and Growth Budget Drivers Current Budget Details Tax Impact Capital Budget Details 3. Departmental Overviews 2

3 2014 BUDGET CORPORATE OVERVIEW John Corbett Chief Administrative Officer 3

4 6.5% Key business needs to maintain current levels of service and respond to growth Mitigation implement service delivery efficiencies and minor increases to user fees 1.9% 2014 Current Budget Recommendation 4

5 BUDGET THEME Focus on Core Services Implement Strategic Plan City-building Accommodate Key Priorities Economic Development Public Engagement Accountability and Transparency 5

6 BUDGET SCOPE Current Budget Capital Budget TOTAL Budget $ 526 million $ 207 million $ 733 million Current Budget Distribution: Operational Departments and Library 83.9% General Administration 15.5% Includes contributions to reserves and grants, community groups and organizations Council and Mayor s Office 0.6% 6

7 CONTEXT Priorities Implement Strategic Plan Growth Management (Growing) Economic Development (Thriving) Corporate Excellence (Serving) Environmental Stewardship (Preserving) Community Engagement (Engaging) Limit Property Tax Impact Implement Long-Term Funding Strategy Implement Corporate Realignment Continue City-building Strategy 7

8 CONTEXT Opportunities Strong position for growth and prosperity in GTA and nationally Only municipality with a population of more than 500,000 with greenfield development capacity Need to leverage to our best advantage Infrastructure Financial management Historic downtown and strong central area Top quality infrastructure Building on City s identity and reputation with key stakeholders Senior levels of government Corporate Media 8

9 CONTEXT Opportunities Diverse demographics Social strength and cultural vitality Economic accessibility (to broader marketplace) Roads, rail, transit, air Environmental quality Corporate investment potential now being realized Corridors and gateways National and foreign investment Financial sustainability AAA credit rating, potential investment capacity Excellent staff leadership Veteran Council / leadership / community connections and strength 9

10 CONTEXT Challenges Delivering a shared vision and direction for next phase of growth Identification and balancing of competing priorities Resource allocation and delivery Infrastructure maintenance and development Scarce financial resources 10

11 CONTEXT Population Brampton Growth and Projections to ,000, , Total Population 149, , , , , , , , ,000 Municipality Population Population Rank Rank Toronto 2,615,060 2,503, Montréal 1,649,519 1,620, Calgary 1,096, , Ottawa 883, , Edmonton 812, , Mississauga 713, , Winnipeg 663, , Vancouver 603, , Municipality Population 2011 Population 2006 Rank 2011 Rank 2006 Brampton 523, , Hamilton 519, , Québec City 516, , Surrey 468, , Laval 401, , Halifax 390, , London 366, ,

12 CONTEXT Existing Infrastructure and Assets 3,400 Lane kilometres of road 3,728 Hectares of parkland Including sports fields, playgrounds, pathways and trails, flowers and shrub beds 278 Conventional and 63 Züm transit buses 75 Corporate buildings Including corporate, parks, transit, works and libraries 65 Recreation and community facilities Including arenas, pools, theatres, etc. 14 Fire stations $2.6 Billion in City Assets (excluding land) 12

13 Development Outlook 2012 Building Permit activity significantly exceeded projections as a result of the Region of Peel increases to Development Charge payments Building permit activity will experience a significant reduction as a result of the advancement of development approvals and permit issuance in Permits Construction Value Revenues 2012 YE Actuals 8,000 $ 2.7 billion $ 21.4 million 2013 Projected 5,000 $ 1.5 billion $ 12.2 million Permit activity is projected to increase in the latter part of 2013 as permit applications are filed in advance of the implementation of the 2012 Ontario Building Code on January 1, 2014 and its increased regulatory requirements. 13

14 Development Outlook Permit Activity 2013 YTD (Oct 31) 2012 (Year End) New Residential Units 1,755 5,940 Industrial Buildings Commercial Retail Buildings Commercial Office Buildings Institutional Buildings 3 new 8 additions 18 new 1 addition 6 new 9 new 15 additions 13 new 8 additions 33 new 3 additions 3 new 1 addition 7 new 13 additions 2014 Building Permit activity projections reflect the overall development forecast with residential permits to be in the 3,000-3,500 unit range and commercial/ institutional activity to remain consistent reflecting residential growth. 14

15 Economic Impact of New Construction Year Construction Investment (Direct) Wages/Payroll (Direct) Employment (Direct) 2012 $2.7 Billion $624.8 Million 11, $1.5 Billion $329.5 Million 6,205 Total $4.2 Billion $954.3 Million 17,972 In the past two years, Brampton attracted approximately $4.2 Billion in residential and non-residential construction activity. This level of investment in Brampton had a number of positive direct impacts on the regional economy: namely, it represented a $954 Million payroll. In addition, the construction industry generates strong indirect and induced spinoffs, such as business spending through the supply chain, and household spending on consumer goods and services. 15

16 2014 Budget Process Core Services Service level Standards imposed by senior levels of government Health and Safety of the public, City employees and businesses Enhanced Services Provide for services to support Brampton as premier city in which to live, work and play Implement service enhancements and/or new services, when feasible Strategic Services Maintain capital infrastructure and adequate capital reserves; address infrastructure backlog Maintain service level standards of By-laws Support managed growth

17 2014 Budget Process and Public Engagement Public Meeting October 2 nd Departmental Briefings October 21 st 22 nd Council Workshop October 28 th Public Meeting November 12 th Citizen input requested via: Feedback form on website Dedicated telephone line Online survey Budget deliberations December 6 th, 9 th and 10 th Budget approval is scheduled for December 11 th 17

18 SUMMARY Provincially mandated as a high-growth municipality that requires ongoing capital spending Need for capital spending and growing infrastructure inventory drive operating costs Need to balance control of spending and limit tax increases, while addressing growth Limited financial resources 18

19 2014 BUDGET FINANCIAL OVERVIEW Peter Honeyborne Executive Director, Finance and Treasurer 19

20 Current Operations and Growth FUNDING Property Taxes & User Fees Fire Services Public Transit Planning New Developments Enhancing Existing Neighbourhoods Economic Development Parks and Recreation Arts and Culture Road Maintenance Snow Removal Animal Control By-law Enforcement Development Charges New Fire Stations Expanded Transit System New/Expanded Roads New Recreation Centres Expansion of Existing Recreation Centres New Parks New Libraries Debt capacity allows infrastructure ahead of growth Debt service payments charged back to developers 20

21 Financial Outlook Budget Drivers (Growth) Public Transit Operations and Expansion (Züm and Conventional) Fire and Emergency Services Road network maintenance and expansion Parks and open space maintenance Operating costs for new facilities (Gore Meadows Community Centre, Fire Station #211, Alderlea) Programming for new parks and recreation facilities Other corporate facilities (e.g. works yards, libraries) Infrastructure repair and replacement Compensation adjustments Fuel and streetlight electricity cost 21

22 Financial Outlook Budget Drivers Continued capital contribution increases for much needed repair and replacement of the City s aging infrastructure One per cent annual incremental infrastructure levy increase built into forecast (deferred for 2014) Need for additional annual capital contribution increase to eliminate growing infrastructure backlog (not included in forecast) Financial and other adjustments Commodity price volatility (fuel and electricity) Planning and development revenue volatility Increasing liability insurance premiums and claims costs Investment income (difficult to predict with accuracy) 22

23 CURRENT BUDGET 23

24 How Did We Get to 1.9%? Identified core business needs to maintain service levels and respond to growth Focused on delivery of core services Identified key business efficiencies / mitigation measures Deferred 1% Infrastructure Levy for 2014 to prevent reductions in some service areas 24

25 2014 Current Budget Incremental Changes Core Operating Adjustments ($14.0 million) Commitments ($16.5 million) Salary and wage costs Inflationary and other financial adjustments to reflect actual expenditure and revenue expectations Transit expansion Growth in roads, parks and new facilities Contribution to capital infrastructure levy Assessment Growth ($9.5 million revenue) Additional tax revenue from new properties added to tax roll partially offsets growth-related increases Mitigation Measures ($14.4 million savings/revenue) Efficiencies in service delivery Minor increases to user fees 25

26 Tax Rate Mitigation Strategy Mitigation measures orientated to protect core services Continuing rationalization of municipal service delivery Budget incorporates community feedback from Strategic Planning initiative with a focus on: Economic Development Growth Management Corporate Excellence Environmental Stewardship Community Engagement Intent to not utilize Rate Stabilization draws 26

27 Tax Rate Mitigation Infrastructure Levy Deferred Infrastructure Levy increase (1% = $3.4 million) for 2014 in order to limit service reductions: Transit Services maintain current routes without reduction or elimination of service Alderlea move ahead with opening in 2014 as previously planned Chinguacousy Park petting zoo to remain open Deferral of Infrastructure Levy results in an equivalent reduction in capital projects expenditures Projects deferred in Public Services, Planning and Infrastructure Services and Corporate Services Departments 27

28 2014 Current Budget Recommended Increase Breakdown of the City portion of the average residential tax bill 1.9% Base Budget $1,733 = $1,767 Base Budget includes: Hospital levy Salaries and Wages Goods and Services Capital contributions Increases to accommodate inflation, growth and to maintain service levels (less mitigation measures) = $34 increase * * Based on 2014 average household with an MPAC assessed value of $364,000 (Brampton) 28

29 2014 Current Budget Submission Priorities Currently Deferred Growth and Service Continued deferral of support staff in light of increases to front line support over the past several years New programs and/or enhancements to existing services 1% Infrastructure Levy increase Funding reallocated to prevent reduction in some service areas identified during mitigation exercise 29

30 2014 Current Budget Total Expenditures $526 million Public Services $256.7M % Corporate Services $56.8M % Planning & Infrastructure Services $107.6M % General Government (Non- Departmental) $79.5M % Mayor & Council $3.0M - 0.6% Brampton Public Library $13.7M - 2.6% Office of the COO $6.7M - 1.3% Office of the CAO $2.0M - 0.4% 30

31 2014 Current Budget Total Expenditures ($000s) 2013 Budget 2013 Actuals* 2014 Budget VARIANCE 2014 Budget vs Budget % Change EXPENDITURES BY TYPE Salary, Wages and Benefits $300,285 $299,955 $319,178 $18, % Office and Administrative $8,360 $7,680 $7,949 ($411) -4.9% Advertising, Marketing & Promotion $4,609 $4,259 $4,835 $ % Staff Development $1,894 $1,653 $1,917 $23 1.2% Professional Services $2,640 $2,106 $2,370 ($269) -10.2% Rent and Lease Charges $2,022 $2,071 $7,882 $5, % Repairs, Maintenance and Materials $20,434 $20,099 $20,978 $ % Contracted Services $44,041 $43,396 $45,593 $1, % Utilities and Fuel $30,028 $29,301 $31,419 $1, % Grants, Subsidies and Donations $16,306 $16,156 $16,426 $ % Internal Borrowing Repayments $12,257 $12,257 $12,720 $ % Financial Services $11,091 $12,563 $12,798 $1, % Contribution to Reserves and Capital $47,404 $48,626 $41,959 ($5,444) -11.5% Total Expenditures by Type $501,370 $500,122 $526,025 $24, % * Forecast year- end actuals based on September 30 th, 2013 actual results 31

32 2014 Current Budget Revenue Sources $526 million Taxes & PILs $357.1M % Contribution from Reserves $9.4M - 1.8% Grants & Subsidies $9.1M - 1.7% Investment & Other Income $17.0M - 3.2% User Fee & Service Charges $133.4M % 32

33 Provincial and Federal Grants ($000s) YE 2012 Provincial 20% Federal 80% Acceleride $19,279 Fare Collection Equipment $980 Small Business Centre $153 Seniors Games $50 MoH Seniors Program $128 Recreation Infrastructure $357 Infrastructure Stimulus $2,836 Gas Tax $32,496 33

34 Gas Tax Brampton receives $8.1 million per year in Provincial Gas Tax funding Fully incorporated in the operating budget to offset prior year transit service increases Brampton receives $24.4 million per year in Federal Gas Tax funding Can only be used towards capital expenditures Evenly distributed between road resurfacing and transit bus replacements 34

35 2014 Current Budget Submission ($ millions) 2013 BUDGET 2014 BUDGET VARIANCE EXPENDITURES $501.4 $526.0 $24.7 REVENUES ($501.4) ($519.4) $18.1 NET $ 0.0 $ 6.6 $ 6.6 Since the City cannot budget for a deficit, net revenue shortfall of $6.6 million is to be funded from increase in tax levy 1% tax levy increase generates $3.4 million 2013 TAX LEVY $ ASSESSMENT GROWTH $ INCREASE TO TAX LEVY $ TOTAL TAX LEVY $

36 2014 Current Budget Submission PROPOSED BUDGET INCREASE $34 on the City portion of the average residential tax bill (0.8% on total tax bill) In combination with the proposed 1.5% Region tax increase and assuming no change in the Education tax, the combined tax bill would rise by 1.4% 36

37 2014 Current Budget Submission Total 2014 Residential Tax Bill ($4,069) Education $736 (18%) $1,767 (43%) City of Brampton Region of Peel $1,566 (39%) 1% = $3.4M * Based on average 2014 residential MPAC assessment value of $364,000 37

38 2014 Current Budget Submission 2013 TAX BILL 2014 TAX BILL* $ CHANGE % BUDGET INCREASE % CHANGE IN TOTAL CITY $1,733 $1,767 $34 1.9% 0.8% REGION $1,543 $1,566 $23 1.5% 0.6% EDUCATION $736 $736 tbd tbd tbd TOTAL $4,012 $4,069 $57 1.4% * Based on 2014 average residential assessment value of $364,000 The City portion of the residential tax bill translates into a 0.8% tax increase or $34 (approximately) on the total residential tax bill 38

39 2014 Current Budget Submission Increase in Typical Residential Tax Bills City Portion Single Family Detached ($424,000) $39 Semi Detached ($310,000) $29 Freehold Townhouse ($294,000) $27 Condominium ($213,000) $20 Average Residential ($364,000) $34 $9 increase per $100,000 of residential assessment (approximate) 39

40 Residential Tax Comparisons - Municipalities SINGLE DETACHED (1) Markham $4,433 Vaughan $4,015 Oshawa $3,857 Whitby $3,627 Hamilton $3,588 Mississauga $3,577 Brampton $3,424 Oakville $3,298 Richmond Hill $3,231 Burlington $3,183 SENIOR EXECUTIVE (2) Oshawa $5,802 Hamilton $5,722 Markham $5,658 Whitby $5,603 Oakville $5,517 Burlington $5,515 Vaughan $5,418 Richmond Hill $5,276 Mississauga $5,161 Brampton $5, Bedroom, 1200 sq ft Bedroom, 3000 sq ft Source: 2012, BMA Management Consulting Inc. 40

41 Where Your Taxes Go Mayor & Members of Council Arts, Culture & Theatres Economic Dev't & Communications Planning, Design & Development Human Resources Financial Administration Peel Memorial Hospital Levy Brampton Public Library Grant Corporate Services Buildings & Property Mgmt Contribution to Capital Reserves Recreation Parks Maintenance & Operations Transit Public Works Fire & Emergency Services 0.6% 2.0% 2.0% 2.0% 2.1% 2.5% 2.8% 4.2% 4.4% 5.9% 6.3% 7.1% 8.0% Total 2014 Residential Tax Bill (City portion $1,767) 14.9% 16.8% 18.4% 41

42 CAPITAL BUDGET 42

43 2014 Capital Budget Outcome Capital Budget Priorities Responsible growth management: infrastructure required in advance of development Transit expansion Recreation facilities Fire Station upgrades Infrastructure replacement/maintenance 43

44 2014 Capital Budget - Drivers Growth-funded infrastructure required in advance of development Roads Community Centres Park Development Fire Transit Library Facilities Development Charges reserve deficit $246M (2013 year-end forecast) Deferral of specific projects (roads, facilities) pending longer term funding strategy Shrinking cash balances results in reduced internal financing cap Need to consider external debt limited impact on tax base 44

45 2014 Capital Budget - Drivers Asset Repair and Replacement Road resurfacing Corporate facilities Energy systems Fleet equipment Bus replacements Storm water pond maintenance Indoor and outdoor recreation facilities Information Technology infrastructure Funding Gap Annual tax-supported contributions for repair and replacement fall significantly short of annual depreciation Gap is increasing as new infrastructure is being added at a greater pace than funds are allocated for future replacement Tax contribution constraints 45

46 2014 Capital Budget Submission - Needs $207.4 Million Corporate Services $ 6.9M - 3.3% Brampton Public Library $2.7M - 1.3% Public Services $ 85.9M % Other Departments $0.1M - 0.0% Planning & Infrastructure Services $111.8M % 46

47 2014 Capital Budget Submission - Funding $207.4 Million Internal Borrowing $8.9M - 4.3% Federal/Provincial Subsidies $60.1M % External Recoveries e.g Region of Peel, Developers $8.1M - 3.9% Other Funding i.e CIL Parkland, Other Reserves $1.3M - 0.6% Brampton Public Library Operating Budget $1.5M - 0.7% Tax Base Capital Contributions $18.8M - 9.1% 10% Non Development Charge Requirement $3.8M - 1.8% Development Charge Reserve Funds $104.9M % 47

48 2014 Capital Budget Submission Future Operating Cost Impact With approval of the 2014 capital budget program, the impact on the operating budget for 2015 and beyond is estimated to be approximately $6.5 million, representing a 2% tax increase. Continued Züm service expansion Conventional transit growth New parks, boulevards, flowerbeds New roads maintenance IT licensing and maintenance/support Internal borrowing repayments (revolving loans) Note: Does not include operating impacts of prior years capital approvals or impacts resulting from the subdivision assumption process. 48

49 2014 Capital Budget - Unfunded Unfunded Capital Total combined unfunded capital needs (10-year) = $576 million $355M Repair and Replacement (R&R) $184M Development Charges (DC) $ 37M Cash in Lieu (CIL) Development Charges (DC) deficit projected to be $246 million by the end of 2013 Parkland acquisition needs exceed available Cash in Lieu (CIL) of Parkland funding Unfunded tax supported capital = infrastructure funding gap 49

50 PowerAde Centre Update Score Board January 23, 2013 Council approved funding for new state-of-the art digital score board Score Board installed and functional for first Brampton Beast Home Game on October 18 th Basketball Floor Brampton A s Basketball team has requested the City to provide $250,000 for a Basketball Floor and a climate controlled storage facility for the floor at the PowerAde Centre The requested $250,000 has been included in the 2014 Capital Budget for Budget Committee consideration 50

51 PowerAde Centre Update PowerAde 2014 Capital Funding Request PowerAde submitted a request for capital funding of $687K to be included in the City s 2014 Capital Budget for the following items: Additional Dressing Room Power, Parking Lot Repairs and Show Power Common Area / Dressing Room / Office LED Lighting Retrofit Concession Condiment Stand Refurbishment Concourse Floor Repair Directional Signage Hand Dryers in Public Washrooms Roof Replacement Spectator Arena - Rink Board Replacement Table & Chair replacement Real Stars Bar & Grill The requested funding has been included on the deferred items list in order to assist in achieving the 1.9% tax rate increase 51

52 POTENTIAL DEBT LIMITS AND BORROWING CAPACITY 20-year term at 5% (per provincial example) Annual payment cap as % of net revenue Annual repayment limit Borrowing permitted DC supported debt limit (lesser of two criteria) 7.5% $30M $375M limited to 20% of average annual DC receipts** $20M $250M Tax supported debt limit 5.0% $20M $250M Overall debt limit 12.5% $40M $500M * Provincial limit sets an annual repayment cap of 25% of net revenue, which equates to an approximate $103M repayment on debt of more than $1.2B. ** Average annual DC receipts is $100M 52

53 Possible Debt Financing Scenario - DC Examples of Development Charge Funded Projects Project Description Term Debt Required Budget Year(s) Annual Interest Sandalwood Drive Widening 1 Year $3.0M 2015 $90K Countryside Drive Widening 3 years $24.1M 2016 $724K TOTALS $27.1M $814M 53

54 Possible Debt Financing Scenario - Tax Examples of Tax Based Funded Projects Project Description Term Debt Required Budget Year(s) Annual Repayment Amount 2014 Tax Levy Impact Fire Training Facility / Station years $25M $2.1M 0.61% Fire Headquarters / Emerg Ops Ctr 30 years $14M $1.2M 0.35% Animal Shelter 30 years $10M 2015 $0.8M 0.25% Works Satellite Yards (2) 30 years $58M $4.8M 1.43% Recreation Facilities (2) 30 years $41M $3.4M 1.01% Fire Stations 214 and years $10M $0.8M 0.24% District Library 3 30 years $15M 2020 $1.3M 0.37% TOTALS $173M $14.4M 4.26% 54

55 Possible Debt Financing Scenario Prior to the consideration of possible debt financing Assess the availability of alternative funding sources Prioritize needs Report back to Council early in

56 CONCLUSION 56

57 SUMMARY 2014 Budget Priorities Implementation of Strategic Plan Growth Management (Growing) Economic Development (Thriving) Corporate Excellence (Serving) Environmental Stewardship (Preserving) Community Engagement (Engaging) Limit Property Tax Impact Implementation of Long-Term Funding Strategy Implementation of Corporate Realignment 57

58 NEXT STEPS External agencies will be presenting now Results of public feedback City Council preliminary Q & A On Monday and Tuesday departments will present their budgets Department budget presentations will outline the specific operating and capital initiatives included in the budget submission Mayor and Council budgets will be presented Tuesday afternoon Budget approval is scheduled for December 11 th Questions? 58