THE CORPORATION OF THE MUNICIPALITY OF PORT HOPE Notice of Budget Meeting Town Hall, 56 Queen St

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1 THE CORPORATION OF THE MUNICIPALITY OF PORT HOPE Notice of Budget Meeting Town Hall, 56 Queen St DATE: September 14, 2010 TIME: 5:00 p.m. 1. CALL TO ORDER Disclosure of pecuniary interest and the nature thereof 2. Delegations 3. Correspondence 3.1 Local Authority Services Ltd. Re: LAS Natural Gas Program. Recommendation to deposit the $4, into the Building Reserve. 3.2 Water for People Re: Request to sponsor. Does not meet the eligibility criteria in the Community Grant Policy. Recommendation to receive as information. 4. Items of Business 4.1 B Spry, Treasurer Re: June Financial Report. Recommendation to receive as information. 4.2 B Spry, Treasurer Re: Library OMERS Costs. Recommendation That Budget Committee recommend Council choose one of the following options with respect to funding the employer s share of the Library employee omission costs: 1. Fund from non-dedicated/discretionary Library donations and any Library year-end surplus until the omission period expenditure is repaid. or 2. Require the Library to include $25,000 per year in their operating budget for the next four years to repay the omission period expenditure. 4.3 L. Araujo, Director of Re: Water Tower Communications Agreement Recommendation that proceeds from the lease revenue from the water tower be recorded as revenue in the year received and, combined with net proceeds from the water treatment and distribution programs, credited to the Water Reserve to fund future water capital projects 4.4 L. Araujo, Director of Re: Budget Guidelines and Timelines. Recommendation that Budget Committee receive the guidelines and Budget Committee Agenda Page 1 of 2 September 14, 2010

2 assumptions outlined in this report for information and direct staff to prepare the 2011 Operating and Capital budgets based thereon. 4.5 J. McCormack, Facilities Manager and Karen Sharpe, Director of Parks, Recreation and Culture re Air Compressor Jack Burger Sports Complex Recommendation that the emergency replacement of the air compressor for pneumatic building controls at the Jack Burger Sports Complex, in the amount of $4, plus HST be funded through the 2010 Capital Pool Filter Replacement Project and further that the remainder of Pool Filter Replacement project be deferred to the 2012 Capital Budget. 5. Other Business 5.1 Next budget meeting date call of Chair 6. Adjourn Budget Committee Agenda Page 2 of 2 September 14, 2010

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7 Item 4.1 Municipality of Port Hope 56 Queen Street, P.O. Box 117 Port Hope ON L1A 3V9 REPORT TO: FROM: Budget Committee B. Spry, Treasurer SUBJECT: Financial Report as of June 30, 2010 DATE: August 23, 2010 RECOMMENDATIONS: That Budget Committee approve the additional funding for capital projects as identified in the report and receive as information. BACKGROUND: The 2010 Operating Budget Financial Report Summary as of June 30, 2010 is attached as Appendix 1. As this report indicates, after six months of operation, most departmental budgets show between 43.9% and 50.4% of the budget remaining, relatively consistent with where they should be year to date (i.e. 50.0% remaining). The following provides an explanation of the more significant variances within each department. Non-Departmental This department is primarily comprised of the taxation revenue budget lines offset by expenditures that are not attributable to any specific department (retiree benefits, insurance deductibles, reserve contributions). The year-to-date totals reflect the entire 2010 property tax billing as well as well as the full-year approved contributions from tax levy to 2010 capital projects. The budget remaining reflects smaller value items whose timing is spread throughout the year such as writeoffs, supplementary taxes, insurance claims and reserve transfers. Re: Financial Report as of June 30, 2010 Page 1 of 6 Budget Committee September 14, 2010

8 Item 4.1 Council This department reflects 47.1% of the budget remaining. There are no significant variances to report. Administration This department includes the CAO s Office, Corporate Services including the Building Maintenance Program and Human Resources. Overall the Department shows 43.9% of the budget remaining. The Administration Program (CAO and Corporate Services Administration) shows 47.7% of the budget remaining. Expenditures for the Election will not be incurred until the later part of the year. Otherwise, there are no other significant variances within the Administration Program. Human Resources has 56.5% of the budget remaining compared to 50% of the year remaining. This variance is largely the result of budgeted training/education amounts which have not been utilized as of yet. The Building Maintenance Program has 39.4% remaining primarily due to the insurance premium being fully allocated early in the year and seasonality of utility charges. These timing differences should resolve by year-end. This department reflects 46.9% of the budget remaining and the variance from where a department should be at this time of year is mainly due to timing of year-end transfers between departments. Currently there is nothing of significance to report and the variance is primarily a timing issue. Because of a three month sick leave that was back-filled with temporary staff, the department budget may be over at year-end. This additional cost may however be sufficiently offset by savings from the Financial Analyst position being vacant for a month and the remainder of the contract being at a lower rate. Staff will monitor the expenditures and transfer funds from the Sick Leave reserve if necessary at year-end. Fire The Fire Department shows 56.4% of its budget remaining. The most significant items creating this variance are timing of transfers from the Fire Department to assist in funding the Police communications and debenture payments related to the fire trucks. Re: Financial Report as of June 30, 2010 Page 2 of 6 Budget Committee September 14, 2010

9 Item 4.1 Police The Police Department budget shows budget remaining of 43.9%. This is primarily attributable to timing as provincial grants will not be received until the end of the year and recoveries from other departments for Communication services will not being recorded until year-end. In addition, several one-time annual expenditures (i.e. insurance premium, conferences) were incurred in the first part of the year. These timing differences should resolve by year-end. Public Works The Public Works Department shows 47.9% of its annual budget remaining. This variance is primarily attributable to timing for such items as the transfer of financing from other departments for road construction/maintenance as well as the expenditures for winter control. There are no other significant variances affecting the budget. Sewer This department is made up of the Sewage Treatment and Sanitary Sewer programs. Sewer program surpluses at year end are allocated to assist in funding associated approved capital projects and any balance remaining is then transferred to the Sanitary Sewer Reserve Fund to be utilized for future years approved capital projects. Any annual operating deficit would be funded from the balance in the Sanitary Sewer Reserve Fund. To date, revenues in these programs have exceeded expenditures by $571,032 and revenues are up 18% compared to year-to-date budget. There are seasonal and one-time annual expenditure items have not yet been processed (e.g. health and safety and clothing allowance expenditures, sludge removal and sampling costs) and as such the net position of the department at year-end may vary from the current status. These programs will be monitored and any surplus transferred as per policy. Water The Water Treatment Plant and Distribution Programs show that revenues exceed expenditures to date by $189,694. Similar to the sewer program, surpluses at year end are allocated to assist in funding associated approved capital projects and any balance remaining is then transferred to the Water Reserve Fund to be utilized for future years approved capital projects. Any annual operating deficit would be funded from the balance in the Water Reserve Fund. Re: Financial Report as of June 30, 2010 Page 3 of 6 Budget Committee September 14, 2010

10 Item 4.1 The Water Department has operated at a deficit for the last few years, primarily as a result of debt charges associated with the new plant and reduced revenues as consumption declined. It is hoped that the approval of the new water/sewer rate schedule will set in progress a trend toward recovery from the annual deficit situation. The water billing revenue is 38.6% higher than budgeted at this time of year suggesting that either consumption has increased, the new rates are providing the revenue they were expected to provide or both. Parks, Recreation and Culture This department has 55.2% of their budget remaining. The most significant variances are due to the cost of seasonal employees being primarily in the summer months and the majority of the utility expenditures later in the year. Library The Library Board shows 50.4% of the budget remaining. There are no significant variances to report. Planning and Development Planning and Development Department also includes Building Inspection Services. These programs show 73.8% of the budget remaining. This is primarily due to the generation of revenues through application, subdivision, and building permit fees in excess of budgeted amounts during the first part of the year. In addition, a full time staff member is on maternity leave until September thus lowering full time salary expenditures. Economic Development and Tourism Economic Development and Tourism shows 55.6% remaining in the budget for this time period. This is mainly due to the timing of expenditures such as promotions and advertising. Boards, Committees and Special Events The expenditures in the department reflect the payments to the outside organizations for their approved 2010 budget allotments as well as the Municipal Boards and Committees. Re: Financial Report as of June 30, 2010 Page 4 of 6 Budget Committee September 14, 2010

11 Item 4.1 The budget report shows 25.2% of the budget remaining in this category. The variance is primarily a timing issue based on when the payments are made to organizations as well as timing of transfer from reserves. Capital Projects Staff are managing more than 150 capital projects. Most projects are on target and progressing within the approved budget. The following projects have exceeded their budget and are identified for Committee information and for approval of additional funding. Budget Remaining Description $ % Action/Explanation Telephone Upgrades (12,452.85) (6.10%) Vincent Massey Memorial Centre (3,500.00) (35.00%) Project over budget re unforeseen complications at Canton site re EOC redundancies for connectivity and data communications and for front-ending Joint Operations communication in conjunction with construction. Propose including additional funding in Phase 3 which will be submitted in 2011 Capital Budget 2009 Billing from Hamilton Twsp was $3,500 more than budgeted. Recommend funding from Vincent Massey Reserve which currently has a balance of $4,732. staff are tracking various other projects that are within the approved budget however donation and fundraising revenues have not met target (Canton Cenotaph, Aquatic Sound System). If these revenue sources do not reach budgeted levels, other funding sources will need to be identified. Other Items of Note The financial system implementation is complete. As with any system change-over, there have been challenges but staff have worked diligently to minimize these and any disruption to residents. Month-end reports have been designed and staff continue to modify them as appropriate based on questions from users. Fine-tuning of the system will continue for some time however staff are, for the most part, pleased with the operation and functionality of the system. As we learn more about it, we will understand more of what it can do for us. Re: Financial Report as of June 30, 2010 Page 5 of 6 Budget Committee September 14, 2010

12 Item 4.1 CONCLUSION: It is too early to project the year-end financial position however, to date, revenues and expenditures are for the most part in line with what is expected at this time of year. Staff continue to monitor the budget on a regular basis and in accordance with the budget policy, will report any anomalies as soon as they are known. Original Signed by: Barbara Spry Treasurer Re: Financial Report as of June 30, 2010 Page 6 of 6 Budget Committee September 14, 2010

13 Item 4.1 APPENDIX 1 Municipality of Port Hope Council Report - Budget vs. Actual For the Six Months Ending June 30, 2010 Year to Date Annual Annual Budget Remaining Actual Budget $ % Non-Departmental (13,427,656) (14,436,700) (1,009,045) 7.0% Council 117, , , % Administration 631,481 1,125, , % 303, , , % Fire 533,188 1,222, , % Police 2,408,415 4,289,600 1,881, % Public Works 1,848,620 3,545,800 1,697, % Sanitary (571,033) (0) 571,032 Water (189,694) 0 189,694 Parks, Recreation & Culture 742,412 1,657, , % Library 284, , , % Planning & Development 102, , , % Econ Dev & Tourism 202, , , % Boards & Committees 285, ,700 96, % Total (6,728,640) 0 6,728,640

14 Item 4.2 Municipality of Port Hope 56 Queen Street, Port Hope ON L1A 3Z9 REPORT TO: FROM: SUBJECT: Budget Committee Barbara Spry, Treasurer Library OMERS Contributions DATE: September 10, 2010 RECOMMENDATION: That Budget Committee recommend Council choose one of the following options with respect to funding the employer s share of the Library employee omission costs: 1. Fund from non-dedicated/discretionary Library donations and any Library year-end surplus until the omission period expenditure is repaid. 2. Require the Library to include $25,000 per year in their operating budget for the next four years to repay the omission period expenditure. BACKGROUND: At the Labour Relations Committee meeting held on September 22, 2009 the Committee was advised that the Library Board had requested the Municipality investigate the eligibility of the part-time Library employees to participate in the OMERS Pension Plan. Subsequently, a meeting was held with Donna Wooton, Chair of the Library Board; Barbara Stephenson, Chief Librarian; Carl Cannon, CAO; Vicki Barrie, Deputy Treasurer; and Gina Jackson, Human Resources Manager to discuss the results of the investigation. In the meeting, the Chief Librarian and Library Board Chair were advised that the OMERS Pension Plan was established for the benefit of all Ontario Municipalities and local boards. The Library is deemed to be a local Board and is therefore eligible to participate in OMERS. The permanent full-time employees (Chief Librarian and Assistant Librarian) have been members since their date of hire. Part-time employees who meet the other than continuous employment criteria are eligible but were not enrolled in OMERS. (The other than continuous (OTC) employment criteria requires an employee to work two (2) consecutive years of seven Re: Library OMERS Contribution Page 1 of 3 Budget Committee September 14, 2010

15 Item 4.2 hundred (700) or more hours in each year or earn 35% or more of the YMPE (Yearly maximum pensionable earnings). Based on the information that the part-time employees could be eligible for participation in OMERS under the other-than continuous employment category, the Library Board decided to proceed with offering and communicating the eligibility requirements to staff. An OMERS representative explained the steps to enrol and the opportunity for some of the long term employees to make pension contributions for the period in which the employee was eligible but not enrolled called the omission period. The OMERS enrolment process to begin pension contributions for all eligible employees occurred in November and December OMERS was also provided information to determine who met the omission period requirements. The cost for eligible employees to contribute to OMERS for the period of omission was communicated to them earlier this year and the employee was given the option to contribute to all or a portion of the omission period or decline contribution. When the employee elected to contribute for the omission period, the Municipality of Port Hope received notice of the employee contributions and the amount owing by the Employer to match the employee contributions, plus pay the interest that would have been earned over the omission period. There are currently six part-time employees who have purchased their omission periods and the employer s share totals $69, Six additional employees are eligible and the cost if they decide to purchase their omission period is an additional $37, for a total of $106, In addition, there will be an annual cost for the employer contribution to OMERS and this is estimated at $30,000 annually based on historic average hours per year. A funding source for the employer portion of the omission period cost needs to be identified. In the absence of reserves and accumulated surpluses on which to draw, the following options are identified for Budget Committee to consider: 1. Fund from the Municipal Working Capital Reserve. This reserve has a balance of $1,078,534 which has not been allocated for other projects. 2. Defer the decision until the Municipal and Library year end surpluses are know and fund from the surplus if possible or, if necessary, fund in the 2011 Budget. 3. Fund from non-dedicated/discretionary Library donations and any Library year-end surplus until the omission period expenditure is repaid. 4. Require the Library to include $25,000 per year in their operating budget for the next four years to repay the omission period expenditure. Re: Library OMERS Contribution Page 2 of 3 Budget Committee September 14, 2010

16 Item 4.2 The Library employees are employees of the Port Hope Public Library Board and this cost is a cost of the Port Hope Public Library, not the Municipality, therefore, options one and two are presented for consideration but not recommended. Option 3 would have the least impact on the taxpayers of Port Hope, however provides no certainty as to repayment timeframe. Option 4 ensures repayment, however impacts the Port Hope taxpayers. CONCLUSION: This information is provided to update the Budget Committee and provide options available at this time. Original signed by: Barbara Spry Treasurer Re: Library OMERS Contribution Page 3 of 3 Budget Committee September 14, 2010

17 Item 4.3 Municipality of Port Hope 56 Queen Street, P.O. Box 117 Port Hope ON L1A 3V9 REPORT TO: FROM: SUBJECT: Budget Committee L. Araujo, Director of Proceeds from Agreement for Lease of Water Tower Space DATE: August 23, 2010 RECOMMENDATION: It is recommended that proceeds from the lease revenue from the water tower be recorded as revenue in the year received and, combined with net proceeds from the water treatment and distribution programs, credited to the Water Reserve to fund future water capital projects. BACKGROUND: On July 13, 2010 Council authorized execution of a license agreement with Bell Mobility Inc. to use the Port Hope Water Tower for telecommunication purposes and referred disbursement of the licence agreement fee for water and sewer infrastructure to Budget Committee for review. The original staff report indicated that revenue generated from the use of the Water Tower by the communications companies will be used to offset the annual operating budget in support of the efforts to reduce the existing water deficit. Any maintenance and repair to the water tower will be included in the ten-year plans used in the development of the water and sewer rates. As the approved rate structure is implemented, the net surplus within the annual operations will be transferred to a reserve to fund future capital costs, including the water tower repairs and maintenance. As such, the lease revenue from the water tower should be recorded as revenue when it is received so it is included in the net operating revenue at year-end transferred to the water reserve. If the lease revenue were put in a separate reserve strictly for water tower repair and maintenance as some have suggested should be the case, it is possible that at some time the Municipality would have, for example, $50,000 Re: Proceeds from Agreement for Lease of Water Tower Space Page 1 of 2 Budget Committee September 14, 2010

18 in the water tower reserve with no tower repair projects on the books while other water projects are being deferred because there isn t sufficient funding available in the general water reserve. By pooling the funds there is more flexibility to complete any and all projects when required. CONCLUSION: The recommendation of this report supports sound financial management principles and avoids impacting affordability of projects by dedicating certain revenues to only fund certain projects. Dedication of funds is generally only implemented where required by legislation. Keeping more general reserves with fewer restrictions allows for more flexibility in funding priorities as they arise. Original signed by: Liz Araujo, CGA Director of Item 4.3 Public Works Water Tower Licence Agreement with Bell Mobility Inc. Page 2 of 2 COW July 6, 2010

19 Item 4.4 Municipality of Port Hope 56 Queen Street Port Hope ON L1A 3V9 REPORT TO: FROM: SUBJECT: Budget Committee L. Araujo, Director of 2011 Budget Guidelines and Timelines DATE: September 1, 2010 RECOMMENDATIONS: It is recommended that Budget Committee receive the guidelines and assumptions outlined in this report for information and direct staff to prepare the 2011 Operating and Capital budgets based thereon. BACKGROUND: Staff is beginning the preparation of the 2011 Operating and Capital Budgets. The following are guidelines for 2011 Budget preparation based on best practices and review of inflationary changes over the last year: Budget Guidelines Salaries & Wages: Full-time: Salaries in the budget will be at the maximum job rate amounts for all approved positions at December 31, 2010 as detailed in a Salary and Wage Report that will be distributed to Department Heads. A cost of living allowance for non-union employees will be included for Council consideration. Salaries subject to policy and union contracts reflect negotiated increases as follows: CUPE 3%; Police Union & Police Civilian contracts are both due December 31, Part-time: Salaries for part-time/temp employees are a best estimate based on historical staffing levels. Estimates should include 4% vacation pay. A cost of living allowance will be included for Council consideration.

20 Item 4.4 Employee Benefits: Full-time: Benefits are calculated on the Salary and Wage Report on a per employee basis to provide departments with more accurate benefit calculations. Benefits are based on current rates plus an estimated inflationary factor per the benefit provider. OMERS pension plan contributions will be increasing by 1% in Part-time: Benefit costs for part-time/temp staff (employer cost for CPP, EI, EHT and WSIB) are estimated at 10% of part-time salaries. Consumer Prices rose 1.8% in the 12 months to July Energy prices rose 7.9% between July 2009 and July 2010, however the increase was only 1.3% increase during the 12 month period to June Within the energy price index, prices for electricity rose 9.8% in July compared with the same month a year earlier, however the Municipality s energy analysis advisor for hydro indicates a 6% increase over actual Also within the energy index, gasoline prices were 4.8% higher in July than they were a year earlier. As this indicates, the energy market is volatile and it is difficult to determine the best factor to use in preparing the 2011 Budget. Preliminary inquiries indicate municipal insurance renewal rates will remain status quo. The employee benefit manager indicates a 3% increase in rates at this point however the final rates will be set after a 9 month review of the plan at the end of September. In addition, there has only been two month of the HST and further analysis is needed to determine the full impact on the budget. It is recommended that inflationary estimates for all supplies and services in 2011 be based on the Consumer Price Index for the period August 2009 August 2010, published in September, adjusted based on discussions with industry experts and consideration of projections for the status of the economy. An update of these rates will be provided to Budget Committee at the first meeting following the release of the indexes. Budget Timelines Attached as Appendix A is the proposed 2011 Budget Calendar for both the Operating and Capital Budgets. CONCLUSION: The budget guidelines outlined in the report address the unavoidable cost of inflation while setting reasonable parameters within which to develop the 2011 Budget. Original Signed by: Liz Araujo Director of

21 Item 4.4 9/10/2010 9:14 AM MUNICIPALITY OF PORT HOPE DRAFT FOR DISCUSSION 2011 CAPITAL BUDGET PROCESS CALENDAR July August September October November December January February March Tasks Who Develop Inputting Formats Staff Training Sessions Prepare & Return Current Year Budget Submission Prepare & Return 10-year Capital Forecasts Review and Analyze 10-year Capital Forecasts Review & Prioritization Capital Projects Budget Meetings with Mngt Team Write Budget Overview Report Depts & Agencies Depts & Agencies and Depts Mngt Team Distribute Capital Budget to Budget Committee & Capital Budget Review - Budget Committee Budg Comm MUNICIPALITY OF PORT HOPE 2011 OPERATING BUDGET PROCESS CALENDAR July August September October November December January February March Tasks Who Prepare Budget Guidelines (Inflationary Estimates) Develop Base Budget w. prior year comparisons Prepare And Return Budget Submission Multi-Year Operating Detailed Review of Budget Submission Budget Meetings with Mngt Team Finalize Budget Submission Write Budget Overview Report Distribute Operating Budget to Budget Committee Operating Budget Review - Budget Committee Budget Presentation to COW Time for Public review and comment Report to COW on Public commment Budget Approved by Council Approval of Tax Rating By-Law Depts & Agencies and Depts Mngt Team & Budg Comm COW / COW Council Council TBD

22 Item 4.5 Municipality of Port Hope 56 Queen Street Port Hope ON L1A 3Z9 REPORT TO: Budget Committee FROM: SUBJECT: Jim McCormack, Facilities Manager Karen Sharpe, Director of Parks, Recreation and Culture Air Compressor Jack Burger Sports Complex DATE: September 8, 2010 RECOMMENDATIONS: That the emergency replacement of the air compressor for pneumatic building controls at the Jack Burger Sports Complex, in the amount of $4, plus HST be funded through the 2010 Capital Pool Filter Replacement Project and further that the remainder of Pool Filter Replacement project be deferred to the 2012 Capital Budget. BACKGROUND: The air compressor is a key component of the heating and ventilation system (HVAC) for the Sports Complex. Its function is to supply air pressure to all pneumatic controls, which in turn provides necessary heating and air movement throughout the facility. Proper ventilation and air supply is crucial in a pool environment in order to ensure bather comfort, provide adequate dehumidification and for the removal of airborne chloramines, a by- product of the reaction of chlorine with organics present in the water. Staff was aware that the existing original air compressor was nearing its useful life expectancy and had identified this item for replacement in 2011 through the ten year capital planning process. The air compressor failed at the beginning of the June pool shutdown and a compressor was ordered immediately. Re: Air Compressor Jack Burger Sports Complex 1 of 2 Budget Committee September 14, 2010

23 Item 4.5 A RFP was issued for the replacement of the 25m pool filters prior to the scheduled pool shutdown. One bid was received, which was substantially over budget. Staff, through consultation with the Director of, determined that this project should be deferred. This will allow staff the opportunity to research other options and budget accordingly. The existing filters should function adequately for two years as some preventative maintenance was completed to them during this year s shutdown. The next scheduled pool shutdown will be in 2012, thus the request to defer for a two year period. This type of work is best completed during a shutdown to ensure there is no impact to the delivery of services to the public. CONCLUSION: The air compressor replacement was a necessary emergency repair. The pool filter replacement requires further research. Staff will be contacting suppliers and other municipalities in order to explore additional options suited to the JBSC operation and that are more financially viable after which the project will be rebudgeted and retendered as appropriate. This report aligns with the Corporate Strategic Plan in the area of Infrastructure and Facilities. Original Signed by: Jim McCormack Facilities Manager Karen Sharpe Director Re: Air Compressor Jack Burger Sports Complex 2 of 2 Budget Committee September 14, 2010