Tax-supported Operating Strategy 2015 proposed Operating Budget and Forecast

Transcription

1 Tax-supported Operating Strategy 2015 proposed Operating Budget and Forecast

2 The proposed Tax-supported Operating Budget and Forecast details the City of Guelph s plan to sustain the delivery of exceptional services while remaining affordable and accountable to residents. Through this budget, City staff has been able to find efficiencies; however, the proposed budget does account for the demands placed on the organization from growth. The staff-recommended 2015 Operating Budget proposes a 3.05 per cent tax increase for residents. For the average household (2015 property value assessed at $301,770) this is equal to a $99.06 increase in Combined with Guelph s water and wastewater rates, the potential impact on average household is roughly $ in The proposed budget incorporates direction from Guelph City Council, continued input from community members and the strategic focus areas of the City s Corporate Strategic Plan organizational excellence, innovation in local government and city building. Building the budget When developing an operating budget that is affordable and predictable for taxpayers, the City takes into account: reasonable and effective financial policies; the Council-approved budget model; a predictable multi-year budget formula; budget estimates based on historic actuals; targets for contingency and reserves which protect the City in an emergency situation; legislated requirements; approved levels of service; direction from City Council; input from community; and recommendations for improving programs and services. i.ii

3 Guelph s credit rating Guelph has developed solid financial policies that guide corporate decisions, including the development of the annual budget. This work has consistently been recognized and reflected in the city s improved credit rating. In 2014, the City s credit rating was reaffirmed at AA+ with a stable outlook after being increased in 2012 and Again, this reflects the City s strong financial management framework and policies that drive transparent and accountable financial decisions, including debt management. This solid financial foundation provides a platform on which to maintain quality core services while looking to enhance quality of life for residents through new services and facilities. Guelph's Credit Rating AA, stable AA, positive AA+, with stable outlook AA+, with stable outlook Predictability and Affordability The City uses a predictable multi-year formula and model for determining the tax levy impact of the proposed budget. To ensure the recommended tax levy remains affordable for residents, the City then compares the impact the proposed levy will have on the average household in Guelph to our comparator municipalities. Predictable multi-year formula Designed in 2014, the predictability formula combines inflationary pressures, volume or demand for City services, efficiencies and productivity improvements to provide a recommended maximum tax levy. For 2015, the proposed maximum tax levy increase is 3.71 per cent. Variable Five-year average for Ontario Consumer Price Index (CPI) Five-year average increase in the number of taxable properties* Tax Impact 1.68% 1.53% Investment factor 0.5% Proposed maximum tax increase 3.71% *Continues to be under review by staff i.iii

4 Budget model The City uses the budget model to ensure the actual overall tax impact (base budget plus recommended investments) does not exceed the proposed maximum increase identified in the predictability formula. Model Base (includes assessment growth and efficiencies) Recommended Investments (see budget highlights for details) Recommended 2015 Predictable Difference Operating Budget Strategic investments 0.05% Service Investments % Formula 1.68% (CPI) 2.56% % (Volume) -0.65% 3.21% Total Investments 0.49% 0.50% -0.01% Overall tax impact 3.05% 3.71% -0.66% Information on the recommended 2015 operating budget is in Tab 1. i.iv

5 As part of its commitment to remaining affordable for tax payers, the City works to ensure the total municipal tax burden is no more than five per cent of the average household income in Guelph. In 2015, the tax burden remains lower than the five per cent threshold; however, it is slightly higher than the average. The following graph compares municipal taxes in Guelph with those in several other cities across Ontario. Note: Cities list in the above graph are Guelph s comparators. Cities identified in green are comparators based on med level income. i.v

6 Historical actuals Over the past five years, the average annual operating budget increase has been 2.89 per cent. Using the multi-year budget formula which is designed to reflect inflation, growth, efficiencies and productivity improvements, the City will further increase the predictability of annual budget changes. Year Base (A) Investment (B) Total Tax Levy Increase (A+B) $ equivalent to 1% increase ($M) % 0.00% 3.66% $ * -0.85% 2.64% 1.79% $ % 0.27% 3.52% $ % 0.93% 3.10% $ % 0.63% 2.38% $ year average 2.00% 0.89% 2.89% 2015 proposed 2.56% 0.49% 3.05% $2.00 Notes * In 2011, City Council approved a total tax levy increase of 3.14 per cent. Subsequently upon review, Council was advised that staff had inaccurately adjusted for assessment growth and the actual tax levy increase was 1.79 per cent. i.vi

7 Tax stabilization The City s reliance on the Tax Stabilization Reserve continues to trend downward. The stabilization reserve is intended to manage the tax levy, fund any year-end variances and prevent sudden tax levy increases particularly during truly hard times or exceptional events. The City has also consistently closed the gap between tax rate increases and the CPI and done so during a period of significant global economic change. The City is not recommending the use of the Tax Stabilization Reserve in Information on City Reserves and Reserve Funds is in Tab 29. i.vii

8 Funding the budget The City s budget is comprised of costs which the municipality controls and those it cannot. The costs which the City cannot control are due to relationships with other levels of government and autonomous boards, and are related to contractual and legislated responsibilities. For Guelph it means that 36 per cent of the budget is not directly controlled by City Council. Information about Guelph Police Services Board, The Elliot Community, Wellington Dufferin Guelph Public Health, Social Services and Social Housing and the Guelph Public Library Board was presented as part of the proposed 2015 Local Boards and Shared Services Budget. The remaining 64 per cent of the budget is then directed towards the City s service areas, including Office of the CAO and Office of Mayor and Council. For the average household, this means $2,016 of their total annual taxes will be directed to City services. The following graph shows the distribution of tax dollars by per cent of the total budget and highlights the actual distribution of tax dollars for the average household. For every $1 collected in taxes, the City of Guelph retains roughly 0.64 to apply to the City s budget. i.viii

9 Note: Dollar amounts are based on the average taxpayer s total taxes for i.ix

10 The City s proposed 2015 budget is focused on taking care of what we own without proposing service reductions or eliminations. The budget is based on estimates more reflective of historic trends to minimize year-end variances. The $206,303,226 proposed budget, which includes a 2.56 per cent base budget and 10 expansion packages with a total of 19.8 FTEs will enable the City to sustain its exceptional service levels throughout the year. Information on expansion requests is in Tab 2. The following charts highlight the proposed 2015 Operating Budget by area Budget 2015 Budget $ Change % Change Tab General and Capital Financing $ 22,488,267 $ 21,833,949 $ (654,318) (2.9)% 28 Corporate Services $ 12,415,571 $ 12,696,049 $ 280, % Public Services $ 72,260,835 $ 78,336,844 $ 6,076, % 7-15 Infrastructure, Development & Enterprise Services $ 16,530,822 $ 17,240,601 $ 709, % CAO $ 1,286,814 $ 1,383,529 $ 96, % 6 Mayor & Council $ 879,820 $ 944,150 $ 64, % 5 i.x

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13 Capital impacts to operating When considering investments in the proposed 2015 Capital budget, City Council and administration evaluated the future impacts these projects have on the operating budget. For example: while funds may be available to build a new community park, consideration is given to the life cycle of the infrastructure added (e.g., playground equipment) and the resources required to maintain the park to ensure the health and safety of the community (e.g., staffing resources, snow removal, mowing, annual landscaping). Planning for ongoing operating costs ensures the City can afford to maintain the asset year over year. The following lists projects in the proposed 2015 Capital Budget that impact the Operating Budget. Project # Project Name FTEs GG0208 MUNICIPAL ST BLDG EXPANSION 60,675 GG0227 PUBLIC HEALTH NEW 2013 DEBT SERVICING 83,630 GG0241 CITY HALL - ICE RESURFACER 10,000 IT0024 IT STRATEGIC PLAN 95,300 PK0001 SOUTH END COMMUNITY PARK 27,000 6,500 PK0002 GUELPH TRAILS 39,000 56,000 PK0004 JUBILEE PARK 83,200 PK0007 VICTORIA RD NORTHVIEW 45,600 PK0014 EASTVIEW COMMUNITY PARK 54,000 PK0048 CITYWIDE SKATEPARK FACILITY 4,200 PK0057 ORIN REID PARK - PHASE 2 4,500 TC0026 TRAPEZE 6 480, ,000 9,600 i.xiii

14 Highlights of Guelph s proposed 2015 Operating Budget In 2014, it was forecasted that the tax increase in 2015 would be 6.20 per cent. To deliver a budget that is affordable to Guelph taxpayers and maintains base services for the community, the City is recommending a tax increase of 3.05 per cent. The proposed 2015 Operating Budget, detailed in the following tabs is well below the upper limit prescribed by last year s multi-year formula (6.20%); is no more than five per cent of the average household income; and is less than the 3.71 per cent maximum calculated using the 2015 predictable formula. The following pages identify what has remained in, what s new and what has been removed from the proposed budget to meet tax levy expectations. What s in, and why? Compensation Staff salaries and benefits comprise a significant portion of the City s Operating Budget. In 2015, compensation represents approximately 46 per cent of the budget, which is equal to or less than other public sector averages. Ongoing management of compensation costs remains a priority for the City. In 2015, the City will be negotiating new collective agreements with both the Guelph Professional Firefighters Association and OPSEU representing ambulance workers. The following graph compares total value of City salaries and benefits for union, non-union and temporary employees. Business licensing categories ($24,300 increase in 2015) To meet growth demands of the business community, the City has budgeted for an increase in the number of business licensing categories in These categories will include, but are not limited to: food trucks, animal control, and donation and publication bins. Costs associated with the increased categories will be applied to the City s administration of the categories. Information on the Business licensing categories is in Tab 4: Issue Papers. i.xiv

15 Employee Engagement Strategy In 2014, the City completed its second Employee Engagement survey. With 77 per cent of employees participating in the survey, overall employee engagement improved slightly; however, the organization made great strides in the areas of recognition (7% increase) and learning and development (6% increase). These increases, and an increase in overall participation in the survey, are due to the work employees are doing at the departmental level. Across the organization, employees are working together to find innovative ways to engage with each other. In 2015, the organization will continue to support employees through the development and execution of departmental action plans aimed at increasing engagement in identified areas. Corporately, we will continue to roll out initiatives such as the Leadership Charter, Employee Recognition Program, Code of Conduct and Civics 101 all initiatives are designed to enhance employee engagement and understanding. Metrolinx ($150,000 in 2015; no change over 2014) In 2013, the City entered into a contribution agreement with Metrolinx as part of the two-way Go expansion. To maintain an affordable budget for taxpayers, the City budgeted cash contributions in 2014 and 2015 of $150,000. However, this does not fund the City s full contribution amount ($3.15M). Prior to the expiry of the agreement, the City will seek to transfer an asset to fund the remaining portion. Information on Metrolinx is in Tab 28: General & Capital Financing. Park and Recreation user fee increases ($4.21 million in 2015; $226,300 change over 2014) Within the Culture and Tourism, and Parks and Recreation departments, there are three main types of user fees that are used to offset the cost of running their respective programs. 1. Program registration fees are applied for a variety of leisure, culture and recreational programs for youth, adults and seniors. In 2015, these fees will increase three per cent on average (range from 0-5%). 2. General administration fees are applied for public swimming, public skating, entrance to Museums and tickets for amusement rides at Riverside Park. In 2015, these fees will increase three per cent on average. 3. Facility rental fees are applied for indoor and outdoor rentals. In 2015, indoor rentals (performing arts stage, gymnasiums, arenas, pools and community rooms) will increase three per cent on average. Outdoor rentals (picnic shelters, historical attractions, festival grounds, civic plazas and open green space) will increase 10 per cent on average. Information on these fees is in Tab 14: Parks & Recreation Facilities and Tab 30: User Fees. Traffic and parking revenues ($21,500 in 2015) To offset increases in operation costs in 2015, the City is proposing an increase in the monthly on- and off-street parking rate, effective May 1, Currently Guelph i.xv

16 charges less than other Canadian cities and well below the national monthly average of $ The increases proposed are as follows: Monthly permits for on- and off-street parking within the downtown: 5% increase o Current permits range from $43.90 to $89.99, increased fees will range from $46.10 to $94.49 o Off-streets: East and West Parkades; and Baker, Wilson, Neeve, MacDonell, Wyndham, Farmers Markett, Arthur and Norwich lots Information on these fees is in Tab 15: Public Works and Tab 30: User Fees. Urbacon ($900,000 in 2015) In September 2014, the City and Urbacon Buildings Group Corp. settled a legal dispute out of court. The costs associated with this matter are being accommodated within the City s capital financing guideline to ensure property taxes will not increase. The City had originally targeted to repay the borrowed amount over a five-year period, with $5.3 million of the capital financing transfer being allocated for this repayment. Due to financial constraints, the repayment plan has been adjusted to a six-year period and the contribution in the tax supported budget has been reduced by $350,000. Information on Urbacon is in Tab 28: General & Capital Financing. i.xvi

17 What s new, and why? The City is proposing 10 investments, totaling $1.35 million, to meet the growing needs of the community. Information on the following expansions is in Tab 2. Adult School Crossing Guards ($29,900 in 2015) Guelph is anticipating the opening of two new schools in September The City has included funds to cover an additional five adult school crossing guards to ensure the safety of children and youth traveling to and from school. The crossing guard locations will be determined in collaboration with the school board later this year. The allocation of funds through the budget will provide staff financial flexibility to manage the changing and complex needs of this program. Corporate asset management ($246,200 in 2015) The City is proposing the establishment of a Corporate Asset Management division to develop a comprehensive Asset Management Plan (AMP) that meets the Ministry of Infrastructure s policy, and to manage the City's assets through a comprehensive and consistent framework. The framework would establish an agreed upon method for setting service standards, projecting future consumption, conducting operational reviews and maintenance, developing repair and replacement strategies that provide the lowest total cost to the City. The division would provide support, analysis and guidance to City departments on the information required, activities expected and planning necessary to provide impactful, timely, corporate decisionmaking. Specifically the division would: Establish measurable service standards for all City assets; Improve quantification and understanding of the City's current infrastructure funding deficit; Develop long-term funding strategies to eliminate the funding deficit and ensure continued viability of the City's key infrastructure; Maintain, repair and replace City assets while meeting established service standards, minimizing total lifecycle costs and reducing corporate risk; and Introduce industry best practices and standardized approaches to asset management in order to build infrastructure effectively and efficiently. The Corporate Asset Management division would consist of the Manager, Corporate Asset Management and an Asset Management Analyst. In the future additional analysts may be required to deal with the expanding volume of data and analysis as the number of fully developed plans is expected to increase. i.xvii

18 Corporate Server Specialist ($0 in 2015; internal audit recommendation) With an increased reliance on technology by the City, the Corporate Server Specialist was established in 2014 to manage the City s corporate servers and mass storage system. Over a number of years, the volume of servers, data storage and backup infrastructure has increased dramatically, warranting the creation of a second position. The additional specialist will enable the IT department to close gaps identified in the Corporate Technology Strategic Plan. The cost of this position is offset by a reduction to contract services that is already included in the departmental base budget. Fire Prevention Officer ($137,700 in 2015) As a result of legislative changes in the Ontario Fire Code to address vulnerable occupancies and safety of occupants in rental properties, it is estimated that the Guelph Fire Department will require a total of 2,395 total personnel hours to cover the workload. Fire prevention staff is required to respond to complaints and requests for inspections. The additional staff hours will be used, in part, to ensure the City s timely response to these requests. As such a new Fire Prevention Officer FTE has been included in the budget. Geographical Information System (GIS) ($97,000 in 2015) The Geographical Information System (GIS) expansion will address three recommendations of in the GIS Technology Plan. 1. Enterprise License Agreement (ELA) would allow the City to take advantage of GIS technology under one licence. An ELA would not only save the City money in the long run, it will enable the whole organization to realize the benefits of GIS through the enterprise model. 2. Open311 mobile, citizen-driven service request system identified in the Open Government Action Plan 3. Easement Layer an additional layer in the City s software program that will enable staff to efficiently search for easements on incoming inquiries. This item lines up with the data management recommendation of the Open Government Action Plan and will reduce future liabilities. Graphic Designer ($0 in 2015) Through the City s Communications Needs Assessment audit in 2013, it was identified that a second graphic designer was required to meet demands placed on the department. Adding a second graphic designer would net an annual savings, as the total cost to hire is less than the annual amount the City pays to outsource collateral it currently does not have the capacity to produce in-house. The graphic designer position also functions as a steward of the City s corporate identity, helping to ensure consistency, quality and overall visual coherence. The City has included the addition of one FTE graphic designer in the budget. The cost of this position is offset by a reduction to contract services that is already included in the departmental base budget. i.xviii

19 Open Government ($0 in 2015; funded through gapping reserve) At its core, Open Government is about modernizing the way governments interact and collaborate with the community. In order to entrench this citizen centric approach within Guelph, an Open Government Action Plan was co-developed with the community. As the City and community work through this Plan, internally City staff will be supported as we change how government business is done in Guelph. In 2015, the City and community will be looking to expand collaboration tools such as Mindmixer, expand and build on open data, launch ask.guelph.ca and launch Open311 an online service request system accessible on mobile devices. To facilitate these initiatives, one FTE has been included in the budget and will be funded through the gapping reserve. This fund is maintained to support Human Resources related initiatives, which include change management. Paramedics ($327,900 in 2015) The EMS division of Emergency Services provides land ambulance service to the Guelph and the County of Wellington. One of the main performance indicators for the service is the response time to emergency medical calls. A comparison of ambulance response time for City comparators shows the City s service level is not at that which Guelph and Wellington County residents should expect. Further, there is a disparity between the services provided to the city and those currently provided to the areas in the County of Wellington. This is the result of moving ambulance resources to the areas with the highest probability of emergency calls occurring. To address these issues three FTE paramedics and replacement part-time staffing to backfill absences have been included in the budget. Specifically, the three paramedics would be used to increase the coverage in Erin Township where at night it can take 30 minutes or more for an ambulance to reach parts of the coverage area. Transit technology plan ($480,100 in 2015) a) Trapeze bus scheduling system The City intends to move forward with Transit s Trapeze contract which will see improved service levels for riders and staff due to technology efficiencies. The contract has been awarded to Trapeze and will result in the termination of the NextBus/Grey Island contract providing a cost saving of approximately $70k per year. The resulting incremental increase to the operating budget is $120k ($190-$70) and has been approved by Council. The Trapeze system will provide: 24-hour, 7days a week support Customer Care Web Site for customer service and support Tracking for support requests and the status of reported issues i.xix

20 Practical online training sessions for staff All software and hardware requirements b) Control Room supervisors With the incorporation of the new Trapeze system and bus-to-base radio system, there is a requirement to staff a Control Room 24/7. The Control Room will act as Transit s hub for radio activity providing direction to bus drivers throughout their shift. All interactions will be logged and will improve the overall service delivery for transit users. As noted in the Capital Impacts to Operating, six FTEs have been included as part of this package. Four are being funded in i.xx

21 What s changed, out or not funded, and why? DC Exempt Reserve Fund ($500,000 removed in 2015) The 2015 Operating Budget reflects a reduction in the contribution to the DC Exempt Reserve of $500,000. The DC Exempt Reserve is maintained to fund lost revenue to DC Reserve funds that resulted from legislative and Councilapproved exemptions. Typically contributions are based on three-year historical actuals as budgets are approved before year-end actuals are known. In 2015, the City has the benefit of basing the contribution on 2014 year-end actuals. This has resulted in staff recommending a $500,000 contribution, reduction to the DC Exempt Reserve. Organizational expansions ($2.85 million not funded in 2015) In total, 25.1 expansion packages designed to find additional organization efficiencies and enhance City services have not been funded to maintain an affordable budget for taxpayers. The 20 service based packages were requested by staff to address increasing demands as the result of city growth. The 5.1 strategic based packages were requested to cover new services and projects that would enable the organization and Council to focus on Citybuilding. Information on the expansion requests is in Tab 2. ServiceGuelph Extended Hours Following an Internal Audit in 2013, administration piloted extended hours of the ServiceGuelph counter for a seven month period in During this period, 226 customer interactions were logged, with 51 per cent taking place with 30 minutes of the normal closing time (4:30 p.m.). Assessing the quantity and nature of requests, along with the challenge of maintaining service levels throughout the day, without added resources, City administration is not recommending continued extended hours of the ServiceGuelph counter at City Hall. Information on ServiceGuelph extended hours is in Tab 4: Issue Papers. Transit service reduction ($327,511 removed in 2015) Since the introduction of the Council-approved transit route system in 2013, ridership growth and revenues have been lower than anticipated, resulting in revenue projections not being realized. To align budget projections, Guelph Transit has assessed ridership volumes and determined that a reduction in Sunday and Holiday service frequency would have the least impact on transit riders. Routes and hours of service will remain; however, the frequency will be reduced from 30 minutes to 60 minutes. Weekday ridership: 22,281* Saturday ridership: 12,945* Sunday ridership: 8,091 Holiday ridership: 3,862 i.xxi

22 *Note: Guelph Transit offers longer hours of service Monday through Saturday. Information on Transit service reduction is in Tab 4: Issue Papers. Transfer to reserve for Integrity Commissioner investigations ($10,000 removed in 2015) In 2014, Council approved a $10,000 reserve transfer to establish a funding source for serious and detailed investigations by the Integrity Commissioner that would result in costs exceeding those covered by the City s retainer. The Mayor has directed staff to remove the $10,000 transfer in 2015 to help lower the City s budget. The City s retainer contribution of $5,000 remains in the budget. Information on the transfer to reserve is in Tab 5: Mayor and Council. i.xxii