Tax Budget Overview Introduction Budget & Business Plan. Lifestyle

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1 Lifestyle There are many attractions that contribute to Halton Region s high quality of life, making it an ideal place to live, work, visit, raise a family and retire such as: Bronte Creek Provincial Park - A unique blend of natural and man-made facilities. It is an all-season park with plenty of opportunity to swim, picnic, hike, fish, skate, toboggan and cross-country ski. Bronte Harbour Waterfront Park - Nestled at the mouth of Oakville's Twelve Mile Creek (Bronte Creek) within the former Village of Bronte is a major new Waterfront Park developed by Halton Region in conjunction with the Federal Government and the Town of Oakville. Mohawk Raceway - The track is uniquely country, yet distinctly modern. Mohawk offers a variety of choices for dining and viewing Canada's best trotters and pacers guided by some of the most talented reins men in North America. Royal Botanical Gardens - Walk through 2,700 acres of natural areas, colourful displays and famous plant collections in the Arboretum, acres of irises in the Laking Garden, two acres of roses in the Rose Garden and 125,000 spring bulbs in the Rock Garden. Nearby is Cootes Paradise, a natural wildlife sanctuary with 1,200 acres of marsh and wooded ravines and 30 miles of nature trails. The Mediterranean Garden is indoors and is open year-round. Waterfront Trail - A waterfront trail extends 325 kilometres from Hamilton to Trenton. In Halton, the trail weaves, linking attractions like the Royal Botanical Gardens, LaSalle Park, the Burlington Art Centre, the Waterfront at Downtown Burlington and Spencer Smith Park, and Oakville sites like Bronte Harbour Waterfront Park, Coronation Park, Oakville Harbour and the Erchless Estate. Cultural Centres The Burlington Art Centre is a public gallery, which hosts dozens of exhibitions of art and crafts throughout the year. The Burlington Performing Arts Centre delivers diverse, world-class arts and entertainment. The Oakville Centre for the Performing Arts has a mix of professional and community theatre entertainment. The Georgetown Cultural Centre houses the John Elliott Theatre and the Art Gallery. 19

2 Museums Halton Region Museum, located in the Kelso Conservation Area in Milton, is open year-round for visitors to the Exhibits Building, featuring interesting displays on the history of Halton and a Museum Shop. Educational programs are available for school, youth and adult groups by appointment and researchers can use the archives and reference library, as well as other onsite equipment. The Alexander Barn s Loft Room and Hearth Room are available to be rented for such activities as weddings, dinners and meetings. Halton County Radial Rail Museum, where visitors can relive the era of streetcars and interurbans in a rural Ontario setting with guided tours and rides. Joseph Brant Museum houses the Woodland Indian Gallery and many artefacts of this culture, as well as many personal possessions of Brant. Oakville Museum is located on the historic Erchless Estate overlooking Lake Ontario, and includes the Chisholm family home and the 1856 Custom House with Oakville's first Post Office, and Thomas House nearby. The Country Heritage Park (formerly the Ontario Agricultural Museum) is located in Milton, and has more than 30 buildings on 80 acres depicting the evolution of agriculture and rural life in Ontario. Royal Canadian Golf Association (RCGA) Museum and Canadian Golf Hall of Fame explores the history of golf, from the middle ages to present day, displaying the changing equipment, architecture and apparel, and honours those who have furthered golf in Canada. Festivals and Events - Halton is home to charming and unique festivals and events such as Sound of Music, Ribfest, Renaissance Festival, Fall into Nature, Jazz Festival and Fall Fairs. Recreation - Halton has many sporting and eco adventures for the whole family, including horseback riding, kayaking, swimming, fishing, boating, sailing, hiking, cycling, rock climbing, cross country and downhill skiing. Farms - Halton has more than 40 farms that sell products and services direct to consumers. Visitors can picktheir-own fruit and vegetables, purchase nursery items or enjoy farm activities like hayrides and horseback riding, all within Halton's borders. Farms include: Springridge Farm, Chudleigh's Apple Farm, Andrew's Scenic Acres, Aldershot Greenhouses, Arbor Garden Centre and Nursery, Cudmore's Garden Centre, Bayview Equestrian Centre, Hutchinson Farm and Five Star Ranch. Golf Courses - Halton has more than 30 golf courses, including Glen Abbey Golf Club. 20

3 Conservation Areas - Halton has six conservation areas, including Crawford Lake, Mountsberg, Rattlesnake Point, Hilton Falls, Kelso and Mount Nemo. Shopping - Each community has a wide selection of casual and fine dining restaurants and unique and quaint shops and retail venues. Marinas - With a waterfront location on Lake Ontario, there are three natural harbour areas in Halton. Education -There are four school boards operating in Halton Region: the Halton District School Board, the Halton Catholic District School Board, the French Catholic School Board and the Central South West French Language School Board - École Renaissance. There are more than 20 private schools in Halton. A complete list of private schools in Ontario is available from the Ontario Ministry of Education. Halton Region is home to the Sheridan Institute of Technology and Advanced Learning, which offers a wide range of full-time day courses, including its renowned animation, fashion technique and design programs. A variety of continuing education programs are also offered. In September 2010, McMaster University opened a campus in Burlington to house their Master of Business Administration degree program as well as providing opportunities for Executive Education. Other post-secondary educational institutions within one hour's drive from Halton Region include: McMaster University, Hamilton Mohawk College of Applied Arts and Technology, Hamilton University of Toronto, Toronto York University, Toronto Ryerson Polytechnic University, Toronto Ontario College of Art and Design, Toronto George Brown College of Applied Arts and Technology, Toronto Seneca College of Applied Arts and Technology, Toronto Centennial College of Applied Arts and Technology, Toronto Humber College of Applied Arts and Technology, Toronto 21

4 University of Guelph, Guelph Conestoga College of Applied Arts and Technology, Kitchener Wilfrid Laurier University, Waterloo University of Waterloo, Waterloo Brock University, St. Catharines University of Ontario Institute of Technology, Oshawa Charles Sturt University, Burlington Health Care - Halton Region offers a wide variety of health care services including extensive public health programs administered by Halton Region's Health Department. There are four hospitals in Halton: Joseph Brant Memorial Hospital (Burlington) Halton Healthcare Services Milton District Hospital Oakville-Trafalgar Memorial Hospital William Osler Health Centre (Georgetown) Places of Worship - Halton has more than 175 places of worship to meet the religious and ethnic heritages of its residents. There are more than 120 Protestant churches, 22 Roman Catholic churches, and more than 15 places of worship for other denominations. Libraries - There are 15 public libraries located within Halton Region. 22

5 Halton Region s Financial Information Presentation General Guidelines All financial information for financial statement presentation is prepared and presented in accordance with generally accepted accounting principles for local governments as recommended by the Public Sector Accounting Board (PSAB) of the Canadian Institute of Chartered Accountants (CICA). Basis of Accounting and Financial Reporting Halton Region follows the full accrual basis of accounting. This method recognizes revenues as they are earned and expenditures as they are incurred and measurable through the receipt of goods or services and a legal obligation to pay. As required at year-end, revenues and expenses that have not yet been processed are recognized and then reversed in the following year when the transaction is processed. Effective Jan 1, 2009 Halton Region began reporting tangible capital assets on the annual financial statements as required by PSAB3150, Tangible Capital Assets. The Fund Based budget prepared by Halton Region is converted to full accrual basis accounting for the purpose of financial reporting, in the following way: The Capital Fund is reported through the Tangible Capital Asset accounts in the Consolidated Statement of Financial Position. The Reserves or Reserve Fund is reflected in the Consolidated Statement of Financial Position as Accumulated Surplus. The Operating Fund is reflected in the Consolidated Statement of Operations which is adjusted to reflect interest on debt only, the amortization expense, gain or loss on disposal of tangible capital assets, post-employment benefits and solid waste landfill closure and post closure expenses. 23

6 Basis of Budgeting The operating budget includes annual expenditures for personnel costs, materials and supplies, purchased services, minor capital, debt charges, reserve transfers, subsidy revenue and program fees. Halton Region s capital budget includes expenditures and financing sources to acquire, construct, maintain and facilitate Regional capital assets such as regional facilities, roads, bridges, EMS stations, long-term care facilities, water and wastewater treatment plants, along with distribution and collection systems and waste management facilities. The capital budget is established on a project by project basis, where the costs are usually incurred in more than one fiscal year reflecting its multi year nature. The operating and capital budgets are approved each year by Regional Council for the period January 1 to December 31. The Municipal Act, O. Reg. 284/09 requires municipalities to budget for amortization expense, post employment benefits and solid waste landfill closure and post closure expenses or, if the municipality does not budget for these items, to report to Council advising of these exclusions. Halton Region does not budget for these items per se, however staff reports on how these expenses are to be funded before Council adopts the budget for the year in order to comply with this regulation. Halton Region utilizes modified program-based budgeting, which reflects expenditures and revenues based on program delivery and responsibility. Halton applies the framework established by the Ontario Municipal Benchmarking Initiatives (OMBI) best practices in budgeting by allocating corporate support costs. Corporate support costs are allocated to programs through various methods in accordance with the OMBI framework. Program chargebacks are allocated where costs are accumulated in various corporate support areas which provide direct services to programs (Direct Program Chargebacks). Corporate Management and Governance costs (Corporate Sustaining Chargebacks) are reallocated to all direct program delivery departments on a prorata basis of the four most recent years gross controllable costs. The use of this chargeback allocation method results in the redistribution of net corporate support costs to direct service delivery programs. 24

7 Fund Structure and Budgeting Halton Region uses Fund Accounting for budgeting purposes, in which a self-balancing group of accounts is provided for each accounting entity established, as the basis for recording and reporting all financial transactions. The Regional budget is composed of two primary funding sources Tax Supported Services and Rate Supported Services. Each of these in turn includes an Operating Fund, Capital Fund and Reserves and Reserve Funds. Rate supported services are water and wastewater, which are billed based on fixed service charge and actual water usage. Tax supported services are levied on the assessed value of property. Operating Fund Activities are budgeted annually for each program based on the estimated operating costs. The factors considered in developing these budgets include inflation, growth, service quality, mandated requirements and customer needs. At the end of any given budget year as part of the year-end closing, any surplus or deficit is transferred to or from reserves and/or reserve funds in accordance with Council approved policies, ensuring a closing balance of $0 in the operating fund. Capital Fund Capital projects can be budgeted in one year or several years depending on the size and scope of the project (i.e. design, land purchase, construction, etc.). The corresponding expenditures may materialize over several years as the project is completed. Upon completion, each project is closed and any surplus or deficit is transferred to or from the appropriate reserve, reserve fund or capital Holding Account in accordance with Council approved policies. Reserves or Reserve Funds The use of reserves is an integral part of the budget planning process and is an important financial tool in developing short and long-term fiscal policies. Prudent use of reserves will mitigate fluctuations in taxation and rate requirements and assist in stabilizing the impact of unanticipated occurrences as set out in Council Report CS-83-02, re: Regional Reserve Policy. Budgeted reserve transactions flow through either the operating or capital budgets. Regional Council has approved the creation of Reserves and Reserve Funds for specific liabilities, contingencies and other specific uses. Policies dictate the use of certain Reserve Funds for designated purposes and prevent monies from being diverted to any other use. 25

8 The Region also receives development charges as provided for in the Development Charges Act, These funds are maintained in separate Reserve Funds that are restricted in use and applied to eligible growth-related capital projects in accordance with the legislation. Fund Relationships While the activities in the Operating and Capital Budgets are mutually exclusive, there are instances when transactions occur between them which are flowed through the Reserves and Reserve Funds, as indicated below. Reserves & Reserve Funds Operating Fund Capital Fund 26

9 Halton Region s Budget Process The process for preparing the Region s budget begins in late spring or early summer with the strategic planning process by which the Standing Committees establish their priorities for the coming year. Actions for the annual Standing Committee Plans are approved by Council in early spring in order to be integrated into the Budget Directions report, a policy document which is considered by the Budget Review Committee and Regional Council. Budget Directions establishes Council s program and fiscal priorities for the following year s budget based on internal and external economic factors. Staff use this as direction in developing the following year s budget. Operating departments prepare their preliminary budget requests based on the Council approved Budget Directions and strategic action plans as established through the annual strategic planning process during the summer and early fall. Departments include base budget adjustments and program change requests in their preliminary budgets. Program change requests are required for any significant change in direction for the program, changes to funding sources or any change in staffing levels. Preliminary budgets are reviewed by staff in the Financial Planning and Budgets Division and by Management Committee, which is comprised of the Region s most senior staff. Budget review meetings are held in September and October with senior staff in each department. At this time, staff in the Financial Planning and Budgets Division also receive budget requests from the Boards and Agencies that are funded through the property tax levy. These requests are then incorporated into the proposed budget. The proposed budget document is compiled and presented to Council in late November and reviewed by each of the three Standing Committees and Budget Review Committee prior to Council approval in December. Budget Review Committee (BRC) is comprised of the chair of each standing committee and is chaired by the Regional Chair. In an election year, the Budget review by committees begins in January, with adoption targeted for late January. 27

10 Proposed Budget As indicated above, proposed budgets are prepared by all departments of the Region with the assistance of the Financial Planning and Budgets Division of the Region s Corporate Services Department. Annually, Budgets staff prepare a Budget Information Package, which recommends cost and revenue increases for various components of the budget (i.e. utility increase 5%, general inflation 2%, etc.) and includes specific technical information for staff in preparing budgets and how to input them into the Region s financial system. Operating and Capital Budgets are prepared for services funded from property taxes (Tax Supported) and from water and wastewater utility rates (Rate Supported). The Operating Budgets include three basic cost categories for review and evaluation: Operating Expenditures o Personnel Services o Materials and Supplies o Purchased Services o Rent and Financial Expenses o Grants and Assistance o Allocated Charges / Recoveries o Corporate Support o Transfers to Reserves Operating o Transfers from Reserves - Operating Capital Financing & Reserves o Debt Charges o Transfer to Reserves Capital o Transfer from Reserves Capital Revenues and Subsidies o Program Revenue o Federal / Provincial Subsidy Net Program Expenditures Capital Budgets are prepared for Tax and Rate Supported programs indicating the gross project cost and sources of financing. Sources of financing are subscribed by the following categories: Subsidy/External Recovery Development Charges (Residential / Non-Residential) General Reserves and Other Reserves 28

11 Capital Investment Reserve Debentures (Growth/Regional) As indicated above, the Budget review process includes a review by the Region s senior management team (Management Committee), the three Standing Committees of Council and the Budget Review Committee. The Standing Committee reviews provide for public participation in the review of the budgets. Adoption of Budget Upon receiving the recommendations from the Budget Review Committee, Regional Council will adopt the Budget by resolution as the Region s annual Budget for the year beginning January 1. The Committee and Council meetings are open to the public and advertised in the local newspapers and on the Regional website. The following are dates for the presentation of the 2012 Budget and Business Plan: Council Information Session November 14, 2012 Budget Presentation to Health & Social Services Committee November 27, 2012 Budget Presentation to Planning & Public Works Committee November 28, 2012 Budget Presentation to Administration & Finance Committee November 29, 2012 Budget Presentation to Budget Review Committee December 10, 2012 Budget Presentation to Regional Council for Consideration December 12,

12 MAY / JUNE / JULY Development of Budget Directions in accordance with Standing Committee Plans JULY Approval of Budget Directions JULY / AUGUST / SEPTEMBER OCTOBER / NOVEMBER Departments Prepare Budgets Management Committee Review Boards & Agencies Prepare Budgets NOVEMBER Presentation of Preliminary Budget to Council DECEMBER Standing and Budget Committee Review DECEMBER Regional Council Review and Approval ONGOING Budget Monitoring Process 30

13 Halton Region s Financial Policies Balanced Budget The Operating Budget is balanced with revenues equal to budgeted expenditures. Any shortfall in budgeted revenues versus budgeted expenditures for a budget period will be funded by tax levies or utility rate revenues equal to the shortfall, thereby resulting in a balanced budget. Deficit Avoidance In accordance with the Municipal Act, municipalities are prohibited from budgeting for a deficit. The annual budgets continue to show fiscal restraint to meet expenditure and revenue targets. In any given year when actual revenue shortfalls or unforeseen expenditures appear to be more than temporary occurrences, both the Capital and Operating Budgets are reviewed and a number of alternatives identified to minimize the Region s exposure including drawing from reserves, reallocating budgets and expenditure constraints. Amendments to Approved Budget The approved budget may be amended from time to time at the direction of Council provided the amount to be collected from property taxes or user rates remains unchanged. Operating budget amendments commonly occur as a result of Provincial funding initiatives for fully subsidized operating programs. The capital budget is revised in May/June after the Local Municipalities budgets are approved and prior to the initiation of the Region s Budget Directions process, in order to align Regional programs with Local Municipalities work. The capital budget is also amended throughout the year as a result of the public tendering process which formalizes the estimated costs and related financing to undertake specific projects. Budget Monitoring & Reporting The Region utilizes a real-time enterprise-wide financial system. Financial reports are available on-demand to all appropriate staff to monitor actual expenditures and revenues. Operating budget variance reports are presented annually to Council for year-to-date and year-end projections as at April 30, August 31 and December 31. Capital budget (life to date) variance reports are presented twice annually as at June 30 and December

14 Operating Fund Balance Actual surplus or deficit during a budget period is transferred to or from a Tax or Rate Stabilization Reserve or other reserves as directed by Council. The targeted balances in the stabilization reserves are 10% of total operating expenditures which are used to mitigate the effect of any large variations in major sources of revenue or expenditure. Given that personnel services account for approximately 33% of the Region's total gross expenditures for all services, excluding the Halton Regional Police Service, strict controls have been established to ensure that any increase in staff complement is explicitly approved by Council. New positions, whether temporary or permanent, are approved through the Region's budget process as program changes. The only exception to the budget process is that, from time to time, the Region receives additional funding from other orders of government or reserves to provide new or additional services. These positions are added to the Region's total complement through in-year staff reports with the positions being fully funded and having no net tax or rate impact. Halton Region s Action Plan On June 22, 2011 Regional Council approved The Citizens Priorities - Halton Region s Action Plan. Each new term, Halton Regional Council develops a plan to reflect Council s priorities and focus on what services are important to Halton residents. These plans are developed for each Standing Committee which set out priority actions and form the basis for measuring the performance of those plans through annual status update reports. The programs and initiatives put forward in the 2013 Budget and Business Plan meet the Action Plan objectives. 32

15 Master Plans Master Plans support the long-term program needs for Regional services including the Official Plan, and master plans for specific programs such as Transportation, Water and Wastewater, Housing and Emergency Medical Services. Operating Budget Forecasts Operating budget forecasts are prepared and reviewed annually for each program for a 10-year period, taking into consideration recommendations included in approved master plans as well as providing sufficient funding to operate, repair and maintain major capital infrastructure as appropriate. Capital Budget Forecasts Capital budget forecasts are presented annually to forecast expenditures on a project by project basis. The capital 10-year forecast includes major works required to upgrade, replace or construct capital infrastructure which the ongoing maintenance of this infrastructure is included in the operating budget. Financing of the forecast capital program is undertaken at a detailed level and presented in a summary level in the budget. 33

16 Use of One-time Revenues The Region does not utilize one-time revenues for ongoing expenditures. However, one-time revenues may be used to fund non-recurring expenditures provided Council approves it. One-time revenue is transferred to the appropriate reserves in accordance with Council s direction. User Fees and Alternate Revenue Sources The Region establishes cost recovery policies for user fees to determine whether fees collected are sufficient to recover the cost of providing certain goods or services. These policies determine the percentage of full service cost to be recovered through fees. The level of cost recovery is routinely adjusted to ensure that fees are current, equitable, competitive and sustainable. Uses of Unpredictable Revenues Certain revenues fluctuate widely year-to-year. At year-end favourable revenue variances are transferred to the Stabilization Reserves as approved by Council. Use of Supplementary Tax Revenue Supplementary taxes are property tax revenue generated from new assessment added in-year to the property tax roll. This revenue source is estimated annually and reflected in the Region s operating budget. Debt Capacity The Province sets a debt capacity guideline for municipalities of 25% of own revenues. The Region s own guidelines (10% of total operating expenditures) translate to approximately 13.3% of the Region s own revenues. The current projected debt capacity for the next 10 years remains below these targets. 34

17 Reserve and Reserve Funds The following table presents a summary of the Region s Reserve Policy. Halton Reserve Policy Stabilization Reserves Purpose To address in-year, uncontrollable or unanticipated changes in economic conditions, funding or costs Target 10% of the gross expenditures Funding Shortfalls from the target should be funded from annual operating surpluses Balances in excess of the target can be used to finance one-time programs or to address deficiencies in other reserves Authority to Access Council authority required to access funds Interest Allocation No interest to be allocated to these reserves Program Specific Reserves Purpose To fund specific programs Target Financial plan required for each reserve and reviewed annually Funding Based on financial plan Authority to Access Council authority required to access funds, normally established within the annual budget or specific Council resolution Interest Allocation No interest to be allocated to these reserves Vehicle / Building and Equipment Reserves Purpose To fund the maintenance and replacement of Regional assets Target Based on lifecycle costs of assets Funding Annual operating budget provisions Shortfalls in funding may require funding from annual operating surpluses or transfers from other reserves Authority to Access Interest Allocation Capital Reserves Purpose Target Funding Authority to Access Interest Allocation Council authority required to access funds, normally established within the annual budget or specific Council resolution Interest allocation at year-end based on actual interest earnings To finance the Region's capital program Based on capital programs Annual operating budget provisions Supplementary taxes Annual operating budget surpluses Council authority required to access funds, normally established within annual budget or specific Council resolution Delegated authority to staff re: project closures or tender awards Interest allocation at year-end based on actual interest earnings 35

18 The Halton Region 2013 Budget and Business Plan include: The 2013 Tax Supported Operating and Capital Budget and Forecast The 2013 Water and Wastewater Rate Supported Operating and Capital Budget and Forecast. The 2013 Tax Supported Budget focuses on the Regional Services which Halton Regional Council manages. The Halton Regional Police Service (Police Services) Budget is included in some of the summary tables as the Police Services Act requires that Regional Council approve the total Regional Tax Supported Budget including Police Services. The detailed Police Services budget is approved by the Halton Regional Police Services Board. Additional information related to the Tax and Rate Supported Operating and Capital Budgets are contained in the Tax Overview, Rate Overview, and Detailed Budget sections of the 2013 Budget and Business Plan. 36