Guelph s Financial Strategy 2014

Transcription

1 Guelph s Financial Strategy 2014

2 GUELPH S FINANCIAL STRATEGY Guelph is one of Canada s most livable cities - a testament to this community s commitment to Guelph s vision: Be a city that makes a difference acting locally and globally to improve the lives of residents, the broader community and the world. Guelph is a dynamic, collaborative and innovative urban centre offering a high quality of life for residents, and a sustainable, prosperous environment for businesses and community benefit organizations. Despite several years of global economic recession Guelph s financial position remained strong, and steadily improved. This is reflected in key financial performance indicators including an increase in credit rating. Because the City integrates strategic and financial planning, Guelph has a solid foundation that drives the decisions which sustain our local competitive edge, and attract diversity, skills, talent, and jobs to our community. The guiding foundation is Guelph s Corporate Strategic Plan a transformational plan focused on building an exceptional community. The plan identifies several key projects, programs and services which ensure Guelph continues to be a well-designed, safe, inclusive and appealing city. The plan includes an ambitious program for change in local government with a focus on innovation, delivering exceptional municipal service and value, and running an exceptional municipal government. It sets priorities and provides a road map of strategic directions and key performance indicators to guide Council s annual budget decision making. Guelph s Financial Strategy brings together several capital and operating strategies which have received extensive public input and Council approval. It includes expenses and revenues which are tax-supported, non-tax-supported and secured from other funding sources. The strategy includes the budgets of Local Boards and Shared Service agencies which meet a portion of their capital and operating needs through municipal property taxes. City of Guelph Capital Investment Strategy: proposed Capital Budget and Forecast

3 TAX-SUPPORTED CAPITAL BUDGET AND FORECAST Together, the Corporate Strategic Plan and Guelph s Financial Strategy seek to balance a wide range of competing needs within a multi-year budget framework built to provide greater transparency, confidence, predictability and prosperity for residents today and for the generations to come. Guelph s Financial Strategy will be presented to City Council in four sections: Capital Investment Strategy: proposed Capital Budget and Forecast Non Tax-supported Strategy: 2014 proposed Operating and Capital Budget and Forecast Tax-supported Operating Strategy: 2014 proposed Operating Budget and Forecast Local Boards and Shared Services Strategy: 2014 proposed Operating and Capital Budget City of Guelph Capital Investment Strategy: proposed Capital Budget and Forecast

4 Tax-supported Operating Strategy 2014 proposed Operating Budget and Forecast

5 >> Proposed Tax-supported Operating Budget Guelph s Tax-supported Operating Strategy is based on four elements: A strong financial foundation based on a solid financial policy framework e.g. Debt Management Policy, Reserve Fund Policy, Capital Renewal Reserve Fund Policy and Investment Policy Strong financial performance monitored through key financial performance indicators and validated through an annual third party external evaluation in successive financial audits and credit rating assessments Strong financial future positioning demonstrated by continued reserve contributions, a predictable budget formula, and recommended investments designed to achieve ongoing operating efficiencies and improved service to the public Open financial reporting as shown through Finance Annual Reports, Annual Benchmarking of financial performance with municipal comparators and full disclosure of financial reports/documents The Operating Strategy supports the City s mission to build an exceptional city by providing outstanding municipal service and value. It balances predictability, affordability, service to the community, business and partners Service excellence remains at the heart of the organization as the City reframes old models, restructures its service approach, and renews its core strengths. Through a variety of ways such as value for money audits, operating reviews, the Integrated Operational Review, the Organizational Assessment, and the Corporate Technology Strategy, the City is increasing efficiency and reducing costs.

6 Recommended 2014 Tax-supported Operating Budget There are no service reductions or eliminations included in the 2014 Tax-supported Operating Budget. The proposed operating budget is based on estimates more reflective of historic trends to minimize year-end variances. The $192,865,918 proposed budget represents a 2.73 per cent base budget increase and a proposed 0.63 per cent investment to execute Council-approved strategies and drive service delivery efficiencies, productivity and optimization of City s operations. The rationale for each of these initiatives is based either in external assessments received by Council or during internal review of expenditures through audit or efficiency studies. The total 3.36 per cent increase represents an average property tax increase of $107 for the average residential taxpayer with a property valued at $311,136. Combined with proposed changes to Guelph s water and wastewater rates, the potential impact on an average household is roughly $134 in Recommended 2014 Model operating budget Base (includes assessment growth and efficiencies) 2.73% Predictable formula Difference 1.94% (CPI) % (volume) = 3.37% -0.64% Recommended Investments (see budget highlights for details) 0.63% 0.50% 0.13% Total 3.36% 3.87% -0.51% CPI Consumer Price Index

7 >> Guelph s budget and financial context Guelph s thriving economy and quality of life are supported by the City s strong financial position. Council-approved financial policies and responsible financial management practices continue to strengthen the organization and ensure predictability and affordability for taxpayers.

8 Predictability and Affordability The City is committed to ensuring the total municipal tax burden is no more than five per cent of the average household income in Guelph. The following graph compares municipal taxes in Guelph with those in several other cities across Ontario. Total municipal burden as a per cent of household income 7% 6% 5% 4% 3% 2% 1% 0% Oakville Mississauga Burlington Markham Vaughan Grimsby Brampton Waterloo Richmond Hill Whitby Ottawa London Pickering Ajax Cambridge Kitchener Windsor Guelph Sault Ste. Marie Chatham-Kent Barrie Thunder Bay Greater Sudbury Oshawa Niagara Falls Hamilton St. Catharines Kingston Brantford Burden as a % of household income Average

9 Over the past five years the average annual operating budget increase has been 3.17 per cent per year. Using a multi-year budget formula designed to reflect inflation, growth, efficiencies and productivity improvements, the City will further increase the predictability of annual budget changes. Approved Average Budget Changes Year Base Investment Total Tax Levy Increase $ equivalent to 1% increase ($M) A B C % 0.79% 3.74% $ % 0.00% 3.66% $ % 2.64% 1.78% $ % 0.27% 3.52% $ % 0.93% 3.10% $ year average 2.24% 0.93% 3.17% 2014 Proposed 2.73% 0.63% 3.36% $1.86

10 The City s use of the Tax Rate Stabilization Reserve continues trending downward. The stabilization reserve fund is intended to manage the tax levy and prevent sudden tax rate increases particularly during truly hard times or exceptional events. The City has also consistently closed the gap between tax rate increases and the Consumer Price Index (CPI) and done so during a period of significant global economic change. 8% Using the tax rate stabliization reserve 6% 4% 2% 0% Tax levy increase (without rate stablilization) Tax levy increase (with rate stablilization) CPI

11 Using municipal tax dollars Every budget includes costs the municipality can control, and others it cannot. This is due in part to relationships with other levels of government, autonomous boards, contractual and legislated responsibilities. For Guelph it means 37 per cent of the budget is not directly controlled by City Council. Information about Guelph Police Services Board, Wellington Dufferin Guelph Public Health, Social Services and Social Housing, and the Guelph Public Library Board, will be presented as part of the proposed 2014 budget for Local Boards and Shared Services. Public Health 2% 2014 distribution of municipal tax dollars Shared Services (includes social services) 13% Library 4% Municipal 63% Police 18%

12 Guelph s credit rating Guelph s strong financial position is also reflected in its credit rating which was upgraded again this year from AA positive outlook to AA+ stable outlook. The following graph compares Guelph with other Ontario cities, and provincial and federal governments. Municipal Credit Rating Comparison MUNICIPALITY A AA- AA AA+ AAA Separated cities Guelph Barrie Kingston Brantford Windsor Peterborough Upper or lower tier municipalities Mississauga Halton Region Peel Region Wellington County Ontario Canada Positive Stable Negative

13 >> Building the budget To develop a budget that is affordable and predictable for taxpayers the City applies: responsible and effective financial policies the Council-approved budget model legislated requirements direction from City Council and input from community 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 approved levels of service recommendations for improving programs and services About the model and predictable multi-year formula This year, Guelph reviewed and renewed its operating model (included in Tab 2) and, for the first time, the City used a formula to develop a budget for City Council to consider. The formula is designed to offer predictability when building the City s budget, and reflect inflationary pressures, volume or demand for City services, efficiencies and productivity improvements. Five-year average for Ontario Consumer Price Index (CPI) 1.94% Five-year average increase in the number of taxable properties* 1.43% Investment factor 0.5 % Proposed budget increase of no more than 3.87% * Continues to be under review by staff To deliver a budget that is affordable for Guelph taxpayers, the City is recommending a base increase of 2.73 per cent and an investment of 0.63 per cent. The 2014 operating budget represents a 3.36 per cent increase over last year well below the upper limit amount prescribed by the formula.

14 Efficiencies, optimization and growing productivity Cost savings and process efficiencies are an established management practice at the City of Guelph. Cost reduction exercises are performed throughout the year and when building annual operating budgets. Generally speaking, the results of this work have not been made transparent to the Council and the community except when highlighted in annual budget presentations. In 2013 Council set an efficiency target of $500,000 and challenged the organization to make the City s work in this area more transparent through regular reporting to Council on progress. The City identified $526,873 in annualized savings which has been applied to next year s base budget. At least $291,000 of these annualized savings are applied to the efficiency target for In 2014, the City will host a series of integrated employee round tables to increase employee participation in developing continuous improvement opportunities, and assemble a front-line staff productivity team (e.g. a municipal dragon s den approach) with the goal of further increasing productivity. The outcome of these engagement processes will be shared with Council and the community. With this transparency now embedded in its established financial practices, the City will continue tracking and reporting on efficiencies as part of its financial performance. Team work will drive a more integrated approach to finding and examining efficiencies, and will result in a further list of operating ideas for review, and value for money audits and operating review ideas for the work plan of the Internal Audit function. The Organizational Assessment, conducted in 2013, identified the need for skills in business process analysis to drive productivity gains. Similar to the business improvement benefits gained in the Wastewater Services department (Non-tax-supported Budget), the City recommends adding a Business Process Improvement Specialist to support the Internal Audit function and our Finance Department to drive optimization of service and program delivery, identify ongoing process efficiencies, and increase employee productivity. Through the work underway on the Corporate Technology Strategic Plan, Employee Engagement Strategy and the Integrated Operational Review the City is striving to improve efficiency and organizational effectiveness and serve the community within existing resources.

15 >> Budget highlights What s already underway The City s commitment to optimizing its systems, increasing efficiency and productivity are further reflected in its progress on several corporate wide initiatives highlighted in the Corporate Strategic Plan. These initiatives are moving the organization forward towards organizational excellence, innovation in local government and in community city-building. They require continued support in order for the community to experience the benefits associated with each program. Affordable Bus Pass Program: After a successful pilot phase, introduction of a discounted monthly bus pass category for eligible low-income residents will increase access to public transit resulting in new riders being able to afford to use public transit which is forecasted to increase transit revenue by $66,661. Corporate Technology Strategic Plan: Continued implementation in 2014 will modernize the City s business systems and use technology to deliver more efficient and effective service to the community. Employee Engagement Strategy: City departments are implementing action plans designed to improve employee engagement; engaged employees are more productive and inclined to drive innovation in the work place leading to the delivery of better services and programs to the community. Integrated Operational Review (IOR): A collaboration between the Planning, Building Services, Engineering and Enterprise Services departments intended to improve the development review process, and make it easier for the business community to work with the City on planning and development matters. Urban Forest Management Plan: Approved by City Council in 2012, the plan is the City s primary tool in pursuit of reaching Guelph s goals of increasing the size and health of its urban forest, and having the highest tree canopy percentage among comparable municipalities. Implementation of the 20-year plan began in 2013, and the proposed 2014 budget recommends continued funding to enable the City to continue executing the plan. See the Recommended Investments section for details.

16 What s new, what s changed and why Organizational Assessment: In 2013 an Organizational Assessment was completed. Its recommendations are intended to strengthen how work is undertaken by focusing existing resources on the most critical priorities, building staff capacity to ensure the right skills are available and freeing up existing capacity to be used to its maximum potential. The Organizational Assessment strongly recommended fundamental action as per the following: Establish a standardized approach to program/project management Secure specialized capacity in business process optimization, change management and program management Address a shortage of 10 administrative support positions Ensure targeted training and development budgets are met Address vacancy management In response, the City is using existing resources to redesign its training and leadership development programs and examine the vacancy management system. The City is recommending three investments in the 2014 budget; a contract Program Manager, Business Process Improvement Specialist and a Timekeeping Review (see the Recommended Investments section for details). Recreation Fee changes: The City recommends increasing its revenues by $15,000 through a new surcharge for recreation facility rentals. Commercial users would pay 10 per cent more than non-profit organizations. Details about all proposed recreation fee changes are included in Tab 29.

17 Base budget and growth The proposed base budget represents a 2.73 per cent increase or $5,085,204 over last year. This amount includes adjustments due to efficiencies, increased demand, or growth. Compensation: Like any business, employee compensation is a significant portion of the City s operating budget. Salaries and benefits represent 46 per cent of the operating budget, which is equal to or less than municipal and other public sector averages. Ongoing management of compensation costs remains a priority. For example, by reviewing and finding efficiencies in the administration of employee benefits, the City has saved approximately $1 million over the past five years. To align the City s benefit costs with municipal benchmarks, the City informed Council of its plans to continue working with all employee groups through the collective bargaining process to find additional savings in benefits plan design while maintaining fairness to employees, and continued investment in employee wellness. In 2013, the City introduced a revised Attendance Management program to improve regular attendance at work and manage lost productivity costs to the organization. As of September 2013, there has been a 6.7% reduction in the average number of days lost due to absences. Managing overtime is the subject of an internal audit, and results will be reported before the end of The results of this audit will be taken very seriously by the leadership of the organization. Vacancy management continues to be a significant focus for the administration in its management of compensation costs. The 2014 budget includes a more assertive approach towards total salary savings of $1.8 million (i.e. an increase of $500,000 over 2013) to reflect ongoing management of unspent salary dollars resulting from employee turnover and naturally occurring vacancies. Employee Engagement Strategy: In 2014, the City requires $50,000 to build capacity to re-survey employees, and respond to actionable organizational priorities following each survey. Examples include but are not limited to leadership development, job satisfaction, and better employee communication mechanisms. Using benchmark results from 2012 the City will continue measuring and reporting on the success the Employee Engagement Strategy to Council and the community.

18 Recommended Investments The proposed budget includes an investment of 0.63 per cent or $1,193,100 to continue streamlining and strengthening City operations and enhancing service to the community. More detailed descriptions of each investment are included in Tab 2. Organizational Assessment $142,100: Contract Program Manager, Corporate Projects: funded within the administrative overhead budget for capital projects for a period of three years to establish and embed this practice and provide internal training to key staff. The $119,400 contract position cost has no impact on the operating budget. A Business Process Improvement Specialist $92,100: working with the Internal Audit function and Finance Department to drive service optimization to gain cost savings and productivity. It is forecasted that after a full year of funding, this position will fund itself through cost savings in subsequent years with annual progress reporting. Timekeeping Review $50,000: The Organization Assessment recommended increasing administrative support across the organization. Early work on the City s timekeeping systems suggests there are opportunities for optimizing the technology and the number of staff using the timekeeping system. Improvements to the payroll and finance systems have potential to free up existing administrative resources, reduce system licensing costs and enable resources to be reassigned to address recommendations from the Organizational Assessment. To expedite a thorough system review, and in the absence of internal resources and capacity, Staff recommends investing $50,000 for a consultant to perform the review.

19 Integrated Operational Review (IOR) $280,000: The following represent the first of several investments required to implement the recommendations of the Integrated Operational Review over the next three years. IOR Implementation Plan $169,400: To proceed with short-term, high-priority initiatives including; a triage protocol to improve the City s response to investment opportunities with multiple and/or major benefits to the City; a capacity analysis to improve staff resource allocation and application processing; a map of the development review process and develop key performance measures; an enhanced communications and customer service strategy specific to the development review process; and support for ongoing Corporate Technology Strategic Plan projects in relation to the development review process. Development Planner II $110,600: to increase capacity of the organization and provide intermediate level planning experience for a variety of development planning. This position is one of 23 recommendations of the IOR and would assist the Project Manager during the implementation phase. Enterprise Development Officer $93,700: This position would further support the recommendations of the IOR and enhance the City s ability to attract and facilitate development investment downtown, ensure efficient processing of development applications, reinforce relationships with existing property owners and foster partnerships and opportunities to enable redevelopment of complex sites including brownfields across the city, the Guelph Innovation District, and nodes in the east and south end of the city. Corporate Technology Strategic Plan $130,300: Corporate Application Analyst: To keep pace with work required to make system improvements, and ensure capacity to implement capital plans, the proposed budget recommends investing $130,300 in a full-time Corporate Application Analyst.

20 Corporate Health and Safety Program Coordinator: This position will provide greater oversight to health and safety legislative compliance and significantly reduce reliance on external legal resources to manage WSIB Appeals. In 2013, the City avoided $1 million using external resources to address WSIB Appeals process. To mitigate risk associated with health and safety legislative compliance, mitigate costs related to WSIB and short and long term disability, and continue avoiding costs associated with WSIB claims, the City recommends more focused attention in this area. As reported in the HR Annual Report, Corporate Health and Safety duties and responsibilities are shared among existing resources, and the City continues to experience increases in reported and actionable WSIB incidents. Municipal benchmarking information supports the need for increased capacity (i.e. Municipal Benchmarks demonstrate an average of 4.3 FTE s dedicated to Health and Safety compared to Guelph s practice of splitting responsibilities and assigning them to two existing positions). A new full time position at $98,500 will be funded from the WSIB Reserve with no impact on the operating budget. Committee Coordinator $86,000: This position is required to address the Legislative Services function within the City Clerk s Office to support a 100 per cent increase in the number of active standing committees over the last two terms of Council. As reflected in the department s Annual Report, the compliment of the Guelph Legislative Services division is 57 per cent lower than its comparator average (i.e. two employees as compared to 4.6). The report also shows that, in 2012, the division supported 27 per cent more annual meetings (90) compared to the average (66.5). An additional resource would add much-needed capacity to respond to increasing volume and complexity of responsibilities in the City Clerk s office.

21 Fleet Mechanics $159,500: Increase capacity to perform required and preventative fleet maintenance and meet requirements of Commercial Vehicle Operator Registration (CVOR). The City s fleet has grown by 58 large assets since 2008, including eight additional buses. This increase has resulted in a maintenance resource gap of 6.9 FTE. The City will report on any savings in overtime and contracted services costs resulting from adding two full time positions at $79,750 each. Urban Forest Management Plan $205,700: Continued execution of Council-approved plan recommends two forestry technicians at $82,050 each and, and part-time GIS technician at $30,000(2.5 FTEs) plus $11,600 cost of vehicle, desk and computers etc. The proposed 2014 Operating Budget sets the stage for the City to continue to deliver on important work already underway rather than introducing a number of new initiatives. It is a budget that seeks to balance affordability and predictability with excellent service for taxpayers. Its development was influenced by Guelph s strong financial foundation, solid financial performance, strong future financial positioning, and open financial reporting. It is a budget that supports the City s mission to build an exceptional city by providing outstanding municipal service and value.