Council Budget Meeting Date: April 28 & 29, 2009 Agenda Item: #4.1

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1 Council Budget Meeting Date: April 28 & 29, 2009 Agenda Item: #4.1 FINANCIAL PROJECTIONS AND 2009 SERVICE LEVEL REVIEWS Report Purpose To review the 2010 financial projections and the 2009 approved Service Levels in all County departments as part of the Business Plan and 2010 Budget planning process. Recommendation THAT Council receive the 2010 financial projections and the review of approved 2009 Service Levels as information. History December 9, 2008 Council approved the Business Plan and 2009 Budget February 17, 2009 Council approved the timeline for preparing the Business Plan and 2010 Budget which included the dates of April 28 and 29 to review financial projections and existing service levels. March 17, 2009 Council held a public input session on the 2010 budget. March 31, 2009 Council approved budget amendments to the Municipal Operations Operating Budget and the Municipal Operations Capital Budget Background/Justification Strategic Plan: (mark beside the applicable sections) Governance X Community Well Being X Community Sustainability X Economic Viability X Service Delivery X Stakeholder Communication X Resource Management X Legislative/Legal: Sections 242 and 245 of the Municipal Government Act ( MGA ), R.S.A. 2000, c. M-26 state that each Council must adopt an operating and a capital budget for each calendar year. Economic: This review will provide input into the Business Plan, a corporate guideline for service delivery, which sets out the provision of programs and services to residents, businesses and industry which in turn will determine resources required. Social: The Business Plan and Budget supports the Social Sustainability framework in areas such as social inclusion and community connectedness by providing citizens the opportunity to access services, learning, recreation and cultural activities. Health and well-being is promoted through safety and cleanliness of their environment and timely, equitable access to key services such as transportation. Social responsibility is encouraged by providing opportunities for residents to join boards and committees, be involved in preserving the environment (e.g. water conservation, recycling), and taking responsibility for the safety of their community. /2 Document #: Corporate Planning

2 2 Environmental: The Business Plan and Budget support the County s role in preserving the environment by the way of various initiatives such as programs for water conservation, diesel to electric transit buses, salt management programs and rebates for building permit fees that achieve Built Green, R-2000 or Leeds Certification. Stakeholder: Strathcona County residents, businesses, and industry Interdepartmental: All County departments Summary: This is an opportunity to review information gathered through public input and currently approved programs and service levels to identify potential changes to service levels that Council would like examined as part of the Business Plan and 2010 Budget Process. Public input opportunities consisted of random telephone survey, online questionnaire, open houses and public input session. Enclosures: I 2009 Service Level Reviews (Corp. Plng. #10778) II Financial Projections - PowerPoint (FinAdmin.79978) III Service Level Reviews - PowerPoint (CPIA.10811) *IV Summary of questions for Council Guidance and Direction, May 5, 2009 (CPIA.10857) * (Enclosure IV see Section 12 in your binder) Author: Janice White, Corporate Planning & Intergovernmental Affairs Date: April 14, 2009 Manager: Kevin Glebe, Corporate Planning & Intergovernmental Affairs, Christine Jackson, Financial Services Associate Commissioner: George Huybregts, Corporate Services/County Treasurer Chief Commissioner: Robyn W. Singleton, QC (Manitoba) Document #: Corporate Planning

3 Council Budget Meeting Date: April 28 & 29, 2009 Agenda Item: 4.1 ENCLOSURE I Business Plan and 2010 Budget 2009 Service Level Reviews April 28 & 29, 2009 Summary of Approved 2009 Services Doc# Corporate Planning.10778

4 Organizational Structure Infrastructure and Planning Services Community Services Corporate Services Senior Administration Elected Officials Associate Commissioner Peter Vana Economic Development & Tourism Engineering & Environmental Planning Infrastructure Engineering Recreation Facility & Open Space Design Associate Commissioner Denise Exton Associate Commissioner George Huybregts Chief Commissioner Robyn Singleton Emergency Services Assessment and Tax Executive Team Mayor & Council Family & Community Services Communications Senior Administration Community Support Special Events Services Facility Services Community Development Capital Region Initiatives Strathcona Transit Financial Services Corporate Planning & Intergovernmental Affairs Planning & Development Recreation, Parks & Culture Services Indoor Recreation Services Development & Building Outdoor Recreation Approvals Services Long Range & Policy Broadmoor Public Golf Planning Course Land Management RCMP/Enforcement Services Transportation & Agriculture Services Transportation Agriculture Fleet Services Fiscal Services Human Resources Information Technology Services Utilities Solid Waste Services Water Services Wastewater & Storm Sewer Services Community Energy System Doc# Corporate Planning

5 Business Plan & 2010 Budget Financial Projections STRATHCONA COUNTY COUNCIL PRESENTATION April 28 & 29, 2009 Doc#: FinAdmin

6 Presentation Outline 2009 Timelines Business Plan & Budget Framework Financial Projection Assumptions Operating Budget Capital Budget Consolidated Operating Financial Projections Consolidated Capital Demand Service Level Presentations 2

7 2009 Timeline Feb 17 Approval of Timeline April 28 Financial Projections April 28, 29 Service Level Reviews May 5 Council Direction Sept 8 Review of Business Plan Initiatives Nov 13 Overview of Recommended Budget Nov 26,27,30 Presentation of Recommended Budget Dec 4, 7 Dec 15 Approval of Business Plan & Budget 3

8 Business Plan & Budget Framework Community Vision Strathcona County is a safe, caring and autonomous community that treasures its unique blend of urban and rural lifestyles while balancing the natural environment with economic prosperity. Through strong, effective leadership, the County is a vibrant community of choice. STRATEGIC PLAN 3-Year Business Plan Annual Operating & Capital Budgets 4

9 Business Plan & Budget Framework Providing Quality of Life Daily Life Needs Community Safety Community Wellness Physical Environment Vibrant Community Roads Police Recreation Opportunities Infrastructure Maintenance Economic Development Snow Clearing Ambulance Parks and Trails Grass Cutting Special Events Drinking Water Fire Protection Family Support Weed Control Communities In Bloom Public Transit Traffic Safety Library Protecting the Environment Volunteer Support Budget is the allocation of resources to deliver services 5

10 Business Plan & Budget Framework Fundamental Principles Guided by/ linked to Council s Strategic Plan & contributes to achieving the Community Vision Strives to achieve balance between environmental, social & economic sustainability Continues to provide annual operating funding for Council approved annual capital programs Budget is balanced and fiscally responsible Continues to identify economies & efficiencies Result Council approved funding for annual operating and capital budgets 6

11 Business Plan & Budget Framework The Operating Budget Equation Expenditures Cost of delivering services Cost of inflation Cost of growth Cost of changes in service levels Services Revenues Revenues Existing tax base New tax base due to growth User fees & charges Operating grants Other & own sources Budget Target: Expenditures = Revenues 7

12 Business Plan & Budget Framework The Capital Budget Equation Capital Projects Annual Projects Rehab & Replacement Growth Capital - Direct Growth Capital - Indirect Value Added Capital Investment Capital Funding Operating Budget (taxes, rates & user fees) Reserves Grants Development Levies Other Sources Budget Target: Project Costs = Funding Sources Debt is not a funding source, it is a financing source that is funded from the above Direct capital includes roads & utility infrastructure; indirect includes facilities, vehicles & equipment 8

13 2010 Budget Challenge Based on status quo services Consolidated base case operating shortfall of $16.2M Projected 5 year capital project priority needs of $758.1M Potential unfunded 5 year capital project priority needs of $318.2M 9

14 2010 Budget Challenge Additional Revenue required to maintain services at current approved levels: Impact Equivalent $M Tax Dollar Increase* Municipal Operations % Utility Operations % Library Operations % 16.2 * Utility % Increase is based on Equivalent Composite Utility Rate 10

15 Assumptions 2010 Operating Budget Base Case 1% Municipal tax dollar increase ~ $1.32M 1% Composite utility rate increase ~ $346k 1% Library tax dollar increase ~ $60k 11

16 2010 Operating Budget Base Case Assumptions 12

17 Assumptions 2010 Operating Budget Base Case Base case maintains Council approved services Base case is developed in the spring to provide an early indication of the trends for 2010 Approved programs & services are adjusted for one-time items, growth, and inflation 0% price increase in operating base case for: Property taxes Municipal user fees & charges Utility user rates 13

18 Assumptions 2010 Operating Budget Base Case - Growth General growth for 2010 is estimated at 2% ( %) General growth is based on projected population and housing starts: Projected population growth in % Projected housing starts in % Growth is expected to increase consolidated revenues by $4.1M ( $13.7M) and consolidated expenditures by $10.3M ( M) Minimal tax growth for 2010-$1.7M ( $10.2M) 14

19 Assumptions 2010 Operating Budget Base Case - Growth Property tax growth projected for 2011 to 2016 averages $2.2M per year excluding significant industrial development. The exception to this occurs in 2011 where projections include substantial industrial growth Significant decline in construction values from 2007 to 2008 and development due to economic recession While development may be slowing down, the demand for municipal services is increasing In addition, the need for protection of people and property through Fire, Ambulance and RCMP services has also increased from

20 Assumptions 2010 Operating Budget Base Case - Inflation Municipal Price Inflation (MPI) MPI Municipal Utility Library County % 3.2% 3.2% 3.9% % 3.7% 8.4% 5.6% Cost of inflation exceeds average CPI for Alberta consumers based on a higher cost basket of goods Basket of goods includes commodities related to the provision of services including: Fire, Ambulance & Police, Transit, Recreation, Parks, Roads, Utilities and Library 16

21 Assumptions 2010 Operating Budget Base Case Annualization of Previously Approved Budgets - $5.5M Municipal Operations Cost impact of new Community Centre impact of new SES Contracts (0.3) Annualized of New Services Utilities debt servicing for *SCWSS 1.3 Library cost impact of new Community Centre *SCWSS - Strathcona County Water Supply System 17

22 Assumptions 2010 Operating Budget Base Case One-Time & Other Adjustments - $2.7M Municipal Operations Impact of 2009 Amendment (0.7) 2009 Business Plan Initiatives 0.6 Allowances for new initiatives 1.5 Other Utilities (reserve adjustments & other) 0.5 Library (0.1)

23 Assumptions 2010 Operating Budget Base Case Conclusions Planning uncertainty due to new Capital Region Board, delays in industrial mega projects and slow down in residential growth Budget challenge greater in years such as 2010 that have little non-residential tax growth Revenue increases are not sufficient to offset increased costs of delivering services While development is slowing down, the demand for services is not Operational pressures are being felt from the impact of delayed growth and enhanced services Inflation continues to cause gaps in the operating budget 19

24 Consolidated Capital Priority Needs Assumptions 20

25 Assumptions Consolidated Capital Priority Needs Very minimal inflation has been included in the 2010 capital projections (compared to $44.9M inflation estimated for the 2009 capital projections) Lower energy prices and softer labor market conditions result in expectations for reduced construction costs There are many projects currently in progress in addition to approved multi-year projects Capital Projects approvals average $96M per year (based on the 5 year period ) 21

26 Assumptions Consolidated Capital Priority Needs Provincial Capital Grants-$M Original estimated grants for Revised estimate for Anticipated Funding Shortfall (22.0) Grant commitments in 2009 budget (~50%) 71.9 Grant uncertainty leads to difficulty in planning for capital needs Grant Funding for MSI and AMIP is based on preliminary estimates from the 2009 Provincial Budget announcement and is subject to change 22

27 Assumptions Consolidated Capital Priority Needs No New Debt is Assumed Future debt servicing is for approved debt only Debt Servicing ($M) Municipal Utilities Library County

28 Assumptions Consolidated Capital Priority Needs Millions $400 $350 $300 $250 $200 Projected Debt Capacity ~$90M to $140M debt capacity $150 $100 $50 $ Projected County Debt PHF Debt MGA & Policy Debt Limit MGA & Policy debt limit is based on approved 2009 budget & projections; no tax dollar increase has been assumed. Total projected debt is based on currently approved capital projects only. 24

29 Assumptions Consolidated Capital Priority Needs Conclusions There will be competing priorities in the Consolidated Capital Priority Needs list Funding sources are uncertain The increased volume and complexity of capital projects adds pressure behind-the-scenes for project management and engineering work Need to be realistic about how many projects can be accomplished Growing infrastructure gap Capital planning requires determination of key priorities within limited resources 25

30 2010 Operating Budget Consolidated Base Case 26

31 Consolidated Operating Budget 2010 Base Case $M 2008 Actual 2009 Budget 2010 Projection 2011 Projection 2012 Projection Revenues Expenditures Net Revenues (Expenditures) Non-Operating Items (42.0) (40.3) (41.3) (42.9) (44.5) Net Impact for Property Tax (16.2) (19.7) (29.6) Projected Revenues are not sufficient to maintain the current service levels 27

32 Consolidated Operating Budget 2010 Base Case $M 2010 Base Case Shortfall - $16.2M Annualization of 2009 Budget 5.5 Inflation Cost Impact 7.6 One-time & Other 2.7 Growth

33 Consolidated Operating Budget 2010 Base Case $M Municipal Operations Impact Equivalent $M Tax Dollar Increase* Projected shortfall due to: Annualization of 2009 Budget % Municipal Price Inflation (4.0%) % One-time items & Other % Growth % Additional Revenue Required % to maintain services at current approved levels *where 1% = $1.32M 29

34 Consolidated Operating Budget 2010 Base Case $M Utility Operations Impact Equivalent $M Composite Utility Rate* Projected shortfall due to: Annualization of 2009 Budget % Municipal Price Inflation (3.2%) % One-time items & Other % Growth (0.5) (1.34)% Additional Revenue Required % to maintain services at current approved levels *where 1% = $346k 30

35 Consolidated Operating Budget 2010 Base Case $M Library Operations Impact Equivalent $M Tax Dollar Increase* Projected shortfall due to: Annualization of 2009 Budget % Municipal Price Inflation (3.2%) % One-time items & Other (0.1) (0.53)% Growth % Additional Revenue Required % to maintain services at current approved levels *where 1% = $60k 31

36 Consolidated Capital Priority Needs

37 Consolidated Capital Priority Needs $758M over next 5 years (expressed in Inflated $) Utility Infrastructure $111.4 Roadway Infrastructure $347.4 Electronic Hardware/Software $15.2 Machinery & Equipment $14.9 Vehicles $59.4 Parks & Open Space Maintenance $26.0 Buildings $173.5 Land Development $10.3 Includes Annual Programs of $149.4M 33

38 Consolidated Capital Priority Needs Capital Funding Pool Consolidated Funding Gap Analysis $M Total Consolidated Five Year Capital Demand Add Estimated Inflation 38.1 Total Estimated Inflated Five Year Capital Demand Total Estimated Funding Available (debt, grants, reserves & operating budget) (440.0) Five Year Capital Funding Gap Funding gap will be partially offset by funding received from external sources such as developer levies, local improvements and Heartland partners is to be determined 34

39 Consolidated Capital Priority Needs Key Competing Priorities Capital replacement (e.g. vehicles, busses) Infrastructure rehabilitation (e.g. roads, utilities, facilities) Development capital (e.g. roads, utilities) Investment capital (e.g. Heartland roads) Soft capital (e.g. transit, emergency services, recreation) Tax and rate supported growth capital (e.g. road widening, water storage) The Big Six 35

40 Recommendation THAT Council receive the financial projections for the Business Plan & 2010 Budget for information. 36

41 Business Plan & 2010 Budget 2009 Service Level Reviews STRATHCONA COUNTY COUNCIL PRESENTATION April 28 & 29, 2009 Service Level Reviews at April 28, 2009 Corporate Planning Doc. #

42 Purpose: 2009 Service Level Reviews 1.To review currently approved programs and service levels. 2. To review the projected 2010 financial challenge of maintaining status quo. 3. Identify potential changes that Council would like examined as part of the Business Plan and budget process. Service Level Reviews at April 28,

43 2009 Service Level Reviews Agenda for April 28 Overview & Financial Projections Infrastructure & Planning Services Utilities Corporate Services Service Level Reviews at April 28,

44 2009 Service Level Reviews Agenda for April 29 Community Services Senior Administration Fiscal Services Elected Officials Council Discussion and Direction Service Level Reviews at April 28,

45 2009 Service Level Reviews Format: Presentations by departments Manager or designate to present services in approved Business Plan Council to provide input after each department presentation Service Level Reviews at April 28,

46 2009 Service Level Reviews What guides Council in determining the County s range of programs & service levels? Council approved bylaws, policies & plans Federal/provincial jurisdiction, legislation and regulations Community needs and wants balanced against legislative and financial responsibilities Service Level Reviews at April 28,

47 What do County residents say about our services? 79% rate our quality of life as high or very high, 3% rate it as low 95% would recommend Strathcona as a place to live 90% said the quality of services is the same or better than 2 years ago Data from Public Satisfaction 2008 Surveys Service Level Reviews at April 28,

48 Public Input into the Business Plan and Budget Council approval of timeline & process March advertising program newspaper advertisements posted information in County facilities on-line information newspaper articles/editorials Service Level Reviews at April 28,

49 Public Input into the Business Plan and Budget Input opportunities resident random sample telephone survey (400) questionnaires - pick-up or mail out (21) on-line questionnaire (25) open houses urban & rural (1) public input session (1) Service Level Reviews at April 28,

50 Public Input into the Business Plan and Budget Random Sample Survey Value for taxes VG-G Average P-VP Value for tax dollar 48.6% 37.7% 13.7% Service Level Reviews at April 28,

51 Public Input into the Business Plan and Budget Random Sample Survey Service options In Favour Neutral Against Maintain service levels 38% 30% 32% Increase service levels 31% 23% 46% Reduce service levels 27% 20% 53% Although the norm has seen support for maintaining service levels the tolerance of reduced service levels has never been higher. Service Level Reviews at April 28,

52 Public Input into the Business Plan and Budget Random Sample Survey Borrowing strategy Agree Neutral Disagree Funding by borrowing 70% 16% 14% Service Level Reviews at April 28,

53 Questions? Service Level Reviews at April 28,