2010 Final Budget Report
COUNCIL REPORT No. CFS10-001 SUBJECT: 2010 Operating and Capital Budgets
FROM: Dan Elliott, Director of Corporate & Financial Services DATE: January 26, 2010 RECOMMENDATIONS a) THAT the 2010 Operating Budget summarized in Attachment #1 with a recommended 2.82% tax rate increase, a total tax levy of $27,405,100, and a
total expenditure plan of $42,617,700 be approved; and,
b) THAT the 2010 Capital Budget for Repair and Replacement of existing
infrastructure totalling $11,461,756 as detailed in Attachment #2 be approved; and, c) THAT the 2010 Capital Budget for New Capital and Significant Studies totalling
$3,954,387 as detailed in Attachment #3 be approved; and,
d) THAT the Town’s full-time staff complement be increased by 12 to 191
(excluding Library Board and York Central Fire staff) as presented in Attachment #5 and funded in the 2010 Operating Budget. PURPOSE OF THE REPORT
To present for formal adoption the 2010 Operating and Capital Budgets as approved by the Budget Committee. BACKGROUND
Budget preparation for 2010 was initiated with Report FS09-032 as approved by Council on July 21, 2009. The 2010 budget directives were to:
• Maintain existing services levels;
• Identify efficiencies and savings available;
• Capital and Operating budgets will manage the Town’s active and passive
capital infrastructure in a prudent manner, with the goal to efficiently maintain
their levels of serviceability for both the long and the short term;
• Minimize the impact of inflation, growth, and legislative changes;
• Enhance the resiliency and capacity of the organization to respond to future
challenges and change. Proposed 2010 Operating Budget and Capital Budgets have been reviewed in detail by the Budget Committee of Council. The operating budget is presented in three sections: Base Budget, Previous Commitments
& Actions, and New Items.
TOWN OF AURORA
January 26, 2010 - 2 - Report No. CFS10-001
• The Base Budget reflects existing 2009 service levels and staff levels as approved in 2009. This section also includes all costs and revenues related to growth, including the additional tax revenue arising from assessment base growth.
• Previous Commitments & Actions are items affecting the 2010 budget which have previously been approved by Council for implementation in 2010, or are annualizations of such items from 2009 budget. These reflect changes in policy,
practice, or level of service, and include some reversals or reinstatements of prior
year budget adjustments.
• New Items reflect any changes to service levels, all new staff requests, or any other
new initiatives.
On October 26th, 2009, staff presented to Budget Committee an overview of the first draft of the Town’s Business Plans and the Operating and Capital budgets. At that time, the draft budget had a total deficit of $1,314,100, which if the entire deficit was to be funded through
increased taxation, would equate to a tax rate increase of 4.95%. Throughout the months of November and December, the Budget Committee deliberated the budget and made a number of changes. Those changes are outlined on Attachment #5 and reduced the funding deficit to $752,300, with a tax rate increase of 2.82%.
The Budget Committee Approved 2010 Operating and Capital Budgets are summarized in Attachments #1, #2, #3 and, #4. The Operating Budget
Town share of the tax bill to increase by 2.82% To achieve a tax rate increase of 2.82% staff and Committee managed the costs of providing existing levels of services or service enhancements which would apply pressure to increase the tax rate. The 2.82% tax rate increase, or $752,300 deficit, is broken down
into the following elements: Tax Rate Tax Rate Increase Breakdown Amount Pressure
Base Services $161,400 0.61%
Previous Commitments & Actions 639,600 2.40% New Items and Projects 690,800 2.59% Tax Rate Impact before Growth 1,491,800 5.60%
New Tax Revenue from Growth (739,500) 2.77%
Net Tax Rate Increase $752,300 2.82%
January 26, 2010 - 3 - Report No. CFS10-001 A graphical presentation of the Tax Rate Increases is set out in Attachment #6.
Overview The 2010 Operating Budget provides an increase in total expenditures of $1,832,100 or 4.49%, from $40,785,600 in 2009 to $42,617,700 in 2010. Total expenditures include $20,541,569 or 42.4% for direct personnel related costs.
The Operating Budget includes an increase in non-taxation revenues of $340,200 or 2.29%
from $14,872,400 in 2009 to $15,212,600 in 2010. Total non-taxation revenues include
among other items $8,441,345 in user fees, fines & charges, $1,608,584 transferred in from reserves, $1,840,400 of investment income, and $1,465,000 of federal gas tax transfers. Taxation revenue has been budgeted to increase by $1,491,800. The increase is comprised of two components: assessment growth and tax rate increase. Assessment growth is the result of an increasing number of assessable properties and structures within Town. Aurora’s assessment base growth resulted in a 2.85% increase in revenue, or
$739,500 of additional taxation revenue. The balance of the increase in taxation revenue will be generated by the 2.82% tax rate increase on all properties.
Base Services Budget meets needs of a growing community and inflation The base is impacted by staffing costs, economic factors, inflation, growth of volume of services and activity, and new or increased fees and other revenues. The Base Budget is not off-set by any additional tax levy which arises from the growth of the community’s
assessment base from development, however cost reductions, curtailments and efficiencies
captured have reduced the pressure.
Base budget operational costs related to all existing full time staff increased by $338,630
for cost of living adjustments and increases in corporate benefit coverages. Costs related to any new staff are not included in this Base Services budget. All approved positions are budgeted for the full year. However, due to naturally occurring turnover, some vacancies will arise during the year. For the first time, Aurora has included a provision of $275,000 to
reduce the overall staffing costs to reflect this reality. This particular issue has been a large
part of past year’s operating surpluses, which will now be avoided. In addition, each department reviewed all direct costs of services and programs for efficiency and effectiveness as well as the impacts expected from normal inflationary and
market pressures. Each department also needed to provide for additional costs to provide
services to the growing community, such as additional waste and recycling costs, and additional recreational services demands. Inflationary and Growth pressures are experienced by every department. While the Town’s share of the costs of fire and emergency services provided by Central York Fire Service increased 2.95%, the $181,000 increase to our largest direct cost represents a 0.7% tax rate pressure.
Contributions from the tax levy to the capital program, or "cash for capital", remains unchanged from 2009 in the Base Budget at $2.695 million. A recommended increase to
this amount for 2010 is noted in the “New Items” section of the budget.
Operational funding support for the Aurora Public Library has been increased by 5.52% or
January 26, 2010 - 4 - Report No. CFS10-001 $150,000 to a total of $2,719,500 to reflect the increasing usage and service demands of the community at our library. The cost of planning and running the 2010 municipal election is estimated at $217,500, and is neutral to the operating budget due to funding from the Election Reserve. The Election
Reserve receives contributions from the Operating Fund over past years, in an effort to smooth the financial impact of election costs to the budgets during the full term of Council. Supplementary taxation revenues are revenues billed mid-year for new properties or structures not previously assessed. The approach to estimating and budgeting this revenue
was reviewed, resulting in the base budget provision for supplementary tax revenue being increased by $75,000. After reviewing the costs of all existing programs, services and revenues, the net base services budget of the corporation increased by only $161,400 which results in a tax rate
pressure of 0.61%. This value is essentially representative of the additional costs to service the growth of the community and the cost of overall inflation for the town’s operations, net of cost savings, efficiencies and increased non-tax revenues. Previous Commitments & Actions have operational impacts for 2010
The Previous Commitments & Actions element of the budget represents new costs or pressures for 2010 which arise from legislative changes, or from actions or commitments of Council from prior years. The total net impact to the Operating Budget of these changes is $639,600, representing a 2.4% tax rate pressure. The following outlines the key items of the budget in this group:
• Additional $118,000 operating costs for full year of operation contract for Church Street School Cultural Centre.
• Additional $361,000 for implementation of a new organizational structure, including the addition of four new managerial staff to improve the operational effectiveness of the Town. Additional operational efficiencies and improvements are expected to be implemented for savings in future year budgets.
• $65,000 with an additional $35,000 from reserves is allocated for compliance initiatives and a staff resource to meet the strict requirements of the emerging Accessibility for Ontarian’s with Disabilities Act (AODA).
• A contingency provision of $50,000 has been reinstated to provide Council with the
financial resources to respond to in-year issues of either a community or operational
nature, or any other matter which Council directs. New Services, Programs & Enhancements provide increased levels of services to the community from 2009
The New Items section of the budget represents new initiatives or new items recommended
by Committee for 2010. $690,800 of additional operating funding has been recommended in this section, representing a 2.59% tax rate pressure before growth revenues. Noteworthy items include the following: New staffing needs: Eight new full time complement additions or conversions to full time
are recommended. Other positions were requested, but not recommended for funding.
January 26, 2010 - 5 - Report No. CFS10-001 Attachment #7 New Positions Listing outlines all recommended positions and the fiscal impacts of each. Net of some Building Fee funding, the cost of these recommended positions is $303,352 imposing a tax rate pressure equivalent of 1.14%. HST: Staff estimated the impact of the HST to be approximately $50,000 in operational
savings in the first part year of operation. However, an increased cost of $180,000 is estimated for our combined planned capital investment program for 2010. Contributions to Capital: In 2009, the operating budget funded capital projects in the amount of $2,694,000. For 2010, an increase in this contribution of $156,000 plus the HST
impact of $180,000 is reflected in the budget, and the full amount of $3,030,000 is noted as a “cash for capital” allocation without links to any specific projects. Additional funding has been requested to increase the capacity of the Parks Division to maintain shrub beds more regularly throughout the Town. An amount of $120,000 has
been endorsed for this purpose, making up for the additional maintenance work required due to the prohibition of the use of herbicides and pesticides. Committee also recommends introduction of an Employee Assistance Program at a first year estimate of $25,000. With the many stresses which face our community today, staff
require additional confidential support systems, frequently provided through employee assistance programs or an “EAP”. Growth in the Assessment Base yields additional tax revenue to mitigate budget During the course of 2009, new construction and other development activities have resulted
in new assessment being added to the community. This new growth represents an estimated 2.85% growth in tax revenues to the Town for 2010. (This growth amount does not stem from the phase-in of reassessment adjustments for individual properties.) A total of $739,500 of new tax revenue is estimated to be available to fund the Operating Fund. This additional growth revenue reduces the combined tax pressure of the foregoing budget
changes by 2.77% from 5.6% down to 2.82%.
Overall, the Committee recommended 2010 Operating Budget presents a proposed operational services bundle which requires an additional $752,300 to be raised from the tax levy. This represents a 2.82% tax rate increase to fund new and existing services and
initiatives.
Capital Budgets
For 2010, the capital budget has been segregated into two parts for more focussed
examination due to the conceptual differences in funding sources:
- Repair and Replacement Infrastructure Capital - Growth and Other Infrastructure Capital and Major Planning Studies
$11,461,756 recommended for investment in existing infrastructure The proposed Repair and Replacement Capital Budget for 2010 represents a gross cost of
January 26, 2010 - 6 - Report No. CFS10-001 $11.5 million, funded with $2.3 million from grants, with the balance coming from capital reserves or the “cash for capital” contribution from the Operating Budget. The program includes restoration work to roads, water lines, sewer lines, storm water management systems, pavement and hardscaping, carpeting at the library, some fleet vehicles and some replacement equipment. Attachment #2 outlines the recommended Repair and
Replacement Capital program by project. Investment in new capital infrastructure or major studies proposed at $3,954,387 The proposed New Capital and Significant Studies Budget represents a gross cost of $3.95 million, funded mainly with development charges of $3.6 million. The balance of the
program is proposed to be financed $207,000 from outside sources including grants, with the remaining $1,037,150 to be funded from various other town reserves, including the levy “cash for capital” contribution to Municipal Capital. This capital program includes the annual debt repayment for the ARC complex. Other significant projects include:
• A study to evaluate the service needs for pedestrian and cycling routes along
Bloomington Road from Bathurst Street to Bayview Avenue
• funding for the Official Plan review and the 2C Secondary Plan study
• initial work on the trails master plan Attachment #3 outlines the recommended New Capital and Significant Studies program for 2010. Attachment #4 presents the combined capital program by category.
Water and Waste Water Budget yet to be prepared Due to time constraints anticipated in preparation for early adoption of the Operating Budget, the Water and Wastewater budget has not yet been completed by staff. Once final wholesale costs have been approved by the Region of York, staff will finalize the budget for presentation to Council in the first quarter of 2010.
Taxpayer Impacts The 2010 Draft Operating Budget proposes a 2.82% tax rate increase on the Town portion only of the tax billing, which translates into an extra 8 cents per day, or about $31.00 per year for a home assessed at $300,000 (for the 2009 taxation year). For reference,
Attachment #8 outlines graphically the Aurora tax rate changes since 1991. The Region and School tax rates for 2010 have yet to be finalized, however both are speculated to remain at 0% for a variety of reasons. Should this occur, the combined impact to the total tax bill would then be only 0.92% tax increase, with the same 8 cents per
day or $31.00 per year increase. Budget Binder of details to be reissued this week Staff are in the process of updating the entire budget binder of details which was previously circulated to members of Budget Committee at the beginning of budget deliberations. The
update will reflect all changes and will be circulated to all existing binders. Copies of the Budget Detail Binder will be available for inspection by the public at the Clerk’s Counter on the Second Floor, the Info Aurora Counter on the Ground Floor of Town Hall, and at the Aurora Public Library.
January 26, 2010 - 7 - Report No. CFS10-001 The Town’s website will be shortly updated to reflect the budget highlights. Given the size, the full Budget Binder will not be posted on the website. CONCLUSIONS The 2010 Operating Budget provides for a Municipal Tax Levy of $27,405,100, which
reflects a tax rate increase of 2.82%. ATTACHMENTS Attachment #1 – 2010 Operating Budget – Summary by Department
Attachment #2 – Repair and Replacement Capital Budget
Attachment #3 – New Capital and Significant Studies Budget Attachment #4 – Combined Capital Budget Allocation by category Attachment #5 – Budget Committee Adjustments to CAO’s October 26th Draft Budget Attachment #6 – Tax Rate Increase Outline
Attachment #7 – New Positions Listing Attachment #8 – History of Aurora Tax Rate Increases
_________________________________ _________________________________ Dan Elliott, C.A. Neil Garbe
Director of Corporate & Financial Chief Administrative Officer
Services