2015 Budget Report

REPORT ON TINY TOWNSHIP 2015 BUDGET

Jan. 19, 2015
First Budget Meeting: 9:00 a.m. – 12:09 p.m. & 1:00 p.m. – 4:23 p.m.
Feb. 2, 2015
Second Budget Meeting: 9:00 a.m. – 12:18 p.m. & 1:00 p.m. – 4:44 p.m.
Feb. 17, 2015
Third Budget Meeting: 9:00 a.m. – 10:55 a.m.
All Members of Council Present at All Three Meetings: Mayor George Cornell, Deputy Mayor Steffen Walma, and Councillors Cindy Hastings, Richard Hinton, and Gibb Wishart
Full Complement of Senior Staff Present at All Three Meetings

Note that all references to 2014 budget figures are actual but unaudited

FIRST MEETING:
Council reviewed the operating budget prepared by staff. Staff proposed a tax rate increase of 4.53%. The meeting was well chaired by Mayor Cornell who encouraged all members to ask questions. Mr. J. Smith, manager of the Huronia Airport, made a presentation concerning the cost of runway repairs and options for dealing with them.

SECOND MEETING:
Council reviewed the capital budget.
As a result of its review of the operating budget at the first meeting, the total net budget was increased by $35,994.00 bringing the proposed tax rate increase to 4.94%.

THIRD MEETING:
As a result of decisions taken by Council during the second meeting, the operating budget was reduced by $59,000 and the capital by $33,000. Consequently at the beginning of this third meeting, the draft tax rate increase had been reduced to 3.89%.
This third meeting was focused on reducing the tax rate increase to 2% by considering recommendations brought forward by staff to reduce the operating budget by $125,000 (by cuts to the roads and fire departments) and the capital budget by $83,000.
At the end of the meeting, Council had succeeded in reducing the budget by close to $165,000 bringing the tax rate increase to 2%.

ITEMS OF NOTE REGARDING THE 2015 BUDGET:

1) Several presentations which were intended to help Council make budget decisions were made during the February 9 Committee of the Whole Meeting, regarding:
Hall’s Creek Bank Restoration,
Parking Strategy, and
Municipal Office Feasibility Study.

2) The final budget was presented to the public and adopted on March 23, 2015.

3) The following points might be made:

• Policing (Account 201)
The OPP announced in 2013 that it would be sharply increasing the cost of service to municipalities such as Tiny, but that the increase (now estimated at about $1.1 million) would be phased in 40%-40%–20% from 2015 to 2017. For many years, however, councils have over-budgeted for this cost, and the OPP has refunded the overpayment to the township in the following year, once its actual costs were known. In 2011 Council set up a Policing Reserve to hold these refunds, which has now accumulated to almost $800,000.
The first 40% of the three-year phase-in would add about $300,000 to the budget this year. However, the 2015 Budget only includes an increase of about $125,000 over last year’s Budget for OPP costs. This is not because Council is drawing on the Police Reserve, which is only planned to fall by $25,000.

Note too that the Council’s new Policing Committee will be funded from the Policing Reserve.

• Septage (Account 956 – environment / capital)
In 2014, the last Council decided to put on hold the ongoing EA while waiting to see if a partnership with other municipalities would be feasible. Therefore $297,778 was not spent and was put on hold. By resolution 061/15 Council directed “that R.J Burnside and Associates Ltd. proceed to prepare a ‘scope of work’ for the Septage Management Class EA to revisit Phase 2 and conduct further work on Alternative #3 and further that all associated works are to be included in the 2015 budget.” The previously unused money was used for this task.

• Parking strategy.
Nothing has been budgeted for the implementation of the study undertaken by the previous Council regarding the ability of roads west of County Road 6 to accommodate both parking and emergency vehicles, especially fire trucks. The cost of additional No Parking signage for any of the 80 problematic roads will have to come out of the capital reserve for roads.

• Impact of corporate insurance increase.
The Township is facing significant pressure regarding insurance costs. Consequently the cost of liability insurance in the budget increases by 13.33 %, from $510,000 plus tax in 2014 (actual) to $578,000 plus tax in 2015 (actual).

• Salaries.
The general wage increase is shown as 2.0% ($98,800). However, if vacation pay, benefits, WSIB and overtime are taken into account, the actual wages for 2015 are $5,040,600 compared with the 2014 budget figure of $4,756,100 (an increase of 5.9%).

• Reserves.

Budgeted Transfers:

The Dec 2014 Financial Indicator Review indicates that the Township Total Reserves and Discretionary Reserve Funds as a % of Operating Expenses were at 50.4 % placing the Township as having a low level of challenge (the lower level of challenge, the better is the ability to face future needs / contigencies).

The water reserve is to increase from $3,177,817 to a projected $3,696,112. Although the water reserve is only to be used for Tiny residents connected to, and paying for, a municipal water system, this reserve is also used as a measure of the Township’s financial responsibility.

It should be noted that the budget plans a decrease in total reserves
from $9,326,941 at the end of 2014 to a projected $8,382,365 at the end of 2015.

Also, the 2015 Reserves report has been simplified from 2014 report,
which included the previous year transfer details.

Documentation:
Minutes of the 3 Budget Meetings.
Budget Drafts for All Three Meetings.
Final 2015 Budget.