HomeMy WebLinkAboutFCS Minutes - 2017-11-20 - 2018 Operating BudgetFINANCE &CORPORATE SERVICES COMMITTEEMINUTES
NOVEMBER 20, 2017 CITY OF KITCHENER
The Finance and Corporate Services Committee met this date commencing at 9:09 a.m.
Present: Councillor S. Davey - Chair
Mayor B. Vrbanovic and Councillors F. Etherington, Y. Fernandes, K. Galloway-
Sealock, J. Gazzola, B. Ioannidis, Z. Janecki, S. Marsh and D. Schnider.
Staff: D. Chapman, Chief Administrative Officer
M. May, Deputy CAO, Community Services
M. Goldrup, Interim Deputy CAO, Finance & Corporate Services
C. Fletcher, Interim Executive Director, Infrastructure Services
J. Readman, Interim Executive Director, Infrastructure Services
J. Miller, Executive Director, Office of the CAO
C. Bluhm, Executive Director Economic Development
R. Hagey, Director, Financial Planning
J. Evans, Director, Revenue/Deputy City Treasurer
H. Gross, Director, Engineering
K. Kugler, Director, Enterprise
D. McGoldrick, Director, Operations Environmental Services
G. St. Louis, Director, Utilities
K. Carmichael, Interim Director, Transportation Services
D. Fagerdahl, Manager, Financial Planning
P. McCormick, Manager, Parking Enterprise
T. Gaber, Manager, Operations (Utilities)
D. Persaud, Manager, Gas Supply Operations & Regulations
R. Hamilton, Senior Financial Analyst
J. Bunn, Manager, Council and Committee Services/Deputy City Clerk
D. Saunderson, Committee Administrator
1. FCS-17-188 - 2018 OPERATING BUDGET
The Committee considered Finance and Corporate Services Department report FCS-17-188,
dated October 16, 20178 Operating Budget proposing a tax levy
increase of 1.7%, together with nine Operating Budget Issue Papers.
Councillor J. Gazzola brought forward a motion to allow members of the Committee to
introduce motions related to the 2018 Operating Budget prior to Final Budget Day, which was
voted on and LOST on a recorded vote, with Councillors J. Gazzola, Y. Fernandes and Z.
Janecki voting in favour; and, Mayor B. Vrbanovic and Councillors B. Ioannidis, D. Schnider, S.
Davey, S. Marsh, K. Galloway-Sealock and F. Etherington voting in opposition. Councillor P.
Singh was absent and accordingly did not vote.
Councillor Y. Fernandes brought forward a motion to take recorded votes on all actions taken
by the Committee this date, which was voted and was Carried on a recorded vote, with Mayor
B. Vrbanovic and Councillors B. Ioannidis, S. Davey, S. Marsh, K. Galloway-Sealock, F.
Etherington, J. Gazzola, Y. Fernandes and Z. Janecki voting in favour; and, Councillor D.
Schnider voting in opposition. Councillor P. Singh was absent and accordingly did not vote.
GENERAL OVERVIEW
Mr. D. Chapman presented a general overview of the Operating Budget, advising staff are
proposing a tax rate increase that is at the rate of inflation, as well as a recommended
combined utility rate increase substantially lower than previously forecasted.
Mr. R. Hagey advised the 2018 Operating Budget highlights include: affordability and
sustainability; investing in infrastructure; and, creating community. It was noted the proposed
tax rate increase of 1.7% is at the rate of CPI inflation, and the proposed utility rate increase of
6.5% is the lowest sustainable option Council discussed as part of the Water Infrastructure
Program review in September 2017.
BOARDS
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1. FCS-17-188 - 2018 OPERATING BUDGET
Kitchener Public Library (KPL)
Ms. Mary Chevreau, Kitchener Public Library (KPL), was in attendance to respond to questions
from the Committee.
Centre in the Square (CITS)
Messrs. Bruce Gordon, Rob Sonoda and Ms. Deb Daub, Centre in the Square (CITS), were in
attendance and responded to questions from the Committee. Mr. Gordon advised the CITS
anticipates needing additional transition funding in the amount of $182,870 from the City in
2018 noting Issue Paper Op-1 (Continuing Transitional Funding for Centre In The Square)
outlines further an explanation of that request.
TAX SUPPORTED OPERATING BUDGET
Mr. Hagey advised in relation to the updated 2015-2018 strategic plan directive for competitive,
rational and affordable taxation levels, staff have taken the following into consideration when
setting the 2018 tax rates: comparison to other municipalities; inflationary factors, including
ability to pay.
Responding to questions, Mr. Hagey advised staff would email the Committee members the
average Consumer Price Index (CPI) and average Municipal Price Index (MPI) for the past 10
years. He further explained while growth and development contributes positively to the tax
supported operating budget, there are capital expenditures associated with growth, such as
building community centres, that cannot be fully funded by development charges.
In response to questions, Mr. M. Goldrup explained Bill 148, Fair Workplaces, Better Jobs Act,
2017, e legislation provides for a
three-stage implementation of the minimum wage increase from $14 per hour on January 1,
2018 to $15 on January 1, 2019, followed by annual increase at the rate of inflation.
Councillor S. Marsh requested staff provide information about the minimum wage impact for
Cambridge and Waterloo.
Councillor B. Ioannidis requested staff provide information about how the minimum wage
changes will impact contractors the City uses/hires to complete work.
Members had questions with respect to Issue Paper Op-02 (Increasing Support for Parks &
Trails, Neighbourhoods and Active Transportation). Responding to questions, Ms. D.
McGoldrick explained the Landscape Architect FTE position would be funded by existing park
& trail capital budgets and would not result in an increase in the 2018 Operating or Capital
Budget. Mr. K. Carmichael advised the creation of the Active Transportation Planning Project
Manager FTE would replace one temporary student position. He further explained funding for
the position would be provided through the Transportation Demand Management capital
account.
Responding to concerns, Mr. M. May indicated the creation of the Neighbourhood Liaison
Coordinator/Project Manager, identified in Issue Paper Op-02 (Increasing Support for Parks &
Trails, Neighbourhoods and Active Transportation), would assist in moving neighbourhood
explained funding for the position would be reallocated from lower priority areas within the
Community Services Department operating budget.
At the request of Councillor Y. Fernandes, staff agreed to prepare an issue paper utilizing a
part-time staff supplemented by co-op students for the Active Transportation position instead
of making this a full-time position.
Councillor S. Marsh requested staff estimate the amount of additional tax revenue the Region
will receive if the City fully recovers the costs of the two new assessment positions.
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1. FCS-17-188 - 2018 OPERATING BUDGET
Councillor S. Davey left the meeting at this time and Councillor D. Schnider became the Chair.
COMMUNITY GRANTS
Mr. Hagey advised as directed through a motion at a Council meeting on August 28, 2017,
there will be some changes to the appeal process for community grants this year. He
indicated this year a Committee of staff, made up of the CAO, DCAO for Community Services
and the Executive Director to the CAO will hear all Tier 1 and Tier 2 grant appeals and render
decisions on those appeals. He stated after the appeals Committee has made its decisions,
Council will approve the specific amounts for each individual Tier 1 group as part of Final
Budget Day. He further advised, Council will be requested to approve the specific amounts for
each individual Tier 2 grant recipients through a staff report in March 2018.
At the request of Councillor K. Galloway-Sealock, staff agreed to include consideration in the
issue paper related to the additional assessment growth for use in the Tier 2 Community Grant
budget.
ENTERPRISE OPERATING BUDGETS
Mr. Hagey gave an overview of the financial positions of the Cfour of
the seven enterprises are projected to have a positive stabilization reserve at the end of 2017.
He added three City enterprises are allowed to, and do, pay a dividend to the City, being Gas,
Golf and Parking, and those dividends are consistent with prior years.
Building
Mr. Hagey provided an overview of the Building enterprise, noting revenues for 2017 were
lower than anticipated. He indicated the Building Stabilization reserve fund remains healthy
and was the reason building permit fees were reduced by 5% for 2017 and are planned to be
held flat until 2021. He further advised Building is not allowed to pay a dividend to the City as
per legislation. Mr. M. Seiling was in attendance and responded to questions from the
Committee.
Councillor S. Davey re-entered the meeting at this time and resumed the Chair.
Golf
Mr. Hagey provided an overview of the Golf enterprise, noting financial results in 2017 are
lower than budgeted due to poor weather during the golf season. He indicated Golf does pay a
dividend to the City based on the Level Playing Field agreement with the Golf industry. He
indicated Golf is expected to remain in deficit through the forecast, and will begin making
progress at eliminating the deficit once a portion of the existing debt is paid off in 2020. Ms. K.
Kugler was in attendance and responded to questions from the Committee.
Parking
Mr. Hagey provided an overview of the Parking enterprise, indicating the enterprise is
projecting a positive result at the end of the year, stating monthly parking revenues have been
better than budgeted. He advised one area of concern is the Parking stabilization reserve,
noting it is currently in a surplus position but is forecasted to decrease each year after 2019
and into the foreseeable future as the cost of Cycling and/or Transportation Demand
Management (TDM) programs are returned and permanently funded from the Parking
Enterprise. Mr. P. McCormick was in attendance and responded to questions from the
Committee.
Gas Works Utility
Mr. Hagey advised Gas Delivery is performing worse than expected in 2017, as revenues were
unfavourably impacted by warmer than normal weather and increased expenses associated
with the T3 Union contract. He indicated although net revenue is still expected for 2017, the
Gas stabilization reserve fund is lower than its minimum bench mark, and is continually
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1. FCS-17-188 - 2018 OPERATING BUDGET
improving and will bring the reserve out of its deficit. He stated Gas Delivery does pay a
dividend to the City, which is the maximum allowed under the rate model set by the Ontario
Energy Board (OEB). He further advised Council has already approved Gas rates, and these
rates are reflected in all of the Gas budget figures. Mr. Hagey indicated for 2018, Gas Delivery
is expecting a net revenue of nearly $1.1M which will help move the reserve balance to be
close to its minimum target, stating for future years of the forecast see modest improvements
to the reserve. Messrs. G. St. Louis and D. Persaud were in attendance and responded to
questions from the Committee.
Mr. Hagey provided an overview on Gas Supply and Transportation which are flow-through
rates to customers, and are not meant to generate a profit for the City and cannot be used to
pay a dividend to the tax base. He indicated as part of setting gas rates, Council approved
combining both of these gas lines into Gas Supply.
Mr. Hagey finalized the Gas Works Utility advising the Ontario Cap and Trade program, which
is provincially legislated, which started January 1, 2017. He indicated Council has approved a
Cap and Trade rate of just over 3.8 cents for 2018.
The Committee recessed at 1:21 p.m. and reconvened at 2:18 p.m., Chaired by Councillor S. Davey
with all members present except for Councillor P. Singh.
Water, Sanitary and Stormwater Utilities
Mr. Hagey advised that water, sanitary and stormwater budgets are linked together during the
budget and as to similar process reviews including the Water Infrastructure Program (WIP)
from this past fall. He stated nearly half of the combined utility bill is used to pay the Region for
their treatment of water and sewage. He indicated investments in capital make up nearly 1/3 of
the costs, followed by 13% for maintenance programs, and less than 10% for everything else.
He commented during the WIP review, presented to Council through Infrastructure Services
Department report INS-17-070, Council was provided with three viable scenarios for capital
replacement. He advised all of the options had different costs, accomplishment targets, and
levels of risk, noting Council endorse the staff recommendation to fund this gap over a 5-year
phase-in. Mr. Hagey further advised the 2018 utility budgets have been prepared to meet
Water Utility
Mr. Hagey provided an overview of the Water Utility advising the results in 2017 are better than
budgeted due to one-time revenue recoveries from the Region, and lower than normal
watermain break repairs. He indicated the net revenues help to move the stabilization reserve
to the positive where it remains throughout the forecast. Mr. Hagey noted there are three Issue
Papers related to the Water Utility; Issue Paper Op-06 (Protecting the Water System from
Cross Contamination), Issue Paper Op-07 (Locating Underground Infrastructure), and Issue
Paper Op-08 (Reducing the Backlog of Maintenance of the Watermain Distribution System)
outlining additional maintenance funding for 2018.
Sanitary Utility
Mr. Hagey presented the Sanitary Utility, indicating results in 2017 are worse than budgeted
due to a very wet year. He commented the wet weather leads to significant inflow/infiltration to
the sanitary system, meaning we are sending sewage flows to the Region that we are not
billing our customers, since the water coming into the system is unmetered. He further
advised this causes the stabilization reserve to be negative in 2017, but will improve through
future budget years.
Stormwater Utility
Mr. Hagey advised for the Stormwater Utility results in 2017 are worse than budgeted due to
high maintenance costs. He indicated this causes the stabilization reserve to remain negative
in 2017 instead of becoming positive as originally budgeted. He noted there is one Issue Paper
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1. FCS-17-188 - 2018 OPERATING BUDGET
Op-09 (Increasing Stormwater Maintenance Program) that outlines how the additional
maintenance funding for 2018 will be used for Stormwater. Ms. D. McGoldrick and Mr. T.
Gaber were in attendance and responded to questions from the Committee.
RESOLUTION
Mr. Hagey advised that Capital Budget deliberations are scheduled to take place on November
27, 2017, adding a public budget consultation session will be held on January 15, 2018. He
noted Final Budget Day has been scheduled for January 22, 2018.
The Committee then undertook a review of the action items arising from this meeting.
It was suggested and agreed that the Issue Paper outlining options for the additional
Assessment Growth would also include consideration for the Kitchener Public Library, tree
canopy and maintenance, and for the Tax Stabilization Reserve Fund (TSRF).
The following motion was voted on and was Carried on a recorded vote, with Mayor B.
Vrbanovic and Councillors B. Ioannidis, D. Schnider, Z. Janecki, S. Davey, S. Marsh, K.
Galloway-Sealock, Y. Fernandes and F. Etherington voting in favour; and, Councillor J.
Gazzola voting in opposition. Councillor P. Singh was absent and accordingly did not vote.
On motion by Councillor B. Ioannidis -
it was resolved:
staff be directed to report and/or take appropriate action on the following matters
arising from the November 20, 2017 Special Finance and Corporate Services
Committee meeting relative to the 2018 Operating Budget, as outlined in the chart
below:
Division/Area Topic Action
Municipal Price
Provide Municipal Price Index and
Index and
Consumer Price Index information for the
Consumer Price
last 10 years.
FINANCIAL Index
PLANNING
Impacts on the
Provide more information on the Change
Tax Levy related
in Net Tax Levy related to increases in
to salary and
salary and wages.
wages
Minimum Wage Provide information about the minimum
Increase wage impact for Cambridge and Waterloo.
HUMAN
Minimum wage
Provide information about how the
RESOURCES
increase and use
minimum wage changes will impact
of outside
contractors we use/hire to do work.
contractors
Prepare issue paper to provide
recommendation regarding allocation of
the additional assessment growth.
Additional Options could include: Tier 2 Grants;
GENERAL
Assessment Active Transportation project
REVENUE
Growth manager/student; WSIB; KPL for wage
impacts related to minimum wage
increase; Tax stabilization reserve fund;
and, Tree canopy and maintenance.
Active Prepare Issue paper utilizing a part-time
TRANSPORTATION Transportation staff supplemented by co-op students for
SERVICES Full-Time the active Transportation position instead
Equivalent (FTE) of making this a full-time position.
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Tax revenue Estimate the amount of additional tax
related to new revenue the Region will receive if the City
REVENUE
assessment fully recovers the costs of the two new
positions assessment positions.
2. ADJOURNMENT
On motion, this meeting adjourned at 3:09 p.m.
J. Bunn D. Saunderson
Manager, Council and Committee Committee Administrator
Services/Deputy City Clerk