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HomeMy WebLinkAboutFIN-21-001 - 2021 Final BudgetFINAL - 1 FINAL - 2 FINAL - 3 FINAL - 4 o FINAL - 5 FINAL - 6 FINAL - 7 FINAL - 8 9 - FINAL 10 - FINAL 11 - FINAL 12 - FINAL 13 - FINAL 14 - FINAL 15 - FINAL 16 - FINAL 17 - FINAL 18 - FINAL 19 - FINAL 20 - FINAL 21 - FINAL 22 - FINAL 23 - FINAL 24 - FINAL 25 - FINAL 26 - FINAL 27 - FINAL 28 - FINAL 29 - FINAL 30 - FINAL 31 - FINAL 32 - FINAL 33 - FINAL 34 - FINAL 35 - FINAL 36 - FINAL 37 - FINAL 38 - FINAL CITY OF KITCHENER 2021 BUDGET ISSUE PAPER ISSUE: BD01 –Increased Gas Meter Replacement FUND: Capital DEPARTMENT:Infrastructure Services – Utilities Gas & Water PREPARER:Greg St. Louis, Director Utilities, Gas & Water BUDGET IMPACT:$1,000,000 from Gas Capital Reserve BACKGROUND: A gas utilities’ use and management of an inventory of gas meters; small and largeis administered and enforced by Measurement Canada through thestatutes that regulate trade measurement, specifically the Electricity and Gas Inspection ActandRegulations. The utility could be subject to fines of $1.00/day for each meter not in compliance. The readings taken at the meters are used to bill customers. The accuracy of natural gas meters must be verified in accordance with the time periods and stipulations set out in the Regulations. As gas meters age they naturally slow down. The error is always in the favour of the customer, so it is in the best interest of utility to replace meter assets in a timely fashion. A small residential meter, when first installed is typically valid for 10 years before the utility can apply to extend its life, as Measurement Canada has stipulated the “seal” period for small meters. Once a meter has been sealed or re-sealed, it has a predetermined period of time to be in service before it must be tested, re-furbished or retired from service, as circumstances dictate. In order to get a meter’s seal life extended, a representative sample of meters must be removed from the populationand sent to an independent lab for testing.If the sample’s accuracy is within tolerance, then the meters within that group can be extended. The advantages of testing meters is that the City can increase the life of a meter from 10 years to 20 years, reducing interruptions to homeowners and saving on replacement costs. The disadvantage of this process is the outcome of the testing process is not known resulting in significant fluctuation of replacement spend annually. RATIONALE / ANALYSIS: The City of Kitchener has approximately 74,500 meters in Kitchener’s distribution system that are administered under the Act mentioned above. Residential small meters represent the largest proportion of the distribution system at 93%. The number of small meters that require replacement fluctuates each year based on their age and type/size of gas meter. In 2019-2020 there was a large quantity of small meters (approximately 15,000) in the distribution system that were due for testing. These meters were identified by the independent lab as requiring replacement because the accuracy did not meet the standards as set out in the Electricity and Gas Inspection Act and Regulations and are in the process of being replaced, but more funding is required to complete the work. FINANCIAL IMPLICATIONS: The annual Gas Meter budget is based on the projection that the majority of small meters samples will pass and therefore,have their life extended. The table below shows the variability in small meter spending over the past five years. 20162017201820192020 Small Meter Spend$2,716,337$2,635,615$1,287,980$1,449,379$2,794,332 FINAL - 39 CITY OF KITCHENER 2021 BUDGET ISSUE PAPER Large meter replacements are based on a fixed dollar amount per year. This approach minimizes collecting funds for replacing all small meters and not using the funds if the sample passes. However, this process requires funding from the Capital Reserve if a large sample of small meters do not get their seal life extended. Based upon the number of gas meter replacements, the 2021 capital budget funding needs to be increased by $1,000,000. RECOMMENDATION: That $1,000,000 be transferred from the Gas Capital Reserve to the Gas Meter Installation capital budget in 2021. FINAL - 40 41 - FINAL 42 - FINAL 43 - FINAL 44 - FINAL CITY OF KITCHENER 2021 BUDGET ISSUE PAPER ISSUE: BD02 -IncreasedFunding for Small Scale Traffic Calming FUND: Capital DEPARTMENT:Development Services Department – Transportation Services & Infrastructure Services Department – Roads and Traffic Operations PREPARER:Barry Cronkite, Director of Transportation Services BUDGET ASK: None BACKGROUND: During the 2021 Operating Budget review session, staff was directed toinvestigate the impacts of increasing the Small Scale TrafficCalming budget by 15%, 25%, and 50%respectively. RATIONALE / ANALYSIS: In 2017, Transportation Services launched a seasonal traffic calming program that included the installation of approximately 40 flexible delineators and 5 speed advisory signs. These have been met with wide acceptancefrom the community and has resulted in many requests. In 2018, an increase in the capital budget for seasonal traffic calming facilitated the purchase of an additional 40 flexible delineators, inclusive of installation and removal. In total, the seasonal traffic calming program currently consists of 8 flexible delineators per ward that can then be used to address 4-8 roadways and 5 speed advisory signs that are deployed throughout the City on a rotational basis, covering an approximate 50 locations per year. Based on Council’s direction as part of the 2020 budget process, Transportation Services had intended to increase the number of flexible delineators to 112 (10 per ward and an additional 12 locations that would be determined as necessary by staff) in 2020. The pandemic required that staff install historical locations due to material and staffing challenges. In 2021 there will be a total increasein flexible delineators of 40% over what was installed in 2020 based on Council’s prior direction Staff does not recommend the installation of more than the proposed flexible delineators at this time. Their current effectiveness may be diminished if too many delineators are installed and the public simply views these delineators as “sign pollution”. In addition, there will already be a 40% increase over what was installed in the community in 2019 and 2020. FINANCIAL IMPLICATIONS: Any option that increases funding to small scale traffic calming would need to be funded from the Capital Pool. This would require a reduction to another project in order to keep the Capital Pool funding the same, or an additional reserve transfer to increase the funding to the Capital Pool. OPTION 1: No change to existing funding proposed – No change to the existing funding for seasonal traffic calming will result in an increase to 112 flexible delineators; a 40% overall increase in the number of flexible delineators that were installed in 2020. The purchase and installation/removal of each additional flexible delineator beyond the current proposed program is approximately $600; $250 per delineator and $350 for install/removals. Additionally, each additional flexible delineator has an ongoing operational cost of $350 beyond 2021. FINAL - 45 CITY OF KITCHENER 2021 BUDGET ISSUE PAPER OPTION 2: Increase the existing seasonal traffic calming budget in 2021 by 15%($9,000) Increasing the existing budget would allow for approximately 15 additional flexible delineators to be purchased and installed over and above the proposed workplan. It would also result in operating costs of approximately $5,250 annually thereafter. OPTION 3: Increase the existing seasonal traffic calming budget in 2021 by 25% ($15,000) Increasing the existing budget would allow for approximately 25 additional flexible delineators to be purchased and installed over and above the proposed workplan. It would also result in operating costs of approximately $8,750 annually thereafter. OPTION 4: Increase the existing seasonal traffic calming budget in 2021 by 50% ($30,000) Increasing the existing budget would allow for approximately 50 additional flexible delineators to be purchased and installed over and above the proposed workplan. It would also result in operating costs of approximately $17,500 annually thereafter. RECOMMENDATION: Staff recommend no change to the funding as initially proposed, as it represents a 40% increase over and above the flexible delineatorsthat were installed in 2020. FINAL - 46 CITY OF KITCHENER 2021 BUDGET ISSUE PAPER ISSUE: BD03 –Additional Funding for Community Trails FUND: Capital DEPARTMENT:Infrastructure Services – Parks and Cemeteries PREPARER:Niall Lobley, Director of Parks and Cemeteries BUDGET IMPACT:$440K – $2.2M over the 10-year Capital forecast BACKGROUND: During the Capital Budget session staff were directed to develop an issue paper that proposed additional investment levels for Council to consider adding to the Community Trails General Provision. RATIONALE / ANALYSIS: The Community Trails General provision supports the development of trails within the City of Kitchener. Three principal project types are funded by the Community Trails General Provision: 1.Repair and replacement of pedestrian bridges The City owns and maintains 65 pedestrian bridges servingour trails network. Investment, repair and replacement is largely reactionary and driven by the findings of the OSIM (Ontario Structure Inspection Manual) Bridge Inspections undertaken on a biannual basis. 2.Development of new trails New trails are informed by the Cycling and Trails Master Plan and largely focuses on developing alternative routes or infilling gaps within the trails network. 3.Upgrade of existing walkways and trails The focus of this work is on upgrading existing granular trails and walkways to asphalt trails and is directed by the Cycling and Trails Master Plan Funding for trails is also supported by individual Capital Budget requests (such as for the recent upgrades to the Iron Horse Trail) and by grant funding ($2M of improvements to the Walter Bean Trail are supported by DMAF, $650,000 of Federal Gas Tax money has recently been allocated toward bridge replacements, and Council endorsed an application for $1.55M of COVID Resilience funding to support trail and bridge projects). A project list stemming from priorities within the Cycling and Trails Master Plan has been developed, and funding allocated from the Community Trails General provision toward completing this work. Between 2022 and 2030, approximately 9.2km of trail upgrades are planned and approximately 2.5km of new trail is planned. Four bridges are currently being replaced (in Vanier Park, in Victoria Park, at Rothsay Avenue, and Lynn Valley) and an additional five are tentatively scheduled for replacement between 2022 and 2030. The Cycling and Trails Master Plan provides a construction estimate of $450 per meter for trails. The nature of construction, landscape and works required alongside trail construction (such as grading, drainage etc.) all have an impact on trail costs, so in some cases this will be a generous allowance, in others, it may be under-reflective of true costs, but broadly speaking, this provides a reasonable number on which budget estimates can be proposed. FINAL - 47 CITY OF KITCHENER 2021 BUDGET ISSUE PAPER Three options for consideration are outlined below under financial implications and include the approximate percentage increase in trail delivery, the additional meters of trail deliveredand the impact over the years of the capital forecast. In all scenarios, staff will rely on direction provided within the Cycling and Trails Master Plan to inform projects. Option 1 will allow staff to complete all identified short-term trail work in the Cycling and Trails Master Plan by 2030. Option 2 will deliver all short-term trail work by approximately 2028 and Option 3 by approximately 2025. Trails development work relies on a single, contract staff person. Through the 2021 budget process, it is proposed that this position be approved on a permanent basis to support this work requested (see Issue Paper OP 03 in the Operating budget package). Without this position, trail work will cease. Dueto a significant body of bridge replacement work, deferred capital work from 2020, 2021 approved capital projects and the recent support for trails work funded through the stimulus funding, there is no capacity to undertake additional work in 2021. FINANCIAL IMPLICATIONS: The additional increase to the Community Trails General provision for each option is outlined below.It should be noted that any option that increases funding to trail upgradeswould need to be funded from the Capital Pool. This would require a reduction to another project in order to keep the Capital Pool funding the same, or an additional reserve transfer to increase the funding to the Capital Pool. Additional transfers to the Capital Pool could increase the likelihood of higher tax rate increases in future years. RECOMMENDATION: For information FINAL - 48 CITY OF KITCHENER 2021 BUDGET ISSUE PAPER ISSUE: BD04 –Using Reserves to Fund the Capital Pool FUND: Capital DEPARTMENT:Financial Services –Financial Planning PREPARER:Ryan Hagey, Director of Financial Planning BUDGET IMPACT:None BACKGROUND: During the 2021 CapitalBudget review session, staff was directed toprovide information about historic reserve balances and the possibility of transferring additional funding from reserves to reduce the tax rate increase. RATIONALE / ANALYSIS: Historic Reserve Levels The graphbelow shows the overall ending capital reserve balances for the past five years, ending with a balance of just under $40M in 2019. The graph also shows actual reserve levels are consistently below the minimum target levels, meaning the City’s capital reserves are on whole underfunded. As was noted during the Capital budget presentation, strong reserve balances in some areas can mask deficiencies in other areas, and due to legislative restrictions, balances in regulated areas like Building and Water cannot be used to benefit other areas like the tax base. FINAL - 49 CITY OF KITCHENER 2021 BUDGET ISSUE PAPER Increasing Reserve Transfers to Reduce the Tax Rate Increase The specific request from the Capital Budget review session was to increase reserve transfers to fund capital by $100,000 per year, which would result in a $100,000 reduction to the tax rate increase, making this kind of adjustment not feasible. First, each year the City maximizes it’s draw on the relevant reserves, while still maintaining some funding for contingencies and the unexpected (e.g. increased tender prices, emergency capital projects, matching funds for grant applications). Further reductions would add risk to the City’s ongoing capital program. Second, the City of Kitchener (and municipalities in general) have been saying for many years they have an infrastructure deficit. To reverse course and use reserves to reduce taxes is disingenuous to the position put forward by the City in several consultations with otherlevels of government. Third, Kitchener’s 2021 budget strategy is one of fiscal restraint that already includes deferrals for some capital projects (where feasible on a short-term basis), and relying on reserves to backstop deficits that are quite likely due to the continuing impacts of COVID-19. Taking money from reserves on a continuing basis will erode the City’s ability to complete capital projects in the future and put the City in jeopardy of needing even higher tax rate increases in the future. Instead, the City would be better situated by keeping the funding in reserves to help offset deficits in 2021 and beyond or to leverage stimulus funding provided by the Federal and/or Provincial governments. FINANCIAL IMPLICATIONS: Increasing reserve transfers to the capital program by $100,000 (plus inflation) each year is not advised and would result in a tax rate reduction of less than 0.1%, or less than $1 annually to the average homeowner. RECOMMENDATION: For information. FINAL - 50 CITY OF KITCHENER 2021 BUDGET ISSUE PAPER ISSUE: BD05 –Impact of Reducing Fleet Replacement Funding FUND: Capital DEPARTMENT:Infrastructure Services - Fleet PREPARER:Don Miller, Director of Fleet BUDGET IMPACT:None BACKGROUND: During the 2021 Capital Budget review session staff was directed to prepare an issue paper regarding the impact of reducing Fleet replacement by $1M across the 10-year capital budget. RATIONALE / ANALYSIS: Changes to the equipment reserve forecast would lead to either higher maintenance costs or reduced service levels. The City has a robust, annual process to review the equipment replacement needs of the corporation that takes into account the performance of each specific piece of equipment, and the needs of divisions to continue delivering service to the community. Before making a decision to replace a piece of equipment, the Equipment ReviewCommittee analyses Fleet data including age, life cycle, utilization, service type, reliability, current physical assessed condition, historical repair and maintenance costs, and in class fuel efficiency. A key indicator in the review is a measure of restoration/repair costs to continue operation exceeding annual depreciation charges. Input is also received from Fleet users for each unit recommended/requested for replacement/deferral with respect to condition and suitability to operations as well as replacement needs to meet operational requirements. As an example of the results of the existing process, the 2021 Annual Equipment Review Meeting held on October16, 2020 resulted in the following: 111 units were eligible for review for replacement at an estimated cost of $10,328,000 63 units were deferred at estimated cost of $4,345,000 48 units were approved for replacement at an estimated cost of $5,983,000 The Equipment Review process inherently manages the reduction of capital Fleet purchases on an annual basis and ensures that minimum operational needs of Fleet users are met. FINANCIAL IMPLICATIONS: Reducing the funding for equipment replacement by $1M across the 10-year capital forecast would actually cost the City more money than replacing equipment at the end of its useful life. The reduction in capital replacement funding wouldresult in increased operating costs due to elevated repair and maintenance costs that exceed the costs of depreciation. As well, the equipment reserve is already forecasted to be in a deficit position by 2024as show in the graph below, so a further reduction would only increase the likelihood equipment replacements would need to be delayed at increased cost. FINAL - 51 CITY OF KITCHENER 2021 BUDGET ISSUE PAPER Equipment Reserve – Projected Ending Balances Finally, additional deferrals would threaten the City’s ability to reduce fuel consumption through purchasing new vehicles/equipment and would negatively impact the City’s ability to achieve its corporate sustainability goals. RECOMMENDATION: For information. FINAL - 52 53 - FINAL 54 - FINAL 55 - FINAL CITY OF KITCHENER 2021 BUDGET ISSUE PAPER ISSUE: BD06 –Huron Brigadoon Community Centre Delayed Opening FUND: Operating DEPARTMENT:Community Services – Neighbourhood Programs and Services PREPARER:Mark Hildebrand, Director Neighbourhood Programs and Services BUDGET IMPACT:Potential Reduction of $255,000 BACKGROUND: During the 2021 Capital Budget review session staff was directed to prepare an issue paper regarding the timing of the opening for the Huron Brigadoon Community Centre, which has been planned and budgeted for in late 2021. RATIONALE / ANALYSIS: The City of Kitchener is working in partnership with the Waterloo Region District School Board (WRDSB) to build a joint school and community centre in the Huron Brigadoon area. In anticipation of a plannedopening of the facility in late 2021, staff included a budget of $255,000 in the City’s proposed 2021 operating budget, for operations of a partial year. The remainder of the budget is planned for the 2022 operating budget, to reflect the full annual cost of operating this facility. City staff were recently informed that construction of the school and community centre (which is being led by WRDSB) has been delayed. Detailed designs for the joint school and community centre have been completed and the necessary building permits have been approved. As required, the school boardhasmade an application to the Province, whomustreview and approve the proposed design and budget of the facility, prior to construction commencing. This application is currently moving forward with the Province, but final approval has not yet been given to the school board. As a result, it will not be possible for the school board to complete the construction and open this facility in 2021 as originally planned. FINANCIAL IMPLICATIONS: Given the Huron Brigadoon Community Centre will not be open in 2021, the budget for this facility, that is included in the proposed 2021 operating budget, can be delayed by one year. Any funding delayed would reduce the tax rate increase in 2021, but shift the increase to 2022. RECOMMENDATION: Delay $255,000 in operating funding for the new Huron Brigadoon Community Centre until 2022. FINAL - 56 CITY OF KITCHENER 2021 BUDGET ISSUE PAPER ISSUE: BD07 –Increasing Capacity of the Assisted Services Winter Program FUND: Operating DEPARTMENT:Infrastructure Services – Parks & Cemeteries Division PREPARER:Niall Lobley, Director Parks & Cemeteries BUDGET IMPACT:None BACKGROUND: In September 2020 Council provided direction to staff to implement an Assisted Service program to support residents who are unable to meet the City’s sidewalk bylaw in respect to winter for reasons of age or ability. Residents must meet eligibility criteria to participate in the program. Staff had proposed 150 places; Council provided direction that this be increased to 175. During budget discussions, Council has asked that the capacity be further increased to 200 places. RATIONALE / ANALYSIS: The Assisted Services program has been piloted successfully through two winter seasons as the City explored different options to respond to winter clearing of sidewalks, to maintain these clear of snow and ice. The City winter sidewalk bylaw placesthe onus of snow clearing of sidewalks to the private property owner adjacent to the sidewalk. It is recognized that seniors and individuals with disability can encounter challenges in meeting the bylaw. The Assisted Services program provides support for these residents. The program has been delivered successfully via a grant provided to the Working Centre. Staff have worked with the Working Centre and had agreed on support for up to 150 residents in winter 2020/21. Council asked that this be increased to 175 residents in September. During budget deliberations, as a result of the program having already reached capacity in 2020/21, Council asked that this be further increased to 200 residents. Staff have discussed this with the Working Centre who have confirmed that they do not have capacity to increase services to 200 residents this coming winter. This is due to vehicle access and staff availability. Staff and the Working Centre are keen to deliver a program that is reliable and meets the high level of satisfaction seen through the pilots and appreciate that the program has been increased by 75% for winter 2020/21 already, and additional places cannot be supported at this time. While other means for delivering services may be available, such as via private contractor, there is no capacity to set this up for winter 2020/21. FINANCIAL IMPLICATIONS: As there is no capacity to increase provision in 2020/21, there is no additional financial impact as a result of this Issue Paper. RECOMMENDATION: No changes are recommended to the Assisted Services program for winter 2020/21. Staff will proceed to add 75 places to the program for winter 2021/22 as per prior Council direction. FINAL - 57 CITY OF KITCHENER 2021 BUDGET ISSUE PAPER ISSUE: BD08 –Freezing Council and Non-Union Management Salaries for 2021 FUND: Operating DEPARTMENT:Corporate Services – Human Resources & Financial Services –Financial Planning PREPARER:Paula Dunn, Director of Human Resources & Ryan Hagey, Director of Financial Planning BUDGET IMPACT:None BACKGROUND: During the 2021 Operating Budget review session, staff was directed to provide information regarding freezing the salary budgets for Council and non-union staff. RATIONALE / ANALYSIS: There are four groups that will be potentially impacted by freezing non-union and Council salaries in 2021. These groups include: 1.Non-union, grades 12 and up 2.Non-union, grades 11 and below 3.9000 series employees 4.Council Non-Union Staff Grades 12 and Up Non-unionized staff in pay grades 12 and up are only management staff, and are typically managers, directors, and members of the Corporate Leadership Team. They have been separated from grades 11 and below as there are no unionized positions within these grades. Non-Union Staff Grades 11 and Below Non-unionized staff in staff in pay grades 11 and below are a mix of management and professional/technical staff who deal with sensitive information that precludes them from belonging to labour groups (e.g. Legal, Human Resources, Technology & Information Services). This group also includes part-time non-union positions such as bylaw enforcement officers, clerical staff at community centres and pools, inclusion support staff, and senior day programming aides. 9000 Series Staff The 9000 Series is the pay group including casual, summer and part-time positions such as cleaners, parking attendants, ushers, crossing guards, student labourers, lifeguards, summer camp staff and building attendants. Council This includes Council members only. The Council compensation policy includes language that Council’s COLA increase will mirror non-union staff. Traditionally all non-union staff and Council increases have mirrored those awarded to the City’s indoor workers’ union (CUPE 791). FINAL - 58 CITY OF KITCHENER 2021 BUDGET ISSUE PAPER FINANCIAL IMPLICATIONS: The chart below shows the potential costs savings (including fringe benefits) if salaries for the different non-union positions as well as Council arenot increased from their 2020 levels. It should be noted that some of the savings would occur in the City’s enterprises and would not have any impact on the tax supported budget. The table below shows impacts to enterprises, the tax base, and in total. Potential Cost Savings of Salary Freeze in 2021 TotalEnterpriseTaxLevy Impact Grade 12 and Up$ 113,188$ 29,784$ 83,4050.06% Grade 11 and Below$ 197,487$ 24,506$ 172,9810.13% 9000 Series$ 33,821$ -$ 33,8210.03% Council$ 6,316$ -$ 6,3160.00% Total$ 350,812$ 54,290$ 296,5230.23% Note: totals may differ due to rounding Before making any adjustments to salary increases for the groups noted above, Council should be advised of the related impacts. RECOMMENDATION: For information. FINAL - 59 FINAL - 60 FINAL - 61 FINAL - 62 FINAL - 63 FINAL - 64 FINAL - 65 FINAL - 66 67 - FINAL 68 - FINAL