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Home My WebLink AboutFCS-12-131 - 2013 Budget - Potential ReductionsREPORT TO:Finance and Corporate Services Committee DATE OF MEETING: August 13, 2012 SUBMITTED BY:Dan Chapman, Deputy CAO PREPARED BY: Ryan Hagey, Director of Financial Planning, 519-741-2353 WARD(S) INVOLVED:All DATE OF REPORT:July 19, 2012 REPORT NO.: FCS-12-131 SUBJECT: 2013 Budget – Potential Reductions RECOMMENDATION: THAT staff be directed to prepare potential reduction issue papers for the following areas, which would be presented as part of the 2013 budget process: [for council’s direction] BACKGROUND: At the Finance and Corporate Services meeting of May 7, staff presented report FCS-12-078 regarding the 2013 budget process. The report outlined that, at the conclusion of the 2012 budget process, the projected tax rate increase for 2013 was 5.87%. The report also acknowledged that this rate of increase was not viable, and committed to reducing the staff recommended budget by at least 3%, meaning the staff submitted tax supported budget increase for 2013 will be no more than 2.87% (including the tenth installment of the Economic Development Investment Fund special levy). At this same meeting, the committee directed staff to report back on August 13 regarding potential tax supported budget decreases and opportunities to enhance community engagement around the 2013 budget process. The motion made at committee and passed by council on May 14 was: That a report be provided to the August 13 2012 Finance & Corporate Services Committee meeting to facilitate direction setting on options to potentially reduce the projected 2013 Budget submission target of 2.87% by up to an additional 1%; and further, That staff investigate and report back on the pros and cons of potentially undertaking any of the following public engagement options for the 2013 Budget process including: use of social media, creation of an interactive budget website, a citizen budget advisory board, and representative survey questions. This report responds to the first clause of the motion passed by council on May 14. é ó ï REPORT: The current council has passed two budgets during this term. During both of the associated budget processes, council directed staff to present a list of potential reduction options that could reduce the tax rate increase if accepted by council. To develop these lists, council directed staff regarding the overall reduction percentage, but gave no specific direction about areas to include/avoid. In both years, staff were able to provide a list that met council’s overall reduction target. Throughout final budget deliberations council approved some of the reduction items, but did not support the majority of the proposed items. For the 2013 budget process, council has chosen to be more directly involved with setting direction regarding reduction options and has requested information that could be used to facilitate a discussion about areas of focus for potential reduction options. Staff have provided this information in Appendix A. The information provided in Appendix A is a summary of the approved 2012 tax supported budget organized by the categories used in the Financial Information Return (FIR). The FIR is a reporting tool used by all Ontario municipalities to report financial information to the Ministry of Municipal Affairs and Housing. Summarizing financial information in this format is beneficial for the purpose of discussing budget reductions for two main reasons. 1. The FIR categories represent services, as opposed to organizational structure. This will give council a picture about the full direct cost of providing a specific service. This is especially important for instances where multiple divisions have budgets to provide a single service. One example of this is arenas, where the Enterprise division budgets for the programming costs and revenues of the arena, but the Facilities Management division budgets for the utilities and maintenance of the arena. 2. Information organized in this way is comparable across municipalities. As noted above, all Ontario municipalities are required to report their actual financial performance in the FIR format each year. The FIR data is then made available online and can be used for comparative purposes. As an example, the debt to reserve ratio which has been shown to council as part of budget presentations is derived from information submitted by municipalities as part of their FIR. Benchmarking City costs may form part of the review of specific services as part of the 2013 budget process. The eight main FIR categories which apply to the City of Kitchener are: 1. General Government 2. Protection Services 3. Transportation Services 4. Environmental Services 5. Health Services 6. Social and Family Services 7. Recreation and Culture Services 8. Planning and Development Appendix A has been divided into these categories to help group similar services together. In preparation for this report, staff surveyed Kitchener residents based on these categories, which has provided some timely and relevant information about the relative priority of services as ranked by residents. é ó î The survey questions regarding Kitchener’s budget were included in a broader survey called the Waterloo Region Area Survey which was conducted in the early summer by the Survey Research Centre at the University of Waterloo. The Survey Research Centre used best practices to ensure the citizens randomly selected to complete the survey were representative of the Region based on the 2006 Census data. As well, the Survey Research Centre actively supervised interviewers to ensure quality control throughout the survey process. Based on the methodology used to select respondents and the measures in place to maintain quality control, the Survey Research Centre “is confident the sample based on telephone data collection continues to represent Waterloo Region residents reasonably well and that weights could be applied based on age and sex within cities if needed.” At the time council directed staff to consider representative survey questions as a public engagement tool, the City of Kitchener was already preparing questions to include in the survey regarding ongoing work with Compass Kitchener, and was able to add questions related to the City’s budget in order to better inform council’s discussion regarding service priorities. The survey was conducted with residents across the region, but to ensure the results were representative, the budget questions were only asked to Kitchener residents. In total, 175 Kitchener residents provided their input through the survey regarding the City of Kitchener’s budget. For the purpose of the survey, Parks and Trails were split out from within the Recreation and Culture Services category as they have been a high priority within the community for the past number of years and make up a fairly significant budget allocation from that category’s budget (nearly $6.5M in 2012). Some of the categories listed above were not included in the survey for the following reasons: General government is comprised mainly of services provided to other City departments, not directly to citizens, so it would be difficult for citizens to comment on those services. Environmental Services is mainly comprised of services provided to citizens through one of the City’s utilities (Water, Sanitary Sewer, Storm Water) and therefore has little impact on the tax base. Health services is only comprised of cemetery services which have a minimal impact on the tax base. Social and Family Services is only comprised of seniors programming which have a minimal impact on the tax base. Summary of Citizen Survey Results The charts below summarize the feedback received through the citizen survey questions as outlined in Appendix B. Please note that the percentage totals do not always add up to 100% as for some of the questions, a very minor number of the people surveyed did not select one of the options provided (i.e. they responded “I don’t know”). é ó í Question 1: If you were prepared to pay increased property taxes for better City services, which of the following would you improve? ServiceYesNo Protection Services51%46% Transportation Services69%30% Recreation and Culture63%35% Parks and Trails63%35% Planning and Development67%31% The results of this question show that there is no clear cut leader where the citizens surveyed would suggest to increase service levels if they were prepared to pay higher taxes. There is general support for increasing any of the services included in the survey, and the results are consistent across the various service areas with the exception of protection services (e.g. fire, bylaw enforcement) which fell somewhat below the results of the other four areas. Question 2: If you had to reduce City services to keep property taxes low, which of the following would you reduce? ServiceYesNo Protection Services18%79% Transportation Services26%71% Recreation and Culture41%57% Parks and Trails51%47% Planning and Development33%64% In contrast to the results to the first question, in the second question, there is not general support for reducing services in any of the areas included in the survey. Only Parks and Trails received more than 50% support for a service level reduction, and exceeded that threshold by the smallest of margins. Based on the results of the first two questions: If the citizens surveyed were prepared to increase service levels, they would generally support an increase to any of the areas suggested, with lesser preference to protection services The citizens surveyed were challenged to support any areas for reduction, with Parks and Trails receiving the most yes votes, but still was only just over 50% Citizens were then asked their preferences towards tax increases and service levels. The results of the third survey question are summarized in the chart below. Option% of votes No tax rate increase, service reduction29% Inflationary tax rate increase, maintain services62% Beyond inflationary tax rate increase, with increase to services8% The results of this question show that the strong preference of the Kitchener citizens surveyed is to maintain existing service levels, even if that would require an inflationary style tax rate increase. This option received more than twice as many votes as the next option to have no tax é ó ì increase but reduce service levels. Finally, the results of this survey show that there is generally little appetite for increasing service levels through tax increases that are beyond the rate of inflation. Feedback from the final two questions regarding citizen preferences towards increasing or decreasing one specific service is provided as part of Appendix A. Process to Facilitate Discussion Appendix A has been provided to assist council with providing direction regarding potential reductions to the tax based budget. The information in Appendix A has been organized based on the service provided as opposed to the organizational structure used to manage the service. Finally, a survey of randomly selected citizens was conducted through the University of Waterloo’s Survey Research Centre to elicit feedback on the priority of services throughout the community and the overall attitude of citizens towards tax increases and service level reductions. Together, this suite of information provides council with the context needed to provide further direction to staff regarding areas of focus for potential reductions to the tax based budget. In order capture the priorities of council, staff have created an online survey where individual councillors are asked to identify the areas they believe should be the focus for potential reductions for the 2013 tax supported budget. There are 117 areas outlined as part of Appendix A, and councillors are asked to identify their top 10 as part of the survey. All survey submissions would be required no later than August 8 so staff can summarize the results and include them in a presentation at the Finance and Corporate Services committee meeting on August 13. The results of the survey will help facilitate the discussion on August 13 which is intended to conclude with a resolution instructing staff to focus on certain areas in order to provide potential tax rate reduction options as part of the 2013 budget. The tax rate reduction target of 1% equates to approximately $1M and staff recommend council identify 10 areas of focus to be considered for potential reductions. Staff will develop specific options in each of these areas which will be presented to council and the public as part of the November 5 budget overview. Staff are recommending these options be included as part of the interactive website improvements which would allow citizens to see the financial impact of the proposed reductions and provide their feedback through an online voting tool. This citizen feedback information could then be considered by council in passing the 2013 budget in January. ALIGNMENT WITH CITY OF KITCHENER STRATEGIC PLAN: Foundation: Efficient and Effective Government Goal: Financial Management Strategic Direction: Strive for competitive, rational and affordable taxation levels FINANCIAL IMPLICATIONS: The potential reduction list will be presented as part of the 2013 budget process, and only issue papers approved by council will impact the 2013 tax rate. COMMUNITY ENGAGEMENT: é ó ë Community feedback regarding the potential reductions options will be solicited throughout the 2013 budget process. ATTACHMENTS: Appendix A – 2012 Budget Organized by Service Appendix B – 2013 Budget Survey Questions ACKNOWLEDGED BY: Dan Chapman, Deputy CAO (Finance and Corporate Services) é ó ê é ó é é ó è é ó ç é ó ïð é ó ïï é ó ïî é ó ïí é ó ïì é ó ïë é ó ïê ßÐÐÛÒÜ×ÈÞ îðïíÞËÜÙÛÌÍËÎÊÛÇÏËÛÍÌ×ÑÒÍ Ì¸»¯«»¬·±²¿µ»¼¼«®·²¹¬¸»«®ª»§¿®»º±«²¼¾»´± ©æ Ì¸»Ý·¬§±ºÕ·¬½¸»²»®¸¿¬¿®¬»¼¬±°®»°¿®»·¬îðïí¾«¼¹»¬¿²¼©±«´¼´·µ»¬±¾»¬¬»®«²¼»®¬¿²¼¬¸» ¾«¼¹»¬°®·±®·¬·»±º½·¬·¦»²ò ïò×º§±«©»®»°®»°¿®»¼¬±°¿§·²½®»¿»¼°®±°»®¬§¬¿¨»º±®¾»¬¬»®Ý·¬§»®ª·½»ô©¸·½¸±º¬¸» º±´´±©·²¹½¿¬»¹±®·»±º»®ª·½»©±«´¼§±«·³°®±ª»æÅÇñÒÚÑÎÛßÝØÃ ¿òÐ®±¬»½¬·±²¬±°»±°´»¿²¼°®±°»®¬§ø»ò¹òôº·®»¼»°¿®¬³»²¬¿²¼¾§´¿©»²º±®½»³»²¬÷ ¾òÌ®¿²°±®¬¿¬·±²ø»ò¹òô®±¿¼ô¾®·¼¹»ô·¼»©¿´µô²±©®»³±ª¿´ô»¬½ò÷ ½òÎ»½®»¿¬·±²¿²¼½«´¬«®»ø»ò¹òô´·¾®¿®·»ô½±³³«²·¬§½»²¬®»ô¿®»²¿ô°±±´ô¬¸»¿¬®»ô»¬½ò÷ ¼òÐ¿®µ¿²¼¬®¿·´ø»ò¹òô°¿®µ¿²¼¬®¿·´¼»ª»´±°³»²¬ô¹®¿½«¬¬·²¹ô »¬½ò÷ »òÙ®±©¬¸³¿²¿¹»³»²¬¿²¼»½±²±³·½ ¼»ª»´±°³»²¬ îò×º§±«¸¿¼¬±®»¼«½»Ý·¬§»®ª·½»¬±µ»»°°®±°»®¬§¬¿¨»´±©ô©¸·½¸±º¬¸»º±´´±©·²¹½¿¬»¹±®·» ±º»®ª·½»©±«´¼§±«®»¼«½»æÅÇñÒÚÑÎÛßÝØÃ »²¬¿²¼¾§´¿©»²º±®½»³»²¬÷ ¿òÐ®±¬»½¬·±²¬±°»±°´»¿²¼°®±°»®¬§ø»ò¹òôº·®»¼»°¿®¬³ ¾òÌ®¿²°±®¬¿¬·±²ø»ò¹òô®±¿¼ô¾®·¼¹»ô·¼»©¿´µô²±©®»³±ª¿´ô»¬½ò÷ ½òÎ»½®»¿¬·±²¿²¼½«´¬«®»ø»ò¹òô´·¾®¿®·»ô½±³³«²·¬§½»²¬®»ô¿®»²¿ô°±±´ô¬¸»¿¬®»ô»¬½ò÷ ¼òÐ¿®µ¿²¼¬®¿·´ø»ò¹òô°¿®µ¿²¼¬®¿·´¼»ª»´±°³»²¬ô¹®¿½«¬¬·²¹ô»¬½ò÷ »òÙ®±©¬¸³¿²¿¹»³»²¬¿²¼»½±²±³·½ ¼»ª»´±°³»²¬ íòß¿Õ·¬½¸»²»®¬¿¨°¿§»®ô©±«´¼§±«®¿¬¸»®æÅÝØÑÑÍÛÑÒÛÃ ¿òÌ¸¿¬Õ·¬½¸»²»®²±¬·²½®»¿»°®±°»®¬§¬¿¨»ô»ª»²¬¸±«¹¸¬¸¿¬³»¿²®»¼«½¬·±²·² »®ª·½» ¾òÌ¸¿¬Õ·¬½¸»²»®·²½®»¿»°®±°»®¬§¬¿¨»¿¬¬¸»®¿¬»±º·²º´¿¬·±²ø»ò¹òôîòðû¬±îòëû÷¿²¼ ³¿·²¬¿·²½«®®»²¬»®ª·½» »¿»°®±°»®¬§¬¿¨»¾§³±®»¬¸¿²¬¸»®¿¬»±º·²º´¿¬·±²±¬¸¿¬·¬½¿² ½òÌ¸¿¬Õ·¬½¸»²»®·²½® °®±ª·¼»¿¹®»¿¬»®²«³¾»®¿²¼ª¿®·»¬§±º»®ª·½» ìò×º¬¸»Ý·¬§±ºÕ·¬½¸»²»®½±«´¼·²ª»¬¿¼¼·¬·±²¿´º«²¼±²¶«¬±²½»°»½·º·½»®ª·½»ô©¸»®»©±«´¼ §±«´·µ»¬±»»¬¸¿¬³±²»§¹±áÅÑÐÛÒÛÒÜÛÜÃ ëò×º¬¸»Ý·¬§¸¿¼¬±®»¼«½»°»²¼·²¹±²¶«¬±²»°»½·º·½»®ª·½»ô©¸»®»©±«´¼§±«°®»º»®¬¸±» ¿ª·²¹¾»º±«²¼áÅÑÐÛÒÛÒÜÛÜÃ é ó ïé