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HomeMy WebLinkAbout2012-12-06 Special SPECIAL FINANCE AND CORPORATE SERVICES COMMITTEE DECEMBER 6, 2012 CITY OF KITCHENER The Finance and Corporate Services Committee met this date commencing at 9:10 a.m. Present: Councillor S. Davey - Chair Mayor C. Zehr and Councillors D. Glenn-Graham, B. Ioannidis, Z. Janecki, Y. Fernandes, K. Galloway, F. Etherington and P. Singh. Councillor B. Vrbanovic was absent and Councillor J. Gazzola entered the meeting after its commencement. Staff: J. Willmer, Chief Administrative Officer D. Chapman, Deputy CAO, Finance & Corporate Services J. Witmer, Acting Deputy CAO, Infrastructure Services M. May, Deputy CAO, Community Services R. Regier, Executive Director, Economic Development R. Bunn, CIO / Executive Director, Integrated Planning Centre of Excellence R. Hagey, Director, Financial Planning M. Hildebrand, Director, Community Programs & Services K. Kugler, Director of Enterprise C. Fletcher, Director, Facilities Management M. Seiling, Director of Building B. Robinson, Director of Engineering H. Gross, Director, Asset Management J. McBride, Director of Transportation Planning A. Pinard, Director of Planning W. Malcolm, Director of Utilities R. Gosse, Director, Legislated Services & City Clerk L. MacDonald, Director, Legal Services & City Solicitor L. Johnston, Director of Communications M. Goldrup, Director of Human Resources D. Miller, Director of Fleet D. Murray, Interim Director, Information Technology S. Berry, Acting Director of Operations T. Beckett, Fire Chief N. Gollan, Manager, Stormwater Utility D. Locke, Manager, Operational Support & Analysis D. Campbell, Manager, Community Resource Centres L. Palubeski, Manager, Programs & Resource Services J. Billett, Committee Administrator C. Goodeve, Committee Administrator D. Livingstone, Committee Administrator FCS-12-186 - 2013 OPERATING BUDGET 1. The Committee considered Finance and Corporate Services Department report FCS-12-186, dated November 7, 2012 concerning the City’s 2013 Operating Budget, together with a consolidated budget summary by Department / Object, Budget Issue Papers for specific items and a list of Potential Budget Reductions of up to 1%. Mr. D. Chapman presented a general overview of the Operating Budget, advising that the budget seeks to find a balance between affordability and sustainability. Affordability is emphasized in steps already taken by staff to reduce the overall tax rate increase by more than half of the original projection, being a reduction from 5.87% to 2.87%; development of additional reduction options that could reduce the tax rate increase further; and in not proposing any new services or staff at the same time as endeavouring to protect existing service levels. Mr. Chapman noted that sustainability of the budget is of significant issue as evidenced by existing service levels that cannot be delivered at current funding levels and by tax supported operations resulting in a deficit over previous number of years, averaging a deficit totalling $1.5M. He stated that effectively the budget is not balanced as expenses have consistently exceeded revenues and is of particular concern given the Tax Stabilization Reserve Fund (TSRF) is almost depleted. Mr. Chapman advised that staff is of the opinion this problem must be addressed and the proposed budget sets the course to do so within the current term of Council. He noted that the forecast for the TSRF anticipates the fund will be fully depleted at end of 2013, assuming a 2012 year-end deficit to which a transfer of $1M from the TSRF will be made to fund the shortfall. It was noted that the budget includes some deficit corrections within the proposed 2.87% tax rate increase made possible by assessment growth SPECIAL FINANCE AND CORPORATE SERVICES COMMITTEE DECEMBER 6, 2012 - 184 - CITY OF KITCHENER FCS-12-186 - 2013 OPERATING BUDGET (CONT’D) 1. coming in at higher than original projections. Mr. Chapman advised that approximately $1M in additional corrections not currently funded are likely to produce a deficit in 2013 and which cannot be accommodated within the direction given by Council. He noted that Council recently decided to divert solar roof paybacks to the tax base instead of back into the Local Environmental Action Fund (LEAF) reserve and staff have further reviewed the sustainable funding amount estimated at $300,000 which could be used to fully address ongoing deficit in electricity in that, the City would be using electricity revenues to pay for electricity costs. Mr. Chapman referred to Debt to Service Ratio, advising that using reserves in 2013 to lessen budget impacts is inconsistent with Council’s approved reserve policy and is not feasible given the City’s ratio exceeds the target level of 1:1 by a substantial margin. Mr. Chapman noted that the budget as tabled meets all of Council’s guidelines, advising that the 2.87% tax levy increase provides a 1.80% general levy increase and 1.07% increase for the Economic Development Investment Fund (EDIF) special levy. In addition, staff has provided options for potential reductions of up to a further 1% at Council’s direction. It was noted that in order to meet Council’s tax rate increase direction, budget increases were limited to compensation and utility costs and user fees generally increased by 3%. All other costs were held to 2012 levels necessitating efficiencies across the board to accommodate inflationary pressures. Considerations given in setting tax rates include: a range of inflationary factors, which recognizes that the Consumer Price Index (CPI) is not the most relevant factor to sustain existing service levels as municipalities have unique expenses to that of the individual consumer; comparison to other municipalities; and balance between service level expectations and willingness to pay for those service levels. It was noted that CPI inflation figures at end of October 2012 is 1.5% and in the same timeframe, the Municipal Price Index (MPI) was 1.8% which reflects on inflationary pressures of the City. Comparing these rates to the proposed 2013 budget, shows that the 1.80% general tax levy increase exclusive of EDIF is consistent with the MPI. Mr. Chapman reviewed the proposed tax rate increase, including and excluding EDIF, relative to CPI and MPI over the past ten years. He stated that tax increases, including EDIF have trended just under MPI, and excluding EDIF, has matched CPI over the past 10 years. A comparison of municipal costs for an average household in 2012 between Kitchener and the Cities of Waterloo and Cambridge was provided, showing Kitchener and Cambridge costs to be similar and Waterloo’s substantially higher. In regard to the tax burden Kitchener has the lowest of any of the cities at $3,090; and even if storm water fees were added back in, Kitchener’s tax burden would still be lower than that of Cambridge. In regard to Utilities, it was noted that water and sewer costs for Kitchener are equal or less than the other cities, and notwithstanding Kitchener was the first to increase rates to proactively deal with infrastructure replacement the others have caught up or have even now surpassed Kitchener. Mr. Chapman noted that Kitchener’s natural gas costs remain higher than Waterloo and Cambridge; however, these are continuing to decline and converge, allowing Kitchener to remain in a competitive position. In response to questions, Mr. Chapman advised that the assessed value figures used are based on 2011 assessment for 2012 taxation and does not at this time include re-assessment figures. Mayor Zehr requested clarification in respect to items not appropriately funded, particularly in respect to Operations. Mr. J. Witmer advised that there are a number of deficiencies in Operations budget, primarily within roads. There are also issues in sportsfields where revenues have been over-stated and are gradually being moved back to appropriate levels. In addition, winter maintenance has been under-funded and although the gap has narrowed more is still needed to reach a level of funding based on historic averages. Mr. Witmer advised that these deficiencies are not proposed to be dealt with in 2013 to allow completion of an Operations Service Review, the results of which will help to identify the right budget and which may require correction over multiple years. Councillor Y. Fernandes referred to natural gas costs wherein surpluses have been realized within the reserve and questioned if these savings should be passed on to users through reduction in rates so Kitchener’s rates come more in line with the other cities. Mr. Chapman advised that this has been considered, referring to the rate re-design discussed in October 2012, which will set a fixed annual dividend that will not fluctuate as it has in the past, and SPECIAL FINANCE AND CORPORATE SERVICES COMMITTEE DECEMBER 6, 2012 - 185 - CITY OF KITCHENER FCS-12-186 - 2013 OPERATING BUDGET (CONT’D) 1. rates will be set to provide that dividend and no more. Mr. Chapman agreed to provide a comparison of the percentages of property tax increases and Utility rate increases between Kitchener and the other 2 cities over the past 3 years (2010-2012) for final budget day. Councillor P. Singh questioned what the 2012 deficit is expected to be exclusive of capital closeouts. Mr. Chapman advised that final figures are not yet available but noted that the majority of deficit relates to Operations. Councillor Singh requested clarification of the deficit in Operations being due to overstatement of sportsfield fees, questioning how this might be corrected. Mr. Witmer stated that this number is not significant in terms of the overall Operations deficit, noting that annual increases of 3% were being added and the revenue gap kept getting larger, so 2 years ago staff began pulling back these fees to achieve a more appropriate level. He added that staff want to review all user fees as it relates to how they charge out rates for these fields and confirm with Council the appropriate allocation for those rates so users pay appropriately and same will be rationalized for the 2014 budget process. Councillor Singh referred to the EDIF levy, questioning what will occur once the debt is repaid. Mr. Chapman advised that this will be a decision of Council to make through the budget process in setting the tax rate for the year. Councillor S. Davey questioned how many years the average deficit of $1.5M is over and Mr. Chapman advised that it takes into consideration a total of 4 years. Councillor Davey questioned what resulted in the largest deficit before capital closeouts of -$3.74M in 2009. Mr. Chapman advised that in 2009 winter control alone had a deficit of $1.8M which illustrates how dire it can be in a harsh winter season. He added that gapping and lower than anticipated supplementary taxes were also factors during 2009. Councillor Davey requested clarification of the amount added in 2012 to winter maintenance and was advised $440,000 was added to Operations budget, reducing the shortfall to a level of approximately $500,000. Councillor Fernandes referred to the difference between CPI and MPI, questioning that notwithstanding the City has differing expenses, if importance should still be given to CPI in terms of looking at what the individual ratepayer has to bear overall. Mr. Chapman agreed that CPI is important to take into consideration but noted that some municipalities do not go beyond that which in his view is too narrow an approach. He suggested that there is a need to reference how the City compares in expenses and CPI should not be the only consideration. Councillor Fernandes commented that ratepayers cannot opt out of the special levy for EDIF (1.07%), questioning if it is somewhat of a misnomer to say that it is not included in the general tax levy increase. Mr. Chapman suggested that it is important to note in this regard, that in some years the base increase has been 0% or even -% while still applying the special levy increase for EDIF, and expressed the view that separating out EDIF allows Council to see how much of the City’s levy room has been committed to the program that has had to be absorbed in the base budget in order to meet budget targets. It was also noted that following 2013 when the special levy for EDIF concludes, the 2014 budget will show a savings and starting in 2018, modest savings will be shown in each year going forward for a period of 10 years as the debt is retired. Mr. Chapman noted that notwithstanding removal of the special levy will have the appearance of savings in 2014, there are other deficient areas that have been deferred to 2014, such as depletion of the TSFR and delay in transfer of funding for the expanded Library project, that will require some of that room to correct those issues. Councillor Z. Janecki questioned if there will still be an EDIF rate levy impact to pay down the debt. Mr. Chapman advised that repayment of the debt will not come out of EDIF but rather has been built into the base Operating budget. Mayor C. Zehr commented that it was anticipated in 2004 when EDIF was established that there would be an accumulative impact to the levy for a period of 10 years and that it would drop off after that which shows in both the rate and ratio. Mr. Chapman advised that a survey conducted early in 2012 of 175 randomly selected residents indicates a substantial majority of respondents prefer inflationary increases while maintaining service levels over any other option; and this remains consistent with the 2009 survey conducted by Environics, wherein the results indicated residents’ value high services over low taxes by a ratio of more than 2:1. Mr. Chapman advised that all that has been taken into consideration has led to the conclusion that the staff proposed operating budget is consistent with the strategic directions for finance. SPECIAL FINANCE AND CORPORATE SERVICES COMMITTEE DECEMBER 6, 2012 - 186 - CITY OF KITCHENER FCS-12-186 - 2013 OPERATING BUDGET (CONT’D) 1. TAX SUPPORTED OPERATING Mr. R. Hagey gave an overview of the net expenditure by Department, which remains relatively unchanged from 2011; and proposed Tax Levy Change Summary by major categories. He explained that proposed base budget adjustments total just under $1.5M, or 1.47% impact to the tax levy, of which the largest component of change relates to staff compensation with most being contractually-obligated. Secondly, budget sustainability items identified as part of the 2012 budget and which are required in 2013 total a 0.57% tax levy impact. Growth related costs have all been off-set by assessment growth and actually equate to a 0.25% net benefit to the tax levy. Mr. Hagey noted that while all growth related items were identified in the 2012 budget, the amount for the Kitchener Public Library (KPL) grant has been reduced significantly from $613,000 to $306,000 and those costs deferred to the 2014 budget based on anticipated timing of the new main Library opening. Lastly, a new section that has no net impact on the tax levy deals with Council service expansion priorities and deficit corrections. Mr. Hagey pointed out that these items are included due to assessment growth exceeding the 1% projection for budget development. The additional $594,000 in revenue is allocated to fund 2 Council approved expansion priorities, being: Wages for Open Air Burning By-law Enforcement and On-Demand Webcasting of Council / Committee meetings; as well as, to fund deficit corrections for: Budd Park taxes, Vacancy tax rebates, Planning sign revenues (net of vacant position), water, electricity and By-law Enforcement fine revenues. Mr. Hagey advised that if left unaddressed, these items will lead to deficits again in 2013 and even with the budget corrections, there still remains approximately $1M in unfunded items, the gap of which needs to be addressed. Councillor Y. Fernandes questioned if this is the final year that the City must fund the OMERS contribution increase and was advised that this is the final year of a 3 year commitment. Councillor Fernandes questioned if a subsequent request to provide for a further increase in contributions beyond this year is made by OMERS, if the City is legally obligated to do so. Mr. Chapman concurred that the City would have legal obligation and the only way the City could exit from OMERS is if every employee who is a member agrees to opt out of the pension fund. Councillor Fernandes requested clarification of the change detail for assessment growth. Mr. Hagey advised that this equates to new revenue to the City resulting from built growth and if not used for anything else, the additional revenue could decrease the levy by 0.89%. Councillor Fernandes raised concerns with a downward trend in new housing, questioning if the figures are overly optimistic. Mr. Hagey advised that even if housing rates are slowing there is still new revenue coming in from what is built that the City did not have before and the figures used are not projections but rather based on actuals provided by the Municipal Property Assessment Corporation (MPAC). Councillor Z. Janecki inquired as to what, if any, contracts are coming due for negotiation in 2013. Mr. Hagey advised that the Kitchener Fire Fighters Association is currently without contract, having already expired and has gone to arbitration. Ms. B. Wagner added that there are 2 CUPE contracts coming due, being CUPE Local 16 (Mechanics) which expires December 31, 2012 and CUPE Local 68 (Civic) which will expire February 6, 2013. Mr. Hagey added that the 2013 budget has made provision for some wage increases for these contracts in 2013. Mr. Hagey also provided explanation as to how the 1% increase in OMERS contribution is being funded, advising that through review of the City’s fringe benefit rates there is capacity to fund a portion of the OMERS amount so there is no need to increase the levy by the full amount. He cautioned, however, that this leaves no capacity in the fringe benefit program to fund additional costs over and above traditional expenditures that could lead to a variance in this account. Mayor C. Zehr questioned that given MPAC adjustments have already come in, if it is fair to assume that supplementary assessments will likely decline in future years and should not be counted on to provide surplus for such things as propping up the TSFR. Mr. Hagey advised that historically MPAC has had a backlog of new built assessment that they are now able to keep up with in a more timely fashion and over time it can be expected that supplementary assessments will decline. Councillor P. Singh raised questions concerning Operations to Service Growth. Mr. J. Witmer advised that the budget has identified $333,000 in tax levy change attributed to service growth, SPECIAL FINANCE AND CORPORATE SERVICES COMMITTEE DECEMBER 6, 2012 - 187 - CITY OF KITCHENER FCS-12-186 - 2013 OPERATING BUDGET (CONT’D) 1. such as additional lane kilometres, parks, natural areas and sportsfields. He stated that it is identified in their budget as to how the funds are to be allocated to account for the $333,000, one of which is an issue paper regarding the Infra-Red Program which has been put forward as an option to consider this date as part of potential budget reductions. In response to Councillor Fernandes, Mr. Witmer advised that the figure identified from assessment growth is an annual allocation that does not necessarily reflect actual costs of growth, which could be higher or lower in any given year and so the figure is an average. He added that through the Operations Service Review it is intended to deal with those line items and a report will be brought back on the results of the review in the new year. Councillor S. Davey requested clarification of the $1M of unfunded items, questioning if Council can pass a budget without funding items if they are not considered to be a chronic deficit. Mr. Hagey advised that is what staff has proposed but will be a decision of Council to make. Mr. Chapman added that staff did make $500,000 in corrections last year and while it is Council’s prerogative he cautioned that the corrections needed are not temporary items and do need to be addressed. Mr. Hagey reviewed the tax base levy, advising that the 2012 total City property tax levy of $99M plus additional assessment growth of 1.6% equates to a 2013 tax levy base of $1.6M. Accordingly, a 1% levy increase or decrease amounts to just over $1M in the budget, or an impact of $9.89 annually to the average household. The 2013 assessment growth is slightly less than 2012 but is higher than expected, primarily attributable to the new Boardwalk Shopping Centre properties, adding about 0.4% to the assessment base alone. Mr. Hagey noted that 2013 assessment values are still being finalized but it is expected the final assessment growth figure will be close to staff’s estimate; however, going forward MPAC has estimated the trend towards the 1% figure is likely to continue and is now the basis for the City’s budget planning. Mr. Hagey then reviewed the 10 Year Tax Rate Projection, illustrating projected tax rate increases over the 10 years consistently in the 2 - 2.5% range. Only final costs for the new main Library are planned in 2014 and no new facility costs are planned until 2017, which is consistent with timing in the capital forecast and subject to change pending update of the City’s Development Charges By-law in 2013-14. Projections also assume removal of funding transferred from the TSFR due to depletion in 2013 and items currently funded by EDIF to be funded from the tax base starting in 2014. A reduction in 2014 related to EDIF represents the amount of EDIF funding that was a direct transfer to the capital fund to pay for EDIF related projects and will not be needed in 2014-beyond and is being removed from the levy. In 2020, small reductions are shown in the EDIF line which represents retirement of EDIF debt issued 15 years previous at time EDIF was originally established and does not include the balance of deficit corrections which amount to approximately 1%. Councillor J. Gazzola entered the meeting at this time. Mayor C. Zehr questioned if it is known what the overall assessment growth for the Region is and how that compares to other municipalities. Mr. Chapman advised that the figure noted is close to the Regional average, with Kitchener the highest among area municipalities and there has also been significant growth in the Townships. Councillor Y. Fernandes requested clarification of the change in the tax rate projection for 2014 from 1.69% in last year’s budget package to 2.42% now shown. Mr. Hagey advised that 2 things caused an increase, being the expanded new main Library for which a part of the cost has been deferred to 2014; and secondly, funding transfers from the TSRF have been completely removed as the fund will be depleted in 2013. Councillor K. Galloway-Sealock questioned the impact of budgeting only 2% going forward across the ten year tax rate projection. Mr. Hagey advised that the bottom line would decrease by 0.5% but would add additional pressure to Departmental budgets, leaving no room for inflationary increases and as the bottom line decreases, the ability to fund operating increases is either eliminated or Divisions will have to look at increasing fees to off-set operating costs. Councillor K. Galloway-Sealock requested clarification of what the funding for Strategic Initiatives is used for. Mr. Hagey advised that this funding is being removed and it was his understanding previously it was used for implementation of new services, programs and SPECIAL FINANCE AND CORPORATE SERVICES COMMITTEE DECEMBER 6, 2012 - 188 - CITY OF KITCHENER FCS-12-186 - 2013 OPERATING BUDGET (CONT’D) 1. staffing; however, due to budgetary constraints the funding has not been made use of over the last number of years. Councillor P. Singh questioned why funding in 2016 for Physician and Specialist Recruitment is at a negative percentage. Mr. Hagey advised that the current agreement for funding ends in 2015 and the forecast assumes funding will not be renewed in 2016; and therefore, is shown to be removed in that year. Councillor Z. Janecki requested clarification of the line item for EDIF. Mr. Hagey advised that EDIF will conclude in 2013 and therefore, is being removed in 2014. Amounts are not shown in 2015 through 2019 because direct transfers are no longer needed and nothing has to be adjusted in those years. In 2020, he advised that debt on the original issue of EDIF funds from 2005 is being paid off which reduces the net levy and debt repayment continues over the next 15 years, ramping down until the debt is retired. Mr. Hagey added that while the percentage decrease shown is consistent at this time, the percentage will vary based on debt cost and will be refined as the forecast moves forward. Councillor Y. Fernandes requested clarification of transfers from Operating to the recreational land reserve to pay back synthetic turf field construction. Mr. Hagey advised that when the synthetic turf fields were built, the cost was borne through Development Charges and monies from the recreational land reserve. This was done on agreement that the funds from the reserve would be paid back over time from revenues generated from use of the synthetic turf fields. Councillor Fernandes questioned that given the sizable amount in the reserve, why some of the money would not be used in other areas, such as for the Southwest park or Emerald Ash Borer (EAB) project. Mr. Hagey advised that use of reserve funds is regulated by the Province and it was his opinion the EAB project would not qualify; and in general, he stated that it would not be good practice to provide for operating costs out of a reserve as these are continuous costs rather than one-offs. He also reminded that the debt to reserve ratio currently exceeds the target level of 1:1 by a large margin. Councillor Fernandes questioned the impact of removing the funding slated for Physician and Specialist Recruitment. Mr. Hagey advised that a 5 year commitment was made to 2015 and if not budgeted for would cause a variance. He added that currently the grant is funded from EDIF and when EDIF concludes in 2013, funding will have to be found from within the tax base for years 2014-2015. Mr. R. Regier agreed to provide an update on the status of the funding agreement for Physician and Specialist Recruitment, as well as their current activities, for final budget day. BOARDS Kitchener Public Library (KPL) and Issue Paper OP-01 (Operating Budget Impact of the Central Library Project) Mr. D. Carli, Chair KPL Board, advised that KPLs 2013 funding request includes the 2012 base budget plus a 1.7% inflationary increase and growth allocation for the new expanded main Library. He stated that in order to meet the City’s budget guidelines, $106,000 was cut from their base budget, including over $80,000 from salaries and benefits. He noted that revenues are down resulting from impact of construction of the expanded facility and due to termination of an agreement with the Region of Waterloo for shared internet service. Mr. Carli stated that the proposed budget also provides for increases in hydro costs, water costs and OMERS contributions. It was noted that the new expanded facility will fully open in 2013 and will experience additional operating costs to facilitate the larger building, as further explained in Issue Paper OP-01. These were identified in the 2004 business case which has been updated over the course of annual budget processes. The operating budget impact is estimated at $817,000 to be spread over 2 years, with $306,000 in 2013 and $511,000 in 2014. Factors impacting operating costs are the need for increased Facility staffing by 0.5 FTE, utilities, building contracts, supplies, repairs and cleaning; expanded technology and associated increase in IT staffing by 1 FTE, network expenses, service contracts and maintenance; and increase in Information / Collections staffing by 7.5 FTEs to handle higher demand for services. Mr. Carli further advised that due to changes in Provincial regulations regarding licensing of security services, City security personnel can no longer be called for assistance to deal with incidents involving the public. KPL is of the view that given the size of the facility, number of visitors and based on past experience, funding their own security services is SPECIAL FINANCE AND CORPORATE SERVICES COMMITTEE DECEMBER 6, 2012 - 189 - CITY OF KITCHENER FCS-12-186 - 2013 OPERATING BUDGET (CONT’D) 1. warranted. He stated that the new facility brings increased benefits to the community by providing more technology and resources to respond to their needs and provides a vibrant space that will appeal to all. Mayor C. Zehr requested further clarification of the issue regarding security. Mr. Carli advised that legislated changes were enacted affecting the structure of security services in Ontario, rd wherein City security staff are no longer permitted to provide 3 party customer service. Mayor Zehr questioned that, given the Library operates under it’s own Public Libraries Act and the Board is appointed by Council, if any challenge has been made in any other jurisdiction on the issue of having to provide separate security services. Ms. C. Fletcher advised that under the new regulations, any time City security is in a situation of providing service to external groups and recouping the costs of same it is deemed as selling its services for which individual staff have to be licensed and trained differently. At this time, City security can monitor the physical library facility but cannot provide internal security services. Mayor C. Zehr requested for final budget day, a 3 year continuity (2010 to 2012) of funding requests made by the Library, what was approved and what the difference was relative to items not approved, resulting in reductions. Councillor J. Gazzola requested financial statements be provided for the Library Board showing the projected budget and actuals for the current year and projected budget for next year. Councillor Gazzola requested clarification that the Library has already cut $106,000 in order to meet Council’s budget guidelines and Mr. Carli advised that was correct. Councillor Gazzola requested clarification regarding the additional funds requested for growth allocation for the expanded central library and what is included in the 0.30% being deferred to 2014. It was agreed that a listing of items that make up the 0.30% would be provided by the Library for final budget day and City staff would provide similar listing of items that make up the 2.87% reduction to the base budget. Councillor D. Glenn-Graham questioned if projections have been made as to rental revenues stemming from the new expanded library facilities. Ms. D. Carli advised that projections have not been made due to the fact the new facility will only have been open for 3 to 4 months in 2013. Ms. S. Lewis, CEO - KPL, added that a review is pending in late 2013-2014 to provide opportunity to see how the new facility is received and how best to promote available rental space, with the outcome to be built into the Library’s 2014 budget. Councillor B. Ioannidis requested clarification in respect to the reduction of library staffing. Mr. Carli advised that reductions amounting to $80,500 was achieved through gapping and reduction in the number of part time employees. Councillor Ioannidis questioned if the $511,000 for operations being delayed to 2014 will meet the maximum capacity required and Mr. Carli advised it would, noting that in actuality the total amount required for operation of the expanded facility was reduced down from $1.5M to $817,000. which is being allocated over 2 years in 2013-2014. Councillor Ioannidis questioned if the proposed FTE for IT will service the main, as well as, all branches of the Library. Mr. Carli advised that the intent is for the individual to service the entire IT system, with the main library housing the servers but maintaining all branch systems. Councillor Ioannidis inquired if the increase in computer technology will include e-readers and Mr. Carli advised that it is intended to continue to meet that demand. Councillor P. Singh requested clarification of the proposed staffing for security and library resources. Mr. Carli advised that annualized costs for security are approximately $75,000 and the remainder will be for full time employees and some resources. Councillor Singh questioned if consideration has been given to phasing in the proposed 7.5 FTEs. Mr. Carli advised that this is being done, with some proposed to be hired in 2013 and others to be added in 2014. Councillor Singh questioned that if inflationary rates are at 1.6% in January 2013 if it would be appropriate to bring the Library’s budget closer to that percentage point. Mr. Carli advised that the Board has met the City’s budget guidelines of 1.7% by cutting monies already from the budget. He added that in 2010 their budget was cut by 11%, reducing the budget to 2004 levels and the Library is looking to achieve a budget that will allow continued building of its collections. Councillor Singh inquired if other libraries of similar size that do not require SPECIAL FINANCE AND CORPORATE SERVICES COMMITTEE DECEMBER 6, 2012 - 190 - CITY OF KITCHENER FCS-12-186 - 2013 OPERATING BUDGET (CONT’D) 1. security have been investigated. Mr. Carli advised they have looked across the Province and most provide security for reasons of addressing health, safety and workplace violence. He added that Library staff is not trained in how to defuse patron disturbances and there is concern for their safety. Councillor Singh expressed the view that arguments need to be made to the Provincial government for changes in the legislation regarding provision of security services to the Library. Questions were raised regarding the costs associated with hiring separate private security for the Kitchener Public Library (KPL), Centre in the Square (CITS) and The Museum compared to the costs the City would potentially incur if it were to provide those services. Ms. C. Fletcher advised that currently, the City provides security to KPL and CITS in terms of the physical site. She added that this matter relates to the provision of enhanced security services with respect to patrons and/or events being held at those facilities. She indicated that an internal cost comparison was completed; however, it did not examine the cost of providing those services at each individual facility. She confirmed that extra training would be required for the City to provide additional security services to those organizations. She stated other factors need to be taken into consideration, particularly the additional liability that would be assumed by the City for the provision of that service. She cited as an example that if The Museum was hosting a special exhibit, the City would have to accept the liability related to that exhibit. She noted that the City would also be putting itself in a position where it would be competing with private security firms. Ms. Fletcher agreed to provide an analysis of the City’s costs to provide the enhanced services compared to the private sector as well as information regarding whether the legislation would permit the City to provide security services to the KPL and CITS at no cost. In response to further questions, Mr. Carli confirmed that a contract for a private sector security guard was included in KPL’s 2013 budget. He noted that this position was not part of the new Full-Time Equivalents (FTE) that KPL has proposed to hire in 2013. Ms. Lewis indicated that the Library has anticipated hiring nine new FTEs toward the end of next year. She stated that once construction was completed, the new staff would be brought on to assist with setting up the new main library prior to its re-opening. Mr. Carli reiterated that in 2010 KPL reduced its resources budget by 11%, which equates to approximately $100,000. of the total $1.1M resource budget. He indicated that of the new hires, only one was intended to work in circulations, which has had its staff compliment reduced by 4½ FTEs over the last four years. He noted that those reductions were resultant to the new self-check-out system. He stated that the other new FTEs would fill positions in information services, reader services, children services, programs and facilities. He noted that by law, the Library is not permitted to charge for those services; however, KPL has been undertaking fundraising campaigns to off-set the costs related to various capital expenditures. Centre in the Square (CITS) and Issue Paper PR04 (CITS - Potential Net Budget Reductions) Ms. Sandra Bender and Mr. Tim Jackson, CITS, addressed the Committee regarding the organization’s 2013 budget, advising that as part of their revitalization efforts CITS is proposing that its budget allocation be frozen at $1.394M over the next four years. Mr. Jackson stated that this funding stability would allow them to develop and execute better long-term plans. He advised that if they were able to enter into a funding agreement with the City to maintain the proposed level of funding for 2013 to 2016, in exchange, CITS would refrain from asking the City for any additional funding over that time. In response to questions, Mr. Jackson advised that to achieve the potential net budget reduction of $24,000., CITS would have to undertake layoffs of ticketing and box office staff, as well as reduce box office hours and services to a level that would not be appropriate for this community. He stated that the majority of their sales are from telephone and internet; however, box office staff is still required to respond to those inquiries. He added that regardless of the budget implications, CITS had intended to reduce box office hours as part of a general re-branding of the Centre. Ms. Bender advised that the industry standard dictates that there are 111 premium dates for a performing arts centre of this size. She stated that while CITS currently holds 150 events per year, they are not at full capacity for those 111 dates. She indicated the challenge related to the proportion of those dates being used for rehearsals as well as by school and community groups. Mr. Jackson advised that the SPECIAL FINANCE AND CORPORATE SERVICES COMMITTEE DECEMBER 6, 2012 - 191 - CITY OF KITCHENER FCS-12-186 - 2013 OPERATING BUDGET (CONT’D) 1. traditional means with which the Centre was book resulted in a number of those premium dates being utilized by some of their long-time partners; however, this limited the number of premium dates available to promoters looking to book a national tour. He indicated most large promoters book venues 12 to 18 months in advance. He added that as part of CITS’ four year plan, they intend to work with their long-time partners to free up some premium dates in 2014 and 2015; thereby enabling the Centre to potentially anchor several national tours. He acknowledged that if CITS’ budget was further reduced, they would have to decrease the amount of services they currently provide to community and non-profit organizations. At the request of Councillor J. Gazzola, Mr. Jackson agreed to provide Council with a copy of CITS’ financial statements. The Committee then recessed at 11:54 a.m. and reconvened at 12:36 p.m. with all members present, except Councillor B. Vrbanovic. ENTERPRISE OPERATING BUDGETS Mr. R. Hagey presented the Enterprise Operating budgets beginning with the current financial position of each self-sustaining enterprise. He advised that three of the seven enterprises are in a deficit position, which is a concern in that the Reserve Fund Policy, adopted earlier this year, establishes target balances to ensure stabilization. He indicated that both Parking and Stormwater Enterprises are projected to be in a surplus position by 2016, as plans have been implemented which will address the current deficit situation; however, although Golf Enterprise has stabilized, sufficient revenue is not projected to address the existing $750,000. deficit. He elaborated that after paying a dividend to the City, Golf will break even in 2013 and 2014, with minimal profit expected in 2015. He added that a plan to lower the deficit will come through future budget deliberations for Council approval. Golf Enterprise Mr. Hagey stated that the 2013 Golf Enterprise budget does not present significant changes from 2012; however, revenue for 2012 was slightly better than expected, as the golf course opened two weeks earlier, generating larger profits. He indicated that a transfer to the Golf Cart Replacement Reserve was necessary in 2012 to offset higher than budgeted cost for replacement carts. He noted that a transfer to the Capital Budget was required to relieve the deficit balance in existing capital accounts; however, an increase in fees and usage generated revenue, placing the Golf Enterprise in a profit position of approximately $18,000. in 2012. Councillor J. Gazzola referred to the anticipated transfer to the Golf Cart Replacement Reserve, questioning the 20% increase over the budgeted amount in 2012. Ms. K. Kugler responded that as the City moves toward a more environmentally friendly approach to golf enterprise, replacement of fuel golf carts with electric carts is a more sustainable, albeit more expensive endeavour. She indicated that although the sale of existing golf carts is expected to off-set the cost of replacement, sales have been less than anticipated and the fuel carts have been put back into circulation. She added that electric carts require less maintenance while having a longer lifespan, proving lower cost over the long term. In response to questions regarding whether fees are high enough, Ms. Kugler stated that the focus has been on stabilizing Golf Enterprise by increasing efficiency in Operations, streamlining administrative processes, and decreasing staff. She affirmed that rates are competitive with other municipal golf courses and strategies are in place to entice golfers through marketing and tournament organization to ensure revenue during less than optimal weather. Councillor D. Glenn-Graham suggested approaching schools and colleges to expand revenue sources through competitive golf teams. Ms. Kugler responded that opportunities are currently offered through the Golf Academy, which provides an after school program. She noted that staff is investigating the possibility of offering a student discount at the Doon Valley Golf Course to target and attract students. SPECIAL FINANCE AND CORPORATE SERVICES COMMITTEE DECEMBER 6, 2012 - 192 - CITY OF KITCHENER FCS-12-186 - 2013 OPERATING BUDGET (CONT’D) 1. Building Enterprise Mr. Hagey advised that building permit activity was lower than anticipated in 2012 and a similar decline is anticipated in the 2013 budget. He explained that permit activity was substantially lower for new low-rise residential and many medium to large-size projects were delayed or placed on hold resulting in lower than anticipated revenue. He stated that 2012 is expected to end in a deficit position; however, the Building stabilization reserve exists for the purpose of covering expected deficits. He advised that direct expenses have been partially stabilized by not filling vacant staff positions and although the Building stabilization reserve fund is expected to be in a surplus position for the duration of the forecast, a significant decline in revenue is anticipated based on forecasted permit activity over 2013-2015. Councillor J. Gazzola expressed concern with the proportion of direct expenses to general revenue, indicating that efforts should be taken to reduce direct expenses. Mr. M. Seiling responded that in an effort to curb the decline in revenue, a full-time staff position, as well as a maternity leave vacancy, has not been filled. He assured Council that Building Enterprise is monitoring expenses, and noted that the largest budget allocation is to salaries. Councillor Z. Janecki referred to the anticipated increase in direct expenses to $3.379M projected in 2013, inquiring if salaries for the vacant positions were included. Mr. Seiling confirmed that the vacancy from the maternity leave ends in January and the full time staff position is a required plumbing official with expertise outside the skill set of existing employees. Councillor B. Ioannidis commented that revenues are projected to be at a historically low level and inquired of any correlating factors that could be attributed to the decline in anticipated revenue. Mr. Seiling responded that Kitchener offers a prime location and has several advantages, such as supply of developable land, available product for first time home buyers, as well as the low current interest rate. Councillor Ioannidis suggested that fees may be deterring permit activity and could be lowered to encourage development and increase building permit revenue. Mr. Seiling indicated the main concerns of developers include land costs which are equal to building costs, and development charges, rather than the associated permit fees. In response to questions, Mr. Seiling indicated that based on analysis, the City may face an economic slide in permit activity. He advised that management is monitoring the permit activity and operations, and explained that anticipated revenue for 2012 and 2013 has been projected based upon approved projects. He stated that although Building operates on a cost recovery basis, each type of permit does not generate the same amount of revenue. Mr. Seiling indicated that the trend of declining activity for all building permit types is expected to continue through 2018. He stated that the actions of developers can be difficult to anticipate, so analysis of City approvals and site plans, as well as forecasts by the Canadian Housing and Mortgage Corporation and economic trends, are used to develop the forecast. Councillor Z. Janecki inquired if assessment growth corresponds with building permit activity. Mr. D. Chapman responded that although permits are a leading indicator of growth, it may be up to three years before Municipal Property Assessment Corporation, adds the assessment to the tax roll. Mayor C. Zehr requested a schedule be provided prior to final budget day, comparing the 2012 Full-time Employee (FTE) count with that of past years where the circumstances were similar to those in 2012 when vacancies such as maternity leave were not filled. Parking Enterprise Mr. Hagey advised that the year-end deficit for 2012 is projected to be $20,000. higher than the budgeted amount of $464,000. He indicated that the deficit can be attributed to lower than anticipated usage and demand of the Charles / Benton Street and Civic District garages. He stated that the Parking Stabilization Reserve Fund is currently in a deficit position, but will be in surplus by 2016, and indicated budget revenues for 2013 are projected at $900,000. higher than in 2012. He referred to the significant changes from 2012 including: a 10% increase in monthly parking permit fees; and, anticipated increased usage and demand of the Charles / Benton Street and Civic District Garages upon opening of the new Courthouse. He added that SPECIAL FINANCE AND CORPORATE SERVICES COMMITTEE DECEMBER 6, 2012 - 193 - CITY OF KITCHENER FCS-12-186 - 2013 OPERATING BUDGET (CONT’D) 1. parking inventory will be increasing by 400 spaces with the expansion of the Bramm Street Garage and Phase II of the Civic District Garage, thereby increasing revenue; however, the availability of parking at the Forsyth lot will be impacted due to the construction of the Centre Block. He explained that the 2013 increase in expenses can be attributed to repayment to the Economic Development Investment Fund (EDIF) for Bramm Street construction costs and forecasted capital allocation of structural provisions previously postponed. Councillor J. Gazzola commented on the considerable decrease in monthly and hourly parking revenue in 2012, and noted that general expenses are 45% of total revenue. He suggested that parking rates are not adequate for cost recovery and expressed concern that the 20% allocation of revenue to parking subsidies is excessive. Mr. J. McBride responded that the monthly permit rates have increased 10% each year and that the rate has been formulated to ensure maximum returns without resulting in a negative impact to downtown commercial businesses. He noted that a balanced approach has been implemented to gradually increase rates over a period of years without detrimental impact to the economy or community. Councillor Gazzola agreed that downtown commercial vitality is important, but suggested the subsidies should be lowered as the public is subsidizing parking. Mr. McBride indicated that Council has previously approved the parking subsidies and it would require action of Council to eliminate free parking. Councillor B. Ioannidis questioned Councillor Gazzola’s comment that the public is subsidizing parking; stating that rather, the public is investing in parking to ensure commercial vitality. Councillor S. Davey requested an issue paper detailing the parking subsidies for 2013. In response to questions, Mr. McBride indicated that when the Courthouse is in operation, it is anticipated that 70-75% occupancy in hourly parking would be realized. He noted that an agreement with the Province is anticipated to be executed upon occupancy of the Courthouse to provide up to 200 parking spaces divided between the Charles / Benton Street and Civic District garages, placing the Enterprise in a position to make a profit in 2013. Mr. D. Chapman stated that the anticipated dividends transferred to the City are projected at a reduction to $1.75M through 2016, indicating that parking will be sustainable in 2013. Mayor C. Zehr encouraged members to remember that parking is a new enterprise and as such, time is needed to gain a surplus. He referred to the Province paying for access to the Charles / Benton Street and Civic District garages, in an amount confirmed by Mr. McBride at $6.5M and $7M respectively. Mayor Zehr stated that although usage and demand was not demonstrated in 2012, a strategy is in place for future stabilization of the Parking Enterprise. UTILITIES Gas Utility Mr. Hagey advised that revenue in 2012 was higher than anticipated due to lower transportation costs that were partially off-set by lower consumption levels. He stated that a new gas rate methodology is being implemented, effective July 2013, referring to the reasons for the new rate design which utilizes a cost-of-service methodology to ensure a consistent approach, budget transparency, and sustainable revenue. Mr. Hagey indicated that utility statements will change as transportation components are shown separately, referring to the new section in the budget where revenue and expenses are extracted and shown separately. He stated that the new rate design will have no impact on most gas customers as the delivery rate increase will be off-set by the decrease in supply rate. He stated that there is an increase in gross profit percentage to 54.15% and explained that it relates to the two-cent rate increase projected for the 2013 heating season, which will require approval in mid-2013. He also noted that in Other Programs, expenses have increased substantially in 2013 as a result of depreciation of rental water heaters. Mr. Hagey indicated that the Gas Delivery Stabilization Reserve Fund is expected to be in a surplus position for all forecast years. He noted that a significant difference in 2013 is an ongoing stabilization dividend of $13M which, in previous years, had fluctuated due to annual profitability of the Utility; and the Capital Reserve Fund is anticipated to remain at zero in 2013 with a positive balance beginning in 2014. Mr. Hagey referred to the long-term objective of Gas Supply, which is to balance revenues and expenses to zero, while maintaining a stabilization reserve fund in order to deal with any negative variability in the short term. Referencing the SPECIAL FINANCE AND CORPORATE SERVICES COMMITTEE DECEMBER 6, 2012 - 194 - CITY OF KITCHENER FCS-12-186 - 2013 OPERATING BUDGET (CONT’D) 1. new section for Gas Transportation, he indicated that it is designed to be a flow-through or break-even operation similar to Gas Supply; and, that a profit is anticipated, as rates for the first part of 2013 will be higher than the actual transportation costs until the mid-2013 rate changes are approved, but will neutralize in 2014. Councillor K. Galloway-Sealock referred to the 2013 transfer to the Gas Investment Reserve, inquiring if is it possible to transfer a portion of the dividend to the Tax Stabilization Reserve. Mr. Hagey responded that although there was a transfer to the Tax Stabilization Reserve in 2012, this is not a typical practice, nor would it be a sustainable practice, as overall all reserves are currently underfunded. He added that the transfer is not in keeping with the objectives set out in the Reserve Fund Policy. Councillor Galloway-Sealock requested an issue paper be brought forward for final budget day, outlining the advantages and disadvantages of a transfer to the Tax Stabilization Reserve fund. Councillor J. Gazzola commented that in past years, Gas Supply was shown in a three year cycle which breaks even during the cycle. Mr. W. Malcolm indicated that there have been changes in the pricing and variances, depending on the time of year purchases are made. Mr. D. Chapman clarified that Gas Supply will break even in 2013 and noted that the Gas Supply Stabilization Reserve Fund was established in 2012, partially based on the rationale that the $2.3M gross profit forecast was not met. Councillors Y. Fernandes and J. Gazzola asked for clarification of the Transportation Reserve Fund. Mr. Malcolm indicated that the transportation section has been extracted from the delivery component and is shown separately. Mr. Hagey explained that 2013 is the initial year for the Transportation Reserve Fund that was established under the new rate methodology. Mayor C. Zehr indicated that 2013 is a transition year as the formula for contributions to reserves is changing, suggesting more information on the new reserve policies passed in 2012 would be of use during the deliberations on final budget day. In response to questions, Mr. Hagey indicated that the increase in profit in 2013 is largely due to transportation costs in 2012, which will be neutralized under the new rate design. He explained that revenue is placed in the reserve funds and that the nature of the Stabilization Reserve Fund is to provide for stability in rates so customers do not experience an increase in rates during slower years. He noted that Capital Reserve Funds are not being built in 2013, but are planned as a way of funding projects in the future. He referred to the Reserve Fund Policy indicating that any allocation of reserve funds are included in the budget and require Council approval. Water / Sanitary Rates - Water / Sanitary Utilities - Water / Sewer Rates: Infrastructure Program Mr. Hagey advised that the combined rate increase for both Water and Sanitary Sewer is 5%. He explained that the majority of the increase relates to the significant increase in costs from the Region of Waterloo, which flows through in the City’s rates. He stated that the City’s portion of the rate increase is considerably less, and represents an inflationary increase on City-controlled expenses. He advised that 2012 projections are better than budget, as more water purchased from the Region is finding its way to billable customers than anticipated. Accordingly, the sales volumes used for the 2013 budget projections have been adjusted for this improvement in unaccounted for water. He indicated that the 2013 to 2017 forecast is based on the decreasing volume in purchases from the Region of Waterloo. Mr. Hagey stated that the Water Stabilization Reserve Fund is expected to be within the targeted threshold throughout the forecast and the anticipated increase in transfers is required to fund the capital program in 2013, including lifecycle replacement projects in excess of the typical capital program. The overall result is a budgeted surplus of $167,000, which is a decrease from the budgeted surplus of $748,000 in 2012. In reference to the sewer rate, Mr. Hagey indicated that the total City sewer rate is expected to remain at 5 to 5.5% over the next few years, as the Regional rate is not expected to decrease. He added that the Sanitary Utility Stabilization Reserve is anticipated to remain within the benchmark range for the forecast years of approximately $2.7M in 2013. SPECIAL FINANCE AND CORPORATE SERVICES COMMITTEE DECEMBER 6, 2012 - 195 - CITY OF KITCHENER FCS-12-186 - 2013 OPERATING BUDGET (CONT’D) 1. Mr. Hagey referred to the Accelerated Infrastructure Replacement Program (AIRP) which was established with the objective to replace linear infrastructure older than 80 years by 2032, resulting in a $1.5 billion investment over 60 years. He acknowledged that to date, less than half of the target has been achieved, with the water and sanitary portion of the funding shortfall equating $126M. He advised that this shortfall is largely due to increased construction costs and project complexity related to changes in environmental regulations. Mr. Hagey indicated that the costs have exceeded rates of inflation, an indicator that the Consumer Price Index is not a sustainable way to budget. He stated that an effective way to address the significant replacement requirement in the future, is to preserve or increase reserve balances to provide the financial means for future Councils to manage what will be a sizable infrastructure problem without having to implement drastic rate increases. Councillor J. Gazzola referred to the 2012 gross profit percentage for water being projected at 45% compared to 42% projected for 2013, stating that the difference in revenue would be $1M. Mr. Hagey responded that 45% is not a sustainable percentage as the sales volumes used for 2013 budget projections have been adjusted for the improvement in unaccounted for water. Councillor Gazzola indicated that he would not support the 5% rate increase as there has been an increase of 100% in water rates and 194% in sewer rates over the past several years. He commented that although he appreciates the concerns regarding deteriorating infrastructure, the rates have increased significantly and should be reflected in savings to the customer. Mr. D. Chapman indicated that Kitchener has the lowest rates of all municipalities within the Region of Waterloo, and advised that the City’s portion of the rate has been limited to 2%. Councillor S. Davey referred to 2012 and pointed out that the City of Kitchener did not increase rates last year but passed through the required Regional increase to the customers. Councillor Fernandes requested an issue paper detailing the amounts spent in 2011 and 2012 and remaining AIRP Capital Accounts. Mayor Zehr requested that the issue paper contain information on rate impacts of reductions to the Capital Program. Mayor Zehr commented that the 2012 projection is roughly $19.7M and even with that projection there is already a shortfall of $15M on average over the past 8 years. He stated that if the allocation is decreased further the problem will compound and he does not subscribe to the philosophy that the future generation will take care of itself, as never before in history has their been this kind of bulge as a result of population growth and hence, required infrastructure to support that growth. He stated that he did not want to leave a legacy whereby future generations would not have the kind of services enjoyed today in respect to infrastructure. Councillor S. Davey expressed the view that it is not appropriate to attempt to subsidize the Region who sets the rates over which the City has no ability to effect control. He added that of the 5% increase, approximately 3.5% is costs directly coming from the Region and in terms of the City the real inflationary amount is 1.6%. He stated that the City has its own areas of control and if it is the prerogative of Council to help ratepayers through these other mechanisms it would be prudent to do so, but water is not one that is controllable. Storm Water Utility Mr. R. Hagey advised that a small surplus in 2012 is projected due to growth and savings in the capital program; however, the Utility is projected to be in an overall deficit position until 2016. The projection assumes a 3% increase for all years of the forecast and three significant changes were noted, being: the 2013 value of revenues reflects the 2012 projected actuals plus the 3% rate increase and a projection for growth; operating expenses were adjusted to reflect 2012 actuals, the most significant portion relating to School Board SWM charges to be treated as a contingent asset until they are collected and an expense line has been included in the 2013 budget to account for this contingency (approximately $420,000); and the capital transfer in 2013 is higher than in 2012 based on the capital work to be done next year. Mr. Hagey advised that all of the adjustments equate to a forecast deficit of $1.4M in 2013. Councillor K. Galloway-Sealock questioned if there is data on actual uptake under the storm water credit (SWC) program. Mr. N. Gollan advised that the program only launched in October SPECIAL FINANCE AND CORPORATE SERVICES COMMITTEE DECEMBER 6, 2012 - 196 - CITY OF KITCHENER FCS-12-186 - 2013 OPERATING BUDGET (CONT’D) 1. 2012 and he expects to have more data in the new year. He noted that staff have received over 2,000 applications and once processed he will have a better idea of actual numbers. Councillor Y. Fernandes questioned if it is anticipated the Storm Water Credit (SWC) fund will be depleted or continue to grow because not all applicants will be eligible for the full amount of credit offered. Mr. Gollan advised that projections for the storm water credits is based on 5% of total revenues generated, as recommended by the consultant and once data has been analysed, he anticipated having a report back mid-2013 on review of the SWC policy, including its successes and/or areas for improvement. Councillor Fernandes suggested that revenues would continue to increase incrementally because the City will not be paying out all monies being collected as most customers will not be eligible to receive the full amount of credit available. Councillor Davey pointed out that staff is not budgeting as if all are getting the full amount of credit available but rather is applying an estimation of what may be paid out under the credit policy. Mr. R. Hagey added that revenues are increasing on actuals by 3% and even if eligible for credit, customers will pay 100% and then the Utility will pay out an expense for the credit which at this time is estimated at 5% of total revenues. It is assumed some may get up to 20% and others more or less, with the average estimated at 5%. Once staff see the uptake in 2013 they will be better able to define the 5% estimate going forward and for those who qualify in 2013 the assumption is the credit will be ongoing in future years, so once benchmarked in 2013 it will be better reflected in 2014 and become a more sustainable figure going forward. Mr. Hagey added that as credits are retroactive, moneys have been set aside in 2012 so that when retroactive payments are made in 2013, there will be no impact to next year’s budget. Councillor Fernandes questioned if expenses in the AIRP are also related to capital for other uses, specifically for SWM pond rehabilitation. Mr. Gollan advised that was correct and also includes watercourses. Councillor Fernandes questioned if the budget is structured so there is no deficit and Mr. Gollan advised that was the intention. Mr. D. Chapman added that the numbers are tied to the total budget in the capital forecast which can be found in the related pages of the capital budget package previously distributed. Mayor Zehr requested clarification of the contingency in 2012 projected at $4.48M. Mr. Chapman advised that the allowance is allocated over 2013-2014 related to recovery of School Board accounts for which a legal question is still to be resolved. Mayor Zehr questioned the need to have two accounts, one for AIRP and a regular capital account. Mr. H. Gross advised that the transfer to AIRP is for triple funded projects for SWM, sanitary sewer and water; and the other is for singular projects related to such things as sewage pumping station upgrades or stand alone sewer replacements / road reconstructions. This meeting then temporarily recessed at 2:45 p.m. and reconvened at 2:49 p.m. with all members present, except Councillor B. Vrbanovic. POTENTIAL REDUCTION ITEMS / NEXT STEPS Mr. Hagey advised that Council had directed staff to provide potential reduction options of up to 1%, noting that a number of options have been identified which can be implemented in 2013 and associated risks for each have been provided. Mr. Hagey advised that next steps include continued collection of public feedback through an interactive website launched several weeks ago and the public is also able to ask questions directly this date through an “Ask the Expert” session on Facebook. Other communications on Your Kitchener the budget have been provided through media reports, public notices, and the City’s website. Public meetings still to come in the new year will begin with a public consultation on January 7, 2013 and will be followed by final budget deliberations on January 17, 2013. At the request of Councillor Y. Fernandes, staff agreed to include an “Impact to Home Owner” chart in the final budget package and provide additional information to Council on the number of staff involved in the two contracts to be negotiated in 2013. SPECIAL FINANCE AND CORPORATE SERVICES COMMITTEE DECEMBER 6, 2012 - 197 - CITY OF KITCHENER FCS-12-186 - 2013 OPERATING BUDGET (CONT’D) 1. The Committee then reviewed the Potential Reduction Items listed in the agenda package along with the Issue Papers detailing each item. No questions were raised in regard to PR01 (Consolidate Onpoint Tools). PR02 - Sick Leave Claims Management Councillor Y. Fernandes raised questions concerning the City’s practice of self-managing short term leaves rather than contracting to Sunlife. Mr. M. Goldrup advised that currently front line Supervisors make determination as to when to involve Human Resources (HR) staff and this is typically around the 10 day mark of an employee off on sick leave. He stated that there is opportunity to move to Sunlife to manage and adjudicate at whatever trigger point the City would decide which could be set at 5 days. An employee would then provide their physician with the appropriate form to submit to Sunlife, who would adjudicate the claim. He stated that the benefits are many, noting that medical information of an employee would stay at Sunlife as opposed to being placed in the hands of a Supervisor and thereby, negating risk of the information being circulated where it should not be; Sunlife has experience in knowing when a doctor’s advice is insufficient to warrant an employee 100% disabled and unable to perform their duties; and inappropriate use of sick leave should lessen in that an employee will have to submit claims directly to Sunlife. Mr. Goldrup added that it is anticipated use of the sick leave reserve will be reduced; however, he pointed out that the City still has liability for payout to eligible retirees and to fund salaries of those on long term disability (LTD) leave. Mr. Goldrup stated that less sick leave used would translate to a positive impact on use of the sick leave reserve, leading to a different actuarial of the amount of reserve needed. Mr. D. Chapman added that the proposed $50,000 reduction is in fact what is being attributed as the projected savings from less sick leave used and while savings will be realized, it is this proposed cut that will effect those savings. Councillor Fernandes requested clarification of payout to eligible retirees, questioning if they are able to bank sick days. Mr. Chapman advised that the City discontinued the practice of banked sick days approximately 10 years ago, grandfathering out all employees among the various Unions, with the exception of Kitchener Fire Fighters who are still entitled to bank sick days. Employees grandfathered are still eligible on retirement for an actuarial payout. Mr. Chapman agreed to provide Council with the amount paid out to retirees for sick leave over the past two years. Mayor Zehr questioned if other systems within the HR field were considered at the same time rd as that used by Sunlife. Mr. Goldrup advised that the practice of 3 party adjudication is well established within the HR field, particularly in terms of the risks associated with self-short term management wherein an employee reaches the point of LTD and is denied their claim; and is then looking to whoever helped in the poor case management that led to denial of their claim. Councillor D. Glenn-Graham questioned the term of the current contract with Sunlife and Mr. Chapman advised that there is 3 years left to go on a 5 year contract. He further noted that at conclusion of the contract, staff will go back out to the market and the proposed claims management will form part of the approved contract in 3 years time. Councillor Glenn-Graham questioned if it will also include Fire Fighters and Mr. Goldrup responded that it is intended they also be part of the proposal. Councillor Glenn-Graham expressed the view that the City would do well to have standard restrictions for all body parts so an immediate offer can be given negating the need to wait a number of days. He suggested that this would facilitate a culture of employees who understand they are being treated fairly and can through the offer made participate in the solution to a return to work. Mr. Goldrup advised that staff is working toward this direction but it is an evolutionary change to make. Councillor Z. Janecki questioned the projected savings of $50,000. given sick leave paid is up $100,000 from 2010 and there is an estimated cost of $125,000 to the City to have Sunlife adjudicate. Mr. Goldrup advised that a scenario was used for the adjudication by Sunlife at around 3 days absence; however, he noted that this trigger is aggressive and 5 days would be more realistic for an employee to recognize the illness is not dissipating and they require a visit to their doctor. He stated that the City will not see costs per case they do not use, noting that at whatever trigger point is set is the frequency that Sunlife will be active on and the City will accrue the associated costs. Mr. Goldrup advised that Sunlife is confident the City will see a 10% return against the expense of $1.8M and is in fact, a conservative estimate. Councillor SPECIAL FINANCE AND CORPORATE SERVICES COMMITTEE DECEMBER 6, 2012 - 198 - CITY OF KITCHENER FCS-12-186 - 2013 OPERATING BUDGET (CONT’D) 1. Janecki questioned if HR does not hear about sick leaves less than 5 days. Mr. Goldrup advised that is correct, noting that currently they are not notified until approximately 10 days has expired and by setting a standard it will ensure notification happens at a more appropriate trigger. Councillor Janecki questioned if the City does not have a good record in regard to use of sick leave. Mr. Goldrup advised that in fact, the City has a good record, noting that it averages 8 days per employee whereas the industry benchmark is 9 days per employee in the municipal sector. Mr. Goldrup referred to a recent newscast which suggests the private sector is doing better than the public sector, having an average of 6 days per employee; however, he pointed out that in looking at the report, comparable companies of more than 500 employees in the private sector is at 9 days per employee which is no different than the public sector. He added that it is the smaller businesses with closer association to their employees and a greater culture of respectful and appropriate use of sick leave that have the lower numbers. Councillor B. Ioannidis commented that the initiative is good, suggesting that the amount of costs to be recouped is actually under-estimated, noting that re-direction of employees to other rd work will be more in-depth and the City should see greater accountability with a 3 party adjudicator. PR03 - Eliminate Infra-Red Asphalt Program Councillor J. Gazzola questioned what happened to the 2011-2012 allocations for this program. Mr. J. Witmer advised that staffing levels were such that there was no physical ability to undertake this program. He stated that the funding is legitimate but as there were no staff resources the program was not carried out during the past 2 years. He suggested that it is better to continue the allocation so that when resources are available the program can be undertaken and staff is not recommending funding be discontinued. Mr. Witmer further suggested that the City would be missing an opportunity to do this work effectively if discontinued. Councillor Gazzola questioned what the savings would be if discontinued. Mr. S. Berry advised that the City has had the equipment for over 10 years and has used it effectively to complete repairs over and above that legislated under the Minimum Maintenance Standards (MMM). Councillor Gazzola suggested that this is a nice to have but the cost of $128,000 is not affordable at this time. Mr. Witmer stated that this type of repair is connected to the pavement quality index wherein the quality diminishes over time and this program helps address that. He stated that while a nice to have, staff prefers to be proactive in Operations work and the Operations budget is not in a surplus position to enable giving up this funding. Mr. Witmer noted that staff was asked to bring forward options and this is one of the options. Mayor Zehr questioned if the equipment / program works and Mr. Berry advised that it is proven technology. Mayor Zehr questioned that given it is proven technology is there greater savings by using it if staff resources are available and Mr. Berry expressed the view this would be correct. Mayor Zehr questioned where savings would be seen in the budget. Mr. Witmer advised that if fully funded, Operations could do more with the dollars they have which would help lessen the deficit position and one area where there is not enough funding is in road maintenance. Mayor Zehr referred to the $500,000 in unfunded items, questioning if this is the type of expenditure that would be considered as part of that and if eliminated now, would it come back in some form or another as a matter to be addressed coming out of the Operations review. Mr. Witmer advised that it may be identified as a gap in current programming and funding available for those activities and may also identify what staff should be utilizing in terms of equipment and resources in order to meet the minimum maintenance standards. He stated that this may come back as part of the unfunded items or if eliminated, on top of those. Councillor Z. Janecki requested further clarification of use of the equipment. Mr. Berry advised that typically the equipment would be used over a 7 month period from spring to fall. He added that staff doing pothole repairs on a regular basis are resources committed to undertake activities to meet legislated requirements and cannot be diverted to accommodate this program. Councillor Janecki questioned the original cost of the equipment and Mr. D. Miller advised that the original cost was approximately $150,000. SPECIAL FINANCE AND CORPORATE SERVICES COMMITTEE DECEMBER 6, 2012 - 199 - CITY OF KITCHENER FCS-12-186 - 2013 OPERATING BUDGET (CONT’D) 1. It was noted that PR-04 (Centre in the Square Operating Grant / Potential Net Budget Reduction) was dealt with earlier this date. PR05 - Reduce Fire Services Staff Through Attrition Councillor J. Gazzola inquired what the total percentage of tax dollars is related to Fire Services. Mr. M. May advised that Fire Services equates to 29% of the overall Operating budget. Councillor Gazzola questioned the cost of installation of Direct Detect to the consumer and what the savings would be, and/or impact to response times, if all were required to have this system in their homes. Fire Chief T. Beckett advised that the City does not set the standards for fire service, noting that this is regulated under the Ontario Fire Code (OFC). He acknowledged that the City can invoke other provisions provided they do not supercede the OFC and pointed out that the legislation only provides that all households have working smoke alarms outside all sleeping areas and on each floor. He stated that the City cannot mandate installation of Direct Detect, except through development of new subdivisions built in areas where response times are longer than the standard adopted; and in this instance, Fire Services can require through the development agreement that the developer install Direct Detect. Fire Chief Beckett added that Fire Services will still be required as Direct Detect does not prevent fires but it will increase timing in which they are warned of a fire. Councillor Gazzola suggested response times would be considerably increased and again questioned the savings if Direct Detect was mandated. Fire Chief Beckett stated that it would facilitate increased protection on shorter response times but noted that Fire Services is currently at an optimum level of response for the size of the City regardless of Direct Detect. He added that it would be better to lobby the Province to mandate residential sprinklers that could put out the fire before Fire Services can reach the scene. Councillor Gazzola suggested that given Fire Services equates to 29% of the overall budget new ideas are needed to mitigate the costs. Fire Chief Beckett referred to the issue paper which proposes reduction of costs through attrition of existing staff. He expressed the view that Fire Services currently provides effective and efficient fire services in comparison to other th comparable municipalities, having operating costs per household at the 4 lowest level in its grouping and which is well below the Provincial average. Councillor Gazzola stated that he does not question the level of service provided but is questioning if there is anything that can be done to mitigate the substantial cost for fire services. Fire Chief Beckett stated that mitigation of costs was already done in the mid-90s through a Station Relocation Study which substantially reduced response times by relocating stations that reduced a model of 10-11 stations to the 7 existing stations and resulting in $2M in operating costs and diversion of capital costs that would have otherwise been needed for additional stations. Fire Chief Beckett suggested that where an impact on costs is needed is at the Provincial level through changes to the arbitration process, wherein the City has no control over wage increases awarded to fire fighters through arbitration. Councillor K. Galloway-Sealock questioned if the risks associated with the proposed reduction of staff through attrition has been factored into the estimated savings of $480,000. Fire Chief Beckett advised that it has not but what is anticipated is that through the proposed reductions removal of fire apparatus as ‘out of service’ will occur first and staff is still conducting analysis on the associated risks over time. He added that removal of an apparatus happens when staffing drops below the standard 35 fire fighters and it is not known how often this would occur if the proposed reduction is made. Councillor Galloway-Sealock asked that if possible estimates of this nature be provided for final budget day. She asked what the cost per household is in savings relative to the proposed reduction and Fire Chief Beckett advised it would equate to approximately $4.75 per household. Councillor Galloway-Sealock expressed the view that further decreases beyond what was approved for the 2012 budget cannot be made without adding risk to the community and she would not support the proposed reduction. Councillor F. Etherington referred to the substantial cost of Fire Services as it relates to the budget and that while a proposed reduction has been put forward, Fire Services management is opposed to the cut. He questioned what solutions Fire Chief Beckett would propose to control costs. Fire Chief Beckett reiterated that some costs are out of the City’s control related to wage increases awarded through arbitration, noting that 96% of Fire Services’ total budget is wages / benefits; and that significant reductions have already been made in the mid-1990s SPECIAL FINANCE AND CORPORATE SERVICES COMMITTEE DECEMBER 6, 2012 - 200 - CITY OF KITCHENER FCS-12-186 - 2013 OPERATING BUDGET (CONT’D) 1. resulting in cost avoidance that the City, unlike other municipalities, has benefited from. He pointed out that it is Fire Services goal to provide an optimum response time to meet the needs of the community and the costs of same in comparison to other cities illustrates that Fire Services is an effective and efficient run service. He added that any efficiencies to be achieved in staffing levels will result in a reduction in service levels. Fire Chief Beckett advised that it is Council who sets the level of service for the City and while it is his recommendation that the level of service should not change, should Council decide otherwise it will be his responsibility to implement the change in a manner that will have the least adverse effect to public and fire fighter safety. Councillor Etherington questioned if Fire Services senior management is also locked into the wage increases awarded through arbitration. Fire Chief Beckett advised they are not, noting that there is himself and 2 other Deputy Fire Chiefs that are excluded from the bargaining unit and receive the same pay increase as any other Director in the Corporation. Councillor Etherington questioned if it is desired to hire replacement staff for the pending retirements in order to maintain current standards and Fire Chief Beckett concurred. Councillor Etherington referred to retirements in 2011 and 2012 that have not made a difference to the budget, questioning if all vacancies were filled. Fire Chief Beckett advised that vacancies were filled in 2012 and there are no scheduled retirements for 2013; however, he has recently accepted letters of intention to retire from 2 staff in Fire Prevention, which will have to be filled in order to meet legislated requirements for inspections. Councillor F. Etherington made reference to a retention bonus and Fire Chief Beckett advised that it is not known as a retention bonus but rather as a 3-6-9 recognition bonus. Councillor Etherington expressed the view that reductions / efficiencies must be found as the City cannot afford these kind of increases. Fire Chief Beckett stated that he is not in favour of doing anything further that risks the public and fire fighters’ safety and he has provided his best advice based on his responsibilities under the Occupational Health and Safety Act to protect fire fighters and public safety. Councillor Z. Janecki questioned if employees who are eligible in 2013 have been approached about retirement. Fire Chief Beckett advised they have not as it is their choice as to whether or not to retire. Councillor Janecki requested clarification of the rationale behind relocating a fire apparatus to another location when staffing falls below 37 fire fighters. Fire Chief Beckett advised that vehicle allotment is reduced by one overall, with an aerial truck kept in service and a pumper reduced out of the Pioneer Park area. Two issues result, being that a truck is taken out of the Fairway / King Station and that area then becomes under-protected; and secondly, the aerial unit is slower on average and has increased response times in the Pioneer Park area as illustrated through compiled statistics. He added that through analysis, if there is a staff shortage and in order to keep an aerial truck in service, the best location has been identified as the Pioneer Park station. Councillor Janecki questioned if there are any other options that were considered and not brought forward. Fire Chief Beckett advised that there were options discussed which have labour relations implications and which would have to be discussed in-camera. Mayor C. Zehr referred to the chart identifying operating costs of Fire Services per $1,000 of property assessment, questioning if the figures are based on total assessment, ie. non- residential and residential. Fire Chief Beckett advised that was correct. Mayor Zehr questioned that since no retirements are scheduled in 2013 that this would mean no guarantee staffing levels would be reduced and the savings then only achieved by finding alternate funding within other Corporate budget lines to fund the reduction on an interim basis. Mr. M. May advised that based on past experience it is likely that there will be some retirements although the number may not reach 4; and bridge funding will have to be found elsewhere in the Corporation if the salary line is reduced by the total of $480,000 and no retirements occur in 2013. Mayor Zehr commented that if a lesser number than 4 retire throughout the year the City would still have to address a shortfall at some point in 2013. Fire Chief Beckett advised that the 4 staff would equate to 1 staff from each of 4 Platoons, and if a fraction of the 4 retire Fire Services would attempt to balance this out to maintain consistency from an operational perspective. He added that potentially if 2 retire there would be half the savings at half the associated risk of 4 retirements. Mayor Zehr commented that he is working with other Mayors across the Province to lobby changes to the arbitration process but this has not met with any great success. He stated that if some changes are not made to this process cities will have to start looking at unthinkable solutions as what is being awarded today is unsustainable. He SPECIAL FINANCE AND CORPORATE SERVICES COMMITTEE DECEMBER 6, 2012 - 201 - CITY OF KITCHENER FCS-12-186 - 2013 OPERATING BUDGET (CONT’D) 1. added that the issue of arbitration does not take into account the ability of the average ratepayer to pay and there is need for a day of reckoning. In response to Councillor B. Ioannidis, Fire Chief Beckett stated that fires double exponentially for every second they go on making response times crucial. He added that new home furnishings and construction materials have increased fire risks due to use of synthetics and plastics. To illustrate the importance of response times, he noted that the City had previously spent $100,000 in order to achieve a decrease in response times by 15 seconds for the Pioneer Park / Huron Road stations. Councillor Ioannidis suggested that due to today’s building standards it would appear to be more important than not to maintain service levels and Fire Chief Beckett agreed. Councillor Y. Fernandes questioned if staff have compared Kitchener to other cities in respect to station locations. Fire Chief Beckett advised that it took considerable time just to complete the station locations study for Kitchener and in order to study other cities he would require additional staff given the process would be arduous and time consuming. Councillor Fernandes raised concerns regarding the 3 tiered level of response to an incident, where in addition to Emergency Medical Services and police, Fire Services also responds to incidents that are not fire related but rather of a medical emergency. Fire Chief Beckett advised that Fire Services is partnered through a tiered response agreement and respond where they are able to make a difference in the outcome. Councillor Fernandes suggested that restricting Fire Services to fighting fires rather than doubling efforts for medical emergencies may be a more palatable reduction in service levels and also expressed the view that a day of reckoning of costs is needed. Fire Chief Beckett reiterated that he is recommending a level of optimal response times to ensure an effective / efficient operation that best meets the needs of the community. He further reiterated that the level of service is under mandate of Council and his responsibility is to implement same with the least impact to public and fire fighter safety. Councillor Fernandes questioned if the reductions in 2012 have resulted in any deaths or serious implications. Fire Chief Beckett referred to Issue Paper OP-02 which shows the number of times a fire apparatus was out of service, being 29 times from Feburary to August 2012 and which resulted in increased response times. He stated that there is no indication of serious implications as a result; however, there are documented situations where the apparatus was in service wherein Fire Services was able to provide more effective response times to the call with positive outcomes. Councillor S. Davey questioned how the City’s response times compare to the National average. Fire Chief Beckett reiterated that he did not have analysis on other Fire Services response times; however, he pointed out that the National Fire Protection Standard identifies a standard of response times that all strive to achieve. The standard provides for a total drive time of 5 minutes or less and Kitchener currently exceeds that standard due to traffic congestion, call volumes and areas where traffic calming has been implemented. Councillor Davey questioned if statistics on how Kitchener compares to other cities and across the country could be received for final budget day and Fire Chief Beckett advised he would make a best effort to provide additional information, noting that he would want to ensure that comparisons made are to like sized municipalities. Councillor Davey questioned what percentage of calls relate to fire incidents. Fire Chief Beckett referred to 2011 statistics, that show 9,500 calls received of which 282 were actually related to fire incidents, 5,500 to medical emergencies, 700 to motor vehicle collisions/rescues and the balance to other incidents such as hazardous materials, carbon monoxide and/or false alarms. Councillor Davey requested that information be provided for final budget day on the impact of the proposed staff reductions in terms of response times to the surrounding neighbourhoods of the affected Platoon. Councillor Davey stated that it is not intended to reflect that Fire Services is not effective or efficiently run, noting that the numbers per capita illustrate the service is very effective and efficient. In looking at the service, he wished to make clear that there are factors outside of Fire Services’ control that is having an adverse impact on its budget. He expressed the view that the value Council has placed on other priorities, such as building community trails, diverts funding to these other priorities and it was his position that he would not sacrifice service levels that would have impact to public safety for these other desired priorities. SPECIAL FINANCE AND CORPORATE SERVICES COMMITTEE DECEMBER 6, 2012 - 202 - CITY OF KITCHENER FCS-12-186 - 2013 OPERATING BUDGET (CONT’D) 1. PR06 - Fire Insurance Recoveries Chief T. Beckett advised that this program would allow Fires Services to recover certain eligible expenses from insurance companies with policies that provide coverage for fire department charges. He stated that while this type of cost recovery has been widely employed in the United States for a number of years, it is relatively new in Canada. Chief Beckett agreed to provide additional information as to the potential for back billing fire insurance recoveries for existing insurance claims. PR08 - Remove Downtown Bulk Garbage Bins Councillor B. Ioannidis declared a pecuniary interest and did not participate in any discussion or voting concerning this matter as members of his family use this service. In response to questions, Mr. S. Berry advised that the intent of this initiative was to transfer responsibility to the businesses / residents who use the six remaining bulk garbage bins. He indicated that nine of the 15 bins in the Downtown core were removed in 2003, and at that time, there was a small learning curve as some businesses were still placing garbage where bins had been removed. He added that discussions have been undertaken with Economic Development staff, as well as representatives of the Downtown Kitchener Business Improvement Area (BIA), to identify options to facilitate the removal and/or transfer of responsibility. PR09 - Limit Grant Funding Increase to 1% in 2013 The Committee agreed to withhold comments in respect to this matter as a report on the 2013 Community Grant allocations was scheduled to come forward for consideration at the December 10, 2012 Community and Infrastructure Services Committee meeting. In response to questions, Ms. L. Palubeski confirmed that the Leisure Access Card program would not be affected by this proposed reduction. PR10 - Reduce Council Technology & Home Office Budget Questions were raised as to the potential to reduce technology and home office expenses beyond the proposed $1,000. per year per member of Council. Ms. D. McCabe cautioned against implementing any further reductions, as some expenses have not yet been submitted and it is unclear whether the projected surplus would be fully realized. She added that it would be prudent to leave some flexibility in this account for when new Councillors are elected. Concerning the 2013 Divisional Budget Summary of Changes, Mr. Hagey agreed to provide the 2012 projected actuals and sub-totals for each Division for final budget day. ISSUE PAPERS In response to questions regarding Issue Paper OP03 concerning conference costs, Mr. M. Goldrup agreed to provide additional information as to the number of employees in each of the City’s Departments. Questions were raised regarding the chart included in Issue Paper OP06 comparing the City’s core staff complement per 1,000 population in relation to the use of overtime and absenteeism / paid sick time. Mr. Goldrup advised that the chart was intended to illustrate the ratio that staffing levels have not kept pace with the growing demand for services; thereby increasing overtime expenditures. He noted that this demonstrates a need for additional staff to address the impact that service demand is having on workload. Councillor Y. Fernandes requested that information be provided comparing the number of FTEs per 1,000 population for the Cities of Waterloo and Cambridge. Mr. D. Chapman agreed to provide the requested information, which should be available through the Municipal Performance Measurement Program. He cautioned that staff could not attest to the quality or comparability of that information. He pointed out that the City of Kitchener has fewer employees now than it did in 2007, which reflects the discipline that has been exercised SPECIAL FINANCE AND CORPORATE SERVICES COMMITTEE DECEMBER 6, 2012 - 203 - CITY OF KITCHENER FCS-12-186 - 2013 OPERATING BUDGET (CONT’D) 1. through recent budgets. He noted for comparison, that the City of Guelph recently approved their 2013 levy at 2.9% inclusive of 18 new FTEs. He noted that Kitchener’s approach over the past five years has been to tightly control adding new FTEs as a means of managing the tax levy. At the request of Councillor D. Glenn-Graham, staff agreed to provide an Issue Paper for final budget day outlining the rationale related to overnight security (11:00 p.m. to 7:00 a.m.) at City Hall and how this information compares to other local municipalities. Councillor J. Gazzola left the meeting at this time. On motion by Councillor D. Glenn-Graham - it was resolved: “That staff be directed to report and / or take appropriate action on the following matters arising from the December 6, 2012 special Finance and Corporate Services Committee meeting relative to the 2013 Operating Budget, as outlined in the chart below: TOPICACTION Household Provide percentage increases for taxes and utilities from 2010 Comparisons to 2012 for Kitchener, Waterloo and Cambridge. Physician / Specialist Provide an update on the physician and specialist recruitment Recruitment programs programs, noting terms of funding and 2013 funding amount. Kitchener Public Provide 3 year continuity schedule for Library - including Library (KPL) requested amount, approved amount and a list of items not approved for 2010 to 2012. Provide a list of reductions within Library to obtain .3% main branch deferral. BoardsProvide Financial Statements (2012 Budget, 2012 Actual, 2013 Budget) for KPL and Centre in the Square (CITS) Base Budget Provide a list of base budget reductions to obtain 3% Reductionsreduction Security Prepare Issue Paper regarding new Security Legislation. Issue Paper to include: details on the change in security legislation and impact to the library budget. information regarding additional cost of training City staff to provide security to KPL and compare to the cost of contracting security services. investigate and report on the legislative and financial impact if the City provided the full security services but did not charge for it. Provide information / rationale for overnight security (11:00 pm to 7:00 am) at City Hall and comparison information from local cities (e.g. Cambridge, Waterloo, Guelph, Hamilton, London) Building Provide a schedule comparing the FTE count of the past several years where circumstances were similar to those in 2012 in which vacancies, such as maternity leaves, were not filled. Parking Provide information detailing parking subsidies. SPECIAL FINANCE AND CORPORATE SERVICES COMMITTEE DECEMBER 6, 2012 - 204 - CITY OF KITCHENER FCS-12-186 - 2013 OPERATING BUDGET (CONT’D) 1. Gas Prepare issue paper to include advantages and disadvantages of transferring between Gas reserve and Tax stabilization reserve. Accelerated Provide amount spent in 2011 and 2012 and remaining Infrastructure balances in any AIRP capital accounts. Issue paper on rate Program impacts of reductions to the capital program. Impact to Home Include Impact to Home Owner as part of final Budget Day Owner presentation. Union Contracts Provide the number of staff involved in the two contracts to be negotiated in 2013. Sick Leave Provide the vested amount paid to retirees for sick leave over the last two years. Fire - Response Times Provide information on response times for neighbouring cities and national averages. Fire - Insurance Provide information on the possibility of back billing for fire Recoveries insurance recoveries. 2013 Divisional Budget Summary of Add a 2012 projected actuals and sub-totals for each Division. Changes Conference Costs Provide number of employees in each of the Departments. Issue Paper Staffing Levels Provide information of FTE per 1,000 population for the Cities of Waterloo and Cambridge.” “ ADJOURNMENT 2. On motion, the meeting adjourned at 5:04 p.m. J. Billett D. Livingstone C. Goodeve Committee Administrator Committee Administrator Committee Administrator