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HomeMy WebLinkAboutFinance & Corp - 2004-03-08 SMARCH 8~ 2004 Present: FINANCE & CORPORATE SERVICES COMMITTEE MINUTES CITY OF KITCHENER The Finance and Corporate Services Committee met in special session this date, commencing at 9:15 a.m. Chair Councillor B. Vrbanovic Mayor C. Zehr Councillors C. Weylie, J. Gazzola, J. Smola, M. Galloway and G. Lorentz Others: FIN-04-011 J. Fielding, Chief Administrative Officer P. Houston, General Manager of Financial Services/City Treasurer G. Sosnoski, General Manager of Corporate Services/City Clerk G. Stewart, General Manager of Development & Technical Services C. Ladd, General Manager of Strategic Services F. Pizzuto, General Manager of Community Services J. Grant, General Manager, Centre in the Square R. Browning, Fire Chief D. Quinn, Director of Utilities R. Pitfield, Director of Corporate Communications H. Gross, Director of Project Administration D. Gilchrist, Committee Administrator 2004 OPERATING BUDGET Ms. Houston presented the 2004 Operating Budget for the City of Kitchener, as recommended by the Administration, providing the following background information: the City has accommodated provincial downloading of $12M over the last 10 years; the Cities of Cambridge and Waterloo have had assessment growth which is greater than their population growth; whereas population growth and assessment growth in the City of Kitchener has been the same. Further the Consumer Price Index (CPI) for municipalities has been higher than the CPI for the general population. As the City's tax rate increases have been based on the CPI for the general population, there is a growing gap between the rate of inflation experienced by the City each year and the rate at which taxes are increased. Mr. Fielding explained that the gap between the residential CPI and the municipalities' CPI is one of the greatest problems facing all municipalities. In 2003, the household CPI increased by 2.2% whereas the municipalities' CPI was 3.4%. In the City of Kitchener this shortfall has been funded through the Tax Stabilization Reserve Fund. Ms. Houston then provided details of cost comparisons for the average household ($163,000 home) in Kitchener, Waterloo and Cambridge, noting that even though Kitchener's taxes are slightly higher, the overall costs in the City of Kitchener are slightly less due to lower costs for water, sewer, hydro and gas. Ms. Houston then reviewed overall employee comparisons between 1995 and 2002.Councillor Gazzola directed staff to provide actual numbers of full-time employees, by department for 1995 and 2002. The Committee then considered surpluses and shortfalls for 2003. Mr. Fielding advised that the increased cost of Operations relates to snowploughing, grass cutting and tree maintenance. Ms. Houston then noted the Operating base projections for upcoming years as follows: 2005 - 7.11%, 2006 - 3.89%, and 2007 - 3.84%. The Mayor directed that details of these percentages be provided to members of Council. Centre In The Square and Kitchener Public Library The Committee considered the 2004 Operating Budgets for the Centre In The Square and the Kitchener Public Library as recommended by the Administration. It was noted that the KPL 2004 Operating Budget is 2% over the 2003 Operating Budget, plus $133,000 to operate the new Country Hills Library. In addition, a budget allocations of $112,000 is being requested to allow for a cost of living increase of 3% plus an additional 1% to increase salaries to the industry standard. FINANCE & CORPORATE SERVICES COMMITTEE MINUTES MARCH 8, 2004 - 33 - CITY OF KITCHENER 1. FIN-04-011 - 2004 OPERATING BUDGET (CONT'D) Mayor Zehr questioned whether the budget allows for gapping, suggesting the requested $112,000 be reduced by $50,000 to provide for gapping. On motion by Mayor C. Zehr it was resolved: "That a 2004 Operating Budget of $6,730,514 for the Kitchener Public Library be approved." On motion by Councillor G. Lorentz it was resolved: "That a 2004 Operating Budget of $1,189,201 for the Centre In The Square be approved." Ms. Houston then advised that the 2004 Operating Budget, as being presented, including all the new initiatives to be presented this date, will require a tax levy increase of 4.6%. Noting the $117,000 revenue reduction created through the cancellation of the Building Inspection contract with the Township of Wilmot, Mayor Zehr questioned whether that full-time equivalent would be removed. Mr. Stewart responded the position will be maintained, as the City needs 80-90% for its Building staff as identified by the City's risk management study; further, building permit fees are in a surplus position. Councillor Lorentz requested details on the net savings/efficiencies totalling $594,000, identified by Ms. Houston. Concerning the growth adjustments for the new market of $67.000, Councillor Galloway requested the list of events for the Piazza programming. Councillor Gazzola directed staff to provide a comparison of costs between the old market and the new market. Enterprises The Committee next considered the 2004 Operating Budgets for the City's Enterprises. With respect to the Doon Valley Golf Course, Mr. Pizzuto advised that staff are undertaking an asset management review which includes examining the logic of opening the golf course expansion. Mr. Baulk advised that the City's options with respect to the Doon Golf Course can be outlined in the short term, and will be presented to Committee, who will be asked to give direction to staff. The Committee was also advised that a property appraisal is currently being undertaken. Mr. Fielding advised that the business case has been suspended until all options have been reviewed. Councillor J. Gazzola questioned why the 2004 budgest for the golf courses are not at least equal to the 2003 budget. It was explained that revenues are based on the number of rounds played which can change from year to year, and projected revenues should be conservative. It was also pointed out that administrative expenses will rise in 2004 due to a re-organization which took place in 2003. With respect to the Rockway Golf Course, Mayor C. Zehr questioned the change in transfers to capital and in particular the transfer to the master plan improvements. Mr. K. Baulk explained that it was decided to defer some of the course changes laid out in the master plan until 2007 - 2008. On motion by Councillor J. Smola it was resolved: "That the 2004 Operating Budgets for the Doon and Rockway Golf Courses as recommended by the Administration be approved." FINANCE & CORPORATE SERVICES COMMITTEE MINUTES MARCH 8, 2004 - 34 - CITY OF KITCHENER 1. FIN-04-011 2004 OPERATING BUDGET (CONT'D) The Committee next reviewed a 5-year projection 2004 - 2008 for the Gas Enterprise. In comparing the projected actual to the anticipated 2004 operating budget, staff advised that it is difficult to anticipate the level of consumption, and the transportation benefit has decreased. Further, delivery rates do not impact the cost of fuel which is established by outside bodies. Concerning the accumulated net revenue from the Gas Enterprise, Ms. Houston advised that Council approval has already been given to fund the deficit in water and sewer expenditures from the Gas Surplus. The transfers to other funds represents the City's dividend on its investment. On motion by Councillor C. Weylie it was resolved: "That the 2004 Operating Budget and 5-year Projection 2004 - 2008 for the Gas Enterprises, as recommended by the Administration, be approved." Mr. Fielding cautioned that should the regulatory body change the rules with respect to Gas Enterprises, the 5-year gas works projection may change, and it's important for the Committee to be aware of this possibility. Reserve Funds With respect to the draw from the Tax Stabilization Reserve Fund each year, Ms. Houston advised that the operating budget is more realistic, and revenues have not been over estimated. Mr. Fielding advised that a draw of $5M from the Tax Stabilization Reserve Fund has been necessary as further savings and increased revenues totalling that amount have not been found in the Operating Budget. He recommended that the City not continue to draw on this fund every year. Mayor Zehr added that the more the draw on the Tax Stabilization Reserve Fund is reduced, the closer the tax levy reflects actual expenditures. Mayor Zehr requested a detailed schedule of the funds in the Asset Management Reserve Fund. Ms. Houston advised that the revenues in this fund have come from the sale of lands the City has declared surplus. She also advised that there is no specific use for these funds at this time. Mayor Zehr also questioned the purpose of the Recreational Lands Reserve Fund. He directed staff to develop Terms of Reference for these two Reserve Funds for Council's approval. Ms. Houston advised they will be presented to Committee in approximately 2 months. The Committee then questioned the need for the Flood Damage Reserve Fund, and directed staff to advise, by Budget Day, if it is necessary to maintain this fund. Mayor Zehr questioned the Sick Leave Reserve Fund. Ms. Houston noted the City's policy is to have 25% of liability in reserve; however, the current Budget shows 15% of actual liability. Ms. Houston agreed to provide further details on the Sick Leave Reserve Fund. On motion by Councillor C. Weylie it was resolved: "That the 2004 Operating Budgets for the City's Reserve funds save and except the Tax Stabilization Reserve Fund, as recommended by the Administration, be approved, subject to receipt of the following: · details of the funds in the Asset Management Reserve Fund; · terms of reference for the Asset Management Reserve Fund and the Recreational Land Reserve Fund; FINANCE & CORPORATE SERVICES COMMITTEE MINUTES MARCH 8, 2004 - 35 - CITY OF KITCHENER 1. FIN-04-011 2004 OPERATING BUDGET (CONT'D) · an estimation of whether the Flood Reserve Fund is still required; and · details of the Sick Leave Reserve Fund." Council Initiatives and Service Level Increases The Committee next reviewed the list of initiatives and service level increases they may wish to add to the 2004 Operating Budget, and voted on each item separately, as follows: On motion by Councillor C. Weylie it was resolved: "That the 2004 funding request for the Children's Museum in the amount of $98,000, be approved." On motion by Mayor C. Zehr it was resolved: "That consideration of the request of the Business Enterprise Centre for an additional $50,000 of funding in 2004, be deferred and referred to the March 22, 2004 Finance and Corporate Services Committee meeting," On motion by Councillor J. Gazzola it was resolved: "That the request of Communiteq for 2004 funding of $35,000 from the City of Kitchener be denied; and further, That the City of Kitchener purchase a 2004 membership in Communiteq at a value of $5,000." On motion by Mayor C. Zehr it was resolved: "That the request of Canada's Technology Triangle for 2004 funding from the City of Kitchener for the Community Portal initiative, in the amount of $25,000, be approved." The Committee then considered the request of Kitchener Minor Hockey for additional funding in 2004, and the Committee was in receipt of a Budget Issue Paper from staff in this regard. The Issue Paper notes that Kitchener Minor Hockey is requesting an additional grant of $79,000 to help balance their 2004 - 2005 budget. The Budget Issue Paper contains a recommendation that an additional grant of $60,000 be approved, plus a 2% increase, for a total additional grant of $66,672.00. Mr. Baulk advised that the recommended amount has been arrived at through discussions between the City and Kitchener Minor Hockey. The discussions also identified savings that could be implemented, and Kitchener Minor Hockey will take over operation of the Hockey School next year. Mayor Zehr questioned the affects of a lesser grant and was advised that fees would have to be raised to a greater extent, which may affect participation. Councillor Lorentz put forward the recommendation in the Budget Issue Paper. Councillor Vrbanovic cautioned that staff must insure there is no frivolous spending and that Kitchener Minor Hockey is investigating other funding options. On motion by Councillor G. Lorentz it was resolved: "That an additional grant be awarded to Kitchener Minor Hockey of $60,000 plus a 2% inflationary increase for a total additional grant of $66,672." Carried Unanimously FINANCE & CORPORATE SERVICES COMMITTEE MINUTES MARCH 8, 2004 - 36 - CITY OF KITCHENER 1. FIN-04-011 2004 OPERATING BUDGET (CONT'D) The Committee was in receipt of a Budget Issue Paper regarding hiring an Internal Auditor, at a cost of $80,000. Ms. Houston stated that an Internal Auditor will give quantitative value for the dollars the City spends, as well as qualitative value to the taxpayers. An Internal Auditor should find savings equal to their salary. Mayor Zehr suggested that the City work in co-operation with the Region who is also investigating hiring an Internal Auditor. He noted that if savings equal the salary then this should not be an item added to the budget. Following further discussion Mayor Zehr put forward the following motion: On motion by Mayor C. Zehr it was resolved: "That no action be taken at this time to hire an Internal Auditor; and further, That as soon as possible staff report to the Finance and Corporate Services Committee with a plan as to how an Internal Audit function could be implemented." Councillor Vrbanovic requested the report be presented at the special Finance and Corporate Services Committee meeting of March 29, 2004. The Committee next considered a shortfall of $800,000 in the operating budget in the Operations Division of the Community Services Department. Mr. Fielding explained that the Administration is attempting to arrive at an adequate base budget for the Operations Division. Further, the issue is to get staff deployed when and where they are needed. Mayor Zehr questioned whether the Division could operate with $650,000, and Mr. Fielding responded that further efficiencies may be found; however, the Division can not function on any less than $650,000. Councillor Gazzola directed staff to provide details of the requested $800,000. On motion by Mayor C. Zehr it was resolved: "That subject to receiving detailed information from staff, an additional $650,000 be added to the Operations Division 2004 Operating Budget." The Committee considered the 2004 Operating Budget for Corporate Communications and Marketing - Tourism. When questioned by the Committee, Ms. Pitfield advised that, if necessary, the marketing portion of the Budget could be reduced by $10,000. Ms. Pitfield advised that staff are investigating other items which could be sold through the Your Kitchener Store, and advised that a report in this regard will be submitted for this Committee's consideration in approximately 2 months. Councillor Galloway directed that staff provide budget details for Corporate Communications and Marketings including Tourism. On motion by Mayor C. Zehr it was resolved: "That the City of Kitchener, through its Corporate Communications and Marketing continue to provide visitor information and sport tourism marketing through KW Tourism Your Kitchener Store at the former Public Utilities Commission Building at 195 King Street West; and further, That a 2004 Operating Budget for Corporate Communications and Marketing - Tourism be reduced by $10,000." The Committee was in receipt of a Budget Issue Paper recommending that an additional training officer be hired by the Fire Department, at a cost of $99,000. FINANCE & CORPORATE SERVICES COMMITTEE MINUTES MARCH 8, 2004 - 37 - CITY OF KITCHENER 1. FIN-04-011 2004 OPERATING BUDGET (CONT'D) When questioned as to whether this new position could wait another year, Mr. R. Browning noted the KPMG report recommending proper training for fire fighters. He also advised that there are inquest repercussions with respect to proper training for fire fighters. Councillor Gazzola questioned the possibility of co-operating with other emergency services, and was advised by Mr. Browning that the possibility is being investigated, but there are labour issues to be addressed. On motion by Councillor G. Lorentz it was resolved: "That an additional training officer be included in the 2004 Operating Budget for the Kitchener Fire Department, at a cost of $99,0002 The Committee then considered an increase of $14,491.00 in the Facilities Management Operating Budget, reflecting increased utility costs for the indoor facility at Budd Park. Mr. Fielding noted the expense of this facility, and questioned whether it is appropriate to have this facility in the City's asset mix. On motion by Councillor G. Lorentz it was resolved: "That the 2004 Operating Budget for the Facilities Management Division be increased by $14,491.00 to cover increased energy costs for the indoor facility at Budd Park." Mayor Zehr questioned whether the funding request of the Waterloo Wellington Training and Adjustment Board is a one-time request. Mr. Pizzuto responded that it is, and this group does not meet the City's policy for general provision grants. On motion by Councillor J. Gazzola it was resolved: "That a one-time grant of $10,000 be approved to assist the Waterloo Wellington Training and Adjustment Board to establish a Community Development Project, known as Hire Profitability, with the funding to be paid from the General Provision Grant Account." The Committee next considered the request of the Woodworking and Craft Centre Association for a capital grant in 2004 and an operating grant in subsequent years. On motion by Councillor J. Smola it was resolved: "That a grant be approved for the Woodworking and Craft Centre Association in the amount of $16,100.00 in 2004 for one-time renovations to the space they will occupy in the St. Louis Adult Education Centre; and further, That commencing in 2005 an annual grant be approved for the Woodworking and Craft Centre Association, in the amount of $46,631.00." It was generally agreed that consideration of the Budget Issue Paper relative to the Capital Reserve Fund for the KMA Complex be deferred to the special Finance and Corporate Services Committee meeting of March 29, 2004. MARCH 8~ 2004 FINANCE & CORPORATE SERVICES COMMITTEE MINUTES - 38 - CITY OF KITCHENER ADJOURNMENT On motion the meeting adjourned at 1:10 p.m. Dianne Gilchrist Committee Administrator