HomeMy WebLinkAboutFinance & Admin - 1995-01-27 SFAC\1995-01-27-SPE
JAN UARY 27, 1995
FINANCE & ADMINISTRATION COMMITTEE MINUTES
CITY OF KITCHENER
The Finance and Administration Committee met this date, commencing at 9:15 a.m., under the
Chairmanship of Councillor J. Ziegler with the following Members present: Councillors T. Galloway, K.
Redman, Jake Smola, John Smola, B. Vrbanovic, M. Wagner and M. Yantzi. Mayor Richard D. Christy,
Councillors G. Lorentz and C. Weylie were in attendance for part of the meeting.
Others present: Messrs. T. McKay, J. Gazzola, L. Ryan, O. den Ouden, R. Freeborn, W. Beck, J.
Ciccutin, D. Paterson, R.W. Pritchard, L. Proulx, P. Summers, L. Gordon, L. Parkhouse, D. Anderson, G.
Borovilos, G. Sosnoski, Ms. B. Baker, Ms. S. Tranter, Mrs. J. Koppeser, Ms. V. Gibaut, Ms. R. Upfold, Ms.
P. Houston and Ms. S. Curzon.
The Committee met this date to consider the 1995 Operating Budget as recommended by the
Administrative Review.
1995 OPERATING BUDGET
Mr. Gazzola reviewed the current budget position noting that at present there would be a levy
increase of .48% is forecast and that a reduction of $276,000.00 in expenditures is required to
bring the proposed increase down to zero. In response to a question from Councillor Ziegler it
was noted that by Council policy, the budgeted contribution from the Tax Stabilization Reserve
Fund is $1.7 million dollars.
Mr. Gazzola reviewed highlights of the Operating Budget for the Department of Administration and
Transit on a Division by Division basis, noting a proposed budget of $7.8 million dollars reflecting a
4% increase. Mr. Gazzola pointed out that budgeted progressions for all City departments include
any job grade increases.
Councillor Galloway inquired whether there have been as many downward grade changes as
upward, and Mr. McKay replied that if the staff compliment remained the same this would be case;
however, with downsizing there is a spreading of responsibilities and under the present rating
system some individuals will qualify for job grade increases. Councillor Galloway expressed his
concern that every department budget seems to reflect positive progressions which go directly to
the base budget, and suggested there should be some averaging of increases and decreases
over time. Mr. Gazzola pointed out that the figures before Council this date are net of any
increases and decreases, and Mr. McKay indicated that staff would follow up on Councillor
Galloway's comments and do a comprehensive analysis. Mr. Gazzola advised that the net figure
for the entire City reflects a $150,000.00 credit relative to progressions and job grade changes and
includes Fire Department figures. It was also noted that if the Fire Department figures were
removed it would be a $20,000.00 increase across all departments. Councillor Ziegler requested
a list of progressions and reclassifications by department.
Councillor Jake Smola asked for the total budget for paid staff parking in the Information Services
Division and Mr. Gazzola agreed to provide a comprehensive report by City department and
division. With regard to Information Services it was noted that paid parking has increased by
approximately $6,000.00, in part due to the necessity of staff accessing remote City facilities.
Councillor Weylie inquired as to funding of the hardware costs relative to the Internet and Mr.
Freeborn advised that these would have to be debited from the Infrastructure Account of the
Computer Reserve Fund, which is the same fund used for all other staff requests. Mr. McKay
noted that in 1994 there was $700,000.00 in expenditures relative to this fund and over $1 million
dollars in requests.
Councillor Jake Smola requested information on changes in the entire City staff compliment from
1990 to 1994. Mr. Freeborn replied that due to the mainframe conversion process some of this
information may have to be compiled manually and may not be comprehensive. He indicated that
he could provide what information the City has by department, and agreed to forward this as soon
as possible. He stressed that the request involves a comprehensive study and will require a
significant amount of staff time. Mr. McKay asked whether Councillor Smola had any specific
areas of concern, and asked that these be forwarded to Mr. Freeborn by Budget Day.
1995 OPERATING BUDGET - cont'd
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CITY OF KITCHENER
Councillor Smola indicated that he was looking for an overview of changes and growth in City staff,
and questioned whether it would not be a standard practice for an organization of this size to
monitor staff changes. Mr. McKay agreed that such monitoring is standard, however, the City's
mainframe system would not support this type of tracking. Councillor Smola asked that to start, he
be provided with organizational charts from 1988 to 1995.
Councillor G. Lorentz entered the meeting at this time.
Mr. Beck reviewed his memorandum of January 25, 1995 relative to various Transit Operating
Budget items and a proposed expansion of service. He also referred to elements of a Strategic
Marketing Plan intended to minimize the ridership declines which are prevalent across Ontario.
Mr. Beck noted that if Council were to approve the net 3% fare increase proposed by staff,
ridership would likely decline by approximately 1.8%, but revenue is expected to increase by
approximately $100,000.00. Alternately, he pointed out that if there is no fare increase in 1995
ridership will likely decline in any case by .8% and there will be a resulting decrease in revenue of
approximately $89,000.00 which would have to be addressed in the Division budget. Mr. Beck
pointed out that the proposed fare increase is being accompanied by service improvements. He
outlined the proposed improvements having a net cost of $104,400.00 and noted that customers
are generally more sensitive to the degree of service access than to fare increases. He advised
that new fare strategies are presently being considered as well as methods of increasing off-peak
ridership. He strongly urged Council to approve the fare increases outlined in his earlier report of
January 7, 1995.
In response to a question from Councillor Jake Smola, Mr. Beck advised that since 1990 transit
fares have increased by approximately five cents per year. Councillor Wagner suggested that he
does not support fare increases in the absence of the Strategic Marketing Plan which was
previously requested by Council. He noted the absence of a plan to attract passengers who do
not presently use the system, adding that past transit strategies seem to be limited to stemming
ridership declines alone. Mr. McKay replied that it is unfair to say that Transit has not addressed
the issue of new riders and pointed out that demographic trends indicate the number of younger
riders are declining as a captive ridership group and at the same time the senior population is
increasing in size. He noted several initiatives undertaken by Transit to encourage use of the
system by seniors, including the installation of concrete pads at bus stops and the use of Iow floor
buses. Councillor Wagner questioned whether non-transit riders are aware of these and other
improvements and suggested that communications in this area could be improved.
Councillor Ziegler reviewed the schedule of proposed fare increases outlined in Mr. Beck's
January 7, 1995 report.
Councillor Galloway inquired as to the status of service to Cambridge and Mr. Beck replied that
this is presently being negotiated and that the Province would subsidize such a venture.
Councillor Galloway indicated his interest in seeing a City provided service option in this regard.
He further noted that Mr. Beck's report does not illustrate the cost of the Transit system to the
taxpayer, and Mr. Gazzola replied that over a ten year period the impact on the taxpayer has not
changed. Councillor Vrbanovic asked whether the City would pursue two of the proposed service
improvements in the City of Waterloo if they did not agree to contribute and Mr. Beck replied that
these service options would be dropped in that case. Councillor Vrbanovic suggested there may
be benefits in using smaller vehicles on less travelled routes and during off-peak times. Mr.
Freeborn replied that this initiative was examined in the 1980's and that though there is a
perception of savings due to the size of the vehicle, the actual savings are marginal at best and
there is an impact on parts inventory. Councillor Vrbanovic requested a copy of the 1980 report
and Mr. Freeborn indicated that he would try to locate it or provide comparable prices.
Mayor Christy referred to the Marketing Plan outline in Mr. Beck's report and noted that the
absence of a marketing strategy includes a radio or t.v. component. He questioned whether it
would be advantageous to increase promotion coincident with the fare increase. Mr. Beck advised
that this could be done if the fare increases were introduced on March 1, 1995.
1. 1995 OPERATING BUDGET - cont'd
Councillor Weylie indicated her support for reinstituting the ticket system and disagreed with any
increase in the cost of bus passes, though she would support individual cash fare increases.
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CITY OF KITCHENER
Councillor Lorentz put forward a motion that further consideration of the proposed fare increases
be delayed until the Transit Division has presented its Marketing Plan in February of 1995. He
suggested that this strategy is necessary in order to make an informed decision.
Councillor Wagner indicated that he would not support a fare increase in the absence of a
Marketing Plan, and Mayor Christy indicated he would support an April 1, 1995 implementation
date. Mr. Freeborn suggested that the fare increase is a separate issue from the marketing
strategy and indicated that the latter would be available for presentation to the Public Works and
Transportation Committee on February 27, 1995. Councillor Jake Smola indicated his hope that
the Marketing Plan would include new route development, specifically in the Stanley Park area,
where at present some service standards have not been maintained. He suggested that services
need to be installed when new subdivisions are constructed, especially where a major arterial road
is involved, and used the example of a seven year delay in the Lackner Boulevard area.
Councillor Lorentz accepted as a friendly amendment the suggestion of Councillor Ziegler that a
fare increase be implemented on April 1, 1995.
The motion by Councillor G. Lorentz, as amended, was then voted on and,
It was resolved:
"That Transit staff present their proposed Strategic Marketing Plan for
consideration by the Public Works and Transportation Committee on
February 27, 1995 and that the fare increases itemized in the report of Mr. W.
Beck dated January 7, 1995 be implemented effective April 1, 1995."
Mr. Gazzola estimated the financial impact of a delay in implementation at a minimum of
$60,000.00.
On a motion by Councillor M. Wagner,
It was resolved:
"That the 1995 Operating Budget for the Department of Administration and
Transit be approved as submitted by the Administrative Review, and as
amended this date to reflect a reduction in fare revenue."
Mr. Gazzola reviewed highlights of the Department of General Services and City Clerks (includin,q
Fleet), noting a proposed budget of $3.4 million dollars resulting in an increase of 2.5%. Mr.
Gazzola also asked that the Election Reserve Fund contribution be increased.
On a motion by Councillor M. Wagner,
It was resolved:
"That the Election Reserve Fund allocations be increased in the amount of
$2,000.00 annually so as to include expenses related to the City Council
inauguration."
Mr. Parkhouse asked for a review of the budgeted charges for recovery of printing and postage
costs, noting that the budget figure of $57,158.00 differs from his $52,400.00 estimate. Mr.
Pritchard added that a reduction in charges for Neighbourhood Association printing should also be
reflected in grant allocations. Mr. Gazzola indicated that the recovery would be adjusted by
$5,000.00.
1995 OPERATING BUDGET - cont'd
Councillor Galloway referred to a recent review of the Strategic Plan for the Environment
undertaken by the Environmental Committee, and noted that due to a shortage of time only one or
two priority projects have been addressed in the Energy Management section. Mr. Pritchard
advised that there is insufficient staff to achieve these goals, and when the Plan was submitted it
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CITY OF KITCHENER
was with the proviso that it would be implemented based on available staff resources. He
suggested that part-time or co-op student staff could be hired to speed the process. Councillor
Galloway asked whether this would insure that more projects are addressed and Mr. Proulx replied
that he would like direction from Council as to whether any available time would be used on the
City Hall building or on another specific Energy Management project. Mr. Pritchard reminded the
Committee that implementation of the Revolving Energy Fund means a decrease in capital to
address projects and that this is a constraint over and above the staff issue. Councillor Galloway
expressed concern over an implementation of the Strategic Plan For The Environment, if the past
performance of Energy Management is indicative of other departments. Mr. McKay pointed out
that Council approval would not be required to hire a co-op student with a corresponding charge to
the Capital Budget. Councillor Galloway indicated that he was reluctant to direct additional staffing
and expenditures and referred to earlier assurances made when the Plan was submitted that the
projects could be implemented over a short period of time using existing resources.
In reference to accident recoveries in the Fleet Division, Mr. Gazzola advised that he will examine
whether this should be funded from the Insurance Reserve Fund. Councillor Lorentz inquired as
to how competitive the City is with the private sector concerning minor maintenance items such as
oil changes. Mr. McKay replied that Fleet productivity is very high by industry standards, and
noted that the Director of Fleet will report in this regard at a future date.
On a motion by Councillor M. Wagner,
It was resolved:
"That the 1995 Operating Budget for the General Services and City Clerk's
Department (includinq Fleet) be approved as submitted by the Administrative
Review, and as amended this date."
Mr. Gazzola reviewed highlights of the Budget for the Chief Administrative Officer, noting a
proposed budget of $169,000.00 and a net increase of .6%.
On a motion by Mayor Richard D. Christy
It was resolved:
"That the 1995 Operating Budget for the Chief Administrative Officer, be
approved as recommended by the Administrative Review."
Mr. Gazzola reviewed highlights of the Finance Department, noting a proposed budget of $2.3
million dollars, reflecting an 1.8% increase.
Councillor C. Weylie left the meeting at this time.
On a motion by Councillor T. Galloway,
It was resolved:
"That the 1995 Operating Budget for the Finance Department be approved
as recommended by the Administrative Review."
Mr. Gazzola reviewed highlights in the Economic Development Department, noting a proposed
budget of $431,986.00 reflecting a 1.4% increase.
1995 OPERATING BUDGET - cont'd
On a motion by Councillor T. Galloway,
It was resolved:
"That the 1995 Operating Budget of the Economic Development Department
be approved as recommended by the Administrative Review."
Mr. Gazzola reviewed highlights of the General Revenues and Expenses Budqet noting reductions
FINANCE & ADMINISTRATION COMMITTEE MINUTES
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CITY OF KITCHENER
of $94,000.00 for a net decrease of 74%. He indicated that he would report back on the
$350,000.00 1995 Budget Provision for Supplementary Assessment, noting that Council could
decide to pass these costs along to the user. In response to a question from Councillor Yantzi, Mr.
Gazzola clarified that new assessments are added to the tax roll throughout the year and that
twenty years ago this assessment function was performed by the municipality; however, the
Province took this over and has since decided to levy a fee for each additional assessment
undertaken throughout the year. Mr. McKay cautioned that the Province may attempt to implement
a fee for all assessment services, noting that this was discussed in the context of disentanglement
initiatives which ceased at the time of the Expenditure Control Plan. Mr. den Ouden indicated that
supplementary assessment fees for new homes, commercial and industrial properties and shared
parking would range from between $50.00 and $125.00, the highest fee being for a new detached
residential unit, and that this would be a one time charge.
Councillor Galloway referred to his previous suggestion that the City meet with provincial MPPs to
discuss this and other downloading issues. He suggested that if the City budgets for this service it
will be passively accepting the situation imposed by the Province, and noted that the fee should be
assessed against individual properties emphasizing that this is a result of Provincial downloading.
Councillor Galloway indicated that he does not support the City absorbing these costs indefinitely
and would have no problem with adding $125.00 fee to the cost of a new home. Councillor Ziegler
argued that this amounts to a lot levy increase on properties which are being brought into the City
and will pay property taxes in future. Mr. McKay reminded the Committee that Council had passed
a resolution in this regard and that the Association of Municipalities of Ontario has been actively
engaged in promoting the position of municipalities. Standard responses were received from most
area MPPs, the Treasurer and the Premier. He pointed out that if the assessment payment is not
made to the Province, it would be deducted from conditional grants and this would be one method
of delaying payment. He referred to previous discussion concerning the passing of this charge
onto the property owner and it was decided at that time that it would be wrong to duplicate the
actions of the Province. Mr. Gazzola offered the opinion that downloading of the cost of this
service by the Province is wrong, though only municipal councils are aware of the situation, and
suggested that billing is one way of informing the public of actions taken by the Province. Mr.
McKay referred to the Provincial argument that supplementary assessment is revenue generating
and on that basis should be paid for locally. Councillor Yantzi questioned whether individual
property owners could be directed to write a cheque to the Province for preliminary assessment
fees in the event the City does not pay this expense out of the general levy.
Mr. Gazzola pointed out that at present there is no allocation in the budget for an increase in
interest or arrears rates. He indicated that staff would re-examine the issue and recast the figures
though he personally feels that the present rate is appropriate. He also advised that at present the
budget reflects a $7,634.00 reduction in the grants paid out by the City, and suggested that the
earlier printing recovery correction be left unallocated for possible grant use.
Councillor Galloway put forward a motion (which was subsequently withdrawn) to reduce the
budgeted amount for the supplementary assessment charges from $350,000.00 to $150,000.00,
and to devise a way to recover the difference which he referred to as the "Provincial
Supplementary Assessment Surcharge" by passing this along to those responsible for bringing the
reassessment on line.
Mr. Gazzola suggested, and it was generally agreed, that the supplementary assessment issue be
flagged for further consideration on Budget Day.
1995 OPERATING BUDGET - cont'd
Councillor Ziegler advised that he would not support passing this charge onto individual property
owners as it sends a negative message to new owners in the community and was part of the tax
base twenty years ago as it should be now. Mr. McKay suggested that given the volume of
matters referred to Budget Day, this issue, being a matter of principle, could be debated at
Monday's Finance and Administration Committee Meeting.
On a motion by Councillor T. Galloway,
It was resolved:
"That the 1995 Budget for General Revenues and Expenses be adopted, and
FINANCE & ADMINISTRATION COMMITTEE MINUTES
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CITY OF KITCHENER
the issue of supplementary assessment charges dealt with on or before
Budget Day."
Mr. Gazzola then presented a detailed review of Reserves and Reserve Funds.
In reference to the Senior Management and General Training Reserve Funds, Mr. McKay noted
that the City of Kitchener is recognized as having one of the best staff training programs in the
Province, and that in this regard a senior officer from the Ministry of Municipal Affairs recently
asked the City to accept a visiting delegation from the Ukraine.
Brief discussions took place on the City's Insurance Reserve Fund centering around the impact of
premiums. A discussion also took place concerning the Tax Stabilization Reserve Fund and the
plan approved by Council in 1994 to replenish and reduce dependency on the Fund. Concerning
the Recreational Land Reserve Fund, Mr. Gazzola noted that funds for both the CP surplus lands
and the Rittenhouse lands are committed, and Councillor Galloway suggested the amount in the
fund seems Iow relative to demand. Mr. Gazzola acknowledged that recreational land is
underfunded based on a six year projection, and that he would not suggest any unfunded capital
outlay in this regard. Councillor Galloway argued that the anticipated shortfall should be dealt
with, possibly through a transfer from another fund. A review took place of the Sick Leave
Reserve Fund and Councillor Ziegler asked staff to provide the current percentage for funding of
the sick leave liability. He also asked for an update on the Retirement Incentive Program.
Councillor Galloway asked whether staff would be opposed to reducing the transfer to this Fund in
1995 by approximately $100,000.00 and Mr. Gazzola replied in the affirmative, noting that this is a
liability which must be addressed.
On a motion by Mayor Richard D. Christy
It was resolved:
"That the 1995 Budget for Reserves and Reserve Funds be approved."
Mr. Ryan reported that at present the City faces a .5% levy increase with a dollar value of
$336,000.00. Councillor Ziegler asked for direction to staff.
On a motion by Councillor M. Wagner,
It was resolved:
"That staff be instructed to identify options which would allow the present levy
increase to be reduced to 0%, and that these be presented for consideration
on or before Budget Day."
Mr. McKay commented that he is assuming staff are not to select an option based on a reduction
in service, but to identify sustainable options. Councillor Galloway agreed, provided all items,
including reserve funds, are options.
Councillor Galloway referred to previous Council direction requesting staff to prepare a Woodlot
Acquisition Reserve Fund report for discussion as part of the budget process, and read the
resolution in the regard. Councillor Ziegler indicated that staff should make an effort to get this
information. Mayor Christy noted that this was direction of a previous Council and suggested
1995 OPERATING BUDGET - cont'd
it may be appropriate to deal with the request outside of the budget process. Councillor Ziegler
asked for an update on the status on the Parks and Recreation Woodlot Acquisition Fund report
for Budget Day.
In response to a question from Councillor Jake Smola, Mr. Gazzola agreed to place two copies of
the 1995 line by line budget in the Mayor's Office.
NEXT MEETING
Final consideration by Council of the 1995 Operating and Capital Budgets is scheduled for
February 10, 1995.
FINANCE & ADMINISTRATION COMMITTEE MINUTES
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CITY OF KITCHENER
ADJOURNMENT
On motion, the meeting adjourned at 2:25 p.m.
........... G. Sosnoski
........... Manager of Corporate
........... Records/Assistant City Clerk