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HomeMy WebLinkAboutFinance & Admin - 1996-01-19 SFAC\1996-01-19-SPE JAN UARY 19, 1996 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, G. Lorentz, K. Redman, Jake Smola, John Smola, B. Vrbanovic, M. Wagner, C. Weylie and M. Yantzi. Mayor Richard D. Christy was in attendance for part of the meeting. Other present: Ms. P. Houston, Ms. S. Fisher, Ms. V. Gibaut, Ms. S. Curzon, Ms. R. Upfold, Ms. B. Baker, Messrs. T. McKay, J. Gazzola, R.W. Pritchard, L. Proulx, P. Summers, B. Gulliver, L. Gordon, T. Clancy, E. Kovacs, S. Gyorffy, B. Musselman, J. O'Rourke, J. McBride, D. Snow, D. Mansell, J. Cicuttin, W. Beck, L. Lynch, M. Grummett, M. Kovatch, G. Sosnoski. 1996 OPERATING BUDGET Councillor Lorentz read a definition of "downsizing" and suggested that the public sector should follow the example of the private sector and investigate further options in this regard. He stressed the need to question what it is the City does, how it does it and why, and to re-examine core services. He also offered the opinion that the only significant, sustainable savings are through downsizing. Mayor Christy noted that Council will be meeting with senior staff on January 22, 1996 and that the issue of hiring an external auditor to evaluate City operations could be discussed at that time. He expressed concern that the corporation which has served the City well in the past should be kept intact, and stressed the need to look closely at department budgets. He also acknowledged that Council requires the expertise of staff in identifying and evaluating possible savings through integration of services and possible downsizing. He suggested that discussion should take place at the upcoming Council/Senior Management meeting in regards to the level of satisfaction with existing service delivery and that steps should be taken to formulate a clear vision of the future. Mayor Christy also stressed the need to resolve these issues as a Staff/Council team. He asked staff to show cooperation and creativity in identifying possible service integrations and suggested that Council must seriously consider the 1% pay increase presently in the budget. He added that now more than ever, the City requires highly motivated staff and made general reference to areas where services may need to be expanded and others which could perhaps be downsized. Councillor Yantzi advised that he would not support a "meaner and leaner" approach, since in his view there is already enough meanness demonstrated at the Provincial level. He acknowledged a need to be sensitive as regards the cost of government, but also to be responsible in terms of both public service delivery and municipal staff. Councillor Ziegler suggested that this type of discussion should take place at an upcoming roundtable session and should not be raised in the middle of the budget process. Councillor Lorentz suggested that a quick fix will not solve the problems presently faced by Provincial and municipal governments and that change is required whether it is wanted or not. Councillor Wagner added that before finalizing the budget he would like to bring forward some budget reduction options he favours for consideration by Council and staff and offered the opinion that to date, Council has not adequately dealt with this issue. Councillor Vrbanovic pointed out that in his mind the most important need is to ensure sustainable quality of life for the citizens of Kitchener, and that reductions do not necessarily have to translate into staff layoffs. He stressed the need to work better within the organization, not necessarily harder. Councillor Vrbanovic also observed that downsizing starts at home, and when faced with the opportunity to do so in its own budget, Council did not follow this line of action. Mayor Christy suggested that the initiatives referred to by Councillor Wagner should be brought forward for discussion at the upcoming roundtable meeting involving Council and Senior Management. Councillor Jake Smola suggested that the January 22, 1996 meeting referred to by Mayor Christy is to deal further with governance issues, and that departmental reviews are a separate issue. Mr. Gazzola advised that as a result of the budget meeting on January 15, 1996, Council made budget cuts totalling $331,000.00 and at this point the levy increase stands at 3.49%. 1. 1996 OPERATING BUDGET - CONT'D FINANCE & ADMINISTRATION COMMITTEE MINUTES JAN UARY 19, 1996 - 22 - CITY OF KITCHENER Mr. Clancy requested clarification of direction given by Council on January 15, 1996 concerning identification of "administrative economies" in the Parks and Recreation Department. He advised that the Department is prepared to set a further budget reduction target of $50,000.00 which will be achieved throughout 1996, with reports to Committee every other month. In response to a further question from Councillor Jake Smola, Mr. Clancy advised that the proposed $50,000.00 reduction is less than 1% of the Department's salary budget. Councillor Jake Smola offered the opinion that it is reasonable to request an additional 2-3% reduction in addition to the regular operating surplus. Mayor Christy suggested that the further budget reduction pledged by Mr. Clancy should be realized through cuts in administrative cost. Moved by Councillor M. Yantzi - "That in addition to the budget reductions already proposed by the Parks and Recreation Department, an additional $50,000.00 reduction in the Department budget is to be made during the course of 1996, with reports in this regard to be submitted for consideration by the Finance and Administration Committee on a bi-monthly basis." Mr. McKay pointed out that the Parks and Recreation Department has been recently reorganized and that staff are still looking for improvements and economies and will continue to do so in the coming year in an effort to offset further Provincial cuts. He suggested that Council accept as a minimum the $50,000.00 figure referred to by Mr. Clancy, but not treat this as a quota for the year. The previous motion by Councillor M. Yantzi to accept a further $50,000.00 budget reduction from the Parks and Recreation Department was voted on and Carried. Mr. Gazzola reviewed highlights of the General Services and City Clerk's Department budget noting that there is no net increase. He also advised that there are budget reduction items for this Department on Lists A & B totalling $117,000.00. Mr. Gazzola then reviewed highlights of the Clerk's Division budget noting an increase of 1.6%. On a motion by Councillor M. Wagner - It was resolved: "That the 1996 Operating Budget for the Clerk's Division be adopted, subject to a final decision on the proposed 1% inflationary increase in staff wages." Mr. Gazzola reviewed highlights of the Facilities Manaqement Section budget, noting a reduction of 0.6%. He also advised of two items on List B involving the layoff of two part-time custodians and a reduction in bus shelter maintenance for a total projected savings of $30,000.00. In response to questions, Mr. Proulx advised that the City presently employs 14 part-time custodians and that the proposed reduction would have no impact on set-up for City Hall rentals to outside groups. Councillor Vrbanovic questioned whether there would be any savings in combining the two Building Services sections in Clerk's and Parks Operations and Mr. McKay replied that staff have been studying this over the last eight months and will come forward with a report in the next month of two. Councillor Jake Smola questioned whether it would be more cost effective to hire two part-time employees for custodial services as opposed to full-time custodians, of which the City presently has five in this area. Mr. McKay cautioned that this issue has to be looked at in the context of labour relations practices and the Collective Agreement. He pointed out that part-time employees are used for shift work, and that where there is 40 hours of continuous employment in a week, the positions would have to be converted to full-time status. He referred to recent instances where the City was forced to convert part-time positions to full-time for this reason. 1996 OPERATING BUDGET - CONT'D On a motion by Councillor C. Weylie - It was resolved: "That the 1996 Operating Budget for the Facilities Manaqement Section be adopted as amended to include the layoff of two part-time custodians and a reduction in bus shelter FINANCE & ADMINISTRATION COMMITTEE MINUTES JAN UARY 19, 1996 - 23 - CITY OF KITCHENER maintenance for a combined projected savings of $30,000.00, and further, That the above be subject to a final decision on the proposed 1% inflationary increase in staff wages." Mr. Gazzola reviewed highlights of the Purchasinq Section budget, noting a reduction of 2.4%. He also advised of an item on List A involving reduction in advertising costs for a projected savings of $2,000.00. On a motion by Councillor C. Weylie - It was resolved: "That the 1996 Operating Budget of the Purchasinq Section be adopted, as amended to include the item on List A involving a reduction in advertising costs for a projected savings of $2,000.00, and further, That the above is subject to a final decision on the proposed 1% inflationary increase in staff wages." Mr. Gazzola reviewed highlights of the Fleet Division budget, noting an overall 0.2% increase. He also noted two items on List A involving the elimination, through attrition, of one mechanic and one serviceman for a combined saving of $85,000.00. In response to a question from Councillor Lorentz, Mr. Gulliver advised that staff in this area have been reduced by 30% over the last three years and that the remaining staff are willing to reduce there time standards in order to cover off the additional workload. On a motion by Mayor Richard D. Christy - It was resolved: "That the 1996 Operating Budget for the Fleet Division be adopted, as amended to include both items on List A involving the elimination, through attrition, of two staff positions for a projected savings of $85,000.00, and further, That the above is subject to a final decision on the proposed 1% inflationary increase in staff wages." Mr. Gazzola reviewed highlights of the Economic Development Department budget, noting a net reduction of approximately 16%. He also advised of an item on List A involving a reduction in the promotional budget for a projected saving of $6,000.00. Ms. Gibaut clarified that the reduction relates to the recognition of local businesses. On a motion by Mayor Richard D. Christy - It was resolved: "That the 1996 Operating Budget for the Economic Development Department be adopted, as amended to include the item on List A involving a reduction in the promotional budget for a projected saving of $6,000.00, and further, That the above is subject to a final decision on the proposed 1% inflationary increase in staff wages." 1996 OPERATING BUDGET - CONT'D Mr. Gazzola reviewed highlights of the Public Works Department budget, noting an overall reduction of 0.5%. He then reviewed highlights of the budget for the Administration Section, noting a reduction of approximately 5%. On a motion by Councillor T. Galloway - It was resolved: FINANCE & ADMINISTRATION COMMITTEE MINUTES JAN UARY 19, 1996 - 24 - CITY OF KITCHENER "That the 1996 Operating Budget for the Administration Section of the Public Works Department be adopted, subject to a final decision on the proposed 1% inflationary increase in staff wages." Mr. Gazzola reviewed highlights of the Operations Section budget, noting a net reduction of approximately 5%. He also advised of a variety of items on Lists A, B and Z. Mr. Gazzola also referred to Provincial grant reductions in this area totalling $775,000.00. In response to a question from Councillor Lorentz, Mr. Gyorffy advised that there has been no public notification regarding the suggestion to eliminate the Garbage Rebate Program for a saving of $445,000.00. He also pointed out that other neighbouring municipalities are considering reductions in this area. Mr. Gazzola pointed out that staff are recommending cancellation of the 1995 claim as this is a retroactive program. Mr. Gyorffy also advised that the items on List B and List Z referring to the elimination of seasonal temporary employees should refer to four employees, rather than eight, in each of the two categories. Councillor Lorentz inquired whether under the current contract, the City could arrange for garbage pick-up every second week during the winter months. Mr. Gyorffy replied that this will be pursued in 1997, and Mr. Kovacs added that the actual level of savings in this area would not be as significant as originally thought. He pointed out that the projected saving would likely be about $50,000.00 and would result in a significant impact on the level of service. It was also noted that at present there is nightly garbage pick-up along King Street from Union to Montgomery, and Councillor Vrbanovic inquired as to the possibility of a weekly pick-up outside of the Downtown core. Mr. Musselman replied that based on current staffing arrangements, reducing this service to once a week would likely result in significant savings, and Councillor Vrbanovic asked that this also be investigated. Further discussion took place concerning the proposed elimination of the Garbage Rebate Program which presently pays a per unit rebate of $24.63 for residential complexes with more than six units. Mr. Gyorffy advised that Waterloo and Guelph also provide this service, and Mr. McKay pointed out that they may be the only other municipalities in the Province which continue this practice. In regard to how such a reduction would be implemented, Mr. Kovacs suggested that it could be phased-in over a number of years, adding that a relatively small portion of the municipality benefits from this program. Councillor Galloway suggested that notwithstanding the current by-law, it may be possible to include condominiums and apartments with non-street frontage in the City's garbage contract in order to secure a more favourable rate for these facilities. Mr. McKay suggested that this would likely have a negative impact on small garbage disposal operators. Councillor Ziegler suggested that this item should be discussed outside of the budget process, and that there is a need to look at the cost of curbside pick-up in this regard. On a motion by Councillor John Smola - It was resolved: "That staff be directed to prepare a report, for consideration on or before Budget Day (February 2, 1996), listing all temporary full-time positions throughout the City by department, and that no action be taken concerning the item on List Z for the Public Works Department relative to the elimination of four seasonal employees pending receipt of the above report." 1996 OPERATING BUDGET - CONT'D A general discussion took place concerning various items on Lists A, B and Z. Mr. Kovacs clarified that with regard to the proposed elimination of the annual watercourse weed and brush cutting, it is the Department's intention to address this task on an as-needed basis, but not necessarily on a timely basis. He also suggested that this may be more appropriately done under the Winter Works Program. Councillor Wagner suggested that consideration should also be given to reducing the level of service for on-street removal of leaves, and Mr. Gyorffy advised that the entire program will be reviewed. Councillor Lorentz referred to a specific watercourse weed and brush problem along the Voisin Greenway and suggested that this area should be cut twice yearly during the summer months. Councillor Ziegler also referred to a similar area involving Wilson Park/Shelley Drive. Councillor Lorentz also asked for a report on the cost of curbside leaf pick-up FINANCE & ADMINISTRATION COMMITTEE MINUTES JAN UARY 19, 1996 - 25 - CITY OF KITCHENER in 1995. Councillor Vrbanovic inquired as to the feasibility of merging the watercourse weed and brush cutting with related Parks and Recreation Department activities due to the proximity of the watercourses to various parks and public trails, and asked that this be investigated in future. Councillor Lorentz also pointed out that the elimination of watercourse weed and brush cutting would effectively eliminate twelve summer student positions. On a motion by Councillor John Smola - It was resolved: "That the Public Works Department budget be amended to incorporate the following reductions in the projected amounts indicated: List A: Elimination of Slotted Catchbasin Program ($12,000.00); List B: Reduce Sump Pump Connection Program by 33% ($10,000.00); new fee for lowering sidewalks and through driveways ($18,000.00); reduce bagged leaf pick-up from three to two times per season ($10,000.00); eliminate four seasonal temporary employees ($70,000.00)." On a motion by Councillor John Smola - It was resolved: "That no action be taken at this time concerning the elimination of the Garbage Rebate Program pending development of a process and receipt of public input, and further, That staff be directed to make no retroactive payments relative to the Garbage Rebate Program pending a final decision by Council as to whether or not the Program will continue." A motion by Councillor John Smola to eliminate the annual watercourse weed and brush cutting program was voted on and Lost. Mr. McKay referred to Council's earlier policy that it would not offset Provincial funding cuts, and noted that in regard to the Operations Division budget, staff are not proposing to reduce the amount of work corresponding to the MTO subsidy reduction of $775,000.00. On a motion by Councillor John Smola - It was resolved: "That the proposed List B budget reduction in the Operations Division relative to a 25% reduction in the Slurry Seal Program for a projected savings of $25,000.00 be adopted." 1996 OPERATING BUDGET - CONT'D On a motion by Councillor M Wagner - It was resolved: "That the 1996 Operating Budget for the Operations Division of the Public Works Department be adopted, as amended this date, and subject to a final decision on the proposed 1% inflationary increase in staff wages." Councillor Ziegler referred to the comment by Mr. McKay pointing out that the Operations Division budget has not been reduced to entirely compensate for an MTO grant reduction. Mr. McKay further stated that if this were done, it would mean cutting winter control and all road maintenance programs. Councillor Ziegler asked that this issue be addressed at an upcoming roundtable meeting to deal with general restructuring. FINANCE & ADMINISTRATION COMMITTEE MINUTES JAN UARY 19, 1996 - 26 - CITY OF KITCHENER The Committee adjourned for lunch at 12:10 p.m. and reconvened at 12:50 p.m.. Mr. Gazzola reviewed highlights of the Street Liqhtin,q Section budget, noting an increase of approximately 4%. He also advised of an item on List A relative to K-W Hydro operating costs for a saving of approximately $20,000.00. Councillor Galloway suggested that consideration be given to lighting every second pole on some streets and that this be looked at with regard to both new subdivisions and possible retrofitting, and Mr. Kovacs advised that this is on K-W Hydro's agenda. Councillor Ziegler asked for a report on what can be done in this area and the safety impact. Councillor Lorentz referred to incidents of lights going out randomly and suggested that lighting every second pole could result in a further deterioration of service. Mr. Snow advised that staff are addressing the issue of spot problems referred to by Councillor Lorentz and will discuss this further with Hydro. Councillor Wagner asked that this item be flagged for consideration at an upcoming roundtable meeting of Council and Senior Management. On a motion by Councillor M. Wagner - It was resolved: "That the 1996 Operating Budget of the Street Liqhtin,q Section of the Public Works Department be approved, including a $20,000.00 reduction in operating costs relative to K- W Hydro, and further, That the above is subject to a final decision on the proposed 1% inflationary increase in staff wages." Mr. Gazzola reviewed highlights of the Traffic Division budget, noting a 1.5% increase. He also referred to various items on List A and B. Councillor Wagner requested general discussion at a future roundtable meeting on the means implemented by the Province to allow municipalities to offset Provincial grant reductions. Councillor T. Galloway put forward a motion to adopt the Traffic Division budget including all of the proposed reductions outlined in List A and B, and subject to a final decision on a staff wage increase. Mayor R. Christy entered the meeting at this time. Councillor Vrbanovic referred to the current practice of using separate vehicles for road construction and repair and for picking up and delivering signs advertising road closure, and questioned whether sign delivery could be accommodated by the vehicles doing the actual repair work. Mr. Snow advised that this could be looked into; however, Mr. Kovacs advised that though this may be a valid concern there are labour relations issues involved. Councillor Vrbanovic asked that this issue be addressed in 1997 with a report to be submitted for consideration. 1996 OPERATING BUDGET - CONT'D Councillor Galloway amended his previous motion so as to remove the item relative to elimination of free service at the Sign Shop which includes work done for neighbourhood associations relative to street closures. The Committee then voted on the following motion. On a motion by Councillor T. Galloway - It was resolved: "That the 1996 Operating Budget for the Traffic Division be adopted, as amended to incorporate the following reductions in the amounts shown: List A: Eliminate contingency funding ($10,000.00); increase fees for services to other municipalities by 5% ($2,000.00); reduce part-time staff in the Sign Shop ($19,000.00); List B: Further reduce part-time staff in the Sign Shop ($19,000.00), and further, FINANCE & ADMINISTRATION COMMITTEE MINUTES JAN UARY 19, 1996 - 27 - CITY OF KITCHENER That the above is subject to a final decision on the proposed 1% inflationary increase in staff wages." On a motion by Councillor K. Redman - It was resolved: "That the budget of Traffic Division be further reduced through the adoption of the List B item involving elimination of free service at the Sign Shop for a projected saving of $3,000.00." Mr. Gazzola reviewed highlights of the Parkin,q Section budget and advised of one item on List A involving an increase in fine revenue by $3.00 per ticket. Mr. Gazzola also advised that Capital Replacement, which previously formed part of this budget, is now being provided through the General Levy and not as a separate enterprise. Councillor Wagner inquired as to when the City will begin aggressively marketing the City Hall parking facility, and Mr. Snow replied that at present he is working with the Kitchener Downtown Business Association on a comprehensive marketing plan. On a motion by Councillor C. Weylie - It was resolved: "That the 1996 Operating Budget of the Parkin,q Section be adopted, as amended to include the item on List A involving an increase in fine revenue by $3.00 per ticket for a projected savings of $38.000.00, and further, That the above is subject to a final decision on the proposed 1% inflationary increase in staff wages." Mr. Gazzola reviewed highlights of the Transit Division budget, noting an increase of approximately 9%. He also referred to numerous items on Lists A, B and Z. Councillor Galloway inquired as to the required fare increase to offset the MTO funding reduction of $447,000.00, indicating by his estimate this would be approximately five cents per ride. Mr. Gazzola advised that this would likely translate, after all factors are considered, into an increase of between twenty and twenty-five cents per ride. Councillor Galloway offered the opinion that the City must consider a fare increase in response to a reduction of this magnitude. Mr. Beck clarified that the increase referred to by Councillor Galloway would involve calculating the potential loss of ridership which inevitably occurs as a result of a fare increase. Mr. Kovacs encouraged the Committee to exercise caution in this area as ridership has increased over the last three to four months, and staff are not sure whether this is a result of the new fare strategy or some other factor. However, he indicated that any increase at this time may hurt this OPERATING BUDGET - CONT'D recovery and is not supported by staff. Councillor Galloway responded that Project Lift is making up the shortfall in part through fare increases, and that it is inconsistent to treat Kitchener Transit differently. He also pointed out that the Province has made it clear they do not intend that cuts be compensated for through the Tax Levy. In response to a question from Councillor Vrbanovic, Mr. Beck advised that the budget does not reflect any proposed route reductions in the City of Waterloo other than the shared Route 8 which is itemized on List A. Mayor Christy advised against any fare increase and suggested that the Committee adopt the savings outlined in Lists A and B alone. Mayor R. Christy put forward a motion to adopt the Transit Division budget plus all of the reduction items on List A, subject to a final decision on a staff wage increase. Councillor Wagner advised that he is totally opposed to the service reductions on List B and Z as they will have a negative impact on ridership. On a motion by Councillor John Smola - It was resolved: FINANCE & ADMINISTRATION COMMITTEE MINUTES JAN UARY 19, 1996 - 28 - CITY OF KITCHENER "That the Transit Division budget amended through adoption of both List B items involving summer and Saturday service on routes 2,4 and 18 at 60 minute intervals for a combined saving of $62,000.00." Councillor G. Lorentz put forward a motion to adopt the balance of the List B items and Councillor Ziegler asked that Councillor Lorentz's motion be dealt with in two parts. The motion by Councillor G. Lorentz to adopt various reductions on routes 2,3 and 4 was voted on and Lost. The motion by Councillor G. Lorentz to adopt transit reductions relative to statutory holidays, Christmas and New Years was voted on and Lost. A motion by Councillor B. Vrbanovic directing staff to make unspecified reductions in transit routes in 1996 totalling $75,000.00 was voted on and Lost. Councillor T. Galloway put forward a motion to increase general transit fares by 2.5% in 1996, with this amount to be apportioned appropriately within the new fare structure. Councillor Galloway advised that by his calculation this would compensate for approximately 50% of the MTO grant reduction. Mr. Beck cautioned that historically every 10% increase in fares results in a 3% decrease in ridership, noting that fares for infrequent users have already been increased in the new 1996 fare structure. Several members of Council indicated a willingness to address the issue of a further fare increase in the Fall of 1996. The previous motion by Councillor T. Galloway to impose a 2.5% fare increase was voted on and Lost. On motion by Mayor R. Christy - It was resolved: "That the 1996 Operating Budget of the Transit Division be adopted, as amended to include the List B reductions adopted this date as well as all of the route amalgamation/restructing options on List A." Councillor Wagner asked when Transit staff would submit a five year marketing plan targetting a 5% increase in ridership as was previously suggested. Mr. Beck replied that the five year strategy is under development and will be brought forward for consideration over the next two months. 1996 OPERATING BUDGET - CONT'D Councillor Jake Smola referred to earlier discussion by Mr. Gulliver as to the Fleet Division's tightening up of "reasonable time expectancy" and asked that Mr. McKay suggest the Public Works and Parks and Recreation Departments consider a similar approach to targeting and tracking job tasks. Mr. Kovacs replied that at present workload is monitored manually and it would be difficult to implement the suggestion in the absence of an automated system. Councillor Smola asked that Mr. Kovacs investigate whether other municipalities have such a program in place, and in this regard Councillor Ziegler asked for a report to be tabled at a future Public Works Committee meeting. Mr. Gazzola reviewed highlights of the Waterworks Enterprise budget. On a motion by Councillor K. Redman - It was resolved: "That the 1996 Operating Budget of the Waterworks Enterprise be adopted, subject to a final decision on the proposed 1% inflationary increase in staff wages." Mr. Gazzola reviewed highlights of the Gasworks Enterprise budget. On a motion by Councillor M. Wagner - It was resolved: FINANCE & ADMINISTRATION COMMITTEE MINUTES JAN UARY 19, 1996 - 29 - CITY OF KITCHENER "That the 1996 Operating Budget for the Gasworks Enterprise be adopted, subject to a final decision on the proposed 1% inflationary increase in staff wages." Mr. Gazzola reviewed highlights of the Sewer Surchar,qe budget. On a motion by Councillor K. Redman - It was resolved: "That the 1996 Operating Budget for the Sewer Surchar,qe be adopted." Mr. Gazzola reviewed highlights of the Finance Department budget, noting a 2.2% increase. Councillor B. Vrbanovic disclosed a pecuniary conflict of interest and abstained from all voting and discussion with regard to the List A item for the Finance Department involving the reorganization of the Information Services Division, as his wife is employed by that Division. Mr. Gazzola referred to the List A item involving the Information Services Division for a projected savings of $50,000.00 and a List Z item involving the elimination of one Inquiry staff for a saving of $44,000.00. He pointed out that staff are not recommending adoption of the List Z option. On a motion by Councillor G. Lorentz - It was resolved: "That 1996 Operating Budget for the Finance Department be adopted, as amended to include the List A item involving reorganization of the Information Services Division for a projected savings of $50,000.00, and further, That the above is subject to a final decision on the proposed 1% inflationary increase in staff wages." Mr. Gazzola reviewed highlights of the Chief Administrator's Department budget, noting that there is no increase. 1996 OPERATING BUDGET - CONT'D On a motion by Councillor G. Lorentz - It was resolved: "That the 1996 Operating Budget of the Chief Administrator's Department be adopted subject to a final decision on the proposed 1% inflationary increase in staff wages." Mr. Gazzola reviewed highlights of the Human Resources Division budget, noting a reduction of approximately 8%. He also referred to items on Lists A and B for a combined projected savings of $27,000.00. Mr. McKay outlined the proposed changes to the Employee Recognition Dinner, noting that the total projected savings of $14,000.00 would not accrue entirely to the 1996 Budget, and that any unrealized balance would be charged in 1996 to the Sick Leave Reserve Fund. Councillor Jake Smola asked that a report be prepared for consideration on or prior to Budget Day explaining the rationale for the increase in the Human Resources budget from $700,000.00 to $1 million dollars between 1992 and 1996. On a motion by Councillor K. Redman - It was resolved: "That the 1996 Operating Budget for the Human Resources Division be adopted, as amended to include the following reductions in the amounts indicated: ListA: Eliminate WHMIS ($8,000.00); Reduce GATBR testing allocation FINANCE & ADMINISTRATION COMMITTEE MINUTES JAN UARY 19, 1996 - 30 - CITY OF KITCHENER ($5,000.00); List B: Reduce Recognition Dinner ($14,000.00), and further, That the above is subject to a final decision on the proposed 1% inflationary increase in staff wages." Mr. Gazzola reviewed highlights of the General Revenues and Expenses budget, noting that the Tax Stabilization Reserve Fund contribution is being reduced by $350,000.00 annually until the Fund is depleted over the next five years. He explained that the intent is to reduce the City's dependency on this Fund. He then reviewed the four items listed on List A, noting that he is recommending the City budget an additional $150,000.00 relative to supplementary assessments. List A also makes provision for the elimination for the Twin City Civic Dinner for a saving of $3,000.00. Councillor M. Yantzi put forward a motion to adopt the General Revenues and Expenses budget including all budget reduction items on List A. Mayor Christy asked that the item relative to the Twin City Civic Dinner be dealt with separately. On a motion by Councillor M. Yantzi - It was resolved: "That the Twin City Civic Dinner be eliminated for a saving of $3,000.00." On a motion by Councillor M. Yantzi - It was resolved: "That the 1996 Operating Budget for General Revenues and Expenses be adopted, as amended to include the following reductions proposed on List A: assessment growth during the year to offset reassess/assess decrease $150,000.00); reduction in insurance provision ($75,000.00); a reduction in fringe benefits $75,000.00). 1996 OPERATING BUDGET - CONT'D Councillor Galloway advised that he would like to revisit the Planning and Development Department budget, noting that the $92,000.00 additional cost in the wake of the recent reorganization causes him a lot of concern. He pointed out that when the position of Commissioner was declared redundant in this Department a severance package was paid including an incentive payout, the latter on the basis that the position would not be refilled. He suggested that it may be more cost effective to hire a new Commissioner and operate under the old Department structure. Councillor Galloway also expressed his general concern over the process whereby job descriptions are revisited based on additional duties and an increase in salary awarded if appropriate. He suggested that Council has no control over this process, which can erode savings. Councillor Galloway suggested that as regards the Planning and Development Department budget, Council should make an arbitrary $50,000.00 cut to ensure that taxpayers benefit from the Iongterm savings which were anticipated with the retirement of the former Commissioner. Councillor Weylie suggested that Mr. McCabe should be in attendance to defend his Department's position, and Councillor Ziegler asked that this item be referred to Budget Day for further consideration. Mr. McKay explained that had the Commissioner position simply been eliminated there would have been a net savings of $50,000.00; however, Council approved various restructuring improvements in the Department which resulted in a variety of responsibilities being taken on by existing staff. Councillor Jake Smola responded that he is not convinced Planning staff are doing more work, since in terms of development the City is at a 25 year Iow. Councillor Smola asked whether progressions had been factored into the figure for sustainable savings. Mr. McKay replied in the negative, but pointed out that during the last two years Council has adopted a new Municipal Plan and a Comprehensive Zoning By-law for the entire City. Councillor Smola reminded the Committee that the savings achieved under the terms of the Social Contract were to be FINANCE & ADMINISTRATION COMMITTEE MINUTES JAN UARY 19, 1996 -31 - CITY OF KITCHENER sustainable, and this has not proved to be the case in the Planning and Development Department. On a motion by Councillor C. Weylie - It was resolved: "That further consideration of a suggestion by Councillor T. Galloway to reduce the Planning and Development Department budget by $50,000.00 to offset a loss in savings due to reorganization, be deferred and referred to Budget Day." Councillor Galloway suggested that Council may also need to review the job evaluation process and the general premise that staff are paid more for taking on additional responsibilities. Councillor Ziegler suggested that this could be an item for discussion at the upcoming roundtable meeting involving Council and Senior Management. He also asked that Mr. McCabe be advised of the discussions this date. Mr. Gazzola advised that at this point Council is in a position which would result in a 1.93% increase in the Levy, or an impact of $10.50 on the City's portion of the tax bill. It was also noted that the figure includes the 1% staff wage increase. Mr. Gazzola further advised that any individual increase in taxes as a result of recent reassessment would be in addition to this figure, noting that the bulk of residential properties are impacting either positively or negatively by an average of 5-10%, which could result in as much as a $60.00 increase on the City's portion of taxes. Councillor Galloway proposed that all consumable and salary inflation be removed from the Budget, and Councillor Vrbanovic asked that these issues be dealt with separately. Councillor B. Vrbanovic disclosed a pecuniary conflict of interest and abstained from all voting and discussion as regards the proposed 1% inflationary increase in staff wages as his wife is employed by the City's Information Services Division. 1996 OPERATING BUDGET - CONT'D Mayor Christy inquired as to the impact on taxpayers of ignoring inflation over a number of years and Mr. Gazzola replied that in his view this course of action is unsustainable in the Iongterm. He further suggested that a tax increase incorporating inflation should be levied, preferably one that is below the Consumer Price Index. Mayor Christy argued that Ontario is facing major restructuring because politicians have ignored reality, and that inflation is one of these realities. He suggested that increasing the City's portion of the tax bill by 1.9% is very responsible and shows a cautious approach to the situation. He acknowledged that all members of Council would like to see no increase in taxes in 1996; however, when it came to making cuts in specific neighbourhoods, Council was reluctant. Mayor Christy also expressed concern over future budgets and suggested that it is not realistic to ignore economic forces, such as inflation, over which the City has no control. He also added that in his opinion staff should be rewarded for their efforts in the form of a modest pay increase. Mr. Gazzola stressed that the City must realize a $1.1 million surplus in each year in order to maintain taxes at a reasonable level. He pointed out that the effect of Council ignoring inflation for the past three to four years is that it makes it harder to realize this surplus. He added that inflation remains whether Council chooses to recognize it or not. Councillor John Smola advised that his personal levy target is 1.2%, which is less than the consumer price index, and indicated that he favours a modest pay increase for staff. Councillor Lorentz stated that he cannot support any inflationary increases given the current economic and employment environment, on the basis that the public sees tax increases as controllable. He also suggested that staff should be happy to have a job at all in this environment and that cutting inflation from the budget is not a great hardship. Councillor Vrbanovic commented on inflation for consumables, noting that it is expected that governments will cut back and that the 2% consumable inflation rate reduction is reasonable under the circumstances. Councillor Galloway advised that he does not see the City of Kitchener as having to deal with the enormity of problems faced in other areas of the economy. He pointed out that he has difficulty seeing why the City is not able to make further reductions, on the basis of finding better ways to do things. He suggested that given the current Iow rate of inflation, it is reasonable to accommodate this figure for consumables in the budget. As regards staff wages, Councillor Galloway suggested that in his FINANCE & ADMINISTRATION COMMITTEE MINUTES JAN UARY 19, 1996 - 32 - CITY OF KITCHENER view, if salaries are increased, a corresponding number of staff positions would have to be eliminated. In response to a request for clarification, Mr. Gazzola stated that salary inflation totals approximately $440,000.00 and inflation for consumables approximately $260,000.00 for a net impact on the levy of 0.70%. Councillor Weylie commented that the perception of the community is that staff make more money than they should, and on this basis indicated that she would not support a salary increase. Councillor Yantzi stated that in his view, not compensating for inflation is both counter productive and shortsighted and advised that he would support a modest increase in staff salary. Councillor Wagner offered the opinion that the major problem is the Province's $1 billion debt and that transfers to the City will likely decrease over the next number of years until they reach zero. He advised that he feels compelled to not increase taxes in 1996, noting that at this point it would not be difficult to get to zero. He acknowledged however, that it is unlikely there will be no increase at the Region or School Board levels and as a result the City's efforts to hold the line on taxes will be lost. Councillor Jake Smola advised that he would not support inflationary increases for either goods or staff wages and that he supports a zero tax increase in 1996. He also stressed the need to follow up on the various reduction issues discussed during the Budget process. Councillor Ziegler indicated his support for no tax increase in 1996 and no increase in either staff wages or consumable inflation. Councillor T. Galloway put forward a motion to remove inflation for both staff wages and consumables from the 1996 Operating Budget for all City Departments and Boards. OPERATING BUDGET - CONT'D In deference to the conflict previously declared by Councillor B. Vrbanovic, Councillor Ziegler indicated that he would deal with the inflation motion in two parts. Mr. Gazzola pointed out that it is his understanding that the 2% inflation rate remains in the Capital Forecast. On a motion by Councillor T. Galloway - It was resolved: "That 1% inflationary increase in staff wages be removed from the 1996 Operating Budgets of all staff Departments and City Boards." On a motion by Councillor T. Galloway - It was resolved: "That inflation for consumables be removed from the 1996 Operating Budget for all staff Departments and City Boards." Councillor Jake Smola inquired as to the amount of reductions necessary to ensure no tax increase in 1996, and Mr. Gazzola advised that he was not sure of the exact figure, given the reductions made by Council this date. Mr. McKay advised that there are still $1.7 million in budget reduction options proposed by staff. He stressed that over the past number of years, the City has lost a significant amount of money in grant reductions and other cuts which have not been compensated for through tax increases but through increased staff productivity. It was generally agreed that discussion would take place at the regular Finance and Administration Committee meeting on January 22, 1996 as to a further special meeting to deal with outstanding Budget issues. NEXT MEETING It was subsequently decided that a third meeting of the Finance and Administration Committee to consider the 1996 Operating Budget would be held on January 29, 1996, prior to consideration of the Budget by Council on February 2, 1996. FINANCE & ADMINISTRATION COMMITTEE MINUTES JAN UARY 19, 1996 - 33 - CITY OF KITCHENER ADJOURNMENT On motion, the meeting adjourned at 4:30 p.m. ........... G. Sosnoski ........... Manager of Corporate ........... Records/Assistant City Clerk