Loading...
HomeMy WebLinkAboutFinance & Admin - 1996-06-24FAC\1996-06-24 JUNE 24, 1996 FINANCE & ADMINISTRATION COMMITTEE MINUTES CITY OF KITCHENER The Finance and Administration Committee met this date commencing at 10.15 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, M. Yantzi and C. Weylie. Mayor R. Christy was in attendance for part of the meeting. Others present: Ms. P. Houston, Ms. M. Walsh, Mrs. J. Koppeser, Ms. V. Gibaut, Messrs. T. McKay, T. McCabe, O. den Ouden, L. Parkhouse, E. Kovacs, T. Clancy, R. W. Pritchard, R. LeBrun, G. Sosnoski. 1. EXTENDED HOURS - BREWERS RETAIL INC. (2642 KING STREET EAST) The Committee was in receipt of correspondence from E. M. Isard, Brewers Retail Inc., dated June 10, 1996 requesting the City's written authorization for a test of midnights closing at the 2642 King Street East retail outlet. On a motion by Councillor M. Wagner it was resolved: "That Kitchener Council has no objection to the request of the Brewers Retail Inc. for permission to extend the Friday and Saturday hours of closing at the 2642 King Street East outlet until midnight for a summer test, beginning July 2, 1996." Mayor Christy asked that he be recorded as opposed to the above recommendation. BINGO REQUEST - K-W HOLOCAUST EDUCATION COMMITTEE The Committee was in receipt of a report from J. Koppeser dated June 19, 1996 in response to a request to hold bingos in the City of Kitchener. Mr. Paul Walman was in attendance to answer questions on behalf of the applicant. On a motion by Mayor R. Christy it was resolved: "That the Kitchener-Waterloo Holocaust Education Committee be granted permission to hold bingos in the City of Kitchener on an ongoing basis, and further, That this matter be reviewed in six months, if the registration number from Revenue Canada is not submitted to the License Office of the City of Kitchener before that date." REFRESHMENT TRAILER/AMUSEMENT RIDES REQUEST - O. MAJUNKE The Committee was in receipt of a report from J. Koppeser dated June 20, 1996 outlining a request from Mr. Oscar Majunke involving a refreshment trailer on King Street in front of City Hall and the operation of amusement rides in the Civic Square. On a motion by Mayor R. Christy it was resolved: "That notwithstanding By-law 96-53 (Street Vendors), and subject to obtaining the approval of the Traffic and Parking Division of Public Works, Mr. Oscar Majunke be granted permission to locate a Refreshment Trailer on King Street in front of City Hall on June 28 and 29, 1996 only, and further, That Mr. Oscar Majunke be granted permission to operate Amusement Rides on Civic Square on June 28 and 29, 1996. FINANCE & ADMINISTRATION COMMITTEE MINUTES J U N E 24, 1996 - 96 - CITY OF KITCHENER 4. 1997 PRO FORMA BUDGET The Committee was in receipt this date of two pro forma budget presentation documents, the first dated June 19, 1996 as submitted to Management Committee, and the second dated June 24, 1996 incorporating changes made by Management Committee. Ms. Houston introduced the 1997 Pro Forma Budget and outlined the relative value of a 1% increase in 1996 and 1997 as well as the cumulative mill rate growth of the City, the Region and the School Board relative to the Consumer Price Index. Mr. Gazzola reviewed the Pro Forma Budget as submitted for Management Committee review reflecting a mill rate increase of 7.22%. As a result of changes suggested by Management Committee, the projected increase was reduced to 4.19%. Mr. Gazzola reviewed the impact of further Federal and Provincial downloading on the 1997 budget, noting that it is anticipated Provincial grants to the City would be reduced by $957,000.00, and to the Library in the amount of $100,000.00. A further $50,000.00 cost would accrue to the City as a result of imposition of the GST on Hydro. He also noted that he had initially proposed a further $800,000.00 contribution in each of the next five years to reduce the City's dependence on Provincial block funding, but this initiative was not supported by Management Committee. Mr. Gazzola reviewed new and other factors impacting the 1997 Pro Forma, and noted that an anticipated transfer from the Tax Stabilization Reserve Fund of $1,000,000.00 leaving only $192,000.00 in the Fund. A brief discussion took place concerning $195,000.00 of taxes and other expenses owing relative to the Farmers' Market and the Market Square Parking Garage. Councillor Galloway indicated that he hoped, subject to a ruling by the Assessment Review Board, the municipal tax portion of this amount would be removed. Mr. Gazzola verified that he expects the Review Board to support this position. Councillor Wagner noted that a 5% reduction in grants is being recommended and that it was his assumption the Grants Committee would make any such recommendation rather than Management Committee. Councillor Wagner advised that he does not support the staff recommendation in this regard. Councillor Ziegler pointed out that it was previously agreed grant reductions would be a two step process, and Mr. McKay noted that recipients were advised of this at the time of the 1996 allocations. In response to further questions from Councillor Jake Smola, Mr. Gazzola reviewed changes and expenditures as a result of the sale of the Market and the Parking Garage. Mr. McKay added that related reductions in staffing are already under way, and in this regard two lay-off notices have been given, and a number of existing vacancies have not been filled. Mr. Gazzola noted that the fuel price increase which reflects an additional $180,000.00 expenditure will be partially offset by $60,000.00 in savings as a result of improvements in the monitoring process. It was also noted that the Public Service Assistant is the only new staff position in the 1997 budget. Mr. Gazzola reviewed the Revenue and Expenditure Work Sheets, noting that assessment growth of 1% has been budgeted. Increases in user fees, transit fees and transfers from enterprises have been budgeted at 2%. Council Galloway questioned whether the budget reflects the value of 1996 supplementary assessments and Mr. Gazzola replied that it is too early to tell; however, this amount could be less than 1/2%. Mr. McKay pointed out that the surge in residential construction which began early in 1996 may not continue, noting that a great deal of residential construction is required to move the City's large assessment base. Councillor Vrbanovic enquired as to when Council could expect a report on the status of assessment growth in the Downtown. Mr. Gazzola replied that staff are presently trying to identify appropriate figures to be used as benchmarks, and is hoping to complete the report within the next few months. Mr. Gazzola then reviewed the changes made by Management Committee to the Pro Forma Budget which resulted in a reduction of the percentage mill rate increase to 4.19%. These 1997 PRO FORMA BUDGET - CONT'D changes included the removal of an $800,000.00 contribution to a reserve fund to reduce the City's dependency on Provincial block funding, the addition of parking revenue in the downtown, and an anticipated reduction in garbage tipping fees, further reductions in grants from FINANCE & ADMINISTRATION COMMITTEE MINUTES J U N E 24, 1996 - 97 - CITY OF KITCHENER the City of 5%, reduced fleet purchases, and a reduction in the budgeted inflation rate for expenses from 2% to 1%. Councillor John Smola indicated his support for a phasing out of reliance on Provincial block funding and in anticipation of ongoing grant reductions. Mr. McKay pointed out that the $800,000.00 amount budgeted has an immediate mill rate impact of over 1%, and though he does not disagree that it would be advantageous to reduce dependency, there is no indication that the Province will reduce municipal grants beyond the amounts already stated. He also suggested that reducing dependency over a 5 year period may be too ambitious. Mr. Gazzola pointed out that the actual contribution required over the 5 year period would be $650,000.00. Councillor Vrbanovic enquired as to the budget process to be followed in 1997, noting that it was his understanding Council would use the core services report as an integral component of the budget process. Mr. Gazzola reported that core service submissions were received from all operating departments, and a ten page document containing 500 - 600 services was compiled. He pointed out that in a number of areas services were not broken down to a sufficient level of detail and these areas are being revised by the Departments affected. He stated that he is prepared to submit a final document to the working committee within the next few weeks. Mr. McKay added that it is expected core services will be reviewed in September of this year. The Pro Forma Budget was then modified to reflect the impact of a $650,000.00 contribution to partially offset Provincial block funding and this increased the required mill rate to 5.31%. Mr. McKay cautioned that the City is already dealing with a $1,000,000.00 grant reduction in 1996, and that Council may be creating a crisis if it attempts to phase out block funding beginning in 1997. He suggested that if there is agreement to proceed in this area, contributions should not be made until 1998. Councillor Vrbanovic expressed concern over how this initiative may be interpreted by the Province, noting that in the past the most financially responsible municipalities have shouldered the highest percentage of grant reduction. Councillor Yantzi suggested establishing a policy that a fixed amount be allocated to reduce dependency on Provincial grants and in this regard suggested $500,000.00 annually. Councillor Lorentz indicated his interest in the philosophy on financial independence from the Province, but noted that Council needs to ensure that Kitchener has access to every grant dollar it is entitled to. He indicated his willingness to work toward phasing out of Provincial funding but suggested that this initiative should not begin in 1997 but should be a long term plan. Mr. McKay cautioned against creating a situation where the Province takes advantage of the municipalities willingness to reduce dependency by reducing grants further. Mr. Gazzola recalled that in the recent past the City undertook a similar initiative with respect to it's internal capital policy; however, despite some pain in the first few years, the policy has served the City well and is one of the best in the Province. Councillor John Smola suggested that if the municipality demonstrated a willingness to reduce it's dependency on Provincial funding, the Province may be more interested in funding special projects. Councillor Galloway countered by stating that the opposite effect could occur, and questioned whether the municipality is in a legal position to undertake the proposed initiative. Mr. Gazzola replied that the City has the right to set up a reserve fund and any contribution in this regard could be credited to the Tax Stabilization Reserve Fund. Councillor Galloway suggested that this constitutes over levying which he is philosophically opposed to. He suggested that from a purely business or accounting point of view this may be beneficial, but indicated his opposition to collecting taxes before they are needed. Councillor Ziegler advised that he does not favour phasing out block funding unless required to do so. Mr. Gazzola clarified that the City would be phasing out it's reliance on block funding and not the block funding itself. Councillor Vrbanovic suggested that this course of action would be prudent over time and would make it easier to deal with changes beyond the municipality's control; however, he suggested that this should not be looked at until 1998, and in accordance with the policy previously suggested by Councillor Yantzi. 1997 PRO FORMA BUDGET - CONT'D A motion by Councillor John Smola to include $650,000.00 in the 1997 Pro Forma Budget for the phasing out of block funding was voted on and Lost. Councillor Jake Smola subsequently put forward a motion similar to Councillor John Smola's, but reducing the contribution to $300,000.00. Councillor Wagner indicated his opposition to any phasing out of block funding, suggesting that further reducing the budget by 4.19% in 1997 is going to be hard enough without making the task FINANCE & ADMINISTRATION COMMITTEE MINUTES J U N E 24, 1996 - 98 - CITY OF KITCHENER more difficult. The previous motion by Council Jake Smola to budget $300,000.00 in 1997 toward phasing out the City's dependency on Provincial block funding was voted on and Lost. On a motion by Councillor M. Yantzi it was resolved: "That staff draft a policy, for consideration by the Finance and Administration Committee, whereby a reserve fund would be established and an amount contributed in each year (beginning in 1998) toward offsetting Provincial block funding and thereby, over a period of time, reducing or eliminating municipal dependency on Provincial grants." Councillor B. Vrbanovic put forward a motion that with regard to the 1997 budget, staff be directed to work toward a zero percent increase in the 1997 levy. Councillor Wagner asked for clarification of the motion, noting that he cannot support zero percent categorically without further information on the service level impact. Mr. McKay offered the opinion that the Committee should not direct staff in this regard, but suggested that an indication be given of Council's support for a levy target so that staff and Council can jointly work toward this goal. Councillor Lorentz suggested that any such suggestion is premature at this time and that direction should only be given to staff after Council has had an opportunity to review and consider the core services report. Councillor Yantzi suggested that the debate around a zero percent increase is very misleading, and that personally he would support an increase below the rate of inflation. He pointed out that over a ten to fifteen year period this is a significant savings and is a responsible approach toward longer term planning. Councillor Vrbanovic withdrew his motion concerning the zero percent mill rate target. Councillor Yantzi indicated his willingness to put forward a motion directing staff to bring forward a budget with the percentage mill rate increase below the rate of inflation. Mr. Gazzola clarified that inflation for 1996 is presently 1.4% and is estimated to be 2% in 1997. He also added that the current 4.19% mill rate increase in the Pro Forma Budget is actually 3.1% in light of a 1% contingency. Councillor M. Yantzi put forward a motion directing staff to budget for a percentage mill rate increase below the rate of inflation. Councillor Jake Smola argued that zero percent is the more appropriate target, and that it is irresponsible to direct staff in any other way. In response to comments made by Councillor Jake Smola, Mayor Christy clarified that he personally supported a zero percent increase in the first year of the new Council and a fair tax policy in subsequent years. He also stressed the need to review the core services report before taking any further action. On a motion by Councillor B. Vrbanovic it was resolved: "That consideration of direction to staff relative to any proposed 1997 mill rate target be deferred pending receipt and consideration of the report on the City's core services." NEXT MEETING The next regularly scheduled meeting of the Finance and Administration Committee will be held on Monday, August 6, 1996. ADJOURNMENT On motion, the meeting adjourned at 12 noon. FINANCE & ADMINISTRATION COMMITTEE MINUTES JUNE 24, 1996 - 99 - CITY OF KITCHENER G. Sosnoski Manager of Corporate Records/Assistant City Clerk