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HomeMy WebLinkAboutFinance & Admin - 1997-01-20 SFAC\1997-01-20-SPE JAN UARY 20, 1997 FINANCE & ADMINISTRATION COMMITTEE MINUTES CITY OF KITCHENER The Finance and Administration Committee met this date 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. Others present: Ms. P. Houston, Ms. M. Murphy, Ms. V. Gibaut, Messrs. J. Gazzola, T. McCabe, R. Arnot, T. Clancy, E. Kovacs, J. Shivas, B. Musselman, J. O'Rourke, S. Gyorffy, B. MacDonald, D. Snow, J. McBride, W. Beck, J. Cicuttin and G. Sosnoski. 1. OPERATING BUDGET Ms. Houston provided an overview of the 1997 Operating Budget as recommended by the Administrative Review Committee. She reviewed the various factors affecting the 1997 budget and it was noted that a $1.3 million Provincial grant reduction added 2.35 per cent to the mill rate. Ms. Houston advised that at the time of the pro forma budget, the levy increase stood at 4.10 per cent and the original department estimates reduced this percentage to 3.98. The review by Administration further reduced the increase to 1.75 per cent, which later increased to 2.42 per cent as a result of a larger than anticipated Provincial grant reduction. The budget was then reviewed a second time and the mill rate increase was reduced to its present level of 1.75 per cent. Ms. Houston advised that residential and commercial assessment have increased for a combined total of 1.12 per cent which has a 1.35 per cent impact on the mill rate. She then reviewed net expenditures by department reflecting an overall increase of .69 per cent, and comparing to 1992 figures, pointed out that net expenditures by department are presently less than they were in 1992. Ms. Houston then reviewed the revenue side of the Operating Budget as well as an analysis of change in the levy. Councillor B. Vrbanovic asked for clarification of the 2 per cent figure under Salaries and Wages and Ms. Houston advised that this represents the combined salary increase in 1996 and 1997, as the final figures were not available for inclusion in the 1996 budget. Councillor Galloway advised that he had not anticipated an actual over-expenditure in individual department salary budgets, but rather had expected that staff would absorb the 2 per cent increase by reducing salary and benefit costs by a corresponding amount. Ms. Houston reviewed the estimated combined mill rates for the City, the Region and the School boards, and indicated that the combined estimate reflects a 2.15 per cent increase in taxes having an impact on the average household of $43. She added that the City portion represents a 0.9 per cent increase or an impact of approximately $10 per household. Ms. Houston then compared mill rate increases for the City, the Region and the School boards since 1987, noting that the growth in Regional taxes has outstripped increases by the other taxing bodies as well as the consumer price index. It was also noted that the City's increases closely parallels the consumer price index from 1987 to 1996. Councillor Galloway questioned whether there was a 1 per cent provision in the budget for inflation, and Ms. Houston replied that the pro forma budget contained a 1 per cent increase; however, the actual department budgets were reduced to reflect a net reduction in expenditure costs, which creates the effect of no inflation. Ms. Houston reviewed the 1997 Operating Budget for the Le,qal Department noting an 8 per cent increase. Ms. Houston explained that the $43,000.00 amount is a budget correction to reflect under-budgeting for salaries in 1996 as a result of the reorganization. Councillor Ziegler requested, before Budget Day, a history of Legal Department staffing costs from one year prior to Mr. Wallace leaving to the present date. Councillor Jake Smola also requested a flow chart illustrating staffing level changes over the same time period. Mr. Shivas pointed out that Council previously decided to retain the City Solicitor position rather than changing it to a Director of Legal Services. Councillor Ziegler replied that it was his recollection that the City Solicitor position was to be higher than a Director but would not be paid at the Commissioner level. Mr. Shivas responded that the Council resolution indicates that the position is to have equal stature to a Commissioner. FINANCE & ADMINISTRATION COMMITTEE MINUTES JAN UARY 20, 1997 -10- CITY OF KITCHENER OPERATING BUDGET - CONT'D On a motion by Councillor M. Yantzi, it was resolved: "That the 1997 Operating Budget for the Le.qal Department be adopted." Councillor Ziegler asked that it be indicated three members of Council were opposed to the motion, of which he was one. Ms. Houston reviewed the 1997 Operating Budget for the Economic Development Division, noting a 6.5 per cent increase. Ms. Houston pointed out that the $20,000.00 commitment toward Canada's Technology Triangle (CTT) is currently in the general City Budget; however, she will transfer this budget line to the Economic Development budget. Councillor Lorentz questioned the increase in the promotion budget, and Ms. Gibaut replied that with the departure of Mr. Borovilos, the Division has had to contract out more of its promotional work. Mr. Gazzola added that the marketing budget in this area has declined over the past number of years and that the additional amount in the 1997 budget will restore funding to the 1991 level of approximately $100,000.00 Moved by Councillor M. Wagner, "That the 1997 Operating Budget for the Economic Development Division be adopted." Councillor Wagner also requested a report on the specific promotional activities planned in 1997 and when they will occur. Councillor Galloway stated that he is objecting to the 2 per cent salary increase in each and every department budget, as it was his belief that the salary increase would be cost neutral as a result of corresponding reductions in the overall salary budget. He expressed concern that this additional amount is being added to the tax base at this time. Mr. Gazzola reminded the Committee that Council approved increases in all collective agreements with a combined two year impact of 2 percent. He suggested that offset options would involve reducing expenditures in other budget lines. Councillor Galloway responded that staff could investigate other staffing related options such as a reduction in part-time hours, gapping, or if necessary a reduction in overall complement. Mr. Gazzola pointed out that Council did not in 1996 direct staff to reduce the complement in order to pay for the wage increase. The motion by Councillor M. Wagner to adopt the Economic Development Division budget was voted on and Carried. Ms. Houston reviewed the 1997 Operating Budget for the Public Works Department, noting that it reflects an overall reduction of 0.6 per cent. She then proceeded to review the individual divisions and sections within the department. Councillor Jake Smola enquired as to the status of the report on the department reorganization, and Mr. Kovacs replied that the position description questionnaires will be presented to the Human Resources Division this month and that by March, he should have an idea of the impact. Mr. Kovacs added that it was his belief that his earlier projections still reflect the anticipated savings. Ms. Houston then reviewed the budgets for the Operations Division and Street Lighting, noting corresponding reductions of 2 per cent and 3.2 per cent. Councillor Lorentz referred to the $71,000.00 reduction in salt expenses and Mr. Kovacs noted that this is a projected savings resulting from the installation of computerized salt control devices. He suggested that a report would be tabled at the Public Works and Transportation Committee by the end of March. OPERATING BUDGET - CONT'D Councillor Lorentz requested information on how the City pays for street lighting, and questioned whether there is a charge when street lights are out for an extended period of time. Mr. Kovacs replied that he believes the Hydro Commission uses a deduct billing method, but will verify this FINANCE & ADMINISTRATION COMMITTEE MINUTES JAN UARY 20, 1997 -11 - CITY OF KITCHENER and report back at a later date. Councillor Lorentz also asked for an estimate of the energy cost savings as a result of the recent street light conversion. Mr. Gazzola replied that the report on energy expenditures will be available on Budget Day, March 3, 1997. Councillor Wagner enquired as to the status of the City's sidewalk maintenance program and Mr. Gyorffy replied that staff are further ahead than in previous years, and plan to study this area in conjunction with the upcoming roads maintenance study. Mr. Gyorffy also agreed to provide a list of criteria for sidewalk repair. Ms. Houston then reviewed the Operating Budgets for the Water and Gas Enterprises noting that no water rate increase is proposed in 1997. Mr. Gazzola pointed out that the water enterprise pays the City a dividend of $1.6 million dollars annually which is used to soften the tax burden. He suggested that this be kept in mind when discussing the rationalization of services. In regard to the Gas Utility, Ms. Houston noted that a net profit of $1,073,000.00 is being projected in 1997. Mr. Kovacs explained the increased expenditures for wages in the dispatch area, noting that the amount is directed toward part-time staff to address currently unmanageable call volumes exceeding 100,000 per year. He pointed out that at present there is a significant waiting time for callers, and that on average one in five callers is unable to get through and eventually hangs us. Ms. Houston outlined the Operating Budget relative to the Sewer Surcharge, and advised that no rate increase in anticipated in 1997, despite a net deficit of $483,000.00 which will be absorbed through the surplus in this area. On a motion by Councillor M. Wagner, it was resolved: "That the 1997 Operating Budget for the Operations Division (including enterprises), and the Administration and Street Li,qhtin,q Sections of the Public Works Department be adopted." Ms. Houston reviewed the Operating Budget for the Traffic and Parkinq Division. Mr. McBride pointed out that the negative impact in the area of fine revenue reflects the fact that the $100,000.00 in lost revenue estimated by staff was Iow relative to the actual amount which is closer to $170,000.00 Ms. Houston reviewed the Transit Division budget noting a net decrease of 2.8 per cent and a major increase in ridership. Councillor Galloway referred to the budget ration between the Operations section of the Transit Division and Administrative Expenses, noting that it seems excessive, and questioning how it compares to other transit authorities. Mr. Kovacs replied that it is significantly better than that of the Toronto Transit Commission or that of Ottawa-Carlton. He also pointed out that the $3,000,000.00 amount includes other related charges including over $1,000,000.00 in debt charges as well as the cost to operate the Transit Terminal. Councillor Jake Smola enquired whether a reorganization of the Transit Division had taken place, and Mr. Kovacs replied that the administration is unchanged in terms of the organizational structure, though some changes in the position description questionnaires are currently being processed. Councillor Jake Smola enquired when the City would realize savings from its investment in natural gas fuelling, and Mr. Kovacs replied that the municipality is close to commissioning the re-fuelling station. Mr. Gazzola added that in future, all economic benefits resulting from the use of natural gas would accrue to the municipality. This is on the basis that the City is no longer obliged to share savings in the Transit Operation with either the City of Waterloo or the OPERATING BUDGET - CONT'D Province. The former due to the recent service contract, and the latter as a result of the elimination of Provincial grants. Ms. Houston pointed out that at present, increased diesel fuel prices are offsetting and outstripping any savings from the use of natural gas. Councillor Lorentz questioned the $40,000.00 expenditure to replace glass in bus shelters and asked whether staff had considered replacing glass with plexiglas in areas where there is frequent vandalism. Mr. Gazzola advised that a report in this regard would be available on or before Budget Day. Councillor Jake Smola also asked for a report highlighting the debenture cost to purchase buses in advance of delivery, and Mr. Gazzola again agreed to report on or before FINANCE & ADMINISTRATION COMMITTEE MINUTES JAN UARY 20, 1997 -12- CITY OF KITCHENER Budget Day. On a motion by Councillor G. Lorentz, it was resolved: "That the 1997 Operating Budget for the Traffic and Parkin,q and Transit Divisions of the Public Works Department be approved." Councillor Galloway advised that he appreciates the work done by staff in bringing in a budget with as Iow an increase as 1.75 per cent, especially considering the ongoing reductions in Provincial grants. However, he could not personally support such an increase and suggested that the levy be kept to a bare minimum under the circumstances. He also expressed his concern over the addition of an increased salary amount to the tax base, and suggested that in these times this type of cost increase should be absorbed in the existing salary and fringe benefit envelope. Councillor Galloway indicated that he feels the need to look seriously at eliminating the $1.1 million dollars allocated toward the salary increase. He noted that it is his intention that the municipality would honour its collective agreements, but that the increase should not be reflected in the tax base. He referred to serious layoffs at the Regional level, which he suggested that largely been avoided in Kitchener to date. Moved by Councillor T. Galloway, "That of the 2 per cent increase in wages and fringe benefits in the 1997 budget, 1.5 per cent be offset through corresponding dollar reductions in the overall City budget for salary, wages and fringe benefits." Councillor Yantzi commented that the motion seems a bit drastic, though he might agree if the percentage were lower. Councillor Ziegler suggested to Mr. Gazzola that it may be worth examining a flexible benefit plan where employees could specify which benefits they would like as part of their pay package and questioned whether this is appropriate in a municipal setting. Mr. Gazzola replied the staff have looked at this in the past and found that there is little in the way of overall savings, though employees may be happier if they can pick and choose which benefits they would like. He cautioned however, that this is a fairly involved process. In response to a further question from Councillor Wagner, Councillor Galloway clarified that his motion is intended to apply to all departments across the board irrespective of size. At the request of Councillor Wagner, Mr. Gazzola indicated that the motion amounts to reducing staff in order to pay for the pay increase and this would require a budget reduction of approximately $900,000.00. Councillor Galloway pointed out that there are a variety of strategies to accommodate this, including gapping, attrition, reduction in part-time staff as well as minor layoffs. Mr. Gazzola responded that staff do some of these things now, and reminded the Committee that all position replacements are reviewed by the CAO before any decision is made to fill a vacancy. Councillor Lorentz thanked Councillor Galloway for bringing this item forward and for sharing his views on the Regional perspective. He asked, that by Budget Day, a report prepared indicating the per capita debt of each municipality in the Region. Mr. Gazzola responded that Kitchener' per capita debt is approximately $70.00 and that Waterloo's is over $200.00. Councillor Lorentz indicated he would support the motion before the Committee and referred to the laying off of hundreds of employees at the Region, and reductions at St. Mary's Hospital corresponding to approximately 18 per cent of the overall budget. OPERATING BUDGET - CONT'D Councillor John Smola suggested that the motion by Councillor Galloway be tabled until the January 24 meeting when staff will have all of the expenditure information needed to make an informed decision. He advised that he is not prepared to support the motion at this time. Councillor Vrbanovic agreed with the comments of Councillor Smola, and further suggested a staff recommendation in this regard could be brought forward on Budget Day. Councillor Weylie indicated that she would like to know the impact of the motion before voting, and asked for clarification as to whether the necessary reduction would have to take effect immediately or accrue by the end of 1997. In response to her further question concerning the full time equivalent corresponding to 1.5 per cent, Mr. Gazzola replied that the percentage equates to 20 positions based on an average salary and benefit package of $45,000.00 Councillor Jake Smola indicated his support for the motion and suggested that any staff reductions should be divided between management and other staff. Councillor Redman advised that she would support the motion, but FINANCE & ADMINISTRATION COMMITTEE MINUTES JAN UARY 20, 1997 -13- CITY OF KITCHENER stressed that it is not meant to suggest a lack of faith in City employees. Councillor Ziegler indicted his support for the motion and pointed out that taxpayers are always asking why Kitchener taxes are increasing over those of Waterloo and Cambridge, and this appears to suggest that Council does not have control of the mill rate. Councillor Galloway suggested that his motion be tabled for further consideration on January 24, 1997, and the Committee agreed. He stressed that what is being asked is a small sacrifice compared to reductions in other local institutions. Councillor Wagner indicted that he would support the motion, and suggested that should the budget be reduced by a further 1.5 per cent as suggested by Councillor Galloway, the remaining 0.25 per cent should be addressed in order to keep taxes a 1996 levels. Councillor Jake Smola enquired as to the status of a report on the current job evaluation process, and suggested that said process should be suspended until the report is considered by Council, noting that the job evaluation process may itself be a problem. Mr. Gazzola replied that he was unaware of any direction from Council to prepare a report on the evaluation process. Councillor Ziegler suggested that by Friday, Mr. Gazzola determine whether Council had given specific direction concerning a report on the job evaluation system, and if not, when such a report could be made available. Councillor Yantzi observed that the evaluation process seems to erase any anticipated savings as a result of reorganization. NEXT MEETING The next meeting of the Finance and Administration Committee to review the 1997 Operating Budget will be held on Friday, January 24, 1997. ADJOURNMENT On motion, the meeting adjourned at 4:50 p.m. G. Sosnoski Manager of Corporate Records/Assistant City Clerk