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HomeMy WebLinkAboutFinance & Admin - 1998-12-18 SFAC\1998-12-18-SPE DECEMBER 18, 1998 FINANCE & ADMINISTRATION COMMITTEE MINUTES CITY OF KITCHENER A special meeting of the Finance and Administration Committee was held this date commencing at 8:35 a.m. and initially chaired by Vice-Chair T. Galloway with the following members present: Mayor C. Zehr, Councillors K. Taylor-Harrison, M. Yantzi, John Smola, Jake Smola, B. Vrbanovic, J. Haalboom, G. Lorentz and C. Weylie. Councillor J. Ziegler was in attendance for part of the meeting. Others present: Ms. P. Houston, Ms. G. Luciantonio, Ms. L. Fryfogel, Ms. F. Currier, Ms. D. George, Messrs. J. Gazzola, E. Kovacs, B. Musselman, D. Snow, S. Gyorffy, B. MacDonald, D. Quinn, J. McBride, J. Cicuttin, B. Stanley, T. McCabe, R. Arnot, T. Clancy, J. Hancock, N. Kuntz and G. Sosnoski. The purpose of the meeting was to further consider the 1999 Operating Budgets for City Departments as recommended by the Administrative Review Committee. 1. 1999 OPERATING BUDGET Ms. Houston reviewed highlights of the 1999 Operating Budget for Council noting a 1.6 per cent decrease. Councillor Jake Smola put forward a motion, which was not accepted by the Chair, to take no action regarding an increase in the Council honorarium. Mayor Zehr noted that the Council and Mayor's honorarium has been budgeted at the same 0.5 per cent increase directed for staff salary and wages, adding that the Council honorarium has not been increased for several years. It was agreed to deal with the honorarium separately from the Council budget proper. On a motion by Mayor C. Zehr, it was resolved: "That the 1999 Operating Budget for Council be adopted as recommended by the Administration Review Committee, excluding any allocation in regard to an increase in the Council honourarium." Councillor Jake Smola indicated that he could not support an increase in the honorarium for members of Council. He suggested that this should be a fixed rate for the three year term of Council and that any increase proposed at this time should only apply to the new Council to be elected in the year 2000. Moved by Mayor C. Zeh~ "That the budgeted increase in the Council honorarium of 0.5 per cent be approved." A recorded voted was requested. MMMMM Councillor Lorentz advised that he can support the increase on the basis that the workload has increased and there has been no change in the honorarium for several years. Councillor J. Ziegler entered the meeting at this time. Councillor John Smola advised that he would only support a percentage increase and Mayor Zehr clarified that the motion deals only with the budgeted amount. As is the case with staff, the actual amount could be determined at a later date subject to contract negotiations. Several other members of Council indicated their support for the minor increase based on workload. Councillor Yantzi noted that what is under discussion is a cost of living increase, adding that he could support the position of Councillor Jake Smola regarding a fixed honorarium for the term of Council if it were considering a dramatic salary increase. The Committee then voted on the motion of Mayor C. Zehr to adopt the budgeted amount for the Council honorarium. 1. 1999 OPERATING BUDGET - CONT'D DECEMBER 18, 1998 FINANCE & ADMINISTRATION COMMITTEE MINUTES - 174- CITY OF KITCHENER In Favour: Contra: Mayor C. Zehr, Councillors K. Taylor- Harrison, M. Yantzi, John Smola, B. Vrbanovic, J. Ziegler, T. Galloway, G. Lorentz and C. Weylie. Councillors Jake Smola and J. Haalboom. Councillor J. Ziegler then assumed the Chair. Ms. Houston reviewed the highlights of the 1999 Operating Budget for the Mayor's Office noting an increase of 5.4 per cent, in part due to a new budget allocation for the Mayor's Advisory Committee on Youth (MACOY). Mayor Zehr advised that the $5,000.00 budged allocation for MACOY could be reduced to $3,000.00 on the basis of actual 1998 expenditures. On a motion by Mayor C. Zehr, it was resolved: "That the 1999 Operating Budget for the Mayor's Office be amended so as to reduce the budget allocation for the Mayor's Advisory Committee on Youth from $5,000.00 to $3,000.00." Mayor Zehr spoke to the proposed increase in staff for the Mayor's Office, noting that it has been suggested the part-time Secretary position currently budgeted at 24 hours per week be converted to a full-time position. Mr. Gazzola advised that this has been suggested due to increased workload in the Mayor's Office and the ongoing need to fill in for vacationing staff in the Mayor's and Chief Administrative Officer's areas. He also noted that the additional $15,000.00 amount required has not been included in the budget at this time. Mayor Zehr referred to the report from L. Fryfogel circulated to Council this date documenting increased activity in the Mayor's Office. On a motion by Mayor C. Zehr, it was resolved: "That the 1999 Operating Budget for the Mayor's Office be increased by approximately $15,000.00 so as to convert the part-time Secretary position to a full-time position, effective January 1, 1999." On a motion by Mayor C. Zehr, it was resolved: "That the 1999 Operating Budget for the Mayor's Office be approved as recommended by the Administrative Review Committee and amended by the Finance and Administration Committee on December 18, 1998." Ms. Houston reviewed the highlights of the 1999 Operating Budget for the Public Works Department on a division by division basis, noting an overall decrease of 0.8 per cent. Councillor Galloway questioned the budget allocation for workstations and office furnishings and asked whether there is a general provision for each department in this regard. Ms. Houston replied that this is generally not the case, though there is often a small provision in some operating department budgets. 1999 OPERATING BUDGET - CONT'D On a motion by Councillor B. Vrbanovic, FINANCE & ADMINISTRATION COMMITTEE MINUTES DECEMBER 18, 1998 - 175- it was resolved: "That the 1999 Operating Budget for the Administration Section of the Public Works Department be amended so as to remove the $12,000.00 allocation for supervisory workstations and re-allocate this amount to the Capital Budget." Councillor Jake Smola requested a staff report on or before Budget Day concerning the tipping fee reduction for bulk containers; specifically, the 1999 cost reduction and whether the City met its 1998 target. Ms. Houston reviewed the 1999 Operating Budgets and projections for the Gas and Water Utilities. She advised that in regard to the gas utility, staff are attempting to maintain a $4,000,000.00 surplus in each year with any amount over this target being deposited to the Tax Stabilization Reserve Fund. Councillor Galloway enquired as to gas purchase costs given the recent deregulation. Mr. Quinn replied that there will continue to be uncertainty in 1999, though purchase increases will not affect any dividend transfer as the City is now required to separate its purchase and delivery operations. He noted that over time, there will likely be a reduction in the retail rate for natural gas delivery in the Province. Mayor Zehr referred to a previous meeting with Energy Minister Wilson, at which time it was indicated that the separation between purchase and delivery operations need only be from an accounting standpoint. He asked whether the City had received written confirmation of this, and Mr. Quinn replied that written confirmation had not been perceived per se, but correspondence was sent following the meeting indicating that this was the City's understanding and no contrary response has been received. Ms. Houston pointed out that no rate increase is proposed in 1999 for either the water or the sewer surcharge rates. She further noted that the target is to maintain an accumulated net revenue for both of these operations of 20 per cent of gross profit. Councillor Galloway enquired as to the impact of the City's passing along to the consumer the decrease by the Region in the wholesale water rate. Ms. Houston advised that this would amount to a $670,000.00 increase per year to the bottom line with a cumulative impact over the five-year projection of approximately $3,000,000.00. Councillor Galloway questioned why staff are not recommending the decrease be passed along to consumers as has been done in other neighbouring municipalities. Ms. Houston replied that on a household basis, Kitchener is already lower than both Cambridge and Waterloo; however, this is different in regard to industrial users. Councillor Galloway asked for the cost comparison figures on or before Budget Day. Councillor Galloway noted that the rate model for the Region of Waterloo shows a flatlining of water rates and a further reduction in sewer surcharge rates. He stated that the City now has the lowest hydro rate, and it would be advantageous from a marketing standpoint to be able to say that it also has the lowest water and sewer surcharge rates. He asked that the Committee consider not making a recommendation at this time in regard to water and sewer surcharge rates pending additional information from staff. Mr. Kovacs cautioned that the Region is proposing to flatline the wholesale water rate not the retail water rate and that approximately 30 - 40 percent of the water utility budget is required to run the distribution system. He further cautioned that there is presently an erosion in the financial position of the water utility and it is uncertain how long it can sustain lower water and sewer surcharge rates. Ms. Houston noted that the recommendations before the Committee are based on long term projections. Mayor Zehr pointed out that concerns have been expressed over the past two years that rate reductions have not been passed along to the consumer. He asked that the report requested by Councillor Galloway also include a history of rate increases in other neighbouring municipalities over the past two years as well as their estimated delivery expenses. He also expressed support for taking no action on the water and sewer rates at this time. Ms. Houston cautioned that reducing the rates now will likely require a rate increase at a future date depending on the performance of the utility as the reserve funds will decrease over time. 1999 OPERATING BUDGET - CONT'D Councillor Haalboom questioned whether it was reasonable to look at a city to city comparison without reference to the level of maintenance of their respective infrastructures. Ms. Houston FINANCE & ADMINISTRATION COMMITTEE MINUTES DECEMBER 18, 1998 - 176- pointed out that a recent study has shown that there are significant differences in the state of repair of the water and sewer infrastructures of municipalities in the Region. On a motion by Councillor T. Galloway, it was resolved: "That the 1999 Operating Budget for the Administration, Operations, Street Li,qhtin.q sections and the Waterworks and Gas Utilities of the Public Works Department be approved as recommended by the Administrative Review Committee and with the changes made by the Finance and Administration Committee on December 18, 1998; and further, That the above be on the understanding that the 1999 Water and Sewer Surcharge rates are being recommended at this time subject to receipt of a staff report and further discussions on Budget Day, said report to include the Water and Sewer Surcharge rates for the Cities of Cambridge and Waterloo during the past two years as well as their corresponding delivery expenses." Councillor Jake Smola also asked for a brief staff report on the 1998 Leave Collection Program. Ms. Houston then reviewed the 1999 Operating Budgets for the remaining Divisions of the Public Works Department. She noted that in regard to the Traffic Division budget, a staff request for two additional co-op students at an annual cost of approximately $20,000.00 has not been included. Mr. Snow pointed out that several years ago the City employed students to perform traffic studies in response to public requests. The present staff cannot address these requests in a timely manner and employing students would also allow for better use of the Speed Advisory Program. Mayor Zehr enquired as to the impact if the position were not approved, and Mr. McBride replied that the critical traffic counts would still have to be performed, but staff would likely have to use two to three year old information as opposed to current data. He also advised that it was planned to use students to undertake the parking turnover study relative to a new Downtown parking garage. Mr. Kovacs added that if students are not hired, this would have an impact on the Division's overtime account. On a motion by Councillor M. Yantzi, it was resolved: "That the 1999 Operating Budget for the Parking Section of the Public Works Department be amended by adding $20,000.00 for two additional co-op student positions." Mayor Zehr asked that the co-op student positions be flagged for the year 2000 budget process, as it is not intended that the funding form a permanent part of the Department's base budget. Councillor Lorentz questioned some of the current locations for bus bench advertising as it was his understanding these were only to be installed along major bus routes. Mr. Cicuttin agreed to review the locations, and reiterated the earlier commitment to only locate these at bus stops. Councillor Jake Smola raised concerns about the state of cleanliness of the City bus shelters. Ms. Cicuttin responded that the bus shelters are under now contract to MediaCom, with transit operators being asked to advise of the shelters which require cleaning or repair. Mr. Kovacs indicated that staff will monitor the situation to determine whether this arrangement results in improvements. Mr. Cicuttin added that MediaCom will be installing approximately 50 new bus shelters this year. 1999 OPERATING BUDGET - CONT'D Councillor Ziegler asked for consideration of the timing of bus shelter agreement renewals so that these do not coincide with peak season use. Mr. Cicuttin advised that staff are currently exploring a possible extension to the agreement so as to avoid any changes during the winter months. Councillor Weylie noted that it was her understanding Council had agreed to the use of taxis to supplement transit service and asked for information on the cost and revenue in this regard. Mr. Kovacs advised that staff would follow up on this matter and prepare a report. Councillor Jake FINANCE & ADMINISTRATION COMMITTEE MINUTES DECEMBER 18, 1998 - 177- Smola also asked for a future report on how successful the City has been in filling bus-advertising space. On a motion by Councillor C. Weylie, it was resolved: "That the 1999 Operating Budgets for the Traffic, Parkin,q and Transit sections of the Public Works and Transportation Department be approved as recommend by the Administration Review Committee." Ms. Houston reviewed the highlights of the 1999 Operating Budget for the Business and Plannin,q Services Department noting a 12 per cent increase. A $5,000.00 decrease in the Urban Design Award Budget was noted, and Councillor Jake Smola asked that it be added back into the budget and the budget line reworded to indicate Urban Design/Environmental Awards. Councillor K. Taylor-Harrison raised the issue of the proposed new position of Safe City Coordinator. Mr. McCabe responded that a report is planned for consideration at the Community Services Committee meeting on January 11, 1999 and subsequently on Budget Day. On a motion by Councillor Jake Smola, it was resolved: "That the $5,000.00 budget amount for the Urban Design Awards be re-instated in the 1999 Operating Budget for the Business and Planninq Services Department with the budget line to be revised to read Urban Design/Environmental Awards." On a motion by Councillor C. Weylie, it was resolved: "That the 1999 Operating Budget for the Business and Planninq Services Department be approved as recommended by the Administrative Review Committee and amended by the Finance and Administration Committee on December 18, 1998." Ms. Houston reviewed the highlights of the 1999 Operating Budget for the Finance Department, noting a 1.1 per cent budget decrease. Councillor Lorentz enquired as to the status of the new computerized billing system and Ms. Houston replied that the project has taken longer to implement than originally anticipated. The initial target was September 1, 1998 and completion is now expected by June 1, 1999. Councillor Lorentz suggested that consideration be given to advising the public in advance of the new system and encouraging participation in the pre-authorized payment plan. On a motion by Councillor G. Lorentz, it was resolved: "That the 1999 Operating Budget for the Finance Department be approved as recommended by the Administrative Review Committee." Ms. Houston reviewed highlights of the 1999 Operating Budget for the Parks and Recreation Department on a division by division basis noting an overall increase of 1 per cent. Ms. Houston noted that the staff request for a Youth Co-ordinator position in the Culture and Special City FINANCE & ADMINISTRATION COMMITTEE MINUTES DECEMBER 18, 1998 - 178- 1999 OPERATING BUDGET - CONT'D Events section at a cost of approximately $37,000.00 is not included. Mr. Clancy advised that the Youth Co-ordinator position arose from discussions on program co- ordination throughout the City. He acknowledged that Council had not had an opportunity to review the request, and indicated he would come back with a full report for future consideration. Councillor Vrbanovic advised that the budget line in this section for increased part-time wages (Youth Programming) can be reduced from the current $13,000.00 allocation. Councillor Taylor- Harrison noted that these wages relate only to programming for the Centreville-Chicopee Community Centre, and noted that some neighbourhood associations are themselves paying the cost of such a position. She asked that budgeting for this type of position be considered citywide and not just for one community centre. On a motion by Councillor B. Vrbanovic, it was resolved: "That the budget allocation in the Culture and Special City Events budget of the Parks and Recreation Department relative to increased part-time wages (Youth Programming) be decreased from $13,000.00 to $7,500.00." Note was made concerning community centre needs in the Wilson Avenue area, and Mr. Clancy agreed to provide additional information on or before Budget Day. Councillor Weylie advised in this regard that the Montessori School is purchasing the former St. Boniface School property. The Committee gave direction that Mr. Clancy investigate whether the new owner is prepared to lease or otherwise enter into a space sharing arrangement with the City. In reference to the Farmers' Market budget, Mayor Zehr noted that the cost to the City to operate the facility is in excess of $300,000.00 annually, adding that it is currently run as a service rather than a business in the strictest sense of the word. Mr. Clancy noted that the Market has evolved over the years from a tourist market to a strong, local produce market. He advised that a committee has been struck to examine the future of the Market over the next two months and make recommendations in this regard. Mayor Zehr referred to the $27,000.00 decrease in fees in the Farmers' Market budget and asked for clarification as to why this would occur if a fee increase is to go into effect in the summer of 1999. He asked that staff review the figure and report on Budget Day. A discussion took place concerning the Cemeteries operation and Ms. Houston advised that once the Williamsburg Crematorium debt has been paid, revenues from this facility will accrue to the taxpayer. Councillor Galloway indicated that it was his understanding the division was working toward becoming cost neutral to the taxpayer, and questioned whether any revenues from the crematorium gardens are included in the budget. Ms. Houston replied that the revenue has been used to offset the near term cost to construct Willow Gardens, which will be paid for by the year 2000. Councillor Galloway questioned whether Council had agreed to divert revenues to pay for the capital costs and Mr. Clancy responded that a report in this regard was submitted to Council. Ms. Houston added that once the Gardens are paid for Council will have to decide whether the revenue is to be diverted to more quickly pay down the crematorium debt. Councillor Galloway indicated his interest in seeing some sort of dividend from this facility going to the taxpayer. He indicted that he was prepared to leave the budget as it is currently structured, but asked that sometime in 1999 staff provide an overview of the cemeteries operation and a schedule of revenue and cost projections which indicate when they will become self sufficient. Ms. Houston responded that staff will attempt to have this information available by Budget Day. Ms. Houston reviewed highlights of the 1999 Operating Budgets and six-year projections for the Doon and Rockway Golf Courses, noting an overall increase in these enterprise budgets of 35.5 per cent. In reviewing the six-year projection, it was noted that payment for the golf course expansion has been included as well as an approved five per cent increase in fees. Mayor Zehr questioned how the dividend contribution of the golf course enterprises in any given 1. 1999 OPERATING BUDGET - CONT'D FINANCE & ADMINISTRATION COMMITTEE MINUTES DECEMBER 18, 1998 - 179- year compares to the tax revenue the City would receive if the golf courses were run privately. Mr. Clancy indicated that the City of Brantford conducted a similar comparison and under circumstances like those of Kitchener. Ms. Houston advised that staff will report back with this information. On a motion by Councillor G. Lorentz, it was resolved: "That the 1999 Operating Budget for the Parks and Recreation Department, including the Golf Course Enterprises, be approved as recommended by the Administrative Review Committee, and amended by the Finance and Administration Committee on December 18, 1998." Ms. Houston reviewed highlights of the 1999 Operating Budget for the Fire Department noting a 2.8 per cent increase. On a motion by Councillor G. Lorentz, it was resolved: "That the 1999 Operating Budget for the Fire Department be approved as recommended by the Administrative Review Committee." Ms. Houston then outlined the recommendation of the Administrative Review Committee that the Staff and Council mileage rate be increased from the current 0.33 cents per kilometer to 0.34 cents per kilometer. She referred to various per kilometer comparitors from other municipalities, and noted that the City's current rate has not changed in five years. Councillor Jake Smola enquired whether consideration had been given to providing incentives for car pooling, and Ms. Houston advised that this is normally done on a department by department basis, but staff could further investigate such incentives. Ms. Houston also noted that the Fleet Division did a comprehensive review of the costs to operate a vehicle, and found that to offset these the mileage rate should be 0.38 cents per kilometer. Councillor Weylie referred to the practice of the City of London to have one rate where less than 200 kilometers are traveled in a single month, and a lower rate where more than 200 kilometers are involved. Mayor Zehr asked that future consideration be given to a two-tier mileage rate. On a motion by Councillor G. Lorentz, it was resolved: "That no action be taken on the staff recommendation that the current City mileage rate be increased from 0.33 cents per kilometer to 0.34 cents per kilometer." Councillor Lorentz referred to ongoing complaints he has received concerning staff who are leaving City vehicles idling for extended periods of time. He referred to a specific instance when a taxpayer reported that a vehicle had been left running for more than one hour, and stressed the need to reduce such occurrences. Mr. Gazzola indicated that staff will investigate ways of addressing this problem, but in the interim he would appreciate hearing of any such incidents reported to members of Council so they can be dealt with immediately. Ms. Houston continued review of the Reserves and Reserve Funds begun by the Committee on December 16, 1998. She advised in response to a previous question, that fee revenue for the entire City is budgeted at $23 million, a $266,000.00, or 1.13 per cent increase. Ms. Houston noted that it is expected the OMERS holiday will continue in 1999 and this is reflected in the budget. She referred to Council's previous direction that the 2 per cent OMERS contribution reduction is to be credited to the Sick Leave Reserve Fund, and the proceeds from the OMERS contribution holiday is to be split equally between the Sick Leave Reserve Fund 1999 OPERATING BUDGET - CONT'D FINANCE & ADMINISTRATION COMMITTEE MINUTES DECEMBER 18, 1998 - 180- and the Tax Stabilization Reserve Fund. Councillor Galloway questioned why such a large sum has accumulated in the Sick Leave Reserve Fund, the anticipated closing balance in 1999 being $3 million. Ms. Houston replied that Council policy established that the sick leave liability should be funded at 60 per cent, the current funding level being well below this target. In reference to the Recreational Land Reserve Fund, Mayor Zehr asked whether this would be debited in the event of a land exchange discussed with the Department of Defence. It was indicated that this reserve fund would normally cover such expenses; however, given the current funding level, an additional allocation would be required. Councillor Jake Smola commented on the funding for the Oktoberfest float and indicated that he was not overly impressed with this year's float. He indicated an interest in reviewing a design concept and seeing improvements which would better reflect the City's image. Councillor Ziegler asked that discussion in this regard take place at a Community Services Committee meeting early in 1999. On a motion by Councillor B. Vrbanovic, it was resolved: "That the 1999 Operating Budgets for the following Reserves and Reserve Funds be approved as recommended by the Administrative Review Committee: Tax Stabilization; Election; Recreational Land; Sick Leave; Parking; Insurance; Project Lift; Telephone; Oktoberfest Float; Senior Management Training; General Training; and Workers' Compensation Fund." Ms. Houston advised that as a result of the Finance and Administration Committee's review of the 1999 Operating Budget the current increase, net of assessment growth, is 1.07 per cent. Councillor Vrbanovic commended the Chair of the Finance and Administration Committee and staff for their efforts in preparing and reviewing the Operating Budget. NEXT MEETING The next meeting of the Finance and Administration Committee will be on Budget Day, January 29, 1999, to finally review its recommendations prior to consideration by Council. ADJOURNMENT On motion, the meeting adjourned at 12:00 noon. G. Sosnoski Manager of Corporate Records and Assistant City Clerk