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HomeMy WebLinkAboutCouncil Minutes - 1995-08-24 SCOUNCIL\1995-08-24-SPE AUGUST 24, 1995 SPECIAL COUNCIL MINUTES CITY OF KITCHENER A special meeting of City Council was held at 5:10 p.m. this date and chaired by Mayor Richard D. Christy with the following members present: Councillors J. Ziegler, John Smola, K. Redman, B. Vrbanovic, C. Weylie, M. Wagner, T. Galloway, G. Lorentz and M. Yantzi. Councillor Jake Smola was in attendance for part of the meeting. Notice of the special meeting had been previously given to all members of Council by the City Clerk pursuant to Chapter 25 of the Municipal Code. The purpose of the special meeting was to review the City's 1996 Pro Forma Budget and obtain direction from Council concerning guidelines for budget preparation. Mr. J. Gazzola referred to an earlier report from Fire Chief J. Hancock dated August 8, 1995 recommending reallocations within the Ten-Year Capital Forecast involving the relocation of five fire stations. He advised that the proposed reallocation would not have an impact on the Operating Budget in 1996 and 1997 and that less money would be spent overall in the long term as the number of fire stations is being reduced. Mr. Gazzola pointed out that there is an impact on the Capital Forecast in that the expenditures are being compressed from an 8 into a 4 year time frame. Councillor J. Ziegler asked that further discussion of this item be deferred to the Capital Budget deliberations. In response to a question from Councillor K. Redman, Fire Chief J. Hancock advised that under the original proposal, Fire Station No.8 would have come on line in the year 2001 with a full crew. This station is no longer required; however, the savings would not accrue until the year 2001. Mr. J. Gazzola outlined the major areas comprising the 1996 Pro Forma Budget. He indicated that in 1996 the value of one residential mill is $653,000 and that the value of one percent is $575,000. He noted that the impact of a one percent increase on a property having a market value of $140,000 is $5.49. Councillor T. Galloway enquired as to the expected net assessment for 1995, including supplementary assessments and Mr. J. Gazzola replied that assessment growths is at zero in 1995 excluding supplementary assessments and that an exact percentage is not available at this time. He added that the assessment office has indicated that a one percent increase is a reasonable projection for 1996. Mr. J. Gazzola reviewed a comparison between the Consumer Price Index (CPI) and the tax rates of Kitchener, the Region of Waterloo and the School Boards. He noted that Kitchener is closer to the CPI than either the School Boards or the Region and at present, is fractionally higher. He pointed out that the inflation rate is presently 2 1/2% to 3% higher than last year and indicated that the Finance Department is suggesting an average 1996 inflation of 2.5%. Mr. Gazzola reviewed various annualization factors including salary progressions and the Planning Department reorganization, as well as several new factors involving the Downtown Task Force recommendations, computer maintenance and the Parking Enterprise. He advised that it is time to stop treating Parking as an enterprise as it has developed into a cost rather than a profit centre. He also referred to the anticipated loss of parking revenue as a result of the decision to remove parking meters from King Street. Mr. Gazzola also referred to a variety of other factors including the General Contingency, which is normally allocated at the rate of one percent, the loss of the City of Waterloo's contribution toward pools, an outstanding Social Contract obligation in Transit, the Parks Operations reorganization and the Auditorium concession contract. Mr. Gazzola also reviewed the Revenue and Expenditure Worksheets. Figures and percentages were then inserted into the Pro Forma outline to reflect the Management Committee review and Mr. Gazzola noted total projected revenues of $108,598,000, projected expenditures of $111,995,000 resulting in a net levy increase of $3,397,000 or a mill rate increase of 5.91%. Councillor Jake Smola entered the meeting at this time. Mr. J. Gazzola repeated his opening comments concerning the Fire Hall Relocation for the benefit of Councillor Jake Smola and summarized that the overall expenditure will be less costly to the City with no operating impact in 1996 and 1997. He suggested that in view of the Capital impact further discussion should be deferred to the Capital Forecast. Councillor Jake Smola enquired whether there would be additional firefighting personnel involved in the proposed reallocation and Fire Chief J. Hancock replied that there would be in 1997 with regard to the Forest Heights Station. Mr. Gazzola added that the AUGUST ~4, 1995 SPECIAL COUNCIL MINUTES -410- CITY OF KITCHENER operating impact is no greater than initially expected. Mr. J. Gazzola then reviewed various Annualization Factors including progressions in the Fire Department, other City staff progressions and the impact of the reorganization in the Planning and Development Department. In response to a question from Councillor G. Lorentz, Mr. Gazzola advised that there is a slight increase of $50,000 relative to the Planning reorganization and subsequent to the City realizing a decrease with the elimination of one Commissioner position. Mr. T. McCabe pointed out that the $50,000 figure is an estimate and that $20,000 of this amount is a retroactive cost. Councillor T. Galloway questioned why the figure for progressions is always positive as opposed to a mixture of increases and decreases. Mr. Gazzola reminded Councillor Galloway that staff had researched this issue last year and it was demonstrated that there were both increases and decreases on progressions. Councillor Galloway indicated an interest in discussing this matter privately with staff. Mr. T. McKay added that he is anticipating 40 early retirements in September and that this should have an overall negative effect on progressions. Councillor G. Lorentz enquired whether the City is still reviewing vacancies to determine whether positions need to be filled. Mr. McKay replied in the affirmative, but noted that 12 of the anticipated retirements involve Bus Operators. Mr. J. Gazzola then reviewed new and other factors which would have a combined impact of approximately $2,000,000. Councillor B. Vrbanovic enquired as to the Parking Enterprise deficit and Mr. T. McKay replied that Council previously eliminated the deficit in 1994 but an operating deficit was forecast for this year totalling $300,000, which in combination with the $500,000 loss of revenue as a result of removing parking meters from King Street, has resulted in an $800,000 cost. Councillor T. Galloway questioned the accuracy of the $500,000 figure for free parking on King Street, and Ms. P. Houston verified that a two to three month estimate projected lost revenue at $475,000. Mr. J. Gazzola explained that the cost relative to the Tax Stabilization Reserve Fund reflects an earlier decision by Council to reduce the amount of the transfer from the Fund and this has created a $350,000 negative impact. He pointed out that the City has $115,000 of unresolved Social Contract obligations involving the Transit Division. He also noted that the impact of the Parks Operation reorganization resulted in a $35,000 credit rather than the zero amount shown in the Pro Forma Budget, and the budget was amended accordingly. Councillor G. Lorentz enquired as to the $24,000 cost resulting from the expiry of the Pool Agreement with the City of Waterloo, and advised that it was his understanding that the lost revenue was to be offset by a surcharge. Mr. T. Clancy explained that the annual loss was estimated at $50,000 a year and that half of this was accounted for in 1995, with the balance to be reconciled in 1996. Mr. Clancy also indicated that he did not recall the revenue amount anticipated as a result of the surcharge, and Mr. T. McKay suggested that it should be assumed that the surcharge will offset lost revenue. The Pro Forma Budget was then amended to reduce the $24,000 for "Pools - City of Waterloo contribution" to zero. Councillor B. Vrbanovic noted that the Province is forecasting a further reduction in transfer payments to municipalities and suggested that this should be reflected in the Pro Forma Budget. Councillor J. Ziegler disagreed, noting that there should be no allocation until further details are obtained. Mr. J. Gazzola advised that at present the municipality receives approximately $9.5 million in Provincial grants, $6 million of which are conditional and $3.5 million unconditional in nature. He added that the latter amount was $5.5 million prior to the Province's Expenditure Control Plan. Mr. J. Gazzola then reviewed the Expenditure Worksheet. Councillor J. Ziegler referred to his previously circulated correspondence regarding the setting of budgetary guidelines for 1996 and the ending of the Social Contract in March of that year. Councillor Ziegler argued that the promised decrease in Provincial income tax amounting to 30% over three years would have a negative impact on inflation and result in a lowering of Consumer Price Index. He suggested that as a result the City should budget zero percent for inflation in staff Wages and Salaries as well as in Boards and Contracts as this move by the Province would have a favourable impact on City staff and agencies receiving municipal appropriations. Councillor Ziegler pointed out that by the time the City sets its 1996 Operating Budget it will have a clearer idea of whether the Province is still on track with the proposed 10% reduction in income tax in 1996. The Pro Forma Budget was amended to change all inflation factors, including those for wages and salaries to zero percent and the resulting percentage mill rate increase declined from 5.54% to 1.87%. Councillor M. Yantzi questioned whether this proposal was realistic and the net impact on City employees of the alleged 30% tax decrease. Councillor J. Ziegler replied that such a decrease would reduce the Consumer Price Index. Mr. T. McKay advised that income tax is not part of the Index and a reduction in this area would have no effect on inflation. He added that the first Provincial tax decrease is planned for AUGUST ~4, 1995 SPECIAL COUNCIL MINUTES -411- CITY OF KITCHENER April of 1996 and that it would take a further year for the benefits of same to work through the system. He also cautioned that the City has to look at its ability to negotiate with its various Unions and referred to the possibility of arbitration with respect to Firefighter wages. Councillor Jake Smola referred to the various new expenditures relative to the Downtown and asked for clarification as to the amount allocated for the Downtown in the Capital Budget. Mr. J. Gazzola replied that at present there is $2.5 million included in the Capital Forecast over a five year period. Councillor Jake Smola questioned whether items such as Downtown decorations and landscaping could be attributed to the Capital Budget. Mr. T. Clancy argued that the City recently took over banner installation in the Downtown, as well as the installation of Christmas lights and that all of this work is on a contract basis and in his department's view constitutes an operating expense. Councillor B. Vrbanovic suggested that expenses for the Downtown Action Team should also be included in the Capital Budget on the basis that these costs have a duration of only two years. Councillor T. Galloway suggested that Councillor J. Ziegler's proposal concerning the freezing of wages and salaries in 1996 should perhaps be discussed in-camera. Ms. C. Thompson, representing the K-W Record objected to this suggestion on the basis that any general discussion of wage rates is a matter for open, public debate. Councillor Galloway countered by pointing out that negotiating strategies may be involved. Both Councillors G. Lorentz and M. Yantzi suggested that discussions relative to negotiations are not appropriate at this time, and Mayor R. Christy noted that it was generally agreed no immediate in- camera discussion was necessary. Councillor J. Ziegler indicated his willingness to put forward a Notice of Motion that at the next Council meeting he would introduce a motion involving a zero percent guideline for municipal taxes and employee wages. Mayor R. Christy suggested that it would be counter productive to discuss this issue at present until a clear indication is obtained from the Province as to the extent of any proposed cut in transfer payments. Any action would amount to establishing a strategy before the facts are known. Mr. J. Gazzola pointed out that at present, the Pro Forma Budget reflects a 5 1/2% increase in the mill rate and that reducing this amount to zero will require a reduction of $3 million over and above any subsequent reduction in transfer payments by the Province. Councillor K. Redman indicated that she was comfortable using the zero target as a provisional figure. Mayor R. Christy enquired when Council would incorporate the reality of the economy as a whole and the actual inflation rate, if inflation is budgeted at zero percent at the Pro Forma stage. He suggested that ignoring the actual inflation rate will compound the problem over the year. Councillor Redman suggested that the City should look at the services they offer, the way these are delivered and at what cost and questioned how to determine where the City gets the best value for its money. Mr. J. Gazzola suggested that Council could give direction to staff to come back with a zero percent increase; however, every City program would have to be reviewed. He advised that Council must decide if zero is a realistic target given all of the other circumstances. Moved by Councillor J. Ziegler Seconded by Councillor Jake Smola That a zero percent increase in the mill rate be established as a target relative to the 1996 budget. A recorded vote was requested. Councillor G. Lorentz stressed the need to be creative in developing scenarios to control costs. Councillor M. Yantzi suggested that it is hard to be in favour of a zero percent target without knowing for certain the extent of Provincial cuts. He also advised that there are limits to the cuts that he is prepared to make in order to reach zero percent. Councillor Yantzi also questioned whether there are areas of service which the City may no longer wish to provide. Councillor Jake Smola indicated that he feels strongly about maintaining a zero percent increase and made reference to the "Z" List circulated during the 1995 budget deliberations outlining reductions involving service cuts. Councillor John Smola agreed with the comments made by Councillor Yantzi and noted that he does not feel a zero percent target is realistic given all the related factors. He indicated that no firm decisions should be made in this regard until the City has a clear indication of the impact of Provincial cuts on the municipality. Councillor John Smola questioned what services and improvements individual Councillors would be willing to forego in their own Wards if the items on a "Z" List were put forward. Councillor M. Wagner stressed that the zero percent figure should be treated solely as a target, subject to examining the budget in greater detail. Councillor M. Yantzi offered the further opinion that a zero percent increase is not realistic at this time. Mayor R. Christy advised that he supports a fair tax policy that is realistic. He pointed out that in his AUGUST 94, 1995 SPECIAL COUNCIL MINUTES -419- CITY OF KITCHENER experience when individual Councillors are asked to indicate what they are willing to give up in their wards, few are prepared to make the necessary cuts. He suggested that the Pro Forma process has to be a realistic one and indicated his preference for developing a policy to generate more revenue. Mayor Christy suggested that the estimated 1996 inflation rate of 2.4% would be a more realistic target pending examination of the budget details. Councillor K. Redman offered the opinion that as the City is trying to keep taxes as Iow as possible, the budget process cannot develop properly if 2% is the initial target. Mr. J. Gazzola reminded Council that grants from the Province have been reduced by approximately $3 million over the past few years, and this does not include the lost value of normal inflationary increases. He suggested that trying to reduce the budget by a further $3 million is unrealistic, and offered the opinion that if Council can stay within the rate of inflation, which is difficult enough, they will have done well. Mr. Gazzola added that the "Z" List previously referred to by Councillor Jake Smola, requires a great deal of staff work to compile. Councillor K. Redman suggested that for budgeting purposes the City should assume the worst as regards transfer payment reductions by the Province. Councillor B. Vrbanovic indicated his agreement with Councillor Redman, pointing out that this is likely to be a painful year, and that through the Provincial election, the public at large has made it clear that they want savings and cuts in government. He suggested that it is better to begin with a hard line and challenge staff in this regard. Mr. J. Gazzola responded that the only way to reduce the budget by $3 million would be to lay off staff, and in his opinion, there is not $3 million in extra staff. The previous motion by Councillor J. Ziegler, seconded by Councillor Jake Smola to target a zero percent tax increase in 1996 was voted on and Carried on a recorded vote. In Favour: Councillors G. Lorentz, K. Redman, B. Vrbanovic, T. Galloway, C. Weylie, J. Ziegler, M. Wagner and Jake Smola. Contra: Mayor R. Christy, Councillors John Smola and M. Yantzi. Councillor J. Ziegler asked that staff be prepared to comment at the September 18, 1995 Finance and Administration Committee meeting concerning changes to the 1996 budget schedule. Councillor T. Galloway asked whether any increase in Downtown assessment as well as possible reductions in Regional tipping fees have been incorporated into the budget. Mr. J. Gazzola replied that neither of the two items have been incorporated and that staff are only expecting a slight decrease in tipping fees. On motion, the meeting adjourned. MAYOR CLERK