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HomeMy WebLinkAboutFin & Corp Svcs - 2005-01-17 SFINANCE & CORPORATE SERVICES COMMITTEE MINUTES JANUARY 177 2005 CITY OF KITCHENER The Finance and Corporate Services Committee met in special session this date commencing at 9:07 a.m. Present: Chair Councillor B. Vrbanovic, Mayor C. Zehr and Councillors C. Weylie, J. Smola, G. Lorentz, J. Gazzola and M. Galloway Staff: C. Ladd, Chief Administrative Officer P. Houston, General Manager of Financial Services G. Sosnoski, General Manager of Corporate Services F. Pizzuto, General Manager of Community Services G. Stewart, General Manager of Development & Technical Services R. Browning, Acting General Manager of Strategic Services R. LeBrun, Acting Manager of Budgets & Financial Services K. Baulk, Director of Enterprise K. Currier, Director of Operations D. Quinn, Director of Utilities R. Gosse, Deputy City Clerk L. Proulx, Director of Facilities Management D. Chapman, Supervisor, Special Events K. Weiss, Manager of Business Development D. Gilchrist, Committee Administrator Councillor B. Vrbanovic called for a moments silence in memory of Ms. Gina Luciantonio, former Director of Budgets & Financial Services, who died on January 2, 2005. He stated Gina had been with the City of Kitchener since November 24, 1997, and in the over 7 years that we had the pleasure of working with her, she left an indelible mark on all those she worked with at the City and throughout local government in Waterloo Region. 1. FIN-05-002 2005 OPERATING BUDGET The Committee was in receipt of Financial Services Department report FIN-05-002, dated January 6, 2005, with respect to the City's 2005 Operating Budget as recommended by the Administration. In addition, Committee members were provided with budget issued papers for the major issues to be discussed at this meeting. Ms. Houston presented the Operating Budget, beginning with a general overview, noting that for the period 1995 to 2004 the City's cumulative tax rate has been in the middle range and towards the least in comparison to the Region and the Cities of Waterloo and Cambridge. Compared to the same municipalities, and over the same period of time, Kitchener's cumulative assessment growth and cumulative population comparison has been the least of the municipalities. Ms. Houston stated the City's total weighted assessment growth for 2004 was 2.63% and for 2005 is 3.17%. Ms. Houston then spoke of the cumulative gap between the City's tax rate increases and inflation, and noting the rate of inflation (CPI) for the period 1995-2004 has exceeded the tax rate increases. She also noted this gap decreased somewhat in 2004 with the establishment of the Economic Development Investment Fund. Ms. Houston advised that the 2005 household CPI is established at 2.2%, whereas the City's will be 3.37%. Ms. Houston then displayed 2004 household comparisons for the Cities of Kitchener, Waterloo and Cambridge for an average household (market value of $183,000) noting the cost of property taxes and other services for Kitchener residents is slightly higher, the biggest difference being that Kitchener residents pay more for Regional Transit. Ms. Houston advised the Committee that the value of a 1% increase in the tax rate results in an increase of $722,000 for the City resulting in a tax increase of $8.07 for a typical household (market value of $183,000). The Committee next viewed an employee comparison chart for the years 1995, 2002, 2003, and 2004. Ms. Houston noted the City had 1032 employees in 1995; however, adjusted for growth the number of employees should have been 1161. In the year 2004, the City had 1069 employees. With respect to legislative changes over the period 1999-2005, Ms. Houston advised the annual impact of these changes equals $1.1M which equates to a tax rate increase of 1.6%. Further, FINANCE & CORPORATE SERVICES COMMITTEE MINUTES JANUARY 177 2005 -11- CITY OF KITCHENER 1. FIN-05-002 2005 OPERATING BUDGET (CONT'D) without the GST rebate, the tax rate increase for this purpose would be 1.7% in 2005. Mayor Zehr requested detailed information from staff on the required increase in the tax rate to accommodate increased operating costs due to the growth in capital projects, as well as a 10 year rate increase projection including the net tax rate impact. KITCHENER PUBLIC LIBRARY & CENTRE IN THE SQUARE The Committee considered the 2005 Operating Budgets for the Kitchener Public Library and the Centre In The Square. It was noted the Centre In The Square is requesting an increase of 2% in their Operating Budget for 2005. The Kitchener Public Library is requesting a 10% increase in their Operating Budget in 2005; of that, 3.7% is required due to salary market implementation and $424,000 of the increase is a result of operating the new Country Hills Library. Councillor Weylie put forward a motion to approve the 2005 Operating Budgets for the Kitchener Public Library and the Centre In The Square as recommended by the Administration. Councillor J. Gazzola stated a 10% increase is substantial. He stated he is not in favour of the direction being taken today, and he cannot support a tax rate increase of 3.9% or greater. The budget needs to be reduced by approximately 2%, requiring the elimination of $1.5M. Ms. S. Lewis, CEO, Kitchener Public Library, advised that 6.3% of the requested 10% represents the annualized cost of the Country Hills Library. She noted the original proform budget for the Country Hills Library was $510,000, which has been reduced to $424,000. Cost of living increases result in a 2.8% budget increase, and the remainder of the increase is for utilities. Further, the budget has been reduced to a point which the Board believes is reasonable, and any further reduction would impact services. She advised the two significant components in the Operating Budget are salaries and resources, and salaries would be impacted if hours of operation are reduced. Mayor Zehr questioned whether Kitchener Public Library provides services for other levels of government, and Ms. Lewis advised the library receives funding from those levels of government for which they provide services. With respect to Capital Funding for resources, Ms. Lewis advised even with this funding they are barely keeping up, and all public libraries have lost buying power when they have to buy outside the country. She noted resources have increased by 5% whereas there has been an 11-13% increase in visits. When questioned by Mayor Zehr as to whether the budget could accommodate a modest adjustment, Ms. Lewis responded the budget is set at the amount that the Kitchener Public Library Board feels they can operate for the coming year, and cuts are not preferred. Councillor Gazzola stated that he believes the Centre In The Square and the Kitchener Public Library do a great job. His concern is not so much with them as with the money being given to the Universities, which now limits the amount of money to cover the things really needed. Senior levels of government should be paying for Universities. Kitchener could have taken the same approach as Cambridge, who supported the University over a 10 year period. Councillor Vrbanovic responded that the decisions to support the Universities were made last year, following one of the most involved public consultation processes ever. Also, seeing our assessment grow is an advantage to our community. Mayor Zehr stated there was major public involvement in the process undertaking last year concerning the investment fund; although no one likes extra taxes, people were supportive. Councillor Gazzola responded the issue is that taxes are increasing too much, and the question is how to reduce the tax rate to a reasonable level. The investment fund discussions last year did not really include all sectors of the community. He questioned whether there is a will for Council and the Administration to work together to reduce the tax rate increase to a reasonable level. FINANCE & CORPORATE SERVICES COMMITTEE MINUTES JANUARY 177 2005 -12- CITY OF KITCHENER 1. FIN-05-002 2005 OPERATING BUDGET (CONT'D) Councillor Weylie then requested that her motion be voted on. On motion by Councillor C. Weylie - it was resolved: "That the 2005 Operating Budget for the Centre In The Square be approved at $1,212,985, representing a 2% increase, and the 2005 Operating Budget for the Kitchener Public Library be approved at $7,405,840, representing a 10% increase." 2005 TAX LEVY Ms. Houston advised the 2005 Tax Levy base is $72,201,000, based on assessment growth of 3.2%. Given the proposed budget, the tax rate increase would be 4.33%, of which 1.82% is the special levy for the investment fund. Ms. Houston then reviewed the tax levy changes. Mayor Zehr questioned utility rate increases, and Ms. Houston advised the increase is 18% for water and sewer, 5% for gas, and 1% for electricity. Mayor Zehr questioned equipment charges of $365,000, and requested a breakdown of this amount by Budget Day. Ms. Houston stated there has been an increase in service, staff, equipment purchases and rentals in the Fleet Division. Mayor Zehr then questioned $618,000 under the category of "Other". Ms. Houston referred to information provided to the Committee at the December Budget meeting concerning rentals, leases, repairs and maintenance. Ms. Houston advised she will provide the Committee with more detail in this regard. Mayor Zehr requested more detailed financial information concerning professional and contract services. Ms. Houston then reviewed Base Adjustments - Revenue Changes. Mr. Pizzuto explained the reduction of revenue for the New Kitchener Market parking garage is due to the fact that it had originally been assumed both the residential and retail components of the development would be fully occupied. Mayor Zehr asked for clarification regarding building permit fees under Bill 124. Mr. Stewart explained that under the new legislation the building permit fees must remain cost neutral and if there is any surplus in a year, the surplus will be placed in a reserve fund to offset any year where costs exceed fees collected. He added that should the reserve fund grow beyond an appropriate level, fees would be reduced and conversely, should the reserve fund be depleted, then fees would be increased. The result is, the building permit fees collected will not impact the general account or taxes. Ms. Houston then reviewed operational savings and efficiencies that will be made from the GST credits, reduction in corporate marketing, staff redundancies and the "gapping" program. She explained this will be the only year when a line item will appear with respect to the GST savings; in future years the savings will be netted with the expenditures. Chair Vrbanovic advised the Federation of Canadian Municipalities has discussed the GST credit program suggesting municipalities develop a method of tracking any savings now and in the future from the program. Ms. Houston advised staff have discussed ways of tracking the savings in the future but have not determined a method of choice. Chair Vrbanovic requested staff develop a method of tracking future savings from the GST credit program and report back on the preferred method. Ms. Houston then reviewed operational items resulting from or adjusted for the growth of the City. These include, the Stanley Park and Downtown Community/Resource Centres; Country Hills Library; increased operations to service growth and expenditures stemming from the capital policy. Mr. K. Currier provided an overview of the costs associated with operations including wages, added equipment charges, legislated changes, turf cutting and water course cleaning. FINANCE & CORPORATE SERVICES COMMITTEE MINUTES JANUARY 177 2005 -13- CITY OF KITCHENER 1. FIN-05-002 2005 OPERATING BUDGET (CONT'D) Councillor J. Gazzola inquired about the costs associated with the community centres and how they compare with existing community centre costs. Mayor Zehr requested staff provide members of Council with a schedule showing the costs associated with each community centre and including other pertinent information such as square footage, staffing and other variables, plus each centres operating costs. He also requested an estimate of operating costs for all community centres being contemplated. He stated that as final approval is being given to these new centres, there should be an appreciation of the new operating costs. Mayor Zehr noted that throughout this budget presentation reference has been made to serving population increases. He requested details on these growth related costs and what the costs include. The Committee next considered items which could be added to and removed from the 2005 Operating Budget. Members had been provided with budget issue papers on each of these items. BUSINESS ENTERPRISE CENTRE The Business Enterprise Centre is requesting base funding of $50,000 from the City of Kitchener in 2005, being a 100% increase over their 2004 funding. The Cities of Cambridge and Waterloo are also being asked for increased funding in 2005, with the aim to have each municipality contribute funding on a 2:1:1 ratio for Kitchener, Cambridge and Waterloo. Responses from Cambridge and Waterloo on their funding requests have not yet been received. Mayor Zehr suggested the Business Enterprise Centre appears to be improving its operations. Further, their business plan shows they will be able to get out of their deficit position, and they have achieved some private sector funding. He put forward a motion to approve $25,000 in base funding for the Business Enterprise Centre, with an additional $25,000 in base funding to be provided subject to the Cities of Waterloo and Cambridge approving funding at their requested levels. Councillor Galloway questioned the success of private funding for the Business Enterprise Centre. Ms. Weiss responded that at its inception it was intended the Business Enterprise Centre be privately funded; however, this is not realistic. Most Business Enterprise Centres are funded by municipalities and the province. Councillor Galloway commented that it seems the Business Enterprise Centre provides good service; however, the costs have increased two fold, and he cannot support the Mayor's motion. Ms. Weiss noted the province has increased its funding for 2004 by $5,000. On motion by Mayor C. Zehr - it was resolved: "That 2005 base funding for the Business Enterprise Centre be approved at $25,000; and further, That should the Cities of Waterloo and Cambridge approve base funding for the Business Enterprise Centre at the requested level, the City of Kitchener provide an additional $25,000 base funding." NEW KITCHENER MARKET The Committee was in receipt of a budget issue paper recommending a reduction in the common area fees for the New Kitchener Market resulting in a budget reduction of $75,590. Mr. Baulk advised this is a realistic view of the situation. On motion by Mayor C. Zehr - it was resolved: FINANCE & CORPORATE SERVICES COMMITTEE MINUTES JANUARY 177 2005 -14- CITY OF KITCHENER 1. FIN-05-002 2005 OPERATING BUDGET (CONT'D) "That the common area fees for full time market shop vendors be phased in, resulting in a 2005 budget reduction of $75,590." FACILITIES MANAGEMENT - LEGISLATED CHANGES The Committee was in receipt of a budget issue paper explaining increased costs arising from a number of years of legislated changes requiring new inspections, certifications, and safety requirements related to buildings and building systems. Mayor Zehr questioned whether asbestos management could be handled in a way other than by paying a consultant, and Mr. Proulx responded it could not be done any other way. Mayor Zehr questioned whether the Chief Building Official can be considered independent from the City for this purpose, and Mr. Proulx was requested to investigate this matter further, including discussions with Legal Services and the Province. Mr. Sosnoski noted that additional funds are being sought for the following: Technical Standards Association (TSSA) certificates of authorization, Ministry of the Environment (MOE) requirements for hazardous waste disposal and water testing, Elevator and barrier free equipment, Backflow prevention; and Emergency generator maintenance and monitoring Mr. Sosnoski explained that having staff undertake these new responsibilities means they cannot keep up with their other responsibilities. Consequently, additional funding is requested. He advised that the four other legislated changes are being financed through the existing budget. On motion by Councillor G. Lorentz- it was resolved: "That the request of Facilities Management for an increase of $76,000 in their 2005 Operating Budget to partially off set provincial legislated testing, certification and inspection costs relative to City buildings and building systems, be approved." Mayor Zehr questioned whether it would be appropriate to increase the Facilities Management staff complement to accommodate the increase in responsibilities. Mr. Proulx responded that when 2000 hours of work is required he will consider requesting an additional staff person. OKTOBERFEST - SPECIAL EVENTS OPERATING The Committee was in receipt of a budget issue paper outlining the need for an additional $5,000 to support Downtown Oktoberfest Events. Mr. D. Chapman noted if these funds are not approved, the programming developed last year will suffer. On motion by Councillor G. Lorentz- it was resolved: "That the Special Events Operating Budget be increased in 2005 by $5,000 to support 'Oktoberfest in Your Downtown'." URBAN DESIGN AWARDS The Committee was in receipt of a budget issue paper with respect to the Urban Design Awards. Three options for the frequency of these awards were put forward by staff; with their preferred option being that the Urban Design Awards and the Mike Wagner Heritage Awards be combined as one bi-annual Planning Awards program. FINANCE & CORPORATE SERVICES COMMITTEE MINUTES JANUARY 177 2005 -15- CITY OF KITCHENER 1. FIN-05-002 2005 OPERATING BUDGET (CONT'D) Councillor Vrbanovic directed staff to investigate the possibility of developing sponsorships for these awards. Councillor C. Weylie put forward a motion to adopt option #3 in the budget issue paper, which was voted on and lost on a tie vote. Mayor C. Zehr put forward a motion to approve option #1 in the budget issue paper, which is recommended by staff. The Mayor's motion was also voted on and lost on a tie vote. It was generally agreed the matter be dealt with at the Special Finance and Corporate Services Committee meeting of January 31,2005. ADDITIONAL BY-LAW ENFORCEMENT OFFICER The Committee considered the budget issue paper explaining the need to hire an additional By- law Enforcement Officer, and the associated budget implications. On motion by Councillor J. Smola - it was resolved: "That an additional By-law Enforcement Officer be hired within the By-law Enforcement Division; and, That $10,000 already included in the Divisions Operating Budget for a seasonal By-law Enforcement Officer by reallocated to the new By-law Enforcement Officer; and further, That operating costs and fine revenue within the By-law Enforcement Division be adjusted to reflect the financial impact of hiring the additional officer." 2005 ANNUAL GRANTS The Committee was in receipt of a budget issue paper outlining the additional grant funding approved by Council on December 6, 2004, for 9 specific organizations. Mr. Pizzuto advised that, as directed by Council, staff have met with these groups and a report will be presented to the Community Services Committee next Monday. Mayor Zehr put forward a resolution with respect to the Joint Medical Recruitment Committee who had appeared before the Finance and Corporate Services Committee last Monday. He advised a meeting has taken place with interested parties. The Chamber of Commerce is working through a restructuring of their Recruitment Committee, and there is also some interest in recruitment of physicians and specialists at the Regional level. Mayor Zehr put forward a motion to defer consideration of the request for financial support for the Joint Medical Recruitment Committee until further discussions take place. On motion by Mayor C. Zehr - it was resolved: "That consideration of the request of the Joint Medical Resources Planning Committee of the Grand River General Hospital and the St. Mary's General Hospital for funding from the City of Kitchener in 2005, of $20,675.00 to assist with the cost of hiring a business manager/co-ordinator for their Physician specialist Recruitment Program, be deferred until further consultation takes place with all related/affected parties; and further, That should the City of Kitchener determine later in 2005, to provide funding for this purpose, the funds may have to be considered as an unbudgeted item and possible over- expenditure of the grants budget." On motion by Councillor J. Smola - it was resolved: FINANCE & CORPORATE SERVICES COMMITTEE MINUTES JANUARY 177 2005 -16- CITY OF KITCHENER 1. FIN-05-002 2005 OPERATING BUDGET (CONT'D) "That consideration of the request for increased 2005 annual grants by the following organizations be deferred to the Special Finance and Corporate Services Committee meeting of January 31, 2005: Homer Watson House and Gallery, Business and Education Partnership, MT, Kitchener Blues Community Inc., Kitchener-Waterloo Symphony Orchestra, Kitchener-Waterloo Performing Arts Association/Theatre & Company, Leadership Waterloo Region, Volunteer Action Centre, and the Kitchener Horticultural Society." This meeting recessed at 11:55 a.m. and reconvened at 1:00 p.m., with all members present. The Committee then considered budget issue papers for the list of potential items which could be removed from the 2005 Operating Budget. SPORTSFIELD MAINTENANCE On motion by Councillor M. Galloway - it was resolved: "That the temporary staff complement in the sportsfield section be reduced to achieve an annual savings in the 2005 Operating Budget of $5,000." TRAILBIKE OFFICER PROGRAM On motion by Councillor G. Lorentz- it was resolved: "That no action be taken to reduce the trailbike officer program." OPERATIONS REDUCTIONS AND INFORMATION TECHNOLOGY POSITION REDUCTION Mr. K. Currier advised the proposed reductions will result in having to undertake this work in future years. On motion by Councillor M. Galloway - it was resolved: "That funding for water course and culvert maintenance in 2005 be reduced by $65,000." On motion by Councillor M. Galloway - it was resolved: "That the two year contract programmer position in Information Technology, Strategic Services Department, be eliminated, for an annual savings of $75,921 ." ACCOUNTING SYSTEM ANNUAL MAINTENANCE FEE On motion by Mayor C. Zehr - it was resolved: "That the 2005 Operating Budget be reduced by $20,000, and staff negotiate a reduced annual maintenance fee for the City's accounting system." VOLUNTARY UNPAID FLOATER, UNPAID LEAVE & CHRISTMAS CLOSURE Councillor Gazzola moved no action on this suggested budget reduction concerning unpaid leave, an unpaid floater and the Christmas non-essential service closure. Ms. Ladd stated this is really two separate items: first staff did not realize they could take voluntary unpaid leave; with respect to the Christmas closure, a survey of other municipalities is being conducted, and each Department has kept a record of their level of activity over this past FINANCE & CORPORATE SERVICES COMMITTEE MINUTES JANUARY 177 2005 -17- CITY OF KITCHENER 1. FIN-05-002 2005 OPERATING BUDGET (CONT'D) Christmas week. Ms. Houston advised it is difficult to determine an exact amount of savings; however, she advised if all management staff takes an unpaid floater, the savings would be $45,000. Councillor Gazzola advised he has no concerns with staff taking unpaid leave; however, he doesn't see the purpose in including this in the budget, if there is no dollar figure that can be attributed. On motion by Councillor J. Gazzola - it was resolved: "That no action be taken to account for a voluntary unpaid floater in the 2005 Operating Budget." Mayor Zehr spoke in support of accounting for the value of unpaid leave in the Operating Budget, which will not in any way affect how staff use the existing policy. To account for these savings would simply recognize what is already taking place. To identify the savings would be a way of taking the money out of Departmental Operating Budgets to ensure the money is not spent on something else. Councillor J. Smola put forward a motion to take no action on including unpaid leave in the Operating Budget, that staff keep track of unpaid leave for a 2 year period; which was voted on and lost. On motion by Mayor C. Zehr - it was resolved: "That $50,000 in savings for unpaid leave be included as a line item Operating Budget for monitoring purposes only, with a report in this presented in 1 year." in the 2005 regard to be Councillor Gazzola requested a report on the gapping program over the last 3 years. On motion by Councillor J. Gazzola - it was resolved: "That no action be taken to include 'Christmas non-essential service closure' in the 2005 Operating Budget." OTHER SUGGESTIONS Councillor Vrbanovic opened the floor to suggestions from Committee members on service level reductions. Councillor Galloway requested details from staff by January 31,2005, as to what savings could be realized if there would be a reduction of 0.5% and a 1% of all operating costs, excluding salaries. Mayor Zehr asked staff to undertake a further review of the Operating Budget and recommend that 0.75-1% of sustainable savings can be achieved. Councillor Gazzola requested additional detailed information on the Communications Division, stating they are not doing what they were originally intended to do. Councillor Vrbanovic stated last year Council set goals for staff to meet in putting forward the budget, and they have achieved those goals. If Council wants a lower budget, staff must be directed accordingly and they will do their best. He asked that any further suggestions be submitted as soon as possible. FINANCE & CORPORATE SERVICES COMMITTEE MINUTES JANUARY 177 2005 -18- CITY OF KITCHENER 1. FIN-05-002 2005 OPERATING BUDGET (CONT'D) MILEAGE RATE The Committee considered a budget issue paper recommending the City's mileage rate be increased to $0.41 from $0.37. Ms. Houston advised the split in rates paid by the Cities of Guelph and Hamilton, at 5,000 KM has to do with spreading fixed costs, such as insurance, over a larger base. ENTERPRISES The Committee next considered Operating Budgets for the City's Enterprises. DOON & ROCKWAY GOLF COURSES Mr. Baulk advised the 2005 projections are based on the current operating program. The net accumulated surpluses are on the plus side for both courses, and transfers to capital are for capital upgrades to the course at Doon. On motion by Councillor J. Smola - it was resolved: "That the 2005 Operating Budgets for Doon Golf Course and Rockway Golf Course, as recommended by the Administration be approved." 5 YEAR GAS WORKS PROJECTION Ms. Houston advised the transfers to gas capital are strictly for gas utility capital works. Also, the supply program works on a break-even basis. Councillor Gazzola questioned whether the surplus means there will be a substantial reduction in gas rates. Mr. Quinn responded it is the surplus which allows the current rate of $0.23 per cubic metre now, and there won't be a surplus in April. Further, he advised the gas profit is decreasing because the margin between retail and wholesale prices is decreasing. With respect to the $0 transfers to the tax stabilization reserve fund noted in the 5 year projections, Ms. Houston reminded the Committee it was previously agreed these transfers would be made directly to capital. Councillor Vrbanovic noted other gas utilities are charging $0.30 or more, and questioned the savings achieved by the City's utilities for its customers, as compared to other municipalities. Mr. Quinn responded that since 1999, $60M in savings has been achieved for our customers. On motion by Councillor J. Smola - it was resolved: "That the 2005 Operating Budgets for Doon Golf Course and Rockway Golf Course, as recommended by the administration be approved." WATER & SANITARY UTILITY PROJECTIONS Ms. Houston advised that a 12% rate increase for water is proposed for 2005 and 3% going forward. Water is in a deficit position this year. The sanitary utility is also in a deficit position and there will be a 26% increase in the retail sewer rate. The rates will be effective March 1, 2005 and will be 1.07 per cubic metre of water and 1.02 per cubic metre for sanitary sewer. Mayor Zehr commented that for the sanitary utility the budget is actually off 50%, and revenues and expenses are both down. Mr. Stewart responded that in 2004 there was a large amount of rain, and when this happens there are greater treatment costs and lower usage. On motion by Mayor C. Zehr - it was resolved: FINANCE & CORPORATE SERVICES COMMITTEE MINUTES JANUARY 177 2005 -19- CITY OF KITCHENER 1. FIN-05-002 2005 OPERATING BUDGET (CONT'D) "That the 5 year projection (2005-2009) for Water and the Sanitary Utility as recommended by the Administration be approved." BUILDING PROJECTIONS Councillor Galloway stated there is a substantial difference between the 2004 projections and 2005 budget for the Building Enterprise, and questioned whether we are undercutting what we will realize given housing growth. Ms. Houston responded there will be no impact on the tax rate. Councillor Gazzola questioned the accuracy of the figures for "Expenses - Direct". Ms. Houston advised an in depth review has been completed in this regard. Mr. J. Witmer advised the City is bound by legislation; all expenses must relate to building permit issuance and expenses for inspections. He stated $652,000 is accurate. Mayor C. Zehr questioned the amount shown as Allocated Expenses for 2005 ($652,000) asking if this represents all expenses that can be allocated against the revenues collected by the Building Division. Ms. Houston advised that staff have revised the amount several times but will conduct another review of all allowable expenses prior to January 31 st. Ms. Houston then reviewed the Reserve Funds noting the City's diminishing reliance on the Tax Stabilization Reserve Fund over the next three years, and transfers from Gas, Hydro and the Development Charges Fund were discussed as part of the Capital Budget review. Councillor Vrbanovic advised that the OMERS Pension Plan may be increasing the employer's contribution to the plan by 1% and questioned if this will have an impact on the OMERS Reserve Fund. Ms. Houston advised that a 1% increase in OMERS contribution would equal close to a 1% tax increase and therefore have a significant impact. Councillor J. Gazzola requested a complete schedule for all reserve funds in excess of $100,000. Mayor C. Zehr raised a concern with the budgeted amount for the WSIB Reserve Fund. Ms. Houston advised that the budget calls for lowering the budgeted amount in 2005 but that staff will monitor this reserve along with the Insurance fund. Ms. Houston concluded her presentation and review advising that based on the recommended changes made this date, the tax increase being proposed is 4.43%. Councillor Vrbanovic advised that the final budget will be presented to the Committee on January 31,2005. 2. ADJOURNMENT On motion, the meeting adjourned at 2:32 p.m. D. Gilchrist, Committee Administrator