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HomeMy WebLinkAboutFin & Corp Svcs - 2006-01-16 SFINANCE & CORPORATE SERVICES COMMITTEE MINUTES JANUARY 16. 2006 CITY OF KITCHENER The Finance and Corporate Services Committee met in special session this date commencing at 9:05 a.m. Present: Councillor B. Vrbanovic -Chair Mayor C. Zehr and Councillors J. Smola, J. Gazzola, M. Galloway, Councillor G. Lorentz and C. Weylie. Staff: C. Ladd, Chief Administrative Officer P. Houston, General Manager, Financial Services & City Treasurer G. Sosnoski, General Manager, Corporate Services & City Clerk R. Browning, Interim General Manager, Development & Technical Services A. Pappert, General Manager, Community Services D. Chapman, Director of Financial Planning & Reporting R. LeBrun, Manager, Financial Planning and Reporting S. Lewis, CEO Kitchener Public Library G. Hastings, Manager, Golf Courses J. Witmer, Director of Building S. Turner, Director of By-law Enforcement R. Regier, Executive Director, Economic Development R. Willms, Supervisor of Administration, Community Services R. Gosse, Deputy City Clerk 1. FIN-06-001 - 2006 OPERATING BUDGET The Committee was in receipt of Financial Services Department report FIN-06-001, dated December 23, 2005 with respect to the City's 2006 Operating Budget. In addition, Committee members were provided with the City Budget Summary by Department and Object, Budget Issue Papers for major issues, Summaries of full-time equivalent (FTE) staffing by division and a summary of the budget impact due to legislated changes. Ms. P. Houston presented the Operating Budget and provided an overview of the approach to preparing the budget beginning with Council's direction of a 3% Property Tax Increase which would include the Economic Development Investment Fund (EDIF) of 1.7%. Ms. Houston advised that when the budget process began staff based the budget on a projected 2.5% increase in assessment yet it has now been determined that the assessment growth in 2006 will be 4.08%. The Committee reviewed the comparison between the household and City Consumer Price Index showing an increase of 2 and 3.2% respectively. The Committee next reviewed the comparisons between Kitchener and the Cities of Waterloo and Cambridge with respect to municipal costs for an average household, including taxes and other services. Ms. Houston noted that in 2005 Kitchener remained lower in total costs in comparison with the other two cities. Ms. Houston advised that the Ministry of Municipal Affairs has established surplus benchmarks as a measure of budget precision and a less than 10% annual deviation as acceptable. She noted that for the past eleven years the City of Kitchener has been well within the 10% deviation. Ms. Houston then provided an overview of the Tax Stabilization Reserve Fund projection noting the need to reduce the dependence on the fund over time. Councillor J. Gazzola asked why there was no transfer from hydro or gas in 2005 and nothing proposed in 2006. Ms. Houston explained that a decision was made by Council not to transfer funds directly into the reserve but rather directly to the Capital Budget. She explained it makes it easier to deal with fluctuations year over year. Councillor M. Galloway requested historical data of the Tax Stabilization Reserve Fund and asked what the annual balance of the fund should be. Ms. Houston advised that an appropriate balance would be $4 to $5 M. The Committee then reviewed the proposed 2006 Tax Levy of 2.89% before any proposed additions and reductions to the budget are adopted by Council. Ms. Houston pointed out that the value of 1% in the Operating Budget equals $779,753. FINANCE & CORPORATE SERVICES COMMITTEE MINUTES JANUARY 16, 2006 - 10 - CITY OF KITCHENER The Committee reviewed the 10 year tax rate impact projection, the staffing levels including a projected increase of staff by 19 full-time equivalent positions and the impact on the City due to legislative changes which for 2006 is projected at $1.5 M. Councillor Gazzola inquired as to the loss of interest regarding tax billing and how this is a result of legislated changes. Ms. Houston explained that due to legislated changes municipalities have had to adjust the due date for commercial and industrial property taxes to later in the year resulting in less interest being accumulated for late taxes. 7.7_1: gib? Ms. Houston presented the proposed Operating Budgets for the Centre In The Square and the Kitchener Public Library showing a 3% and 4.9% increase respectively. Ms. Houston noted that the 1.3% increase beyond the 3% target amount for the Kitchener Public Library amounts to $97,525. and that an issue paper has been prepared for the Committee's consideration. Councillor Gazzola requested that the latest financial statement of the Kitchener Public Library be provided to the members of the Committee prior to the January 30th Budget Day. Mayor C. Zehr raised a concern regarding the Book Reserve explaining the Reserve was set up originally to compensate for the higher US dollar when purchasing books and other materials for the Library from US sources. He questioned whether this account was needed in the future in light of the growing Canadian dollar and why differentiate between operating and capital budgets. Ms. S. Lewis explained there were three reasons for the Book Reserve; to offset the higher US dollar; to offset inflation; and, to support new material formats for the library. Ms. Houston added that the Book Reserve was put in the Capital Budget as it was thought to be a short term account but due to the longer term need the account could be put into the Operating Budget. Mayor Zehr requested the balance of the Book Reserve and Material Purchasing Account for the January 30th Budget Day. Ms. Lewis informed the Committee that the 2005 Financial Statement will be completed in February. Councillor Galloway requested a Draft Financial Statement for 2005 prior to the January 30th Budget Day. Councillor Gazzola asked if the proposed Operating Budget for the KPL could not be changed to meet the 3% target. Ms. Lewis responded that there are only two accounts that could be cut without eliminating a service, those being wages and the material acquisition budget. Councillor Galloway suggested that in order to make a final decision the actual financial figures from 2005 would be required. The Committee then considered the proposed Operating Budget for the two Boards. On motion by Councillor G. Lorentz - it was resolved: "That the 2006 Operating Budget for the Centre In The Square be approved at $1,249,000. representing a 3% increase over 2005." On motion by Councillor M. Galloway - it was resolved: "That the 2006 Operating Budget for the Kitchener Public Library be deferred to the January 30, 2006 special meeting of the Finance and Corporate Services Committee in order to allow time for the Library's 2005 actual financial figures to be given to members of the Committee." ENTERPRISES Golf Courses The Committee reviewed the proposed Operating Budgets for the Doon and Rockway Golf Courses. Councillor Gazzola raised a concern with the proposed 2006 Budget when, according to the Financial Statement, the 2005 gross profit was not met. G. Hastings FINANCE & CORPORATE SERVICES COMMITTEE MINUTES JANUARY 16, 2006 - 11 - CITY OF KITCHENER Golf Courses (Cont'd) explained that in 2004 the two Golf Courses had record years which could not be matched in 2005 therefore it is not expected that the final figures for the year will meet the budget targets. Councillor Gazzola suggested that the proposed 2006 Budget may be too aggressive and should be reviewed. Mayor Zehr questioned how the transfer to the City Revenue Fund was calculated. Ms. Houston explained that the formula used in calculating that transfer has not changed in many years and is based on what the Golf Course would pay in property taxes if they were private courses. Mayor Zehr suggested that perhaps it is time to review how the transfer is calculated and requested that staff provide further information prior to the January 30th Budget meeting on the formula used in calculating the funds to be transferred from the Golf Courses to the City. Councillor Gazzola pointed out that the projected figures for the Rockway Golf Course were more conservative than those for Doon and suggested that perhaps the two budgets be reviewed and possibly changed to reflect actual 2005 figures. Ms. A.Pappert advised that staff will conduct a five year Operating Budget Review to determine if changes should be made. On motion by Mayor C. Zehr - it was resolved: "That the 2006 Operating Budgets for the Doon and Rockway Golf Courses be deferred to the January 30, 2006 special meeting of the Finance and Corporate Services Committee to allow a further review of the Operating Budgets." Buildin P. Houston advised that legislation came into effect July 1, 2005 that led to the Building Division becoming an enterprise and 2006 will be the first full year. J. Witmer advised that the projected number of permits to be issued in 2006 is lower than in 2005 but many of those permits were for small additions and decks which do not have a significant impact on the revenue therefore it is not expected that the revenues for the Division will be reduced. He further explained that a reserve is being established in order to keep permit fees stable during periods of high and low volumes of applications. Councillor Gazzola questioned if the City was sufficiently charging back overhead costs to the Division ensuring that taxpayers are not supplementing the department. Mr. Witmer advised that the proposed Operating Budget is based on previous Council decision and will be reviewed to ensure the accuracy of the expenditures. Councillor Gazzola asked if staff could provide the figures for 2005 based on the assumption that the Building Division was an enterprise for the entire year rather than just 6 months. The Committee then considered the issue paper regarding additional AMANDA system Resource. Mr. S. Turner, representing the AMANDA Steering Committee, advised that currently there is only one FTE for the AMANDA system yet several divisions throughout the Corporation use the program daily. He added that the AMANDA system is not being used to its full potential and with an additional resource the City could see improved efficiency, customer service and increased capacity especially in the area of inspections. Councillor Galloway asked if an analysis has been undertaken regarding the number of hours required to maintain the AMANDA system. Mr. Turner responded that currently approximately 80% of the AMANDA Administrator's time is spent on maintaining the existing system and 20% is spent on new initiatives. He added that many new initiatives are being delayed due to the lack of resources. Councillor Galloway advised that without statistics for the justification regarding the number of hours required and the possibility of phasing in a staff person from Information Technology, it is difficult to make a decision on this request and he asked for further analysis and a Work Plan prior to the January 30th budget meeting. FINANCE & CORPORATE SERVICES COMMITTEE MINUTES JANUARY 16, 2006 - 12 - CITY OF KITCHENER Building (Cont'd) On motion by Councillor M. Galloway - it was resolved: "That the request for an additional AMANDA System Resource (staff) as outlined in the 2006 Budget Issue Paper be deferred to the January 30, 2006 special Finance and Corporate Services Committee meeting for additional information and justification for the position." Gas Works Utilitv Ms. Houston advised that 2005 was a profitable year for the Gas utility but the projected 2006 Budget remains somewhat more conservative due to the many factors that may impact the utility. D. Quinn advised that weather can have a significant impact explaining that the mild weather for the first two weeks of this year has reduced consumption. Mr. Quinn then explained how wholesale costs and transportation costs were a factor in 2005 allowing a better than expected gross profit. Mayor Zehr asked what effect it would have on the tax rate if the projected gross profit was increased. Ms. Houston responded that any surplus from the gas utility is transferred into the gas Reserve Fund and has no effect on the tax base. Mayor Zehr suggested that the formula use to determine the transfer to the Reserve be reviewed to ensure appropriate amounts are being transferred. Ms. Houston advised that there is no exact formula used and that the transfer is based on past practices. Mayor Zehr requested further information on the 2003 - 2004 gross profit for the Utility and information on the calculations made for the transfer to the Reserve Fund. On motion by Mayor C. Zehr - it was resolved: "That the proposed 2006 Operating Budget for the Gas Works Utility be approved." The Committee the recessed at 11:15 a.m. and reconvened at 11:30 a.m. Chaired by Councillor B. Vrbanovic and with all members present. Water Utilitv Ms. P. Houston advised that the proposed water rates reflect an accelerated increase which is to serve as a means of eliminating future deficits. She noted that previous anticipated increase in water consumption rates are speculated at 1% however that was found to be too aggressive and has since been re-adjusted to .5%. She stated that gas surpluses are used to offset the water and sanitary deficits until the accelerated rate increase bring about a balance of revenue and expenditures. Councillor J. Gazzola requested further information to be provided prior to the January 30th budget meeting regarding the possibility of readjusting the water and sanitary rate increases to the same level as the tax increase. On motion by Mayor C. Zehr - it was resolved: "That the proposed 2006 Operating Budget for the Water Utility be approved." Sanitary Utilitv Ms. P. Houston advised that sanitary rates are based upon the rate of water consumption. She noted that as the water consumption rates have been readjusted so have the sanitary rates. On motion by Councillor G. Lorentz - it was resolved: "That the proposed 2006 Operating Budget for the Sanitary Utility be approved." FINANCE & CORPORATE SERVICES COMMITTEE MINUTES JANUARY 16, 2006 - 13 - CITY OF KITCHENER Water /Sanitary Sewer Rates Ms. P. Houston presented the proposed Water /Sanitary Sewer Rates and advised that the City is currently running a $9.5 M a year deficit for sanitary and water services noting that the accelerated rate increase will act as a means of eliminating this deficit. She added that the rate increases of the services will have a $24. per year impact on the average Kitchener household. TAX SUPPORTED OPERATING BUDGET Ms. Houston presented the 2006 Tax Levy of 2.89% which includes the Economic Development Investment Fund but does not include any add-ons or reductions being proposed by staff. Ms. Houston then reviewed: base adjustments to staff costs and non-staff costs; growth adjustments; strategic adjustments; Council pre-budget approvals; and, revenue increases. Members of the Committee requested that further information be provided prior to the January 30th budget day on the following: the chart used in analyzing the fringe rate adjustment; a breakdown of the equipment charges adjustment; a detailed report on the gapping program; the projection on rates for investment income; and, a breakdown on the figures used with respect to the increased penalty and interest revenue. Additions /Reductions The Committee then considered the add and reduction packages being proposed by staff. On motion by Councillor M. Galloway - it was resolved: "That $10,000. be added to the Community Services Arts and Culture Operating Budget to support Culture Plan II Implementation Strategy Initiative in 2006." On motion by Councillor G. Lorentz - it was resolved: "That $12,271. be added to the Community Services "Every Kid Counts" Operating Budget to hire three additional Inclusion Facilitators to support children and youth with a disability municipal summer programs." On motion by Councillor J. Smola - it was resolved: "That $108,000. be added to the Market Operating Budget with $85,000 funded through a one-time transfer from the Tax Stabilization Fund, resulting in a net levy impact of $23,000." Mayor Zehr advised that the Finance and Corporate Services Committee on January 9, 2006 did approve an additional expenditure regarding the Greater Kitchener-Waterloo Chamber of Commerce Health Care recruitment Program. On motion by Councillor G. Lorentz - it was resolved: "That the Centre In The Square event parking rate be increased from $5. to $6. effective July 1, 2006 and that parking revenue be increased in the 2006 Operating Budget by $14,000." Councillor B. Vrbanovic advised that the items listed under the Reduction Package regarding reducing the Library increase at 3%, tax stabilization transfer and an increase in the Hydro dividends would be dealt with on January 30th. He further advised that the remaining item on the Reduction Package regarding a reduction in grants would be dealt with individually later during this meeting. FINANCE & CORPORATE SERVICES COMMITTEE MINUTES JANUARY 16, 2006 - 14 - CITY OF KITCHENER The Committee then recessed at 12:15 p.m. and reconvened at 1:00 p.m. Chaired by Councillor M. Galloway and with all members present. Councillor B. Vrbanovic was in attendance for part of the meeting. Ms. Houston advised the Committee of the Issue Paper regarding the proposed new Mileage Rate paid to employees for use of their personal vehicles for business purposes and requested that the Committee consider the recommendation to increase it from $0.42 per km for the first 5,000 km and $0.36 thereafter to $0.45 and $0.39 respectively. Councillor Gazzola advised that when he calculated the cost per kilometre based on the figures provided in the issue paper his results showed $0.43 per km for the first 5,000 km and $0.39 thereafter. On motion by Councillor J. Gazzola - it was resolved: "That the City of Kitchener's Mileage Rate per kilometre increase to $0.43 for the first 5,000 km and $0.39 for each additional kilometre effective February 1, 2006." GRANT ALLOCATIONS Councillor Galloway suggested that the Committee review those Grant Allocations where staff are recommending a change from the grant requested as outlined in Appendix A to the material provided to the Committee this date. Communitech Technology Association Inc. Councillor C. Weylie requested further information on the Communitech Technology Association Inc. grant request. Mr. Regier advised that the grant provided in 2004 and 2005 was to be used to attract firms to the region but the current grant request did not outline any particular program. He further advised that a meeting will be held on January 17, 2006 when he would be obtaining further information on the recruitment work plan. Councillor Weylie suggested that before making a decision on the grant that the Committee be given information on the proposed work plan from Communitech. On motion by Councillor C. Weylie - it was resolved: "That the 2006 grant request from Communitech Technology Association Inc. be deferred to the January 30, 2006 special Finance and Corporate Services Committee meeting in order that the Committee receive an outline on the Association's 2006 work plan." Councillor B. Vrbanovic entered the meeting and assumed the Chair. Capital Grants Councillor Gazzola raised a concern regarding the capital grant request from the Hospice of Waterloo Region, Community Justice Initiatives, and the Kitchener Alliance Community Homes suggesting that these should be charged to the Capital Budget. Councillor Vrbanovic suggested and it was agreed that the three capital grants be included as part of the proposed budget and be dealt with at the January 30th Budget Day. Homer Watson House and Gallery Councillor Gazzola advised that the grant request from the Homer Watson House and Gallery was in part to deal with a wage issue to bring staff wages on par with the City of Kitchener. Councillor G. Lorentz raised the question of why the City owns and operates Homer Watson House and suggested that perhaps discussions with the Region of Waterloo should take place as part of an overall initiative for the Region to operate the Regional Museums and Galleries. Mayor Zehr advised that currently discussions are being held at the Region regarding an Artefact Museum and perhaps that could be expanded to include the gallery. Ms. C. Ladd advised that there were a number of initiatives in 2006 regarding the Region and that staff will look at this particular issue and discuss it with Regional Staff. FINANCE & CORPORATE SERVICES COMMITTEE MINUTES JANUARY 16, 2006 - 15 - CITY OF KITCHENER Homer Watson House and Gallerv (Cont'd) On motion by Councillor J. Gazzola - it was resolved: "That the 2006 Grant Request in the amount of $164,200. from the Homer Watson House and Gallery be approved." Theatre and Company Mayor Zehr advised that last year Council granted a one time grant to assist Theatre and Company in reducing its deficit which was part of the Theatre's three year financial plan. Ms. R. Willms advised that Council did approve the one time grant last year but at that time stated they would consider additional grants in years two and three. Councillor Galloway raised concerns with the grant request advising that Theatre and Company has a large reserve account. The Committee was informed that the reserve account is part of a one time donation and the Theatre is not permitted to access that account as part of its operational budget. Councillor Gazzola requested the 2005 Financial Statement from Theatre and Company before the Committee makes its decision. A motion by Mayor C. Zehr was brought forward to approve the grant request in the amount $54,200. and was voted on and lost. On motion by Councillor G. Lorentz - it was resolved: "That the 2006 grant request from the K-W Performing Arts Association /Theatre and Company be deferred to the January 30, 2006 special Finance and Corporate Services Committee meeting in order for the Theatre's 2005 Financial Statement to be submitted to the Committee for review." Leadership Waterloo Region Councillor M. Galloway assumed the Chair. On motion by Councillor B. Vrbanovic - it was resolved: "That the 2006 Grant Request from leadership Waterloo Region in the amount of $7,500. be approved." Councillor B. Vrbanovic assumed the Chair. K-W Opera Mayor Zehr advised that the Opera Company is subsidized by Kitchener and the City of Hamilton and is experiencing cash flow issues. He requested further information on the amounts provided by the two cities comparing the amounts subsidized and the number of shows that are given in each City. Mayor C. Zehr put forward a motion to approve a grant to the K-W Opera in the amount of $5,358. to be paid in the usual manner and $2,142. divided by the number of planned performances to be held in the City of Kitchener, to be paid when each performance is given. Councillor Gazzola suggested that without the financial information requested by the Mayor any decision regarding this grant should be deferred. On motion by Councillor J. Gazzola - it was resolved: "That the 2006 grant request from K-W Opera be deferred to the January 30, 2006 special Finance and Corporate Services Committee meeting to allow for further FINANCE & CORPORATE SERVICES COMMITTEE MINUTES JANUARY 16, 2006 - 16 - CITY OF KITCHENER K-W Opera (Cont'd) information on the subsidies paid by the Cities of Hamilton and Kitchener and the number of planned shows in each of the cities." Kitchener Blues Community R. Willms advised that Kitchener Blues Community did make a one time grant request last year for $30,000. which Council approved. She further advised that the Kitchener Downtown Business Association also provides funding for this event. On motion by Councillor J. Gazzola - it was resolved: "That the 2006 grant to the Kitchener Blues Community in the amount of $10,200. as recommended by staff be approved." Skills Canada Ontario On motion by Councillor M. Galloway - it was resolved: "That the 2006 grant to Skills Canada Ontario in the amount of $650. for in-kind services be approved." Renaissance Singers On motion by Councillor M. Galloway - it was resolved: "That the 2006 grant to the Renaissance Singers in the amount of $986. be approved." K-W Art Gallery Councillor C. Weylie advised that the requested increase from the Art Gallery is directly related to the rent increase from the Centre In the Square and therefore a 3% increase from 2005 would be appropriate. On motion by Councillor C. Weylie - it was resolved: "That the 2006 grant in the amount of $163,781. to the K-W Art gallery be approved." Business and Education Partnership On motion by Mayor C. Zehr - it was resolved: "That the 2006 grant in the amount of $5,750. to the Business and Education Partnership be approved." R.O.O.F. Councillor Galloway suggested that in light of the recent fire that destroyed the building where R.O.O.F operated from that the $10,000. grant may be appropriate. Mayor Zehr suggested that the grant being recommended by staff be increased by 3% and that the difference between that amount and the requested $10,000. be given as a one time grant to go towards the Building Fund. FINANCE & CORPORATE SERVICES COMMITTEE MINUTES JANUARY 16, 2006 - 17 - CITY OF KITCHENER R.O.O.F. (Cont'd) On motion by Councillor M. Galloway - it was resolved: "That the 2006 grant to R.O.O.F. be approved as follows: $5,690. as an Operating Grant and $4,310. as a one time grant for the new Building Fund." House of Friendship -Chandler Mowat and Kinosdale Community programs On motion by Councillor J. Gazzola - it was resolved: "That the 2006 grant request from the House of Friendship for the Chandler Mowat and Kingsdale Community Programs in the amounts of $35,900. and $58,290. respectively be approved." C.A.F.K.A. R. Willms advised that C.A.F.K.A. is proposing to hold their event every second year instead of annually and requires a commitment from Council for the two years. She added that for 2006 they are requesting a $19,OOO.grant being $15,000. in cash and $4,000. in-kind services and in 2007 would be requesting $40,000. being $18,000. in cash and $12,000. in in-kind services. Councillor Gazzola raised a concern that C.A.F.K.A. is now looking for an annual grant of $30,000. per year whereas currently it is $18,000 and suggested that clarification from C.A.F.K.A. is required before a decision can be made. A. Pappert advised that staff will discuss the plans with C.A.F.K.A. and report back to the Committee. On motion by Mayor C. Zehr - it was resolved: "That 2006 grant request from C.A.F.K.A. be deferred to the special Finance and Corporate Services Committee meeting of January 30, 2006 in order to allow further information from the organization to be submitted to the Committee." Region of Waterloo Swim Club On motion by Councillor G. Lorentz - it was resolved: "That the 2006 grant to the Region of Waterloo Swim Club in the amount of $11,700. as recommended by staff be approved." RESERVE FUNDS Ms. Houston provided a review of the Reserve Fund balances advising that the sick leave fund is closer to 25% being the guideline suggested by the City's auditor. Councillor Gazzola requested the historical and projected balances for each of the funds be provided to the Committee by the January 30th Budget Day. He also requested comparable figures for sick leave funds from other municipalities. Ms. Houston cautioned that in looking at other municipal sick leave funds that the individual policies of the municipalities should also be reviewed. Ms. Houston advised of three new Reserve Funds as part of the proposed budget being Building Enterprise, Business Parks and Gas Capital Investment. Councillor B. Vrbanovic suggested that should any member of the Committee or staff have any further suggestions regarding the Operating Budget they should forward them to Ms. Houston by Monday January 23rd. in order that they can be assessed and brought forward for consideration at the January 30th Budget Day. Councillor Gazzola suggested that the target for the Operating Budget be revised to 2%. Mayor Zehr cautioned that with so many unanswered questions regarding the proposed Operating Budget and the number of deferred items from this meeting it would be difficult to FINANCE & CORPORATE SERVICES COMMITTEE MINUTES JANUARY 16, 2006 - 18 - CITY OF KITCHENER RESERVE FUNDS (CONT'D) specify an exact percent increase for the budget. Councillor Galloway suggested that any over taxation resulting in a surplus from the previous years budget be returned through an increased contribution from the Tax Stabilization Fund. 2. ADJOURNMENT On motion, the meeting adjourned at 2:50 p.m. R. Gosse Committee Administrator