city of cornwall 2006 draft budget presentation november 17, 2005

City of Cornwall2006 Draft Budget Presentation

November 17, 2005

2006 Draft Budget

2006 2005

Operating expenditures $128,024,559 $120,255,796Capital expenditures (net) 3,556,000 4,653,000Net Expenditures $131,580,559 $124,908,796

Net tax levy $50,242,861 $ 47,355,196

Water $ 6,571,926 $ 6,520,690Sewer 6,258,608 5,476,584

Net user charges $ 12,830,534 $ 11,997,274

The departmental requests resulted in a year over year net expenditure increase of $8,615,120. This represents a 5.5% increase in expenditures over the 2005 approved budget.

In reviewing these requests, administration has taken the following actions:

maintained a constant tax rate as approved in 2005, resulting in a possible increase in tax

revenues of $2,907,665. reductions to requests made by the CAO

and Manager of Finance in the amount of $4,918,500

leaving a budgetary shortfall of $788,955.

The following represents the proposed cuts from 2006 requests:

Capital ReductionsRoad Work

Brookdale Avenue $1,150,000Courtaulds Spur Line 700,000Asphalt Resurfacing 100,000

FacilitiesJustice Building 110,000

FireHeadquarters (R) 800,000Pumper (R) 150,000

Emergency ManagementGenerator 86,942

Emergency Medical ServiceHeadquarters (R) 500,000

Capital Reductions con’t

Municipal WorksEquipment (net) 547,000

RecreationCladding - Civic Complex 600,000

Funding from ReservesAmbulance Replacement 42,251Fleet Hydro Fuel Injection 24,612

$4,810,805Operating Reductions

Fire Truck Lease $ 10,751Emergency Management Mapping

and Op Center 18,655EMS Advanced Care Training (net) 78,289

$107,695

Included in the 2006 budget is $3.5M in gross expenditures requests from outside / non-controllable entities.

It is management’s view that budgets submitted by “outside agencies” (including City agencies) are beyond our scope to propose cuts in expenditure requests or service levels.

Outside agencies include any budget approved by a board or commission prior to review by City Council.

City of Cornwall Police Department Cornwall and Area Housing Corporation Cornwall Public Library Glen Stor Dun Lodge Eastern Ontario Health Unit Raisin Region Conservation Authority Cornwall and Seaway Valley Tourism Cornwall Historical Society Cornwall Regional Airport Cornwall Regional Art Gallery Heart of the City Genealogical Society

Outside/Non-controllable agencies include:

When reviewing the level of these requests, the total contributions requested exceeds $6,067,000 (an increase of $999,000 over 2005). It should be noted that the Police Services Board has not yet approved the 2006 budget. (The 2005 approved budget approximated $13M and is expected to increase by approximately 3% in 2006. The specific budget has been included as a single line item in the draft budget being presented.)

The total requests from these agencies (including 3% for the Police) exceeds $1.4M. Using the 2005 tax levy, this in itself would generate a tax increase of 3%.

Wages and benefits (excluding Police) exceeded $40M in 2005. The industry standard for increases approximate 3%. A 3% wage increase itself represents an additional $1,2M in expenditures resulting in a 2.5% tax increase. This does not include step increases awarded to employees as they proceed through union contracts

and non-union pay grids. It should be noted that not all wage increases are passed on to the municipal taxpayer as specific departments (SS, EMS, GSDL) have portions of their wages and benefits funded through various ministries and the Counties of SD&G

The expected cost of utilities, including, water, electricity and natural gas is projected to increase ($3,332,819) by $276,654, itself representing a potential tax increase of .58%.

In reviewing other expenses, a significant increase is noted in contracted services. The majority of this increase relates to the “Best Start” program, that as we understand will be funded 100%.

Best Start

Wages & Benefits $ 83,593Purchase of Goods 30,700Services & Rents 2,703,609Financial 669

2,818,571Corporate Costs 26,429

2,845,000Provincial Funding 2,845,000

Net Cost to Municipal taxpayer $ 0

Expenditure comparisons (excluding Police)

0

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

70,000,000

2006 43,133,240 9,211,611 18,732,402 60,115,902

2005 40,694,910 8,792,838 15,214,651 59,341,270

Wages & benefits

Purchases Goods Financial

The major sources of funding can be segregated into a number of categories including:

Taxes Government Grants Other Municipalities Fees and service charges Investment income Licences and permits Fines and penalties

Funding Sources

Government grants represent funding provided by the province and federal government. Provincial funding represents the majority of funding typically relating to various social programs. Ministries including Community and Family Services ($23M), Ministry of Health ($7.5M), Ministry of Transport ($150K) and Ministry of Municipal Affairs and Housing ($3.5M) provide funding for specific programming.

The Ministry of Finance provides funding relating to downloaded services and replaces the former CRF. The CRF model funded a number of programs including Social Services, Social Housing, Emergency Medical Services (Land Ambulance), Public Health…

The new funding model is based on cost of delivering social programs (social services and housing) and is related to individual municipal assessment. There does not appear to be a recognition of costs associated with either EMS or a similar costing of Public Health.

Previous years budgets allocated a portion of CRF funding to EMS ($871,000) and the Eastern Ontario Health Unit ($497,000). The OMPF format does not appear to provide equalized funding.

Is the taxpayer now funding these programs exclusively?

The 2005 City of Cornwall OMPF allocation is as follows:

Social Programs Grant$7,613,906Equalization GrantAssessment Equalization 4,503,016

Phase-in Adjustment (limited to $80 per household) (437,553) $11,679,369

Other Provincial IncentivesProjected Public Health Net Benefit 33,237

Provincial Gas Tax 512,937

2005 OMPF Grant $12,225,543

Other municipality revenues relate to shared services delivered by the City on behalf of both City and County taxpayers. These services include Social Services, EMS, Social Housing and Glen-Stor-Dun Lodge.

The City will be receiving Federal Gas Tax in 2006 in the amount of $1,379,902 representing the full 2006 allocation and the balance from 2005. These funds can be utilized on a number of programs including water, sewer, solid waste, roads and bridges. The government has established specific rules for spending of these funds.

2005 tax rate at 2006 assessment 2005 levy at reduced tax rate 2005 tax levy plus taxes associated

with new growth resulting in reduced tax rate

change in tax rates to finance required expenditures

change ratios to alter tax revenue from tax classes

The tax levy represents the funding source that Council has complete control over. A number of scenarios can be presented to finance the net required expenditure base.

These include:

CVA Assessment Growth

-20,000

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

136,734 7,862 9,114 -9,080

Residential Multi-Res Commercial Industrial

9.78%

6.93% 1.96%-9.8%

New Growth

-2,000

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

16,706 18 1,351 -1,831


1.21%

.02%.41%

-3.46%

(000’s)

2005 tax rates @ 2006 assessment

-500,000

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

CVA 2,349,348 322,613 324,972 -324,466

New Growth 332,092 934 75,276 -177,074


$50,262,861

2005 tax levy

0

0.01

0.02

0.03

0.04

0.05

2005 0.01747742 0.04105796 0.03434313 0.04596562

2006 0.01646637 0.03868279 0.03235641 0.04330655

Residential Multi-res Commercial Industrial

$47,355,198

2005 tax levy

0

5,000

10,000

15,000

20,000

25,000

30,000

2006 25,274 4,690 13,641 3,548

2005 24,144 4,654 14,078 4,267


1,130 36 -437 -719Change

$47,355,198(000’s)

2005 tax levy

Although the overall tax rate decreases by approximately 5.8%, to generate the same level of tax revenue, not all taxpayers will see a consistent tax bill. Because of the weighting of the assessment base a significant shift to the residential class will occur with a 5.8% tax rate reduction.

If Council were to agree a 0% strategy as discussed, 3,230 residential tax payers would either remain the same or actually have a tax reduction whereas, 10,968 residential ratepayers would still see an increase in taxes.

$47,355,198

2005 levy plus new growth

0

0.01

0.02

0.03

0.04

0.05

2005 0.01747742 0.04105796 0.03434313 0.04596562

2006 0.01658111 0.03895236 0.03258189 0.04360834


$47,685,198

2005 levy plus new growth

0

5,000

10,000

15,000

20,000

25,000

30,000

2006 25,450 4,722 13,736 3,572

2005 24,144 4,654 14,078 4,267


1,305 68 -342 -695Change

$47,685,198(000’s)

Tax ratios

The province has established a set of acceptable ratios for the various tax classes. Without specific overriding legislation, municipalities must move toward the range of fairness.

The province will not allow an increase in respective ratios, thus mitigating the opportunity to pass on residential increases to other classes.

The threshold ratios and comparative City ratios are as follows:

Ratios

0

0.5

1

1.5

2

2.5

3

Province 2.74 1.98 2.63

City 2.3492 1.965 2.63

Multi-res Commercial Industrial

Relative growth levels with our comparable communities

0

5

10

15

20

New growth 0.67 2.32 1.06 1.64 1.7 1.39 1.67

CVA 5.75 6.62 12.89 8.22 15.39 4.68 10.66

Prov. (NG) 1.7 1.7 1.7 1.7 1.7 1.7 1.7

Prov. (CVA) 10.92 10.92 10.92 10.92 10.92 10.92 10.92

Cornwall Brockville Kingston Belleville Peter North Bay Ottawa

Education Rates

A major component of the tax levy relates to the education portion of the tax bill. Rates are determined by the province and are consistent throughout the province for the residential and multi-residential classes.

The rates for commercial and industrial vary significantly. The range for the commercial class varies from a low of 1.0155% to a high of 2.6417%. Similarly, the range for the industrial class varies from 1.745% to 3.4809%.

The commercial rate for the City presently stands at 2.4709% (3rd highest in study) and the industrial rate is 2.9490% (21st in the study). We have annually attempted to persuade the province to implement a standard rate across the province for all classes.

We have had a number of discussions over the past years with the Ministry of Finance requesting a standard education rate. Using 2005 assessment and rates taxpayers would have benefited as follows:

The total savings would be: (median across the survey)

Commercial $3,073,163 (29.50%) Industrial $ 416,360 (17.28%)

The total savings would be: (ave. across the survey) Commercial $2,580,748 (24.77%) Industrial $ 360,817 (14.94%)

Total taxes on $100,000 assessment

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

Education $296 $296 $2,471 $1,859 $2,949 $2,509

Municipal $1,748 $4,106 $3,434 $3,434 $4,600 $4,600

Res Multi-res Comm Average Ind Average

$612 $440Savings with standardized rates

AjaxAuroraBarrieBellevilleBramptonBrantfordBurlingtonCaledonCambridgeChatham-KentClaringtonCobourgCornwallEast GwillimburyFort ErieGeorginaGrimsbyGuelphHalton HillsHamiltonInnisfilKawartha LakesKingKingstonKitchenerLakeshoreLeamingtonLincolnLondonMarkhamWindsorMiltonMississaugaNewmarket

Niagara FallsNiagara-on-the-LakeNorfolkNorth BayOakvilleOrangevilleOshawaOttawaPelhamPeterboroughPickeringPort ColbornePrince Edward CountyRichmond HillSarniaSault Ste. MarieSt. CatharinesSt. ThomasStratfordSudburyThoroldThunder BayTimminsTorontoUxbridgeVaughanWainfleetWasaga BeachWaterlooWellandWest LincolnWhitbyWhitchurch-Stouffville

Net Levy per Capita

$990

$1,010

$1,030

$1,050

$1,070

$1,090

$1,110

$1,130

Comp. Mun. $1,000 $999 $1,002 $1,134 $1,137 $1,109

Average $1,003 $1,003 $1,003 $1,003 $1,003 $1,003

Median $1,000 $1,000 $1,000 $1,000 $1,000 $1,000

Cornwall Peter NB Kingston Belleville Ottawa

Taxes as a % of income

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

Comp. Mun. 4.70% 5.40% 4.40% 4.20% 4.80% 4.60%

Average 4.00% 4.00% 4.00% 4.00% 4.00% 4.00%

Median 4.00% 4.00% 4.00% 4.00% 4.00% 4.00%

Cornwall Peter North Bay Kingston Belleville Ottawa

The total budgeted requests in 2006 exceed $145 million of which approximately $109 million is not under the direct control or authority of Council. Identified non-controllable departments include:

Fire, Police, Social Services, Social Housing, Emergency Medical Services, Emergency Management, Winter Control, Solid Waste Management, Water, Sewer and certain outside agencies including Raisin Region Conservation Authority and the Eastern Ontario Health Unit.

It is important to remember that any expenditure reductions (operational) typically have to be borne by those departments under full control of Council. For example, if Council were to request a reduction in total expenditures of $4 million, (3%), many of the above noted departments and agencies are restricted in their ability to reduce either expenditures or service levels. The $4 million would have to be deducted from the remaining 25% of expenditures resulting in a decrease of 11% against those departments.

Controllable vs non-controllable

25%

75%

Fire expenditures per capita

$0

$50

$100

$150

$200

Fire Services $121 $121 $180 $135 $152 $130

Average $101 $101 $101 $101 $101 $101


Net Policing cost per capita and per household

$0

$100

$200

$300

$400

$500

$600

per capita $244 $185 $212 $166 $232 $199

per household $554 $450 $474 $408 $546 $485

Avg. (per capita) $192 $192 $192 $192 $192 $192

Avg. (houshold) $464 $464 $464 $464 $464 $464


SSS net expenditure per capita

$0

$50

$100

$150

$200

$250

Social Services $220 $206 $209 $165 $198 $132

Average $131 $131 $131 $131 $131 $131


EMS services per capita

$0$5

$10$15$20$25$30$35$40$45

EMS $41 $27 $35 $31 $42 $28

Average $33 $33 $33 $33 $33 $33


Roadway cost per capita

$0

$50

$100

$150

$200

Roadways $130 $109 $125 $101 $186 $168

Winter Control $35 $21 $37 $41 $28 $50

Avg: Roadways $113 $113 $113 $113 $113 $113

Avg: W.Control $30 $30 $30 $30 $30 $30


Assistance to aged per capita

$0

$20

$40

$60

$80

$100

GSDL $23 $13 $18 $94 $10 $18

Average $20 $20 $20 $20 $20 $20


City of Cornwall

Review of specific departments

Protective Services

Police (not included in 2006 budget document)Fire ServicesEmergency Medical ServicesEmergency Management

The City has little control over the level of spending in these departments. (Wages and benefits represent 80.11% of total expenditures)

City council has accepted fire marshal recommendations and have staffed the department to accommodate 14ff on each shift to ensure 10ff would be on scene. Similarly, the majority of EMS bases are staffed for 24 hour service.

Protective Services(excludes Police)

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

2005 $11,964 $920 $741 $433

2006 $12,894 $833 $1,020 $502

Wages Goods Services Financial

(000’s)

Emergency Medical ServicesThe City became the delivery agent for this service

in 2000. At time of takeover, Provincial records indicated the service cost approximately $2.8M with 50% to come from the province. Standards have changed dramatically since that time resulting in a significant change to costs.

Total budgeted expenditures for 2006$8,877,204Ministry of Health Funding

2,968,282 33.4%

CRF allocation in 2005 $ 871,000OMPF allocation in 2006 0The net expenditure increase in 2006 $

1,191,571Tax rate increase required to support 2.51%

Social Support Services

This is another department that allows limited opportunity for council to eliminate services or reduce costs. The Province mandates certain services and provides funding at varying levels from 50% to 100%. Permissive programs can be adjusted, however review of these programs in past years have provided limited savings due to the level of provincial and County funding.

The net expenditure increase in 2006 $754,793Tax rate increase required to support 1.6%

Social Support Services

$0

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

$30,000,000

$35,000,000

$40,000,000

$45,000,000

Revenues $32,005,380 $34,959,290

Expenditures $39,507,268 $43,215,971

2005 2006

Glen Stor Dun Lodge

The Lodge is now 10 years old and is requiring some renovations to a variety of areas including flooring, furniture and some exterior work.

Standards of care are imposed by the province and funding is related to the level of care required for the residents.

The net expenditure increase in 2006 $461,177Tax rate increase required to support .98%

Net costs are shared with the Counties on a 75:25 basis.

Glen-Stor-Dun Lodge

$0

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

$7,000,000

$8,000,000

$9,000,000

$10,000,000

Revenues $7,519,914 $7,728,617

Expenditures $8,677,255 $9,347,135

2005 2006

Social Housing

Social Housing was downloaded to the City in 2000 based on a business plan submitted to the Province. The housing stock was aging at the date of transfer with the province providing a funding formula for capital that was less then the average spent over previous years when the service was managed by themselves. The housing stock requires significant maintenance exceeding previous capital allotment.

The net expenditure increase in 2006 $422,603Tax rate increase required to support .89%

Social Housing

$8,200,000

$8,400,000

$8,600,000

$8,800,000

$9,000,000

$9,200,000

$9,400,000

$9,600,000

$9,800,000

Revenues $8,793,673 $8,792,622

Expenditures $9,322,397 $9,743,949

2005 2006

Outside Agencies

A number of outside agencies (non-city related) provide mandatory programming and are outside the ability of council to influence either the service level or funding requirements. Total funding requests from all outside agencies approximate $3.5M in gross expenditures.Of these requests, $1.2Mrelating to EOHU and RRCA cannot be altered by council under any circumstance. The tax rate alone for these two agencies is 2.6%. Council, if they so choose could eliminate funding to the other agencies.

Outside Agencies

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

Increase 5,330 43,899 60,319 0 -1,125 5,000 74,098

2005 177,653 324,793 82,183 866,245 115,000 55,000 1,627,254

Tourism RRCA Airport EOHU Museum GRAG Library

Capital

Total capital requested $ 10,500,000

Sewer surcharge $1,950,000 Sewer reserves 500,000 Waterworks 2,700,000 County re shared services 114,000 Other 137,000 Progress fund 960,000 General reserves 583,000

6,944,000

Tax Base $ 3,556,000

Capital Requests - Roadways

Intersections $ 115 Asphalt resurfacing 1,500 1st street parking lot 180 Sidewalks 235 Other 135

Capital Requests –Solid Waste

Optimist Park $ 75 Gas Collection System 200

Capital Requests –Sewer Collection

Eamers Corners $ 775 Cumberland 7th – 9th 500 Sydney 8th – 9th 190

Capital Requests –Wastewater Treatment

Digester cleanout $ 200 WWTP upgrades 500 Others 185 Asset management 100

Capital Requests –Water

Distribution $ 600 WPP Upgrade 1,200 General Improvements 225 Asset management 100 Meters 75 Cumberland 7th – 9th 500

Capital Requests –Recreational facilities

HVAC - Complex $1,300 Roof – Complex 560

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Capital Requests – EMS

Ambulance replacement$240

Fuel injection system 60

Capital Requests – GSDL

Building repairs $225 Flooring 175 Furniture 55

Capital Requests – other

Transit Generator $45 Fire #2 Generator 52 Skateboard Park 80 Park & Furniture Replacement

82 Fire Pre-emption System

36

Water/Sewer

To provide adequate supply of potable water for public consumption and fire protection.

To efficiently operate the waste water treatment plant and maintain the sanitary system, combined sewer systems storm sewers.

Water and sewer billings billed twice yearly

Self supporting

Water/sewer per household

$0$100$200$300$400$500$600$700$800$900

Water/Sewer $522 $664 $503 $744 $801 $645

Average $656 $656 $656 $656 $656 $656


Sewer

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

2005 $1,289,831 $935,741 $986,382 $1,926,038

2006 $1,363,350 $976,815 $948,121 $2,610,823

W&B Goods Services Financial

$761,117 year over year increase

Water

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

2005 $1,509,814 $914,570 $537,947 $3,068,975

2006 $1,614,780 $1,017,760 $627,636 $2,784,838

W&B Goods Services Financial

$13,708 increase

Average Water/Sewer billings per household

$115.00

$120.00

$125.00

$130.00

$135.00

$140.00

2005 $134.68 $123.91

2006 $138.72 $127.63

Water Sewer

Total municipal burden

0500

1,0001,5002,0002,5003,0003,5004,0004,500

2,637 3,374 2,877 3,170 3,236 4,087

Average 3,304 3,304 3,304 3,304 3,304 3,304


Reserves and Reserve Fundsat Sep 30, 2005

Working reserves (unrestricted) $ 4,055,493

Working reserves (restricted) 1,600,544

Stable Funding reserve 3,469,164

Reserve Funds 1,691,171

Progress Fund 25,418,889

Debt Retirement Fund 2,966,119 $39,201,380

Progress Fund

Balance Sept 30, 2005 $25,418,889

Estimated investment income to Dec 31, 2005 206,412

Commitments (490,907)

Project balance Dec 31, 2005 $25,134,394

Projected earnings in 2006 800,000

Request in 2006 budget (960,000)

Projected balance Dec 31, 2006 $24,974,394

city of cornwall 2006 draft budget presentation november 17, 2005

Documents

tax increase

net expenditures

capital expenditures

gross expenditures requests

expenditure requests

total requests

specific budget

approved budget approximated