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2015 Business Plan

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Following a series of cuts to the proposed capital & operating budget, City Council has approved a 3.19% tax increase for residents.

The 3.19% increase translates into an additional $116 to the typical Barrie home assessed at $282,000. The 2015 Business Plan Consolidated Motion identifies all of the changes made to the draft Business Plan.

The City’s budget includes three elements:

A tax rate based operating budget: ongoing programs and services funded primarily from a combination of property taxes, user fees and reserves. These services are delivered either by the City or by one of the City’s service partners.

A user rate based operating budget: ongoing programs and services funded primarily from user fees and reserve funds, based on user rates intended to make the programs and services self-sustaining.

A capital budget: routine and non-routine projects designed to create, enhance or restore the service potential of the City’s significant network of assets. The capital budget is funded from a combination of property taxes, development charges, debt issuance, grants and reserves.

Draft Business Plan

Executive Summary  1
Budget & Financial Overview: Tax Rate  12
Budget & Financial Overview: User Rates  33
Financial Condition: Debt & Reserves  41
Capital Plan Overview  47
Service Areas: Operating Budget Details, Tax Rate  65
Service Areas: Operating Budget Details, User Rates  233
Service Partner Budget Support   239
Capital Budget 2015–2019  260
Capital Outlook 2020–2024  275
Service Level Change Forms  279
Proposed Fee Changes 317

The full document is available for public viewing in a hard-copy format at the City Clerk’s Office or Finance Department, 70 Collier Street, 1st Floor. If an alternate format is required, please call 705-739-4204. The 2015 Business Plan Consolidated Motion identifies all of the changes made to the draft Business Plan.

Council Direction

On June 23, 2014, Council provided the following direction on the 2015 budget:

  • maintain current programs at current service levels
  • annualize prior period decisions (if the costs of a program or service change based on only a partial year, costs for 2015 needed to include the entire years cost)
  • include operating impacts of new development
  • implement a scenario based approach to identify a set of options to assist Council
  • consider user fees to ensure cost recovery and increased reliance on non-tax revenues
  • include additional assessment growth
  • ensure contribution to reserves consistent with Financial Policy Framework
  • include water, wastewater, parking, service level changes, capital plan

Scenarios for Council's Consideration

The budget gives Council several scenarios for consideration. The scenarios are packaged for potential service changes, cost reduction measures, or ways to raise additional revenue. The following scenarios have been included in the 2015 Business Plan for Council to discuss and consider:

Scenario A: Alternative Service Levels
Identifies a number of alternative service delivery options many of which result in cost savings.

Scenario A proposes a number of alternative service delivery recommendations. Each proposal is listed below and is also supported by a detailed service level change form. A number of varying types of options are presented. These include:  

  • legislative requirements (contaminated sites under PSAB)
  • identified efficiencies and reductions (Internalization of ticket sales at downtown terminal, opportunities for reductions in recreation programs and IT costs)
  • areas identified for rightsizing (operations, stormwater pond maintenance, accessibility, strategic initiatives).

The two service level changes in regards to roads and storm water request a total of $552,000. Over the past number of years the City’s Roads and stormwater infrastructure has grown, increasing pressure on operations and maintenance for these assets.

Resources in these areas have not grown in step, resulting in deterioration of service levels. The service level requests provide for increased staff, equipment and supplies to restore service levels and ensure our assets are being properly maintained. The costs are phased over 2015 and 2016.

The other significant request relates to the mandated PSAB 3260 requirement by December 31, 2015 to inventory and value liabilities related to contaminated land. Costs for the initial scoping exercise would be managed within current departmental resources. To assess properties that are inactive and have a medium-high risk level based on historical use will result in a cost of approximately $5,000 per property, for a total of $125,000.

Also included is a request for staff related growth management. These staff are required to coordinate the Growth Plan, process development applications, set-up processes to track financial information to manage implementation of required infrastructure. In keeping with the principle that growth pays for growth, staff has developed a new fee structure for the processing of development applications to fully recover these costs.

For a chart detailing Scenario A, refer to page 25 in Budget & Financial Overview: Tax Rate .

Scenario B: Service Partner Adjustments
Recommendations on potential adjustments to service partner budget requests.

This scenario includes two proposed amendments to the Service Partner Budgets totalling a reduction of $200,000:

  • a reduction in the Physician Recruitment program of $50,000 to maintain the service level at the 2014 approved funding amount
  • a reduction in Library grant of $148,241 to reflect the revised City owned maintenance budget for 2015.

These reductions have an impact of 0.09% on the 2015 tax rate. Additional changes may become available as the service partner budgets are reviewed by County Council or partner boards.

Scenario C: Parking
Recommendations to address the parking deficit to eliminate the need for tax funding for parking.

The City’s Parking Operation is intended to be self-sustaining. However, the Parking Reserve will be in a deficit at the end of 2014 (estimated at $465,000) and is expected to generate an operating deficit in 2015 of approximately $764,000 (base budget).

The Parking Reserve has been used to fund in year operating deficits historically. However, with the Parking Reserve in a deficit position, any further operating deficits from Parking operations effectively represent an unfunded financial exposure to the corporation overall.

The 2015 base budget includes a $743,000 tax funded contribution to the Parking Reserve to address this exposure. This contribution supports the majority of the $763,000 draw from the Parking Reserve included in the 2015 Parking base budget ($500,000 increase over planned draw in 2014) and prevents the unfunded reserve deficit from getting significantly worse.

The $743,000 tax funded contribution to the Parking Reserve will be eliminated if Scenario C is adopted as recommended. Under this scenario, the Parking operating budget will be adjusted by reducing the draw from Parking Reserve by $650,000 to be replaced by an equivalent amount of revenue from weeknight and weekend paid parking.

A draw from the Parking Reserve in the amount of $114,000 will still be required to balance the Parking operating budget in 2015. However, staff anticipate the annualized revenue generated from weeknight and weekend paid parking (estimated at $1.3M) will be sufficient to begin rebuilding the Reserve in 2016 and eliminate the need for future tax based subsidy of the Parking Fund.

This illustration reflects the projection of the Parking Rate Reserve under the current model, as well as the “Scenario C” recommendation. Without the increased revenue the enterprise will continue to operate at a deficit, requiring over $15 million in tax funding over the next 15 years.

The alternative to staff’s recommendation would be to no longer treat parking as a separate enterprise and treat parking operations as a tax-supported program.

Scenario D: Infrastructure Renewal Levy
Recommendations to implement an annual infrastructure renewal levy of 1% on the property tax rate to address our aging infrastructure.

The City currently owns infrastructure with a historical cost of $1.6 billion – the replacement value of this infrastructure in current-day dollars is $3.5 billion. Of this amount, almost $1 billion (historical cost) is for infrastructure that supports tax funded programs, and therefore requires tax dollars for repair, replacement and rehabilitation. Like most municipalities, the City has a significant gap between annual funding available for renewal and the required spending to maintain assets in a state of good repair. 

For more information, refer to pages 27–28 in Budget & Financial Overview: Tax Rate .

In order to begin to address this infrastructure gap, the 2015 Business Plan and Budget recommends the implementation of an Infrastructure Renewal Levy of 1% on the property tax rate. For the last number of years the City has been following a plan to increase contributions to the Tax Capital Reserve to a minimum of the annual amortization expenses. The plan provides for an annual increase in the transfer of $720,000, as well as an increase to reflect the net increase in amortization expense arising from new assets being brought into service, offset by amortization reductions for retired assets. Additionally, savings in debt charges from the maturing of a debt issue are also added to the reserve contribution.

This scenario proposes to replace the annual increase of $720,000 with a 1% Infrastructure Renewal Levy. By the year 2024, the transfer to the tax capital reserve will be $17 million higher than under the existing plan. Over the ten years, an additional $90 million will be transferred to the Tax Capital Reserve.

This will significantly reduce debt requirements or increase the amount of capital works that can be undertaken. The reduction in debt will reduce future debt servicing costs and undertaking additional renewal works will help avoid significant maintenance costs.

The impact of the 1% Infrastructure Renewal Levy in 2015 is actually only 0.64%, which works out to $23 per average home ($282,324), as it is offset by the elimination of the existing plan to increase the transfer by $720,000 per year. 

For more information, refer to pages 27–28 in Budget & Financial Overview: Tax Rate .

Scenario E: Service Level Changes for Council Consideration
Includes a number of service level enhancements and service reductions for Council’s consideration but are not recommended by the Executive Management Team at this time.

Scenario E represents additional serve level options that were considered by the Executive Management Team, but are not recommended in the 2015 requested operating tax levy. They are presented for Council consideration and direction.

Description 2015 Budget
 Operating  Capital
Fire Prevention Officer 70,384 38,500
Customer Service Strategy Implementation 50,000 -
Multi-Residential Organics Pilot Program 80,944 -
Organics Collection Program Enhancement 362,500 -
Multi-Residential Front-End Garbage Collection 199,750 -
Geese Control in the Waterfront Parks 50,000 -
Inclusion Services: Capacity & Support 48,400 -
Elimination of Summer Beach Lifeguards (Centennial & Johnson's beaches) (61,847)  -
Total Net Budget Impact 800,131 38,500

For more information, including staff complement and forecasts for 2016 and 2017, refer to page 29 in Budget & Financial Overview: Tax Rate

All above excerpts regarding scenarios have been sourced from Budget & Financial Overview: User Rates.

Water/Wastewater

The proposed 2015 Water Operations Budget reflects an increase of 2.5% ($7) for a typical household and the proposed Wastewater Operations Budget reflects a rate increase of 5% ($20) for a typical household. These increases are required to maintain current service levels and provide funding for the rehabilitation of water and waste water infrastructure, as required by Provincial legislation.

Water Bill (2.5% increase) $7
Waste Water Bill (5% increase) $20
Total Impact to Average Home $27

Service Partners

Services directly controlled by the City account for 51% of the property tax bill. Other services are provided by service partners. These include Barrie Police, the County of SimcoeLibrary Board and Conservation Authorities. The proposed changes in service partner budgets add 1.2% to the property tax bill.

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