Budget deliberations begin with conservative forecasts

(Gazette file photo)

 

SARAH WILLIAMS

STAFF WRITER

Tuesday night ushered in the annual Prince Edward County Council budget deliberations. After the inaugural year for this council saw a tax levy increase, 2020 has already brought some relief to tax payers with no increase to the tax levy being proposed. The first of several meetings shed light on the broader context of the County’s budget, set against the backdrop of a report from CAO Marcia Wallace, the Finance Department and the Community Development Department.

Wallace’s report outlined possible avenues for efficiencies with an eye to the unrealized task of finding 10 per cent savings within the budget.

Since July, staff have been tasked with finding such efficiencies but a recent report from Amanda Carter, head of the Finance Department, indicated finding such a cost reduction could not be done without impairing the current level of service provided by the County- including those that are statutory or mandated through provincial or federal legislation.

With the crux of the meeting being how best the County can rise to the challenge of finding efficiencies while also supporting the various needs of the public, the municipality is entering 2020 with a 0.5 per cent decrease to residential property tax payers

The report from Wallace provided context through way of a multi-year lens for a balanced budget as well as investments that may prove to be cost saving in the long run.

“What I would highlight in this report is it was positioned to put some context around the budget, recognizing the next few days of discussion will be really important in terms of setting the fiscal picture for this year, but as municipalities set single year budgets we also need to be looking at it from a multi year lens. Part of that is looking at how we can be more efficient and effective in terms of services offered and delivery,” said Wallace.

To that end, Wallace proposed using $98, 675 of the provincial modernization funding to conduct a service delivery review of administration and governance processes.

Similarly, council has also allocated $91,000 from provincial modernization funding reserves to implement a recreation/facilities online booking system, an online public consultation tool and a payroll human resources IT system.

The modernization funding reserves were set-up as a one time grant of $725,000 from the provincial government as a way for small, rural municipalities to reduce expenditure growth long term while becoming more efficient.

Among other modernization tasks suggested by Wallace were a more user friendly public-complaint system, automation of a variety of bill payments or frequently used fees and charges, and a public WIFI system for Prince Edward County, with the first phase being in Picton and subsequent phases enveloping Wellington and Bloomfield.

In her report, Wallace also recommended studies be done on downtown parking, future developments combined with the accompanying need for improved infrastructure and asset management.

In the past two years the County has spent $86,000 in preparing data to facilitate an Asset Management Plan however due to various factors, asset management has been a challenge for the municipality according to Wallace’s report.

“As an interim step, the 2020 budget proposes to cancel many older projects that have not gotten started, in order to free up funds for the priority work that can realistically be completed in 2020 and increase our capital reserves,” wrote Wallace.

Councillor Mike Harper. (Jason Parks/Gazette Staff)

Given the Official Plan hasn’t been updated since 1998 and the provincial expectation is municipalities update the OP every five years Wallace also stressed the need for the County to prioritize this during 2020.

Councillor Mike Harper spoke in favour of the CAO’s recommendations while urging council and staff to differentiate between asset management and asset governance.

“I am in favour of the CAO’s recommendations for those bundles of studies. I think that’s a great use for the modernization fund,” said Harper.

“The idea of asset governance is we have to be careful to not, as council, expect or hope that software is going to solve what we do. We have to use our judgement and that means taking into account all the facts we can but ultimately we have to make an informed intuition judgement about what we’re doing,” expressed Harper. “ Also, they said don’t put a lot of reliance on consultants. You know better than many what your issues are.”

Wallace asserted that the County should employ a mix of consultants/software and community dialogue to achieve their goals.

“We need to think about what we can afford long term. Where I see this conversation going is asset class by asset class. To have some conversation with the evidence we’ve collected in order to determine what we’re striving for. We’re going to start this conversation with roads in March to talk about road needs, our ability to pay and where we can get to collectively in terms of the service level we can afford,” said Wallace. “The software and consultants are effective at helping you understand the relative impact of the choices you make but they don’t tell you what is good enough or what you’re striving for or what you can afford overall. Those are some of the bigger questions in a dialogue with the community we need to have to get a good asset management plan.”

Amanda Carter, Director of Finance, also spoke to council providing a budget overview. This year, the proposed operating budget is $56.9 million, with the capital budget being $12.1 million. The recommended budget will decrease the residential property taxes by 0.5 per cent.

“If any of you have access to our 2015 capital plan, I urge you to go back there. There was a lengthy list of projects listed both on the reserve for roads capital as well as on the federal gas tax reserve funds schedule and while that’s a beautiful list of projects, if you look at where those reserves were sitting, at the end of a five year forecast, we were in a $23 million dollar deficit,” stressed Carter. “So, regardless of how many projects were listed, not enough emphasis was placed on the fact that those plans were not attainable in any stretch of the imagination. We did not have $23 million sitting in any bank account anywhere.”

Carter emphasized that over the years, she has aimed to be more cautious of where reserves are at and what can reasonably be afforded by the County.

Furthermore, Carter reiterated that the 2020 operating budget will maintain service levels without raising the tax levy.

Carter focused some of her presentation on the need for a water/wastewater study and the inherent cost to the municipality should such a study not be conducted.

“We’ve not gone back and updated (the sustainable water/wastewater plan) and with the Wellington Master Services Plan Capital coming in, outside the timeline of the rates study, that will impact the rates because it’s not considered in terms of the debt servicing cost required to support the capital coming onto the plant earlier than anticipated,” said Carter. “The other factor is our consumption is declining year after year. With that decline in consumption, the amount of revenue is declining which impacts the amount of money we can put in reserves to fund operating.”

“The water rate study that was connected to the water/wastewater operating budget was set to a specific percentage increase year after year. We are slightly above that,” she said. “ Those three things has made me urge you to approve a water/wastewater study. We need to ensure those rates are adequate for what’s ahead of us.”

The funding for the hospital has been maintained at the 2020 rate, according to Carter, where a one per cent was levied last year. It was not increased but included in budget calculations.

“The transfer to roads construction in 2019 was increased by 2.5 per cent as levied by council bringing the amount going into the reserve to 4, 80,000. In the 2020 budget we’ve maintained that amount. The debt is retired and the loan was paid off. Instead of letting that fall to surplus, that was added to the transfer for roads construction,” said Carter.

In speaking to council, Carter referred to the reserves as a savings account, stressing the importance of viewing it as such.

“If you think about our reserve like a savings account, we’re putting in 6.7 million, but our budget is saying we want to take out $9.5 million. Unless we already have money saved in that reserve, we’re in a deficit out of the gate,” stressed Carter. “At the end of 2019, with all our continuing capital, if we were to spend all the money committed, we would have a $2.4 million deficit heading into 2020 in our reserve for roads construction.”

Some other highlights from the budget overview include an increase of $1.5 million in the operating revenue, in part due to increased grant money and permit fees. According to Carter’s presentation, expenditures increased by $1.2 million, but were offset by increased cost recoveries of $234,000 and a decrease of $327,000 in debt servicing.

During budget deliberations, council also voted on staff recommendations with regards to funding requests from community services and organizations.

Among the requests approved by council were:

  • $40,000 per year over the next ten years to go towards Kingston General Hospital redevelopment
  • $20,000 for food insecurity, with a commitment to reconsider an increase to $40,000 for 2021
  • $13,450 in cash and up to $11,840 in-kind for use of municipal facilities to continue operating the County Seniors Centre program as part of the PEC Community Care for Seniors Association’s Active Living Program

Council rejected staff’s recommendation to support the request for a Haul Out Service at the Picton Marina in the amount of $12,000.

Athol Councillor Jamie Forrester. (Jason Parks/Gazette Staff)

Citing a deputation by a member of the public with regards to leasing the marina, Councillor Ernie Margetson stated he was unwilling to support such an expenditure until council receives the forthcoming staff report regarding marina operations.

Councillor Jamie Forrester also protested the request, believing that marinas should be providing revenue as opposed to becoming an expenditure.

“When I look at marinas..they should be paying for themselves. We should be making money, not being asked to pay. I would want to see a report that says there is a payback on this. Just to come out and support this-I can’t do it,” stated Forrester.

Staff also recommended that council not consider a recent request from Prince Edward Learning Centre for $35,000 to go towards the Financial Empowerment Program. Instead, staff are urging PELC to pursue funding through the municipal grants program.

Councillor Bill Roberts spoke to the need for this funding to be carved out of the 2020 budget, rather than going through a competitive channel where funding for PELC is not guaranteed.

“This council has the ability to make things certain when it comes to dealing with people who are poor in our community and that’s somewhere around 1 in 6 or 1 in 5 people who live in this community and this motion would move it into a zone of uncertainty. If staff can tell me moving this to the municipal grants process is the equivalent of a done deal, that’s one thing, but if not, it’s unconscionable,” said Roberts.

Council agreed with staff on this recommendation, advising PELC to access municipal grants to attain necessary funding.