2012-06-12 - presentation on budget targets

7/31/2019 2012-06-12 - Presentation on Budget Targets

1/16

2013 2017 Operating Budget

Targets

Strategic Priorities & Policies

CommitteeApril 30, 2012


2/16

2

How the Municipal Budget Works

OPERATING BUDGETSalaries/WagesUtilitiesSuppliesFuelContracted ServicesAnnual InsuranceDebt PaymentsCapital Levy (PAYG)Reserve FundContributions

CAPITAL BUDGETNew ArenaNew Fire TruckRoad WideningNew Bike PathAsset Rehab

Property Tax

Grants

User Fees

RESERVE FUNDS

DEBT

Outside:

DevelopmentCharges, Grants,etc.


3/16

Budget Focus

ExpendituresNet Budget

(Tax Levy)

Non-Property TaxRevenues- =

From

Tax Rate

Increase

From

Assessment

Growth

3


4/16

Balancing the Budget

Current

Services &

Service Level

What Exists

Cost of

Business

Labour

Materials

Regulation

Expanding City

New homes

New businessesMore of Same!

Service Changes

New Services

Higher Svc Levels

=+

+

+

Expenditure

Requirements

BASE BUDGET SERVICE GROWTH

EXISTING: TAX LEVY, USER FEES, GRANTS, ETC

PROPERTY TAX FROM RATE INCREASE

PROPERTY TAXFROM ASSESSMENT GROWTH

OTHER REVENUE:NEW: USER FEES, GRANTS,

LICENSES, ETC

ONE-TIME

REVENUE(DEFERRAL)

RESERVE FUND

4


5/16

The Balancing Act Zero or not!

5

Cost containment (operating

efficiencies)

Ontario Works Upload

Operating Budget Contingency

Reserve

**Assessment Growth**

Permanent Service

Adjustments/Reductions

$

Labour costs & Collective

Agreements (over 0%) Capital Financing

Inflation - 3.1%

Increased demand for new

services (especially social,

cultural and economic)

New regulation (e.g. AODA)

**Expanding City services &

capital maintenance**

$

Acceptable

Tax increase

from rates

New Opportunities$700 m LIMIT to $100 m: New City Hall

401/402 Corridor Development

Green Bin

Transportation Master Plan

New initiatives (SOHO CIP, Downtown,

OW decentralization)


6/16

Background/ Perspective

Residential Property Tax Comparison

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

$5,000

2009 Property Tax - Residential( for Municipalities with Populations over 100,000)

For a three bedroom, 1,200 sq ft detached bungalow with 1.5 baths and a single cargarage, on a 5,500 sq ft lot

(Source: BMA - Municipal Study 2009)

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

$5,000

2011 Property Tax - Residential( for Municipalities with Populations over 100,000)

For a three bedroom 1,200 sq ft detached bungalow with 1.5 baths and a single cargarage, on a 5,500 sq ft lot


SHIFTED 2 POSITIONS

2011 Group Average: $ 3,293 (2009 $ 3,196)2011 City of London: $ 3,079 (2009 $ 3,031)6


7/16


Commercial Property Tax Comparison

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

2009 Property Tax - Commercial( for Municipalities with Populations over 100,000)

For prime location commercial office space, property taxes per sq ft of grossleaseable area


$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

2011 Property Tax - Commercial( for Municipalities with Populations over 100,000)

For prime location commercial office space, property taxes per sq ft of grossleaseable area


SHIFTED 1

POSITION

2011 Group Average: $ 3.28/sq .ft (2009 $ 3.38/sq. ft)

2011 City of London: $ 2.23/sq ft (2009 $ 2.61/sq. ft)7


8/16


Industrial Property Tax Comparison

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

2009 Property Tax - Industrial( for Municipalities with Populations over 100,000)

For standard industrial property under 125,000 sq ft, newer construction, flexibledesign - taxes per sq ft of floor area basis


$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

2011 Property Tax - Industrial( for Municipalities with Populations over 100,000)

For standard industrial property under 125,000 sq ft, newer construction, flexibledesign - taxes per sq ft of floor area basis


SHIFTED 4 POSITIONs

2011 Group Average: $ 2.04/sq .ft (2009 $ 2.12/sq. ft)2011 City of London: $ 1.51/sq ft (2009 $ 1.76/sq. ft)8


9/16


3 Year Comparison of Municipal Property Tax

Levy Increases from Rates

Municipality 2010 2011 2012

3 Year

Average

Toronto 2.9% 0.0% 2.5% 1.8%

Ottawa 3.8% 2.4% 2.4% 2.9%

Chatham Kent 1.4% 1.4% 2.3% 1.7%Hamilton 2.0% 0.8% 0.9% 1.2%

Sudbury 2.5% 3.5% 2.8% 2.9%

Windsor 0.0% 0.0% 0.0% 0.0%

AVERAGE 2.1% 1.3% 1.8% 1.75%

London 1.86% 0.0% 0.0% 0.6%

Consumer Price Index

Based on change as of December

3.3% 2.0% 1.7% 2.3%

* Tax levy increases based on information identified on respective websites.9


10/16

2011 and 2012 Tightening

To achieve 0% :

In 2012, a further $18.1 million in

adjustments comprising of:

One time funding sources

Service changes and reductions Position Management

Additional revenue

Provincial Upload

In 2011, $6.0 million in reductions

were achieved through salary and

wage freezes, position managementand cost containment initiatives.

$ 24.1 million10


11/16


Forecasts

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

20132014

20152016

2017

5.5%

3.8% 4.2% 3.6% 3.4%

Property

TaxL

evy

Years

Updated Tax Levy Forecast

(excluding impact of assessment growth)

2013 2014 2015 2016 2017 Total

Forecasted Tax Levy $ 493.0 m $ 511.8 m $ 533.1 m $ 552.0 m $ 571.0 m $ 2,661 m11


12/16


Forecasts

Forecasts do not include:

Additional funding for the Investment & Economic Prosperity Plan

Increased investment in municipal infrastructure to close infrastructure gap

Additional funding to meet targets as laid out in the Emerald Ash Borer Strategy

New initiatives, or enhanced service delivery of existing services

Items included in forecasts are:

Impact of contractual settlements

Financing costs associated with capital plans in keeping with Strategic Financial Plan

Increase to complement (Policing Services)

Anticipated increases in costs for fuel and energy

Continued upload of Ontario Works Benefit costs and Court Security costs

Moderate growth in transit

Continued position management initiatives

Increased contribution to Economic Development Reserve Fund (2013, 2014)

Strategic reduction in the reliance on the Operating Budget Contingency Reserve for

base funding

12


13/16

2013 2014 2015 2016 2017 Total

Forecasted

Tax Levy$ 493.0 m $ 511.8 m $ 533.1 m $ 552.0 m $ 571.0 m $ 2,661 m

2013 2017 Operating Budget Forecasts

Compared to Proposed Targets

2013 2014 2015 2016 2017 Total

Forecasted

Tax Levy$ 493.0 m $ 511.8 m $ 533.1 m $ 552.0 m $ 571.0 m $ 2,661 m

Proposed Tax

Levy TARGET$ 485.0 m $ 500.2 m $ 517.3 m $ 532.8 m $ 547.3 m $ 2,583 m

Difference $ 8.0m $ 11.6 m $ 15.8 m $ 19.2 m $ 23.7 m $ 78 m

20132014

20152016

2017

AVERAGE

5.5%

3.8% 4.2%

3.6%3.4%

4.1%

Target Forecast

20132014

20152016

2017

AVERAGE

3.8%3.1% 3.4%

3.0%2.7% 3.2%

5.5%

3.8% 4.2%

3.6%3.4%

4.1%

Target Forecast

13


14/16

Potential Impact of 2013 Targets

Somebody pays.either now or in the future.

14

Increase/ Decrease

2013 Property Tax Levy Increase based on forecast $ 25.6 million

Reduction required to meet 3.8% target $ - 8.0 million

Additional reductions required to achieve 0% $ - 17.6 million

Total impact to services in order to achieve 0% $ - 25.6 million

Two ways to achieve target:Permanent service reduction (expenditures)

Sustainable non property tax supported revenue

sources


15/16

2013 Operating Budget Targets

Service/Source of change

2013 Maintain

Tax Levy

Requirement

in $ millions

At 3.8% Levy

Impact

$ millions

Cumulative

At 2% Levy

Impact

$ millions

Cumulative

At 0% Levy

Impact

$ millions

2012 Council Decisions 4.1 - -0.1 -4.1

London Police Service 4.3 -1.2 -2.5 -4.3

London Fire Services 1.6 - -0.5 -1.6

Land Ambulance 0.3 - -0.1 -0.3

Conservation Authorities 0.2 - -0.1 -0.2

Social Housing 0.5 -0.3 -0.3 -0.5

London Transit 1.3 - -0.9 -1.3

London Middlesex Housing Corp 1.1 -0.6 -1.0 -1.1

London Middlesex Health Unit - -0.3 -0.5 -0.7

Business Attraction & Retention 1.8 -0.3 -1.7 -1.8

Capital Costs and Contingencies 7.3 - -1.9 -6.8

Social Support and Long Term Care -2.5 -1.1 -1.1 -1.1

All other Services 5.7 -4.3 -5.8 -5.8

Total 25.7 -8.1 -16.5 -25.7

15


16/16

2013 2017 Operating Budget Targets

Next Steps

March April May June July August September October November December

16

2012-06-12 - presentation on budget targets

Documents