by: councillor austin davey interim chair budget committee of the whole

By: Councillor Austin Davey

Interim Chair

Budget Committee of the Whole

February 26, 2002Budget Committee of the Whole 2

Council’s DirectionCouncil’s Direction

Council Resolution #2001-575 stated:

“Be it resolved that the Council of theCity of Greater Sudbury directs theChief Administrative Officer to prepare the 2002 Operating Budget estimates to reflect the following guideline: that the net basic budget increase be zero percent.”


PurposePurpose

• To review 2002 Budget facts and figures

• To outline alternative approaches to resolving 2002 Budget challenges

• To outline a schedule of budget meetings


Magnitude of 2002 Magnitude of 2002 Budget IssuesBudget Issues

• approximately $4.3 million of ongoing costs related to amalgamation

• approximately $10.2 million in 2002 unavoidable costs

• an annual $40 million+ capital deficit due to long-term under-funding


2001 Adjusted Base 2001 Adjusted Base Budget EstimatesBudget Estimates

$(millions)

2001 Levy 115.0

less adjustment for annualization

of water and wastewater revenue(3.8)

Revised 2001 Levy 111.2

Amalgamation Adjustments 4.3

2001 Adjusted Base 115.5


2002 Base Budget 2002 Base Budget Estimated IncreasesEstimated Increases

$(millions)

Contractually Obligated 1.4

Provincially Mandated 2.7

Outside Boards 1.8

Cost of Provincial Services Downloaded without Offsetting CRF

1.0

Loss of Investment Interest Income 0.9

Inflation (excluding water, wastewater) 5.5

Changes in CRF Funding/Additional Revenues (3.1)

Total 2002 Base Budget Increases 10.2


2002 Current2002 CurrentBase BudgetBase Budget

$(millions)

Revised Levy 111.2

Amalgamated Adjustments 4.3

2002 Base Budget Increases 10.2

2002 Current Base Budget 125.7

Dollars required to attain0% increases on revised levy

14.5 million


Traditional Budgeting Traditional Budgeting OptionsOptions

• efficiencies and process improvements• Revenues• capital reductions• service/program reductions• one-time offsets• Other


2001 Revised Levy2001 Revised Levy

$ millions

2001 Levy 115.0

less adjustment for annualization

of water and waste water revenue

(3.8)

Revised 2001 Levy 111.2


2001 Adjusted Base2001 Adjusted Base(Ongoing Costs (Ongoing Costs

Related to Amalgamation)Related to Amalgamation)Revised 2001 Levy 111.2

•Recreation Services - maintenance of parks and play fields; part-time clerical and program staff

1.0

•Roads Services - summer maintenance (patching, grading, dust control, culverts, lane markings)

1.0

•Corrected Staffing Requirements – (Corporate Services and Emergency Services) 0.7

•Transit Services - increased fuel (additional commuter trips) and increased maintenance costs (aging fleet)

0.4

•Telephone Services 0.2

•2001 Revenues Overstated (lottery licenses, Trillium leases, arena revenues) 1.0

Total of Amalgamation Adjustments 4.3

2001 Adjusted Base 115.5 Million


2002 Base Budget 2002 Base Budget Estimated IncreasesEstimated Increases

$ millions

2001 Adjusted Base 115.5

Contractually Obligated

•Pensioners 0.2

•Information Technology - software/hardware maintenance agreements and licensing

0.3

•Insurance Costs on Levy - including fire protection for transit fleet 0.3

•Utility costs - (increased costs re energy, wastewater charges) 0.5

•Annualization of Bylaw Officers 0.1

Total of Contractually Obligated 1.4

SUB-TOTAL 116.9


2002 Base Budget 2002 Base Budget Estimated Increases (con’t)Estimated Increases (con’t)

SUB-TOTAL 116.9

$ millions

Provincially Mandated

•Tax Write-offs, Charity and Vacancy Rebates 0.9

•Solid Waste Management 0.5

•Ontario Works - GWA caseload, provincial ceiling on administration

1.3

Total of Provincially Mandated 2.7

SUB-TOTAL 119.6



SUB-TOTAL 119.6

$ millions

Outside Boards

•Police Services 1.8

Total of Outside Boards 1.8

Cost of Provincial Services Downloaded

without Offsetting CRF

•Social Housing 0.6

•Land Ambulance 0.4

Total of Provincial Services Downloaded 1.0

SUB-TOTAL 122.4



SUB-TOTAL 122.4

$ millions

Loss of Investment Interest Income 0.9

Inflation (excluding water, wastewater) 5.5

Changes in CRF Funding/Additional Revenues

•Reclassification of CRF Bonus from one-time funding to permanent funding

(2.6)

•Taxation from Power Dams (0.5)

Total Changes in CRF Funding (3.1)

2002 Current Base Budget 125.7


The numbersThe numbersare large!are large!

They are here to stayand must be addressed immediately

in a different wayif we are going to be

a sustainable communitythat not only survives, but thrives


Challenges present Challenges present OpportunitiesOpportunities

• to show leadership, move forward, plan for the future

HOW? By adopting a new budgeting process:• a process that allows us to deal with the issues in

the current budget year in a unique short-term fashion

• a process that requires us to look ahead and address our fiscal needs over the next ten years


Sustainable Sustainable Community ModelCommunity Model

Prudent Fiscal ManagementOpens the door to options not available undertraditional year-to-year budgeting methods

Two-step process:1. the development of a short-term financial plan for 2002 only, and, more importantly, 2. the development of a long-term financial plan for the City, (which would be presented to Council in early October.)

Goal: A sustainable community


Long-TermLong-TermFinancial PlanFinancial Plan

• Public input• property and business

assessment base forecasts• future and emerging revenue

streams• pressures/opportunities

impacting expenditures• required levels/sources capital

financing• fiscal policy for debt

management

• adequacy/levels of reserves and special funds

• property tax policy and rates• financial indicators• current financial management

policies• current financial planning /

budget process• best practices in long-range

financial planning• sustained economic growth• risk analysis


ProcessProcess

Phase 1 - Issue identification

Phase 2 - Identify policy options

Phase 3 - Policy evaluation

Phase 4 - Financial Plan

Result – Sustainable Community


City of Edmonton adopted City of Edmonton adopted a Long-Terma Long-TermFinancial PlanFinancial Plan

City of Edmonton adopted a Long-Term Financial Plan in 1998 to guide financial decision-making to 2008 by addressing financial issues facing the City and outline effective stategies to deal with these issues

Long-Term Financial Plan:

• an innovative and progressive component of a professionally managed financial system

• will support our ability as a City to efficiently finance public services on an ongoing basis


Benefits forBenefits forCity of EdmontonCity of Edmonton

• helping the City to better understand / address its long-term commitments

• providing accurate and timely information

• providing principles to guide decision-making

• providing a policy approach to planning

• ensuring municipal responsibilities are aligned with appropriate revenue sources

Result:New approach to financial management that shifts the emphasis from bottom line financial concerns to service delivery, within a longer-term financial planning horizon.


Benefits to the Sustainable Benefits to the Sustainable Community ModelCommunity Model

for the City of for the City of Greater SudburyGreater Sudbury

• Provides for public participation and input into Council decisions;

• Fosters confidence in both the public and the business community by demonstrating leadership and planning by this Council;

• Provides a sound basis for a short-term 2002 solution that is not available under any other option;



for the City offor the City ofGreater SudburyGreater Sudbury

• Provides for third party involvement; i.e. the hiring of an outside expert to work with staff to prepare long-term options for Council’s consideration;

• Supports Council’s direction of “Council control through policy”;

• Continues to keep open the political options of approaching the Federal and Provincial Governments with the same urgency that exists today.


Unique OpportunityUnique Opportunity

Sustainable Community ModelAn opportunity to budget differently and keep us on a solid track

In keeping with Council’s Vision: “a growing, world-class community bringing talent, technology and a great northern lifestyle together.”

Traditional method of budgeting - not sustainableWill result in: significant reduction in services, downsizing(staff reductions) and/or drastic reductions in capital,all of which are not sustainable in the long-term.


2002 Short-Term 2002 Short-Term SolutionSolution

The Sustainable Community Model allows for a 2002 short-term solution that would not be available under any other option:

• the use of reserves to offset ongoing costs in 2002 only provided there is a long-term financial plan being put in place for 2003 and beyond.


Traditional BudgetingTraditional Budgeting

In traditional year-to-year budgeting, optionsin all of the following categories are considered:a) Efficiencies;b) Service reductions and/or eliminations;c) Long-term capital reductions;d) One-time offsets;e) New or enhanced revenue sources;f) Other.


Traditional BudgetingTraditional Budgeting

• Favors year-to-year management, and is contrary to the sustainable cities concept, and the outcomes of the CGS’s visioning exercise;

• Provides no perception of leadership or planning to the public and/or business community on behalf of Council;

• Perpetuates ward politics (not in my ward);• Provides for no policy framework;• Provides for no opportunity for public input on policy

issues; and• Reduces the urgency of a new deal with the Federal and/or

Provincial Governments.


Seeking Council Seeking Council SupportSupport

• Adopt the Sustainable Community Model of budgeting:

with a short-term solution and long-term financial plan

• Hire an expert to assist in the development of the Long-Term Financial Plan with a target completion dateof October 2002



• Provides for public participation and input into Council policy decisions;

• Fosters confidence in both the public and the business community by demonstrating leadership and planning by this Council;

• Provides a sound basis for a short-term 2002 solution that is not available under any other option;

• Provides for third party involvement; i.e. the hiring of an outside expert to work with staff to prepare long-term options for Council’s consideration;

• Supports Council’s direction of “Council control through policy”;

• Continues to keep open the political options of approaching the Federal and Provincial Governments with the same urgency that exists today.


Thank You!Thank You!

By: Councillor Austin Davey

Interim Chair

Budget Committee of the Whole

Questions?

by: councillor austin davey interim chair budget committee of the whole

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