Municipality aims for tax rate
increase of two to three per cent in 2014 budget

By Liz Dadson

Kincardine council

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Kincardine council is going to have to find a sharper pencil if it wants to keep the tax rate increase at two to three per cent in the 2014 budget.

Council held its first round of budget talks last night 
(Dec. 16) at the municipal administration centre.

Treasurer Roxana Baumann presented a comprehensive report, with a proposed tax rate increase of six per cent for the combined operating and capital budgets for next year.

The proposed increase would provide additional revenue of $534,000 to fund the operating budget shortfall, she said, and would contribute $67,000 to the capital budget.

The six-per-cent increase equates to an additional $71.40 annually for an average residential assessment of $245,000, said Baumann.

She noted that every one-per-cent increase in the tax rate will generate about $89,000 in additional revenue. 
The impact of a one-per-cent tax rate increase on the average residential assessment is an annual increase of $11.90.

The treasurer explained there are a number of financial pressures which make it difficult to balance operating costs with revenue, and meet capital expenditure requirements.

These include:

  • Stagnant population levels and taxation base
  • Reduction in discretionary provincial grants
  • Inflationary pressures
  • Increases in cost of contracted services
  • Aging infrastructure

Baumann said property taxes represent 65 per cent of the total revenue for the municipality, excluding water and wastewater.

Overall, non-taxation revenue is projected to decrease by $1.013-million (8.3%), while expenses before amortization are budgeted to decrease by $31,000 (0.1%).

Affecting revenue are:

  • 15% decrease in Ontario Municipal Partnership Funding of $218,000
  • $111,000 decrease due to reduced building activity by Ontario Power Generation (OPG) and, therefore, no permit revenue is anticipated in 2014
  • $50,000 reduction in the Building Permit Reserve Fund revenue recognized due to the gradual depletion of this fund
  • Estimated 2014 Current Value Assessment growth of $415,000

There is a corresponding list of items affecting operating expenses:

  • Increase of $175,000 (7%) for OPP costs under the current cost-recovery formula, due to an increase in salaries and wages for officers
  • An increase of $313,000 for wages and fringe benefits to account for an estimated three-per-cent increase in salaries, as well as step-up pay, new positions and employment changes. An additional $40,000 has been included for wage parity for non-management employees
  • Additional expenses that have been included in the draft 2014 budget include: $13,500 for downtown wifi; $25,000 for the Rural Economic Development (RED) grant, $100,000 for community grants (increase of $50,000), $142,500 for the Penetangore Regional Economic Development Corporation (PREDC), and $12,000 for Team Kincardine
  • Reserve fund transfers amounting to $345,000 are included in the operating budget: $100,000 for the Davidson Centre roof; $100,000 for the Ward 2 landfill cell construction, $50,000 for the Davidson Centre refrigeration system; $80,000 for phragmites management, $10,000 for IT costs; and $5,000 for the planning department's five-year plan
  • Total water and wastewater reserve fund transfers are projected at $2.67-million

Baumann said that $784,000 has been budgeted for amortization expense, representing about 24 per cent of the total amortization (excluding water and wastewater).

In summary, she noted that the total budgetary impact from loss of revenue versus assessment growth, equates to $452,600.

That necessitates a five-per-cent tax rate increase, plus contribution to capital of another one-per-cent tax hike for a total of a six-per-cent increase.

"Without a tax-rate increase or reductions to services, the municipality would have an operating deficit of $466,000," said Baumann, "with a zero contribution to current capital."

Councillor Randy Roppel said a six-per-cent tax-rate increase "is not going to happen" and called on council to start cutting costs rather than jacking taxes up.

Baumann said the OPP wage freeze ends Dec. 31 this year, but that information was provided to staff after the council meeting in which council agreed to hold the line on OPP costs.

The department heads each went through his/her operating budget, stating the goals, objectives, and significant budget changes.

Chief administrative officer Murray Clarke outlined the mayor and council budget, noting there is $4,500 included for an energy conservation plan to be done next year.

Councillor Kenneth Craig suggested a review be done by the next council in 2015-2016, on whether Kincardine needs nine members on council. "That would be one way to decrease expenses," he said.

"That's a short-sighted and ineffective way to lower expenses," said councillor Ron Coristine. "That would just mean added work for the seven remaining councillors."

Fire chief Kent Padfield bought forward a request for a full-time fire prevention officer for Kincardine, due to increased workload in all avenues of fire prevention.The cost would be $24,000. That was later rejected by council.

Clarke noted that the major priority for the public works budget is fixing up the municipal administrative centre.

He said the cost of repairs to the HVAC (heating and air-condition system) was about $70,000 over the past four years. In addition, the siding must be replaced due to water infiltration problems.

"This building is almost inoperable," he said. "The new HVAC is a real priority."

Also, he noted that the municipality has no fleet preventative maintenance program.

"We have more than 75 pieces of rolling stock worth about $10-million," he said. "We need a repair and maintenance co-ordinator."

In addition, he said $5,000 is in the operating budget to look at drainage from the hospital property that runs across the Kincardine Golf Course, and another $5,000 has been added for a groundwater monitoring well in Huron Ridge.

Clarke said the Kincardine Community Medical Centre needs remodelling of the reception area, to the tune of $27,000.

"That's a brand new building, what renovating is required?" asked councillor Maureen Couture.


Clarke said each physician has his/her own receptionist but space is required to expand that area to accommodate those employees.

As for a proposed need for a snowplow route optimization study, Clarke said the municipality has three foremen who set up the routes most effectively and efficiently.

"We need to look at re-purposing the three works yards as maintenance and service depots," he said.

Craig said his overall view of the budget is that revenue is flat or decreasing, while expenses are flat or increasing.

"There needs to be a balance to cover the cost of services," he said. "User fees may have to cover the cost to provide the programs. We're told we need to provide recreation programs for the health of our community but the costs are rising faster than the user fees."

Councillor Jacqueline Faubert said there is not an ability by the taxpayers to tolerate increased taxes, increased costs to the municipal centre, and increased costs for hydro.

"We're looking for a 'no frills' budget that is equitably distributed," she said. "That means cuts and capital deferrals across all departments and all pillars."

She suggested keeping community grants at $50,000, rather than doubling them to $100,000, since the Enbridge grants of $50,000 are still available to these groups.

"We are not maintaining what we have," said Couture. "We need to look at our buildings and equipment and get down to the nuts and bolts of the operating and capital budgets. Let's fix the things that are broken and upgrade the things that are falling apart. I'm done with studies and investigations. Let's look after what we've got. We don't need more than a two-per-cent increase on the tax rate."

Deputy mayor Anne Eadie agreed. "It's a tough budget, but we have to keep the tax-rate increase to two per cent."

Coristine said council must come up with some innovative and creative ways to deliver services at a reduced cost.

Couture questioned the $142,000 to PREDC, even though the corporation's situation has been altered, unfortunately, with the loss of executive director Gerry Taylor.

Council was told later that PREDC will be bringing its budget request to the Jan. 8, 2014, meeting.

Council also agreed to maintain $50,000 in community grants, rather than double it to $100,000.

As council began to lean toward having department heads look at more cuts to their budgets, Clarke noted that any changes would require cuts to services or increases in fees and changes.

Perhaps, as has been suggested, there should be no more free bag tags, and every bag of garbage would cost $2.50 to dispose of, he said.

Couture argued that if council starts thinking about cutting services for roads, perhaps it should look at cutting the physician recruitment cost first, since health care is not a municipal responsibility.

However, Clarke noted that Kincardine has a contract with its partners, including Bruce Power, to provide incentives for new doctors. "You could end up with unattended consequences. You have to think about the implications when you start to cut things from the budget."

Baumann said the major capital projects include:

  • Renovations to the municipal centre - $1.824-million
  • Construction of the Leachate Treatment Facility - $1.8-million
  • Exterior and interior restoration of the Tiverton water tower - $300,000
  • Paving of the downtown municipal parking lot - $292,000
  • Rehabilitation of the south pier - $275,000
  • Exterior restoration of the Kincardine water tower - $140,000
  • Concession 10 culvert replacement - $106,000
  • Browns Hill Bridge engineering - $101,000
  • Restoration to the foundation of the lighthouse - $50,000

Total high-priority capital project costs amount to $5.684-million, with $1.996-million funded out of
existing reserves and reserve funds, $1.8-million funded from debt, $1-million from potential grants, and the remaining $67,000 funded from the tax rate.

Other projects and initiatives include:

  • Inverhuron pavilion
  • Whitney Crawford Community Centre
  • Arts Centre renovations
  • Tourism information centre
  • Kincardine Minor Soccer
  • Lions Club Splash Pad
  • Airport Runway expansion
  • Municipal website re-design
  • Queen’s Lookout Trail expansion
  • Funding for Owen Sound Hospital
  • Kincardine Medical Clinic Reception Renovation

As council began to get bogged down in various projects, Craig recommended adjournment until staff can get more figures together for a future meeting.

At the end of the meeting, council had pared the six per cent back to just over a five-per-cent increase on the tax rate.

As the meeting became heated over whether council should continue to operate out of the current municipal centre, Roppel said there is no guarantee that the building will maintain tenants on the second floor, providing $92,000 per year.

'We have to operate the municipality out of somewhere," said Couture.

"How about a tent?" joked Roppel.

"We're not operating out of a tent," said Couture.

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Tuesday, December 17, 2013