Budget discussion sees preliminary rate reduced
by Sandy Lindsay

January 26, 2016

Town Council

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Kincardine's first draft budget presented in December saw a proposed 10 per cent tax rate increase that included a three per cent capital tax levy to address that infrastructure deficit.

Then on January 25th, after considerable debate, that rate was reduced to 9.1 per cent with a blended rate (County & Education factored in) of four per cent (4.03), although Education is not yet in.

An analysis presented, indicates that, when it comes to household income, property values and net financial assets per capita, Kincardine ranks high on the scale.

While this may indicate a strong economy, it also is a detriment when it comes to applying for Provincial grant assistance for capital projects when the numbers indicate that property taxes as a percentage of income are too low, according to the Province.

"As far as I am concerned," said Councilor Jacqueline Faubert, "how the government looks at the average household income of $113,237 is skewed.  I am worried about those whose incomes are fifty per cent of that and even lower at below $30,000."

Deputy Mayor Laura Haight said however that those people are taxed at a lower rate and they also get a property tax rebate.  "People are demanding services," she pointed out, "so it is dangerous to look at just the low end when there are Federal and Provincial assistance available."

Mayor Anne Eadie said that there is a recognized need in the area for more social services.  "While there are those with high incomes, we are a bit polarized."

"Let's not forget older people in their homes," said Council Gord Campbell.  "There are some who are having problems paying their taxes and are even finding it difficult to stay in their own homes."

Councilor Randy Roppell asked the Treasurer Roxana Baumann, what would be available as a surplus for reserves.  "At a very preliminary guess," said Baumann, "there may be $200,000.  These funds have always been put into the Contingency Fund but last year there was a significant deficit due to the Bruce Telecom potential sale and legal fees that were covered by that Fund."

She added that the Fund currently sits at $1.5 million.  "It would be prudent to continue to grow this Fund for unforeseen circumstances that would not be good to place on the taxpayers. "

 Roppell asked if it would be advisable to put funds back into the Contingency Fund if they were recouped from Bruce Telecom. 

"Yes," said Baumann.  "We used those funds for a lot of capital projects as we had nowhere else to get that money."

"Our responsibility is the people of Kincardine," said Councilor Maureen Couture.  "The Province has been helping out municipalities for 20 years and there is no money left.  I know it's hard on our taxpayers but the figures show we do have some room on our property tax to move up a little more."

"Maybe we have to consider if this municipality can afford to have a healthy Lifescycle Fund and Contingency Fund," said Roppell. "Can we afford one without the other because of issues beyond our control? We have to look at our reserve fund and what we can and cannot afford."

Baumann pointed out that even if Kincardine were "lucky enough" to get funding from the government, the municipality would still have to fund one third of a project.  "We would not be able to fund any projects like bridge repairs."

A total of $1.9e million was included in the budget as a transfer to the Lifecycle Reserve made up of the 2015 base amount of $935,000, an anticipated Bruce Telecom dividend of $600,000, a three per cent Asset Management Policy (APM) levy at $330,000 and the 2016 estimated dividend from Westario of $65,000. 

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According to the draft budget however, there had been funding of 10 high-priority capital projects included  for $1.319 million therefore , the next transfer to the Lifecycle Reserve would only be $611,000.  The draft capital budget also included eight high-priority projects that remain unfunded at a total of $7.458 million.

While it was pointed out that reducing the transfer to the Lifecycle reserve would lower the tax rate increase 'in the short term', it would not:

  • support a long-term financial sustainability model
  • be sufficient to fund existing 2016 capital program
  • fund future infrastructure requirements
  • position the municipality to be eligible for future Federal gas tax funding
  • uphold the principles contained in the Municipality's Asset Management Policy (APM)

Total Operating Budget revenue in 2015 was $23million and this year, 2016, it is anticipated to be almost $25million ... an 8.1 per cent increase.  On the expense side, there has been an increase of $879,216 or 4.0 per cent.

When it comes to Capital projects, the municipality was looking at over $14million before deliberations.

Mayor Eadie pointed out that there would be dividends of some $600,00 realized from Bruce Telecom.  "That will be divided into the Capital and the Operating budgets, with any excess being invested back into Bruce Telecom.  That will bring the Operating budget down to six per cent." 

At the end of the day, as it stands until the next go around on February 8th, the minicipal tax rate increase stands at 6.37 per cent with a blended rate of 4 per cent.  Therefore, according to Baumann, the average assessed home of $243,000 will be looking at a tax increase of $82/year.

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Tuesday, January 26, 2016