Saugeen Shores Struggles with their budget

Town Council

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Like many municipalities all over North America, the Saugeen Shores Mayor, Council and Staff have been working to contain costs and keep tax levy increases to single digits.  The effects of downloading have increased because it is more and more important to go through the costly and time consuming grant process, which is vital for many of the infrastructure projects proposed  After the original draft budget came in with a 10% increase, a goal of a 3% was decided upon by Council and Staff.

The Saugeen Times will attempt over the next few weeks to go into some of the items that have been cut or deferred and also some of the expenses that have been maintained.  The staff at the Town has been gracious and forthcoming with information.  A  long public meeting was held in this process that the Saugeen Times attended.  It was not well attended by the public.

Overall Cuts

The reader should keep in mind that the Town of Saugeen Shores maintains a healthy cache of reserves (see below).  These are like 'cookie jars' that are set aside for a rainy day need.  Every good Municipality or large business does this.  They sometimes do not jump off a balance sheet for the casual reader.  Therefore, we will try to define them in a non-spread sheet form.

In order to keep the increase in levy to 3% a number of projects have been put on hold and other funds have been moved around to achieve the reductions.   Some funds have been moved from reserves to help keep the increase down.

The tax levy last year was budgeted at $7,496,103 and it was proposed to be $8,34,666.  Keep in mind that the Town gets revenue from a lot of sources like grants, rentals, charges at the harbour and the like.

After deliberation the increase was pegged at about 3%  or at a total of $7,932,137 for the tax levy.  This number was computed by adding growth dollars of $205,001 and then working to achieve the 3% increase ⁽⁴⁾

The original Draft budget had some items that could be deferred or cut.  Some of them are:

• The Police Department's physical expansion that was estimated to be $75,000 was deferred.
• Laptops for Council at $15,000 was deferred.  It appears that many of the Council members could have or do have their own personal Laptops ⁽¹⁾ 
• The Airport budget that had remained at $19,500 for 3 years was cut to $15,000
• The new medical building in Port Elgin has a 20 year debenture of $120,000/year and the first payment was set back by a year ⁽²⁾ The building cost of about $1,500,000 has a debt load of approximately $120,00/year for twenty years or $2,400,000 current cost plus expenses.  How this deferral was accomplished is not clear at this writing.
• The pool study which is ongoing had an original cost of $60,793.  It was cut to $45,793 for a $15,000 reduction. ⁽³⁾

Movement from Reserves

Subject to audit as of December 31st, 2008, the Town of Saugeen Shores had an operating surplus of approximately $500,000 for the year which is a good number relative to the scope of the Town obligations.  In order to reduce the anticipated levy increase from about 10% to 3%, the staff recommended a transfer of $198,957 of the $500,000 to get to 3% accompanied by the above deferrals.  That is, instead of moving the $500,000 directly to the reserve, only part of it will be moved.

The Town has a total capital budget of about $17,864,894 including water and sewer.  Much of the revenues come from successful applications for grants.

The Town has a healthy reserve.  It is estimated that at the end of 2009 it will be $5,502,182 which is a reduction year over year of $1,004,149.  This shows that the reserve is not growing, but it did accumulate in the past.  That is, the Town has had to dip into reserves to achieve the goals of the budget as proposed and achieve an increase of 3%

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16/03/2009 12:00 AM

Editorial Comments and Clarifications:

• The inclusion of Development charges which went into effect this year helped.  It garnered over $500,000, but the reader should note that these funds are 'earmarked' for specific tasks and much of the impact is not felt on a single project as some goes to water and sewage and others go toward things like recreation.  For example, although Wal-Mart paid a large development charge their contribution is earmarked to things that really support the existence of the building by way of infrastructure... water, roads, sewage....  Things like recreational charge help from development charges comes in large part from home development.

The Saugeen Times wrote over 20 articles on development charges.  A good breakdown in is developed in one past article..  Click here for details  It is clear that Council was wise approving them although their impact is minimal as yet.  Only one Council member voted against them.

• The costs of Medical Care in Saugeen Shores really should be a  budget line item.  It does show up in part as a Medical Building item, but the total cost is spread across a lot of other projects.

Saugeen Shores like many communities in Canada is in the Health Care Business.  OHIP has created a need for communities to support in some part their hospitals, doctors and doctor recruitment.  If they don't, then development slows and people do not seek to move to the community.  It's a shopping item for home buyers as are schools and recreation.

Medical costs rise every year and they should be laid out as a department like community services, police and fire and other line items.  Rather than showing the items as projects, they should be bundled as a real department of the Community with somebody responsible for it.  It could be handled better on that basis and the reporting and costs would be easier.

Notes

⁽¹⁾ The Saugeen Times attends every Council Meeting and has not seen any use of personal Laptops at the meetings.  If some of the documents that are presented were available in up to date form, then they could be useful to both the Council and the Public.  The Town Web site is on average behind what is printed. 

 ⁽²⁾ A debenture is a loan that is unsecured.  That is, it is not guaranteed by real property or assets, but only by the stature and reputation of the organization borrowing the money..  In a debenture there are no asset or set of assets that will transfer in case of default.

⁽³⁾ A new pool has been anticipated for the past few years due to the age of the present one.  The Blue Water School Board owns the present one, but have said that they do not wish to refurbish the old one or build a new one.  The school board debt including interest is an astounding $105,000,000 so they don't have extra money for pools and pool maintenance.

⁽⁴⁾ New levy is computed from old levy plus growth dollars and then the 3%  is computed.  That is, $7,496,103/$7,701,104 is about .97 which gives the target 3% increase

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