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2011 Budget Presentation to Lake Country City Council
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LAKE COUNTRY THINKING FORWARD2010-2011
2011-2015 Financial Plan and 2011 Annual Budget
Process
Strategic Priorities and Corporate PlanStaff Submissions:
Base Budget Increases Operating Budget Increases Capital Projects – 5-Year Plan
First Meeting with Council – Big PictureDraft Budget Package to Council by January 7th, 2011Second Meeting with Council – Details of Budget and
Financial Plan – January 25th, 2011Annual Budget and Financial Plan Draft prepared by
StaffThird Meeting with Council for final deliberations (To be
rescheduled in February)
First Meeting with Council
Provide Council with the Big Picture in terms of Finances and account allocations
Show the alignment with Strategic PrioritiesProvide Council with comparables to quality of
lifeProvide Council with policy recommendations as
to: Options for tax increases Options for fee increases Options for reserve levels and replenishment Options for funding capital projects and long term
infrastructure deficit
Elements of Budget
Year End Results for 2010 (not available)Base Budget and Expected Variations for 2011Operating Service Increases (Supplemental Requests)Capital Expenses and 5-Year Capital PlanSurplus and Other Reserves (estimates)Proposed Budget, Tax Rates and Policy
Recommendations
Current Financial Situation - Revenues
Revenues 2010
Property Tax (Including Fire Levy) $7.91M
Parcel Tax $0.94M
Fees & Charges $6.30M
Other Revenues $6.53M
Proceeds from Borrowing $2.40M
Transfers from DCC Reserves $1.20M
Transfers from Statutory Reserves $1.70M
Transfers from Non Statutory Reserves $0.82M
Operating Surplus $0.10M
TOTAL REVENUES (Including Water & Sewer Funds)
$27.90M
Current Financial Situation - Expenses
Expenses 2010
General Operations $11.1M
Water Operations $2.1M
Sewer Operations $1.1M
Debt Repayments (Interest and Principal) $1.4M
General Capital Expenditures $3.3M
Water Capital Expenditures $6.3M
Sewer Capital Expenditures $0.8M
Transfers to Statutory Reserves $1.2M
Transfers to Non Statutory Reserves $0.6M
TOTAL EXPENDITURES (including Water & Sewer)
$27.9M
Comparison Revenues-Expenditures
Revenues 2010 Expenditures 2010
Property Tax (including Parcel Tax)
$8.85M Operating Expenditures
$14.30M
User Fees $6.30M Capital Expenditures
$10.40M
Other Revenues
$6.53M
Transfers from Reserves
$3.82M Transfers to Reserves
$1.80M
Borrowing $2.40M Debt Payments $1.40M
TOTAL $27.90M TOTAL $27.90M
Allocation of Property Tax and User Fees
Fund Revenue Expenditures Variance
General Operating $7.60M $11.06M $3.69M
Water Operating $1.70M $2.06M $0.36M
Sewer Operating $1.36M $1.13M $0.23M
TOTALS $10.66M $13.25M $2.59M
Fund Revenue Expenditures Variance
General Capital $0.30M $3.26M $2.96M
Water Capital $0.21M $6.16M $5.95M
Sewer Capital $0.03M $0.85M $0.82M
TOTAL $0.54M $10.27M $9.73M
Analysis 2010 Budget
Direct Revenue from Taxpayers:$15.15MTotal Expenditures: $26.17MGap funded from Other Sources: $11.02M1. The direct Taxpayers contribution is 58% of
our entire budget2. The other 42% comes from Grants,
Borrowing, Reserves, and Other Sources3. What does this mean?
1. Using more reserves2. Using more surplus3. Need to apply for more grants
Budget Sustainability
Establish a reasonable annual tax increase for the next 5 years
Establish reasonable annual fee increases for the next 5 years
Establish an annual reserve allowance to replenish our reserves
Establish targets for asset management and new capital projects
Establish targets for a sustainable surplus
2011-2015 Financial Plan and 2011 Budget
New Growth is estimated to be $150,000 (Revenue)
1% Tax increase is equivalent to $79,000The average residential assessed value in
Lake Country is $502,000The effect of a 1% tax increase on a
$100,000 of assessed value is approximately $2.75
The additional cost of a 1% tax increase to a taxpayer owning an average assessed value home ($502,000) is $13.80
Tax Increase in Perspective
1% Tax Increase to an individual owning a residence assessed at an average $502,000 represents the cost of a package of cigarettes plus a coffee at a convenience store;
In 2010, the tax increase was 3.48% or about $47 for the same taxpayer. In other words a dinner for two at a neighbourhood restaurant.
All this is a one time expense in July.The benefits the taxpayer receives for the
$47 a year are huge
Tax Rate Increases for the last 5 Years
2010: 3.48%2009: 3.93%2008: 4.90%
Election Year and Beginning of Recession
2007: 3.20%2006: 4.50%AVERAGE: 4.00%
Funding Reserves
Usually we set aside 4.5% of the total operating budget for reserves. Let’s see the numbers:
Year Amount
2010 @ 4.5% $355,865
2011 additional growth @ 4.5% $18,354
Total 2011 @ 4.5% $374,219
Extra 0.5% for 2011 $41,580
Total 2011 @ 5% $415,799
2011 Base Budget Increases
Base Budget is the current budget approved by Council for 2010
The Base Budget is subject to increases: Contractual Agreements External Agencies charging more for services (RCMP
for instance) Collective Bargaining/Salary increases Inflation
The Base Budget is also subject to possible reductions in revenue (charges/fees)
The estimated net increase of the current Base Budget is approximately $460,000
Tax Rate Increases for the last 5 Years
2010: 3.48%2009: 3.93%2008: 4.90%
Election Year and Beginning of Recession
2007: 3.20%2006: 4.50%AVERAGE: 4.00%
2011-2015 Supplementals
The question is: if just the base budget is going up $460,000, can we afford service increases?
What is Council expectation about services?
What are the factors that we should consider in order to introduce service increases?
Is it wise to cut services to make room for new services?
The estimated total for supplemental requests is $132,000
2011-2015 Capital Budget
The integrated Asset Management Program (IAMP) requires that we reach an acceptable level of revenue to fund for aging infrastructure
The acceptable level of funding to maintain current infrastructure conditions is an average of $4.2M a year (although ideally, in order to reduce the deficit, the funding should be an average of $6.4M)
In 2010 we allocated a total of $0.5M for capital projects
2011-2015 Capital Budget
The annual average funding needed in the budget to take care of the infrastructure deficit for roads and transportation is $2.2M
Water infrastructure will need an annual $3.5M
Sewer will need $80,000 a yearStormwater will need $150,000 a yearOther infrastructure will need $450,000
a year
2011-2015 Capital Budget
Municipalities our size usually fund capital projects with an amount of $1.0M a year from General Revenue Fund
Our budget should increase to $1.0M in 2011 to begin meeting the targets of our IAMP (this is a $0.7M increase compared to 2010)
The Sewer Capital fund needed in 2011 is $1.15M
The Water Capital fund needed in 2011 is $0.57M
Proposed Policy Recommendations - 1
That Council direct staff to prepare the 2011 Budget and the 2011-2015 Financial Plan, based on the following principles: Maintain the current level of service provided to the
residents and provide for necessary increases of services in areas identified in the Corporate Business Plan and in Council Strategic Priorities;
Reduce the current asset management maintenance gap by consistently providing the necessary funding to improve and maintain existing infrastructure
Maintain an acceptable level of reserves by balancing the use of reserve funds for projects with an adequate replenishment of reserves by adding an extra 0.5% annually to the current 4.5% of the total property taxes for the year
Proposed Policy Recommendations - 2
That Council direct staff to prepare a 2011 Annual Budget based on the principles guiding the preparation of the 2011-2015 Financial Plan and with the following parameters: A 4.0% tax increase to provide for inflation increase and to
maintain the current level of services provided to the community. This percentage is also to provide sufficient funding to accomplish the strategic objectives of Council;
An allocation of 5% of the total property taxes to replenish the Capital Works Reserve;
An allocation of $1.0M from General Funds for capital expenses in order to deal with our aging infrastructure needs
An adequate water and sewer fee increase, if necessary, to: Balance the Water and Sewer operating accounts; Increase the sustainability of water and sewer infrastructure
Alternative Recommendation for 2011 Budget
That Council direct staff to prepare three budget options to be considered at the January 25th Budget meeting