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January 14, 2019
Long Range Financial Plan
Presented by:
Ken Nix
Commissioner of Corporate
Services and Treasurer
Context/Current State
May, 2018
Budget Preparation and Review
Feb 19
Budget Deliberation
s and Approval
Feb 11
Budget Overview and
Public Input
Jan 21
2019 Budget Target
Jan 14
Long Range Financial
Plan
Feb 4 Proposed Budget Released – Budget Book
Builds on Dec. 10, 2018
Council Orientation
Context for Council
2019 Budget Road Map
and Budget Highlights Deliberations
Page 2
Page 3
• 10 year planning horizon and update each year
• Considers proposed service delivery and
affordability
• Significant Strategic Priorities not known/fully
developed when budget prepared: Council
Goals, strategic plan, organizational design
Long Range Financial Forecast
Context/Current State
Page 4
• Translate Council’s Goals, strategic
priorities in terms of services, and service
levels into $$ and ability to deliver
• Identifies challenges based on proposed
service delivery
• Allows Council to strategically balance
current budget decisions while preparing
for the future
LRFP and Budgets - more than taxes
Context/Current State
LRFP and Financial Policies
Economic and Environmental
Factors
Infrastructure, Services and
Quality Levels
Financial Condition/Sustainability
Council Goals
Strategic Plan
Community Input
Strategic Tools /Guidance
Business planning
Long Term Perspective
External Influences
Outside of Council’s
Control
Page 5
Context/Current State
Financial Condition & Sustainability
Page 6
Source 2018 BMA Study
Financial Condition Good Now
Many unknowns
Sustainability
Vulnerability Flexibility
Context/Current State
• Asset Management
• Significant Growth – growth does not pay for growth
• Costs increasing more than inflation
• Reliance on taxes as revenue source, other revenues not keeping
pace and decreasing non-residential share of taxes
• Focus on modernizing service delivery – SDR, CITSP, Succession
Planning etc to meet expectations
• Staff capacity to deliver
• Provincial support ?– transfer payments primarily regional
implications but will effect Whitby taxpayers; no new revenue tools;
Development Charge Revenue risks
• Many unknowns outside of Council’s control (economy, tariffs, GM,
climate change…)
Ongoing Challenges
Page 7
Context/Current State
2018 Long Range Financial Plan
Long Range Financial Plan
Page 8
Page 9
Long Range Financial Forecast Impacts of Inflation, Growth, Services and Capital Programs into Tax Impacts.
Long Range Financial Plan
Note: Council’s Goals and Corporate Strategic Plan will impact future forecasts
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
2019 Model Average Tax Increase for Council term – 2019-2011
2019 Average – 10 Year
2019 Long Range
Financial Plan
2018 Average – 10 Year
• How was this achieved?
• SLT Participation/Input/Agreement
• Focus on Capital requirements and impacts
• Reduced/deferred capital growth program
• Limited new projects or resources
• Re-scoped, phased projects
• Changed policy assumptions
Long Range Financial Forecast
Long Range Financial Plan
Page 10
Asset Type 2018 Capital Growth Forecast ($000’s)
Draft 2019 Capital Growth Forecast ($000’s)
Change ($000’s)
Roads and Related 182,270 144,313 (37,597)
Parks 49,155 29,723 (19,432)
Facilities 95,051 94,270 (781)
Studies 14,508 12,545 (1,963)
Fleet and Equipment
27,369 27,081 (288)
Total 368,353 307,933 (60,420)
Ten Year Growth Forecast Reduction
Long Range Financial Plan
Page 11
Highlights of Significant Project Changes Long Range Financial Plan
Project/Change $
Various Road Projects – pushed out of ten year forecast eg Columbus Rd Widening/Extension $7.9M, Ashburn Rd Reconstruction $5.6M, Cochrane Reconstruction $5.8M
<$48M>
Various Facility Projects - pushed out of ten year forecast eg Station Gallery Expansion $1.5M, Fire Training Complex $2.8M
<$4.8M>
Library Branch Expansion – project removed and incorporated in Whitby Civic Centre Project
<$4.6M>
Whitby North Sports Complex – project scope/budget reduced to $26.6M and timing shifted to 2022-2024
<$19.2M>
Whitby Civic Centre Project – project scope/budget increased to $50M $28.3M
Various Waterfront Parks Projects – pushed out of ten year forecast eg Victoria Fields Urban Park $7.8M, Dupont Lands Development $3.8M
<$11.6M>
Page 12
Long Range Financial Forecast Long Range Financial Plan
Component 2018 Model 10 Yr avg
2019 Model 10 Yr avg
Asset Management Contribution 1.6% 1.0%
Asset Management due to Growth - New Infrastructure
0.7% 0.5%
Growth Reserve Contribution 1.8% 1.0%
Operating Cost Increase for Growth 1.4% 1.1%
Operating Cost Increase for Inflation 2.1% 2.4%
Other 0.1% 0.2%
Revenue from Growth (2.5%) (2.2%)
Overall Tax Increase 5.2% 4.0%
Page 13
Page 14
Assumptions/Risk
Future – Cautious….
Many unknowns
Sustainability
Vulnerability Flexibility
Not at inflationary
tax increases
Very Limited Many
unknowns
• Assumptions/Risks: Development Charge Collections Shortfall
• Development Charge Background Study vs Actual Rate of Growth
DC Revenues vs. Projections
Assumptions/Risk
$-
$2
$4
$6
$8
$10
$12
$14
$16
2016 2017 2018
Mill
ion
s
Residential DC Collections
DC Study Actuals
$-
$1
$1
$2
$2
$3
$3
$4
2016 2017 2018M
illio
ns
Non-Residential DC Collections
DC Study Actuals
Page 15
• One-Time Reserve Fund Overcommitted
• Actual non-statutory DC Exemption Costs for the Town greater than estimate in
the DC Background Study
DC Exemptions vs. Projections
Assumptions/Risk
$-
$1
$2
$3
$4
$5
Residential - DC Study (16-25) Residential - Actual Cost (16-18) Non-Residential - DC Study (16-25) Non-Residential - Actual Cost (16-18)
Mill
ion
s
DC Study Non-Stat Exemptions (2016-2025) 2016 Actual Cost 2017 Actual Cost 2018 Actual Cost
Page 16
• Growing Asset Management Infrastructure Gap
• 10 year MAMP Requirement vs Current 10 year Capital Asset Management
Budget Forecast
Long Range Financial Forecast
Assumptions/Risk
$-
$50
$100
$150
$200
$250
$300
$350
$400
$450
2019-2028
Mill
ion
s
Current 10 Year capital budget asset management investment 2017 MAMP 10 year requirement (inflated)
Page 17
• No funds-Limited Flexibility
• Given Community Improvement Plan (CIP) upfront funding and
other community and economic initiative funding in 2018, the
projected 2018 year end uncommitted reserve fund balance
$0.5M.
• The only ongoing funding source for this reserve fund are loan
repayments (Library DC portion and Building Permit) which are
scheduled to end in 2022.
• Any future balance is considered committed for future community
and economic initiatives in the form of DC by-law discretionary
exemptions (office, industrial, special care)
One time reserves fully committed
Assumptions/Risk
Page 18
• Long Term Debt
Debt Capacity within policy
Assumptions/Risk
The dark blue line is the forecasted 12% internal net revenue threshold, based on assumed growth
$-
$5
$10
$15
$20
$25
$30
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
Mill
ion
s
Debt Capacity: Total Annual Debt Payment to not Exceed 12% of Net Revenues (FIR)
Total Debt Payments including Internal Debt 12% of Net Revenues (Policy)
Page 19
• DC revenue shortfalls affect debt capacity
DC Debt within policy
Assumptions/Risk
$-
$1
$2
$3
$4
$5
$6
$7
$8
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
Mill
ion
s
Debt Capacity: Total Annual Debt Payment Funded from Development Charges to not Exceed 25% of Forecasted DC Collections
Total DC Funded Debt 25% of Average as per Policy
Page 20
• Residents say quality of life in Town is good and are satisfied
• Value services for tax dollars –comfortable with taxation levels
• Most would not reduce service levels • Focus on services not taxes • Results of community survey provided in more
detail in Report CAO 02-19
Town Provides Value Affordability/Expectations
Page 21
Affordability
3% of Total Tax Dollars Goes to Town of Whitby The Town is responsible for collecting property taxes on behalf of the Region of Durham and the School Boards.
*Source: AMO
Share of
Property Tax Bill
Region of Durham 53% of 9% = 5%
Town of Whitby 33% of 9% = 3%
School Board 14% of 9% = 1%
Affordability/Expectations
Page 22
Durham Lakeshore 2018 Property Tax
Affordability/Expectations
$-
$1,000.00
$2,000.00
$3,000.00
$4,000.00
$5,000.00
$6,000.00
$7,000.00
Pickering Ajax Whitby Oshawa Clarington
Lower Tier
Education
Region
Based on the 2018 average assessment value of $437,000
Page 23
Pro
pe
rty T
axe
s
Total Taxes as % of Household Income Affordability/Expectations
2014 and 2018 BMA Municipal Study: Average Residential Taxes as a % of Household Income
Page 24
3.87% 3.64%
4.60% 4.05%
3.68%
-1.00%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
Whitby GTA Oshawa Pickering Clarington
2018
2014
3.95%
4.78%
3.82%
4.26%
3.64%
GTA Comparable Property Tax
Affordability/Expectations
$-
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
2018 Municipal Study: Senior Executive Home GTA Comparison (2 Storey 4 or 5 bedroom home 3 bathrooms main
floor family room plus atrium. Full unfinished basement, attached 2 car garage approx 3000 square feet)
Page 25
Pro
pe
rty T
axe
s
Many Municipalities recognizing new reality for sustainability
Affordability/Expectations
Page 26
Municipality 2019 Budget Increases
Burlington N/A - Overview Jan 24, 2019
Oakville 5.3% before assessment growth, 3.1% net of assessment growth
Milton 7.61% (including service level reductions of 2.29%)
Caledon 5.79%
Mississauga 4.8%
Richmond Hill Not known
Pickering Draft at 2.2%
Ajax Draft Range 3.75% - 4%
Oshawa Not known
Clarington Draft Range 3.8% - 5%
• Requires long term planning
• Strategic choices about services, levels of service and infrastructure
• Service/service level and infrastructure decisions impact both
operating and capital costs
• Need to balance both the short and long-term needs and risks
• Financial Sustainability needed in order to achieve Community’s
Vision
• Good financial planning aligns budget with Corporate Strategy to
achieve Council’s goals
• Financial sustainability is not cheap in a growth environment
Financial Sustainability
Sustainability/Choices
Page 27
• 1st year of new Council term – Strategic
Priorities (Council Goals, Corporate Strategic
Plan, Community Input, Restructuring)
• Balance affordability with services/infrastructure
in both the short and long term while addressing
imminent growth pressures
2019
Sustainability/Choices
Page 28
• Starting pressures
• Inflation, asset management, growth
• Annualization of previous decisions and
impacts
• Resources – Staffing - capacity gap
• Modernized Technology and service delivery
• Legislation (prompt payment, cannabis, DC
charges)
2019 Immediate Challenges
Sustainability/Choices
Page 29
• Unknowns & External influences
• Pause Year
• Plan and evaluate options:
• Services/Service Levels, Revenues/Fees
• Business plans to meet Council’s Goals and
strategic priorities
• Reorganize structure
• Create some flexibility to deal with
unknown and future
2019 Approach
Page 30
Sustainability/Choices
January 14, 2019
Questions?
Page 31
