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2020 DRAFT

T

a

x

Supported Operating Budget

and

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Section Pages Treasurer's Report

Treasurer's Report ……… 1 - 47 Net Levy Summary ……… 49 - 52 Tax Supported Summary ……… 53 - 54 Finance and Corporate Services ……… 1 - 75 Non-Program ……… 1 - 5 Public Works Administration ……… 1 - 7 Transportation ……… 1 - 47 Environment ……… 1 - 11 Community and Planning Services ……… 1 - 86 Health Services ………..……… 1 - 34 Airport ……….………...………..…… 1 - 9 Sources of Financing

Capital Reserve Funds ……… 1 - 26 Development Charge Funds ……… 27 - 28 Operating Funds ……… 29 - 38 Other Sources of Financing……… 39 - 40 Fund Purpose and Source of Funding……… 41 - 43 Appendices

A Full Time Equivalents ……… 1 - 2

The District Municipality of Muskoka

2020 Tax Supported Operating and Capital Budget

Index

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To: Chair and Members Muskoka District Council

From: Julie Stevens

Commissioner of Finance and Corporate Services

Date: February 7, 2020

Subject: 2020 Draft Tax Supported Operating Budget and Capital Budget and Forecast Report: 2(2020)-1

_________________________________________________________________________________________________________ Recommendation 1

THAT the 2020 Report on Excluded Expenses – Ontario Regulation 284/09 regarding expenses excluded from the 2020 Draft Tax Supported Operating Budget and Capital Budget and Forecast, as included in Report 2(2020)-1, be approved.

Recommendation 2

THAT The District Municipality of Muskoka’s 2020 Draft Tax Supported Operating Budget and Capital Budget and Forecast dated February 7, 2020, for the General Tax Supported Services be endorsed and forwarded to Muskoka District Council for final approval.

Origin

Section 289 (1) of the Municipal Act requires The District Municipality of Muskoka (District) as an upper-tier municipality to annually prepare and adopt estimates required during the year for the purposes of the municipality, including amounts sufficient to pay all debts of the municipality falling due within the year, amounts required to be raised for sinking funds and amounts required for any of the upper-tier municipality’s local boards. Council’s review of the attached 2020 Draft Tax Supported Operating Budget and Capital Budget and Forecast represents formal compliance with this section of the Act.

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Summary

The 2020 Draft Tax Supported Budget, as presented, has a net levy increase over 2019 of 2.79% which is lower than the approved guideline of 3.0%. Taking into consideration estimated assessment growth of 1.55% in 2019 and shifts in weighted assessments, the effective tax rate for 2020 is proposed to be 1.22% higher than the tax rate in 2019. The impact on the tax rate and the taxes paid by an individual property owner will vary depending on the property’s assessment applied by the Municipal Property Assessment Corporation (MPAC) relative to the average assessment and to the 4-year phase-in provisions.

The following table shows that the estimated annual tax increase on a typical residential property assessed at $300,000, before any adjustments as a result of the reassessment, is $10.45. As shown in the bottom portion of the table below, $3.11 or 30% of the proposed annual increase in taxes relates to the net impact of reductions in Provincial funding, while the increase in reserve contributions to fund the rehabilitation and replacement of infrastructure represents $4.96 or 47%. This draft budget includes increases to all capital reserves at the guidelines presented in the District’s asset management plan. All other budgetary increases represent $2.38 or 23% of the proposed annual increase.

In June 2019, staff recommended a guideline for the 2020 Tax Supported Operating Budget that would hold the tax levy increase to 4.5%. Council approved a budget guideline of 3.0%.

The following table breaks down the proposed budget into four different categories. Staff performed a detailed review of services in an effort to contain tax levy increases. As a result, the base budget net levy increase has been held at 0.42%, for the proposed levels of service. Provincial funding has decreased significantly in 2020, particularly in the Community and Planning Services and Health Services departments. Some of these reductions have resulted in reductions in transfers to others and program services. However, some services have been maintained at current levels and resulted in a net levy increase due to these funding cuts of just over $633,300 or 0.84%. Staff are recommending that contributions to capital reserves be increased from $27.4 million to $29.6 million. This increase of just under $1,002,600 represents a net levy increase of 1.32% and will be used to fund the rehabilitation and

2019 Tax Rate

2019 Taxes

2020 Effective

Tax Rate 2020 Taxes

% Increase (Decrease)

$ Increase (Decrease)

0.00285850 $857.55 0.00289332 $868.00 1.22% $10.45

$3.11 $4.96 $2.38 $10.45 2020 Budget Impact on a Residential Property Assessed at $300,000

Portion attributable to the following:

Net Impact of Reduction in Provincial Funding Increased Contributions to Infrastructure Reserves

All other costs Total Increase

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replacement of infrastructure throughout the District. Lastly, the additional requests, under the 2020 Service Level Changes (SLC) column, have increased the net levy by 0.21% to arrive at the 2.79% net levy increase, before the impact of assessment growth.

How was the Net Levy Achieved?

Staff have proposed a net levy increase of 2.79%, including the impact of increasing the contributions to reserves at the guideline within the District’s Asset Management Plan. If the infrastructure reserve increases are removed from this figure, the combined total of all other adjustments is 1.47% which is lower than the 12-month average Consumer Price Index for Ontario of 1.9%. Staff

performed detailed reviews, including a peer review, which considered trends in actuals compared to prior years’ budgets, cost curtailment goals within various departments and maximizing revenues wherever possible. In addition to the items highlighted in the following table, over $500,000 of additional cuts were made during the final peer review by senior management in order to reduce the net levy impact without negatively impacting staffing or service levels. The draft budget provides the necessary resources and

finances to allow the District to:

 Fulfill its existing contractual obligations;

 Maintain legislative compliance;

 Maintain the financial position of the Corporation and increase the level of its infrastructure reserves;

 Maintain or improve current service level standards for continuing programs;

 Address certain emerging needs; and

Total Operating Costs $101,455,252 $101,611,687 (1,094,710) $804,224 $101,321,201

Total Finance

Charges/Reserves 27,404,393 28,731,158 (31,372) 1,002,593 (82,086) 29,620,293

Total Net Internal Service

Charges (3,163,271) (3,391,587) 3,216 (12,250) (3,400,621)

Total Expenditures 125,696,374 126,951,258 (1,122,866) 1,002,593 709,888 127,540,873

Total Revenues (49,904,424) (50,842,157) 1,756,202 (550,511) (49,636,466)

Total $75,791,950 $76,109,101 $633,336 $1,002,593 $159,377 $77,904,407

Year-over-Year $ Increase $317,151 $633,336 $1,002,593 $159,377 $2,112,457

Year-over-Year % Increase 0.42% 0.84% 1.32% 0.21% 2.79%

2020 Total Budget 2020

Service Level Changes 2019 Revised

Budget

Net Provincial

Funding Reduction

Infrastructure Reserve Increase 2020

Base Budget

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 Work towards the achievement of the Corporation’s approved Strategic Priorities.

Some significant decisions have been incorporated into the proposed budget. The following table highlights these decisions and the net levy risk.

Department Budgeted Item Rationale Page

Reference Finance and

Corporate Services

Police Services:

The Court Security and Prisoner Transportation grant from the Province has been increased to the 2019 level at $413,931.

Tax levy risk: If the grant is eliminated, the impact is 0.55%.

The Court Security and Prisoner Transportation grant from the Province is utilized to offset the costs to provide these services in both the Provincial Offences and Criminal Courts in Muskoka. The 2020 costs associated with these services are $648,664. This program has been under review since 2018 and there is no

additional information about the 2020 funding allocations. There is a risk that this program could be reduced or eliminated which would result in an unfavourable variance of up to $413,931.

FCS 71

Engineering and Public Works

Transportation - Roads:

The net levy budget for all Transportation – Roads divisions, excluding the

contribution to reserves, is $9,602,557, which represents an increase of $93,674 compared with the prior year budget.

Tax levy risk: 1.69%

Staff increased the overall net levy for

Transportation – Roads, excluding reserves, by $93,674 or 1.0% which reflects the six-year average of actual or projected costs incurred. If costs in 2020 are consistent with the projected results for 2019, which is expected to be a very high cost year, there will be an unfavourable variance of approximately $1,280,000.

Conversely, if costs in 2020 are consistent with the results in 2015, which was a lower cost year, there will be a favourable variance of $788,000.

EPW 5

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Department Budgeted Item Rationale Page Reference Community and

Planning Services

Ontario Works Program Summary: The current budget assumes 100% Provincial funding similar to what was received in 2019.

Tax levy risk: Limited as staff will reduce program expenditures to avoid a net levy impact.

Grants from the Province have been maintained to reflect the current administration contract. In October 2019, the Province announced a funding reduction of $200,000 prorated for an impact of $150,000 in 2020. At the same time, District has submitted its proposal to be part of the prototype Service System Manager and Service Delivery Agent with a municipal consortium for Muskoka – Kawarthas. Once the successful proponent for this prototype delivery model is selected, staff will bring forward a budget amendment. Whether successful or not, staff plan to mitigate the $150,000 Provincial funding reduction by related decreases in program expenditures.

CPS 61

Services or Program Change Options for Council Consideration

Staff have proposed a budget increase of 2.79% which is 0.21% below the approved guideline of 3.0%. In prior years, staff have provided service or program change options for Council’s consideration to increase or decrease the proposed net levy within the draft budget. Given the number of service transformations underway and grant programs that are currently under review that could be reduced or eliminated, a list of service change options has not been created at this time.

Although reductions were made by staff to achieve the proposed increase of 2.79%, should Council want to consider further reductions to the budget, it is likely that the proposed service levels will be reduced. At the request of the various Standing

Committees, staff can have this information available for review at the Committee of the Whole meeting scheduled for February 7, 2020.

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Analysis

The accompanying table summarizes the major

contributing factors behind the year-over-year net levy increase as presented in the budget

binder.

Subtotal $

Provincial Funding Reductions

Ontario Municipal Partnership Fund Grant (Grant reduced 15%) 58,070

Affordable Housing (elimination of the Investment in Affordable Housing program and reduced

allocation from Ontario Priorities Housing Initiative (OPHI)) 603,800 Homelessness (net impact of a reduction in one funding envelope and increase in another) 37,905 Ontario Works Programs (primarily elimination of Addictions Services Funding, partially offset with

minor increases) 68,925

MED Childcare Service Agreement (reduction in ongoing funding) 260,433

MED Childcare Service Agreement (elimination of one-time capital grant) 36,413

MED EarlyON (elimination of one-time capital grants) 205,612

Paramedic Services - Community Paramedicine (elimination of funding effective April 1, 2020) 48,028 Paramedic Services - Base Funding (elimination of inflation factor in grant calculation) 102,100

Health Link (elimination of funding effective April 1, 2020) 171,000

Pines Long Term Care funding 163,916

Affordable Housing (reduced transfers to others to offset Provincial funding reductions) (603,800) Affordable Housing (continued funding administration of Provincial program from reserves) (34,235) Homelessness (reduced operations to offset net Provincial funding reductions) (37,905) MED Childcare Service Agreement (reduced operations to partially offset net Provincial funding

reductions) (257,488)

MED EarlyON (reduced operations to partially offset net Provincial funding reductions) (189,438)

Increase Transfer to Roads Reserve (5.0% as per Asset Management guideline) 839,502 Increase Transfer to Reserves at 1.97% Asset Management guideline (Environment, Fleet,

Corporate, Ambulance, Pines, Social Housing, and Airport) 133,865

Increase Transfer to Port Carling Locks Reserve (to fund ten-year capital program) 29,226

Finance and Corporate Services (within Corporate Administration and Human Resources) 148,477

Engineering and Public Works (within Design and Survey) 54,233

Community and Planning Services (within Affordable Housing and Childcare with all positions added

funded from eligible grant programs or contributions from reserves) 0 Health Services (within the Pines Long Term Care and Health Strategies and Initiatives) 47,883 Airport (additional revenue anticipated to exceed additional proposed resources) (91,216)

Police Services (primarily for Court Security and Prisoner Transportation grant increase, partially

offset for a reduction in transfer from reserves) ($121,785)

Health Unit Requisition (to reflect reduction in Provincial funding resulting in higher municipal

contribution) $79,348

Property Assessment Services (MPAC Service Contract) 4,700

354,888

Total Increase (Decrease) $2,112,457 Other Year-over-Year Inflationary and Departmental Adjustments

Contracted Services

(37,737) 2020 Budget Increases (Decreases)

Investment in Infrastructure through Capital Reserves

1,002,593

Levy Impact of Service Level Changes by Department

159,377 $1,756,202

Expenditure Reductions to Mitigate Provincial Funding Cuts

(1,122,866)

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As shown in the table, there are a few main factors that contributed to the total levy increase of $2.1 million projected for 2020. First, the reduction in provincial funding is significant at $1.76 million and is concentrated in Affordable Housing, Childcare and Health related funding. The impact of some of the funding reductions has resulted in an increase to the levy as services were maintained at current services levels. This is particularly true for Health Services for The Pines Long Term Care Home (The Pines) and base Paramedic Services. In addition, staff has maintained services for Community Paramedicine and Health Link, although these programs are discretionary and could be eliminated, as directed by Council. Staff maintained these services as we see benefits for the care of complex client cases and the broader Health sector. Staff will review the continuation of these programs in 2021 once the Ontario Health Team is created and there is clarity regarding the availability of funding. The District Chair has sent a letter to the Province advocating for this funding to be reinstated which would reduce the impact on future levies, if successful.

Some of the Provincial funding reductions have resulted in a corresponding reduction in the District’s transfers to others or program costs in order to mitigate the impact. These mitigations are shown in the second grouping on the table and total a reduction in net expenditures of $1.1 million or 64% of funding cuts. These are primarily cuts in payments transferred directly to proponents for Affordable Housing projects and programs, Homelessness and EarlyON and reductions in program services for Childcare. The net impact of these first two sections is a levy increase of $633,336 which ties back to the second table in this report.

The next largest impact on the levy in 2020 is related to the District’s continued investment in Infrastructure renewal through

increased contributions to reserves which fund the 10-year Capital Forecast. The contributions to capital reserves are increasing by just under $1,002,600 from last year and reflect increases in line with the District’s asset management plan of 5% for the Roads Capital Reserve, 7.1% for the Locks Reserve and 1.97% for all other Tax Supported Capital Reserves. The Capital financing section later in the report will highlight that 96% of the District’s Capital program is financed by reserves and as such, continued investment is critical for financial sustainability.

The total net levy increase for service level changes is $159,377 and these changes are highlighted in more detail in the next section. Contracted services for Police Services, Property Assessment and the Health Unit are decreasing year over year by $37,737 or

0.05%. The total cost for OPP policing, net of the grant for Court Security and Prisoner Transportation (CSPT) is decreasing by $121,785, primarily due to an increase in the CSPT grant allocation of $188,902. This impact is partially offset by an increase in the cost for the Health Unit of $79,348 which is a result of a reduction in Provincial funding and a corresponding increase in the municipal allocation.

In summary, the value of all other increases across the organization totals $354,888 or 0.47% on the levy. When the impact of the net decrease in contracted services of 0.05%, noted immediately above, is included, the levy increase is $317,151 or 0.42% which ties back to the second table in this report.

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Service Level Changes

Of the total budget net levy increase of $2,112,457, Service Level Changes account for $159,377. These items represent new requests that were not in the 2019 Budget. Within each department section, there are narratives and Service Level Change forms, as required, for each division or program that highlight each Service Level Change. The following is a high level summary of the information.

Within the Finance and Corporate Services and Non-Program departments, the Service Level Changes have a total net levy impact of $148,477 and includes the addition of 0.5 FTE in Corporate Administration to assist with growing demands in this area as it relates to business case analysis and other special projects and 0.8 FTE in Human Resources to provide departmental support for The Pines. The Pines has reduced its complement by 0.8 FTE to reduce the net levy impact to just under $19,400.

Engineering and Public Works (EPW) shows Service Level Changes with a combined net levy impact of $54,233 and includes 1.6 FTE for a Construction Inspector 3 position and Capital Infrastructure Project Manager. The personnel costs for the Inspector position are charged to Water and Wastewater capital to oversee linear infrastructure projects, while personnel costs for the Project Manager are charged to Roads capital. The net levy in 2020 relates primarily to the purchase of a vehicle for the Inspector and will not recur in 2021. These positions will reduce the need to hire external consultants and thereby reduce costs.

Within Community and Planning Services there are three divisions with Service Level Changes noted below with no net levy impact as all of the costs are funded from either Provincial grants or reserves. There is 1.0 FTE in Affordable Housing for the transition of the Project Coordinator position, approved in 2019 on a temporary basis, to a permanent position to continue to encourage and coordinate new projects and enable increased support to the Housing Task Force. In an effort to eliminate the impact on the levy, staff has proposed that this position be funded from the Muskoka Affordable Housing Initiatives Reserve. Childcare Services is requesting 2 positions with an impact of 1.5 FTE in 2020 which are both funded from ongoing Provincial grants. The first position is for administrative support to gather statistics, prepare scheduling, data entry and collection and payment of accounts and is allocated 75% to MED Childcare programs and 25% to Muskoka Home Childcare Agency (MHCCA). The second position is for a supervisor within the Muskoka Home Childcare Agency within Childcare Services to provide oversight and monitor compliance with the

extensive legislative requirements for both homes and home visitors.

The Health Services department is showing a Service Level Change totalling $47,883. This includes a request for 0.75 FTE

Manager of Strategies and Initiatives and a reduction of 0.8 FTE at The Pines to offset the increase in Human Resources staffing for to The Pines. The Manager position will supervise the delivery of Health Link, support advancement of the Muskoka and Area Health Team on behalf of the District, and manage special project work including long-term care capital development and service

transformations resulting from provincial reforms.

The Airport has included Service Level Changes that will result in a net surplus of $91,216 and includes the addition of 3.14 FTE, the costs of which are fully offset by additional revenues. With SkyService Aviation now located at the Airport, additional seasonal staffing of 0.67 FTE is required to manage the anticipated increase in traffic and is offset with additional Ramp Fees and net Fuel

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sales. During 2019 an operational review was undertaken and staffing levels are recommended to increase to meet the regulatory requirements and to service the increase in aircraft traffic and passengers. To accomplish this, the addition of 0.72 FTE

Administration Coordinator, 0.67 FTE Seasonal Operator, 0.38 FTE (6) Customer Service Representatives, and 0.70 FTE (2) Summer Students is required. These costs are offset by additional anticipated revenues from VIP Fees, Rent and Scheduled Service Fees.

The following table summarizes the proposed Service Level Changes. It should be noted that all of these figures are prorated based on the applicable start date. Information on the fully annualized impact is provided on each SLC form within the binder. The overall net levy increase is $159,377 or 0.21%.

Service Level Changes 2020

FTE Impact Net Expenditure Impact $ Net Levy Impact Increase / (Decrease) $ Page Reference

Department Request

Finance and Corporate Services

Corporate Administration - Addition of 1.00 FTE to start July 1, 2020. This position will focus on business case analysis, process improvements, and special projects and provide additional resources to ensure knowledge transfer and business continuity with anticipated upcoming retirements.

0.50 $83,401 $83,401 FCS 18

Finance and Corporate Services

Human Resources - Addition of 0.80 FTE to the existing vacant 0.20 FTE to create 1.00 FTE HR Coordinator to enable departmental support for The Pines.

0.80 65,076 65,076 FCS 22

Finance and Corporate Services

Fleet - Operating cost for new fleet unit budgeted for the Design Construction Inspector 3 position. Total cost is $17,600 with an offsetting fleet recovery resulting in no net expenditure or levy impact.

0 0 FCS 42

Non-Program Insurance - Premium for Design Construction Inspector 3 position vehicle. Total cost is $420 with an offsetting insurance recovery resulting in no net expenditure or levy impact.

0 0 NP 4

Engineering and Public Works

Design - Addition of 1.00 FTE Construction Inspector 3 to start March 1, 2020. Personnel costs of $72,066 are charged directly to water and wastewater capital projects and not shown in the expenditures total. Position will reduce the need to hire consultants.

0.83 49,600 49,600 PW Admin

6

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Service Level Changes 2020 FTE Impact Net Expenditure Impact $ Net Levy Impact Increase / (Decrease) $ Page Reference

Department Request

Engineering and Public Works

Design - Addition of 1.00 FTE Capital Infrastructure Project Manager to start March 1, 2020. Personnel costs of $100,223 are charged directly to roads capital projects and not shown in the expenditure total. Position will enhance successful contract administration and project delivery.

0.83 4,633 4,633 PW Admin

7

Community and Planning Services

Community Housing - new Canada Ontario Community Housing Initiative (COCHI) is a multi-year plan to

sustain, grow and preserve the Social Housing system. Funding will be transferred to local providers.

18,990 0 CPS 29

Community and Planning Services

Affordable Housing - Addition of 1.00 FTE Project Coordinator to be permanent as of January 1, 2020. Position will continue to encourage and coordinate new projects and enable increased support to the Housing Task Force. The cost in 2020 is $88,776 and staff is proposing that this position be funded from reserves resulting in no net expenditure or levy impact.

1.00 0 0 CPS 35

Community and Planning Services

Childcare Services - MED - Addition of 1.00 FTE Administrative Support to start April 1, 2020 to be allocated 75% to MED Childcare programs and 25% to Muskoka Home Childcare Agency (MHCCA). Position will provide support to management and divisional program functions.

0.56 33,732 0 CPS 65

Community and Planning Services

Childcare Services - MHCCA - Addition of 1.00 FTE Supervisor and 0.25 FTE Administrative Support to start April 1, 2020. Positions will provide increased oversight and administration due to extensive legislative

requirements.

0.94 84,539 0 CPS 75

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Service Level Changes 2020 FTE Impact

Net Expenditure

Impact $

Net Levy Impact Increase / (Decrease)

$

Page Reference

Department Request

Health Services

Health Strategies and Initiatives - Addition of1.00 FTE Manager of Strategies and Initiatives to start April 1, 2020. Position to provide strategic leadership and policy development.

0.75 93,570 93,570 HS 20

Health Services

Pines Operations - Reduction of 0.80 FTE Wellness Coordinator, which offsets the 0.80 FTE addition in HR for Pines support.

(0.80) (45,687) (45,687) HS 24

Airport Airport Operations - Addition of 0.67 FTE Seasonal

Operator required for new SkyService Aviation, offset by anticipated additional revenue from Ramp Fees and Fuel Sales.

0.67 179,860 (83,140) A 6

Airport Airport Operations - Addition of 2.75 FTE to enhance

and maintain operations (1.00 Administration Coordinator starting April 1, 2020, 0.67 Seasonal Operator, 0.38 Customer Service Reps, 0.70 Summer Students). Personnel costs are offset by anticipated additional revenue from VIP Fees, Rent and Scheduled Services Fees.

2.47 142,174 (8,076) A 7

Total 8.55 $709,888 $159,377

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Net Levy Comparisons

The following table highlights the contributing factors for those functions which have experienced net levy increases or decreases greater than $70,000.

Major Year-over-Year Budget Net Levy Variances by Function

Increase Personnel (primarily for position related to the Service Level Change) $86,803

Other adjustments 5,327

Increase Personnel (primarily for shared services position) 84,748 Decrease Legal Services Internal Recovery (primarily for Paralegal position charged

directly to Provincial Offences) 60,200

Increase Service Charge Municipal Recovery (for shared services cost recovery) (94,093)

Other adjustments 20,598

Decrease OPP billing by 0.24% based on annual billing statement (39,273) Decrease Transfer from Reserves of prior years' surpluses ($684,000 transferred in

2017, $275,000 in 2018, $125,000 in 2019 and nil in 2020) 125,000 Increases in Grants (for Court Security and Prisoner Transportation) (188,902)

Increases in User Fees (61,000)

Other adjustments 42,390

Decrease Personnel Gapping (to reflect anticipated job vacancy and rate gapping) (165,000) Decrease Tax Write-offs (to reflect three-year average) (208,000) Increase Insurance Premium (to reflect average annual increases) 54,216

Other adjustments (30,284)

Increase Roads Reserve at asset management plan guideline of 5.0% 839,502 Increase Personnel (for wage and benefit costs) 55,760 Increase Materials and Supplies (primarily Winter Control operating supplies) 146,363 Decrease Contracted Services (reflects six-year historical average) (142,656)

Other adjustments 34,207

Increase Personnel (for wage and benefit costs and additional allocation of

management and roads staff) 26,378

Increase Transfer to Reserves (to fund 10-year capital forecast) 29,226 Increase Fleet (based on actual costs) 15,435

Other adjustments 4,804

Transportation

933,176

$ Increase (Decrease) Corporate Administration $92,130 Financial Services (349,068) 71,453 Legal Services Police Services (121,785) 75,843 Port Carling Locks

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Major Year-over-Year Budget Net Levy Variances by Function Increase Personnel (for wage and benefit costs and additional allocation for

administrative costs) 41,319

Increase Taxes (based on increased assessment from MPAC) 30,703 Increase Grounds Maintenance (based on three-year average) 33,000

Increase User Fees - Rents (24,240)

Other adjustments 9,215

Increase Personnel (primarily for position related to the Service Level Change) 120,883 Decrease Transfer to Others (primarily for reduction in grants, partially offset by

increased subsidy for 12 new units at Cambrian Court) (537,123) Increase Transfer from Reserves (primarily to fund new position) (84,626) Decrease Grants (primarily for discontinuation of the Investment in Affordable Housing

(IAH-E) and reduction in the Ontario Priorities Housing Initiative (OPHI) grant) 601,270 Other adjustments (primarily for increased operating costs for McVittie) 43,999 Increase Personnel (primarily for reallocation of position from OW Programs) 90,804

Increase Program Supplies 15,317

Increase Program Services 16,806

Increase Grants (for the new Seniors Active Living Centre funding) (17,640)

Other adjustments 6,798

Increase Personnel (for wage and benefit costs) 34,528

Decrease Program Services (40,200)

Increase Rent External (primarily for Gravenhurst and Huntsville locations) 26,918

Decrease Transfer to Others (28,078)

Increase Finance Services Internal 33,644

Decrease Grants (primarily for reduction in Additions Services funding) 68,925

Other adjustments (8,948)

Increase Personnel (to reflect wage settlement) 168,628

Increase Operating Supplies 33,600

Increase Support Services (primarily Rent) 55,403 Decrease Grants (primarily for elimination of Community Paramedicine funding

effective April 1, 2020, partially offset by a small increase in base funding) 27,067

Other adjustments (12,856)

Health Unit Increase Transfer to Others (to reflect reduction in Provincial funding resulting in

higher municipal contribution) 79,348 79,348 Community Housing

89,997

Seniors Programs and Services

$ Increase (Decrease)

271,842 Affordable Housing 144,403 112,085 Paramedic Services Ontario Works Programs

86,789

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Major Year-over-Year Budget Net Levy Variances by Function

Increase Personnel (primarily for position related to the Service Level Change) 118,732 Decrease Grants (primarily for elimination of Provincial funding of Health Link program

effective April 1, 2020) 171,000

Other adjustments (17,532)

Increase Personnel (primarily for wage and benefit costs, net of a reduction of 0.8

FTE to partially offset additional Human Resources assistance) 57,010 Increase Corporate Services Administration (primarily for additional Human

Resources assistance) 64,900

Other adjustments (8,303)

Subtotal 1,872,020 Other Adjustments 240,437 Total $2,112,457 $ Increase (Decrease) Health Strategies and Initiatives

272,200 Pines Operations

113,607

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The following graph shows the net levy for each of the major service delivery functions or departments offered by the District over a three-year period (2018-2020).

The top section of the graph illustrates the dominance of the Roads Reserve Contributions used to finance construction and rehabilitations of infrastructure and Roads Maintenance which is ongoing operating costs. These two sections account for $28.0 million or 35.9% of the District’s Tax Supported net levy. The increases within these two functional areas account for just over $1,039,300 or 49.2% of the net levy increase in 2020. The majority of this increase is due to an increase in the Roads Reserve Contribution of $839,502, in line with the asset management plan guideline. It should be noted that the vast majority of Roads Maintenance division costs are contracted to the Area Municipalities or various contractors for both roads maintenance and construction.

$0 $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 $14,000,000 $16,000,000 $18,000,000

Health Unit Property Assessment Services Police Services Airport Non-Program Environment General Finance and Corporate Services Health Services Community and Planning Services Roads Maintenance and Locks Roads Reserve Contribution

Tax Supported Net Levy by Department or Service

2020 2019 2018

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Community and Planning Services and Health Services represent 13.4% and 11.2% of the total levy, respectively, but 19.5% and 16.4% respectively of the total expenditures. The reason for this difference relates to the fact that there are programs delivered within each of these departments that have significant grant contributions. The increase in 2020 for both of these departments is related to a reduction in Provincial funding which has been highlighted in the sections above.

The bottom section of the graph shows that contracted services for Police, Property Assessment and the Health Unit represent 24.9% of the total 2020 levy.

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Expenditures

Budgeted expenditures, net of Internal Service Charges, in 2020 total $127.5 million (2019 - $125.7 million). The graph below highlights the percentage share of each major expense category. The relative share of the operating budget’s expenditures for each of the major expense categories has shifted in some key areas compared to 2019.

The Personnel category is increasing slightly this year due primarily to estimated or negotiated wage and benefit costs, as well as, service level changes.

Purchased Services is decreasing primarily due to reductions in Program Services as a result of reduced funding in Childcare. The Transfer to Others category is decreasing relative to other

categories primarily due to the delay in funding the Fairvern project, as well as, the reduction of grant programs within Affordable Housing.

The total amount of Finance Charges and Reserves is growing due primarily to the proposed increase in reserve contributions in accordance with the District’s asset management plan, as well as, a reduction in the contribution from the Debt Reduction Reserve due to the delay in the Fairvern project.

Personnel 31.3% (2019 - 30.7%)

Employee Related Expenses

0.7% (2019 - 0.7%)

Materials and Supplies

5.4% (2019 - 5.1%)

Purchased Services

27.2% (2019 - 28.0%)

Transfer to Others 14.9% (2019 - 16.2%) Net Internal

Service Charges -2.7% (2018 - -2.5%)

2020 Budgeted Expenditures

Finance Charges/ Reserves

23.2% (2019 - 21.8%)

(20)

Personnel costs account for $39.9 million (2019 - $38.6 million) of the total budgeted expenditures. The year-over-year increase is highlighted in more detail below, but the majority of the increase is related to estimated or negotiated wage settlements and benefit costs of $818,874. This amount also includes the annualized cost for

positions approved in 2019 of $80,634. Increases related to staffing proposed through Service Level Changes amount to $602,809, with an overall levy impact of $159,377. When comparing the District’s Personnel costs as a percentage of total expenditures from the annual Financial Information Returns (FIRs) for 8 other upper-tier municipalities, the District’s percentage of Personnel costs is well below the other municipalities (estimated at 27% for the District compared to an average of 39% for the other municipalities in 2018).

Material and Supplies represents $6.8 million

(2019 - $6.4 million). Fuel for fleet vehicles and aviation sales accounts for $2.1 million or 32% of this total. The volume of aviation fuel sales is expected to increase in 2020 by approximately $140,000 as a result of the arrival of SkyService. There is a

corresponding increase in fuel sales revenue of $174,000. The other significant increase year-over-year is related to the cost of sand and salt for winter control on roads which is increasing just under $201,000 to be in line with the six-year average of costs incurred. Of the $34.6 million (2019 - $35.1 million) in Purchased Services, Police, Roads Maintenance and Property Assessment Services contracts account for $24.4 million or 71%. Overall, there is a decrease in Purchased Services compared to last year of just over $483,100 which is primarily due to a reduction in Program Services related to Childcare Services, as well as a reduction in Road contracted costs and consultant costs across the District.

Of the $19.1 million (2019 - $20.4 million) in Transfer to Others, $16.6 million relates to Social Assistance and Community Housing programs, $1.5 million relates to the Simcoe Muskoka District Health Unit requisition, and the remainder is split between funding for hospital capital needs, the Muskoka Tourism Marketing Agency (MTMA), Fire First Response calls within Paramedic Services and an allocation to the Areas for Community Policing costs. Overall, there is a decrease from last year of $1.3 million which is primarily due

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to the delay in the Fairvern project which was approved to have $1.3 million in grant funding released in 2019 compared to nil in 2020.

Of the $29.6 million (2019 - $27.4 million) in Finance Charges/Reserves, $27.9 million is for contributions to Reserves to fund the District’s capital program and Debt Reduction Reserve, net of reserves withdrawn to fund special programs such as local hospitals’ capital projects and MAHIP. The majority of capital reserve contributions have increased in accordance with the asset management plan guidelines of 5.0% for roads and 1.97% for the other services. As noted earlier, the contribution for the Port Carling Locks has increased by $29,226 in order to finance the ten-year capital plan. The remaining $1.7 million relates to Debenture payments, provisions for Write-offs, Interest Charges and Bank Fees.

The following table highlights the underlying budget drivers by major expenditure category and relates to the “All General by Object” report on page 53. Detailed explanations by departments are included in the attached budget schedules.

Year-over-Year Budget Drivers by Major Expenditure Category (Decrease) $ Increase

Personnel

Increase for estimated wage and benefit costs (including annualized cost of positions approved in

2019) $818,874

Increase for Service Level Changes 602,809

Increase Gapping Provision resulting in reduction in expenditures (165,000)

Subtotal 1,256,683

Employee Related Expenses

Increase Travel (primarily for EarlyON and Homelessness to reflect costs for outreach) 24,636

Increase Memberships/Subscriptions (primarily for Crime Stoppers which was reallocated from

subcontractor) 13,500

Decrease Conferences Seminars (primarily for CAO hosting Municipal Innovators Conference) (48,985)

Other adjustments (14,826)

Subtotal (25,675)

Materials and Supplies

Increase Operating Supplies (mainly Winter Control and Paramedic Services) 209,652

Increase Fuel (primarily due to increased cost of Aviation Fuel for re-sale and fleet fuel cost) 171,855

Increase Taxes (District Housing Stock and McVittie) 41,557

(22)

Year-over-Year Budget Drivers by Major Expenditure Category (Decrease) $ Increase

Decrease Utilities (mainly due to Electricity rates) (67,692)

Other adjustments 13,430

Subtotal 368,802

Purchased Services

Increase Building and Grounds Maintenance (mainly District Housing, Pines, Ontario Works, McVittie,

and the Huntsville, Gravenhurst, Mactier and Port Carling Ambulance Stations) 170,368

Increase Equipment (mainly Software Maintenance and Fleet Maintenance, offset in part by

decreases in Hardware Maintenance) 111,972

Increase Prime Contractor (mainly Telephone partially offset by recovery in Support Services) 96,504

Increase External Rent (mainly Strengthening Communities for Nest and Gravenhurst Hub partially

reallocated from Program Services) 75,009

Increase Insurance Premium (estimate based on average increase of 7%) 65,246

Increase Communications (primarily for dedicated circuits for cameras at approved sites and

increased services in remote areas) 33,338

Decrease Legal (primarily for Provincial Offences as dedicated legal position added) (46,080)

Decrease Consultant (primarily Fairvern project, Winter Control, Health and Safety, Health Link, Community Transportation, Community Initiatives, CAO/Admin, offset in part by increase in Human

Resources, Hauled Sewage and Fleet) (193,592)

Decrease Subcontractor (mainly Childcare Services, Airport and Traffic, offset by increase in

Stormwater, Paved Roads, Winter Control and Hauled Sewage) (137,200)

Decrease annual estimate for Roads contractors (reflects six-year average) (163,856)

Decrease Program Services (mainly Childcare Services, offset in part by increases to Community

Transportation) (507,908)

Other adjustments 13,036

Subtotal (483,163)

Transfer to Others

Increase Muskoka Home Childcare Agency (to reflect program growth) 323,304

Increase Special Needs (Childcare Services) 107,998

Increase Health Unit requisition (to reflect reduction in Provincial funding and cap on increase) 79,348

(23)

Year-over-Year Budget Drivers by Major Expenditure Category (Decrease) $ Increase

Increase Grant Funding to Provider (EarlyON and Community Housing) 65,019

Increase Transfer to Areas (allocation for Community Policing reallocated from Purchased Services -

Rent) 32,200

Decrease Grant (for one-time grant to Ontario Chambers of Commerce) (10,000)

Decrease Fee Subsidy (Childcare Services) (19,430)

Decrease Client Supports (Ontario Works and Homelessness) (69,904)

Decrease Affordable Housing (to reflect reduction in Provincial funding) (537,123)

Decrease Fairvern Grant (to reflect delay in build for consideration of additional beds, offset by

reduction in transfer from reserves) (1,210,000)

Otheradjustments (12,110)

Subtotal (1,250,698)

Finance Charges/Reserves

Net Decrease in Transfer from Debt Reduction Reserve (Fairvern Grant) 1,280,000

Increase Transfer to Roads Reserve (5.0% as per guideline) 839,502

Net Decrease in Transfer from Debt Reduction Reserve to offset impact of OPP Billing Phase-in ($0 in

2020, $125,000 in 2019, $275,000 in 2018 and $684,000 in 2017) 125,000

Increase Transfer to Reserves at 1.97% guideline (Environment, Fleet, Corporate, Ambulance, and

Airport) 121,300

Decrease Transfer from Muskoka Services Investment Fund (MSIF) Reserve (Community Initiatives,

EarlyON Childcare Programs, and Muskoka Home Childcare Agency) 64,102

Decrease Transfer from Corporate Reserve (primarily for one-time projects in Finance and Facilities,

offset by increases for one-time projects in CAO/Admin) 50,000

Decrease in Transfer from Roads Capital (for one-time project in Winter Control) 30,000

Increase Transfer to Port Carling Locks Reserve (to fund ten-year capital program) 29,226

Decrease Bank Fees (mainly OW Programs and Financial Services) (17,500)

Decrease Transfer to Muskoka Services Investment Fund (MSIF) Reserve (Muskoka Home Childcare

Agency) (45,000)

Increase Transfer from Affordable Housing Initiative Reserve (to finance coordinator position) (84,626)

Decrease Tax Write-offs (to reflect actuals) (208,000)

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Year-over-Year Budget Drivers by Major Expenditure Category (Decrease) $ Increase

Other adjustments 31,896

Subtotal 2,215,900

Net Internal Service Charges

Increase in Finance Services Internal (19,103)

Increase Drafting Internal net Recovery (to reflect allocations from capital budget) (43,746)

Increase Fleet Recovery (to reflect increased costs, including a SLC for Design and Survey

Construction Inspector 3) (65,160)

Increase in Telephone Recovery (to reflect reallocation of charge-outs, offset by increase in Prime

Contractor) (87,925)

Other adjustments (21,416)

Subtotal (237,350) Total $1,844,499

  

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Revenues

Budgeted revenues, including the net levy, total $127.5 million in 2020 (2019 - $125.7 million). The graph below shows the percentage share of each major revenue category.

The increase in the percentage share of funding from the net levy corresponds with the decrease in the relative share of grant revenue. This decline in grants has been discussed previously, but is primarily focused in Affordable Housing, Childcare Services, Addiction Services, Long Term Care, Paramedic Services, Homelessness and the Ontario Municipal Partnership Funding (OMPF).

Grants 28.0% (2019 - 29.4%)

Supplementary Taxes

0.7% (2019 - 0.7%) Service Fees

-External 9.3% (2019 - 8.8%) Service Fees

-Municipal 0.9% (2019 - 0.8%) Net Levy

61.1% (2019 - 60.3%)

2020 Budgeted Revenues

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The 2019 and 2020 budgets for each of the revenue categories are compared in the accompanying graph.

Similar to the expenditures graph, the revenue graph shows the absolute increases over the two years and the dominance of one or two

categories, in this case the Net Levy and the Grants categories.

The following table summarizes the significant changes in the year-over-year revenue budget as shown in the above graph by major revenue category. Some of these revenue changes are partially offset with reductions in expenditures that were explained in the Expenditures section above.

Year-over-Year Budget Drivers by Major Revenue Category

(Decrease) $ Increase Grants

Decrease Affordable Housing Funding ($601,270)

Decrease Childcare Services Funding (296,847)

Decrease EarlyON Childcare Program Funding (205,612)

Decrease Health Link Funding (171,000)

Decrease Provincial OMPF Funding (58,070)

Decrease Ontario Works Financial and Program Funding (51,115)

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Year-over-Year Budget Drivers by Major Revenue Category

(Decrease) $ Increase

Decrease Community Paramedicine Funding (48,028)

Decrease Homelessness Funding (37,905)

Decrease MTO Funding (8,143)

Increase Seniors Programs and Services Funding 17,640

Increase Community Housing Funding (SLC) 18,990

Increase Paramedic Services Funding 20,961

Increase Provincial Gas Tax Funding for Community Transportation 59,865

Increase Court Security and Prisoner Transportation Grant 188,902

Other adjustments 909

Subtotal (1,170,723)

User Fees, Fines/Penalties, Application Fees/Permits and Supplementary Taxes

Increase User Fee Rates (Airport) 224,050

Increase Fuel Sales (Airport) 190,032

Increase External Fees (Muskoka Home Childcare Agency) 145,192

Increase Rent (Airport, District Stock, AHP-Condominium and McVittie) 79,408

Increase User Fees (Hauled Sewage - to reflect actuals) 48,000

Increase Other Revenue (Strengthening Communities and Pines) 27,569

Increase Supplementary Taxes (to reflect actuals) 18,700

Increase Fees Miscellaneous (mainly Police, Roads, Community Transportation, Strengthening

Communities, offset in part by CAO / Admin and Water Strategy) 18,405

Other adjustments 28,122

Subtotal 779,478

Service Charges Municipal

Increase Municipal Service Charges (mainly Legal Services and Bracebridge Ambulance Facility) 108,290

Increase Municipal Service Charges (IT Services) and other adjustments 14,997

Subtotal 123,287

Total ($267,958)

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Provincial Funding

The District receives provincial funding for a number of programs throughout the organization. Funding for Social Assistance

programs, Long Term Care, Paramedic Services and Ontario Municipal Partnership Fund (OMPF) are the largest components. The following section summarizes the impact on Provincial funding in 2020 and future years, if information is available.

Non-Program Division

The OMPF is the Province’s main general assistance grant to municipalities. The program comprises four core grant components that reflect the objectives of supporting municipalities with limited property assessment, recognizing the difficulties facing northern and rural municipalities, and targeting those municipalities with challenging fiscal circumstances. The District does not qualify for any of these program components; however, there has been transitional assistance that provided guaranteed support up to 85% of the previous year’s funding. The Province has been phasing down the transitional assistance portion of the OMPF funding model over the last seven years as other municipal benefits have increased with provincial uploads. As a result, the District’s OMPF funding has decreased $875,400 since 2012 which includes a reduction of $58,070 or 15% in 2020. This program is currently under review and there is a risk that the decrease in funding for 2021 may be higher than the 15%.

Community and Planning Services

Provincial funding for affordable housing for the last number of years has been flowed mainly through the Investment in Affordable Housing (IAH-E) program with allocations for the District that ranged between $550,000 and $875,000 since 2013. In 2019, the Province announced two new programs, namely the Canada-Ontario Community Housing Initiative (COCHI) and the Ontario Priorities Housing Initiative (OPHI). Funding for this program in 2019 was $561,300, but drops to $309,790 in 2020 and then grows to $600,235 in 2021. Approximately 5% of the funding may be used for administration of these programs. Over a number of years, staff has determined that this level of administration is not sufficient to advance the program. As a result, a contribution from the Muskoka Affordable Housing Initiatives Reserve has also been used to fund the required administration since 2019. The reserve allocation is proposed at $38,424 in 2020.

Within Ontario Works (OW) Programs there are a number of different funding programs. In 2019, the Addictions Services funding was eliminated for a reduction of $82,425. This reduction has been reflected within the 2020 draft budget. The Province also announced a reduction in 100% funding for OW program delivery of $150,000 in 2020 and $700,000 in 2021. In addition, the Province launched an Employment Services Transformation initiative and the District has submitted a proposal as part of a service manager consortium to provide services for the Muskoka - Kawarthas employment area. Given the uncertainty with this program delivery, staff has left all funding related to employment services unchanged in the 2020 draft budget. Once the Province makes a decision regarding the successful proponent for the Employment Services Transformation initiative, staff will provide a budget amendment to reflect the necessary changes. Should the consortium not be selected as the successful service system manager, staff are confident that program expenditure reductions could mitigate the 2020 funding reduction.

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Significant change to the Ministry of Education allocations and new administrative caps in Childcare were announced in 2019. As a result, there was a reduction in base funding of $260,433 in 2020. Funding will be reduced a further $317,092 in 2021 and $113,640 in 2022. As service levels must be maintained, these funding reductions will result in an anticipated growth in the net levy for this program from $419,880 in 2019 to just under $890,000 by 2022. A portion of the impact in 2020 has been mitigated through

optimizing expense allocations to fully leverage the available funding. Staff will continue to review programs with the aim to minimize future levy impacts where possible.

Health Services

In the 2013 Treasurer’s Report, it was noted that the funding for Paramedic Services had been restored to the 50/50 funding level. Historically, paramedic funding is based on 50% of the prior year’s accrual-based budget plus a provincial inflation factor. In 2019, the Province announced that it would no longer be providing the provincial inflation factor. As a result, the 2020 funding is

approximately $102,100 lower than prior years. The 2020 grant funding has been maximized and is now covering approximately 48.5% of the total budgeted expenditures.

Funding for Community Paramedicine and Health Link programs has been eliminated effective April 1, 2020. This is a reduction of $48,028 in 2020 for Community Paramedicine and $178,630 for Health Link. Staff has proposed to maintain these program services throughout 2020 as there are benefits for the care of complex client cases and the broader Health sector. As a result, there is a net levy increase totalling $226,658. Staff will review the continuation of these programs in 2021 once the Ontario Health Team is created and there is clarity regarding the availability of funding. The District Chair has sent a letter to the Province advocating for this funding to be reinstated which would reduce the impact on future levies, if successful.

There are four funding envelopes provided by the Ministry of Health and Long-Term Care to support the provision of Long-Term Care: Nursing and Personal Care, Program and Support Services, Raw Food and Other Accommodations. The funding envelopes must be used for only prescribed costs and combined funding covers a portion of the total cost for service delivery. There was a calculated reduction in funding in 2020 of just under $164,000 due to a change in the case mix index and lower inflationary increases.

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Muskoka Affordable Housing

During 2013, Council approved the reallocation of future provincial upload savings in OW to the Muskoka Affordable Housing Initiatives Program (MAHIP) operating budget, subject to future annual budget deliberations. The table below shows the annual increase in the investment in MAHIP, as well as, the cumulative investment since 2013. It should be noted that in 2015 the full amount of the upload savings was budgeted at $329,500, but in an effort to reduce the impact of overall budget pressures, caused primarily from rising policing costs, and expenditure increases in other Community Services’ divisions, Council limited the increase in the net levy for MAHIP to $123,700. As a result, there was $205,000 of upload savings that had not been reinvested in the MAHIP program. In August 2017, Council approved a recommendation to phase-in an increase in the net levy of $205,000 for the MAHIP budget over three years in order to fully invest the OW savings into affordable housing. The final year of phase-in is $68,600 and is reflected in the table below. Lastly, it should also be noted that during the 2017 budget deliberations, $45,000 of the upload savings were transferred to the senior’s program budget and have been included in the figures below.

Year

Year over Year Savings in

OW

OW Savings from 2013

Net Levy

Annual Increase in Investment In MAHIP &

Seniors

Investment in MAHIP & Seniors since 2013

2014 $233,100 $233,100 $233,000 $233,000

2015 329,500 562,600 123,700 356,700

2016 270,000 832,600 270,800 627,500

2017 275,300 1,107,900 275,000 902,500

2018 228,460 1,336,360 291,600 1,194,100

2019 0 1,336,360 68,000 1,262,100

2020 0 1,336,360 68,600 1,330,700

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Capital Budget and Forecast

The capital budget and forecast impacts the current operating budget in two ways. First, there may be an operating budget impact related to maintaining or utilizing infrastructure once a capital project has been completed. For example, in 2020 the operating costs for the condominium that was purchased for affordable housing in Gravenhurst have been reflected.

The second impact on the operating budget is through the magnitude and timing of annual reserve contributions required to fund capital programs. The goal is to steadily increase reserve contributions in the operating budget to reflect the expenditure needs with the capital budget and forecast. The future year projected contribution requirements to the various reserve funds, as noted under the sustainability section, support the capital program contained within the 2020 Draft Tax Supported Capital Budget and Forecast. The 2020 Draft Tax Supported

Capital Budget contains $29.1 million in project costs ($27.2 million in 2019) and is

dominated by the Roads Construction program which constitutes 73.1% (81.3% in 2019) of the total proposed expenditures.

The decrease in the Roads share of the 2020 capital program is attributed to a significant increase in other program requests. Airport capital costs increased due to expansion and infrastructure development. These projects are consistent with prior years’ capital forecasts and will not proceed without an Airport Board drive business case. Pines capital costs increased due to bedroom furniture and bathroom replacements. General Administration costs increased as a result of

Port Carling Locks 0.8% (2019 - 2.1%) Community and Planning Services

0.8% (2019 - 1.7%)

Community Housing

1.4% (2019 - 0.9%) Paramedic

Services

1.9% (2019 - 2.2%) Hauled Sewage

2.2% (2019 - 1.9%)

Airport

3.6% (2019 - 0.2%) Pines

4.2% (2019 - 1.1%) Fleet

4.7% (2019 - 4.5%) General

Administration 7.3% (2019 - 4.1%)

Roads

73.1% (2019 - 81.3%)

2020 Capital Budget

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upgrades to the database environment and core IT infrastructure, which are both at end of life. In addition, there is a final allocation for the electronic document records management solution. Fleet capital costs increased due to heavy equipment requirements within the landfill division. While the percentage share of Roads capital decreased, the 2020 capital request is relatively consistent with the 10-year average annual request of $20 million.

There were five projects added in 2020 and 2021 to utilize the Modernization funding received by the province in early 2019 of $725,000. These projects include $125,000 for Customer Experience Modernization which is the implementation of the customer service strategy finalized in 2019, $225,000 for Efficiency Analyses, $75,000 for a review of software to improve the Development Review process, $175,000 for a Mobile Workforce Strategy to review business mobility requirements and implement the most effective solution, and $125,000 to assist with new developments of Affordable Housing.

$0 $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000 $35,000,000

2020 2021 2022 2023 2024 2025 2026 2027 2028 2029

2020 - 2029 Forecasted Capital Expenditures

Community Housing Pines Port Carling Locks

Hauled Sewage Community and Planning Services Airport

Fleet General Administration Paramedic Services

Roads

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Over the 10-year capital forecast period, the Roads component of the capital budget accounts for $200.5 million of the $246.7 million in planned capital expenditures, or 81.3% (83.7% in 2019) of the total 10-year capital expenditures. Fleet and General

Administration represent the next two largest components of the 10-year capital forecast with a total of 9.9% of the capital

expenditures. Under General Administration, regular updates to the core IT infrastructure have been included to ensure effective delivery of services.

In 2021, The Pines has five significant projects for a sloped-roof shingle replacement, kitchen improvements in the resident home areas, upgrades to the emergency generator, replacement of the resident bus and a new operations system.

In 2022-2023, the Muskoka Airport has a major repair to the apron scheduled which is consistent with prior year forecasts and in line with the updated asset management plan. In 2023-2024 repairs to the taxiway and road are scheduled with a project cost of

$662,400 over the two years. These project costs have been moved to earlier in the forecast compared to prior years based on the asset condition.

One project for Paramedic Stations in West Muskoka has been included with a preliminary cost estimate of $2.6 million in 2022 and $1.9 million in 2024.

The following table summarizes the forecasted expenditures for major projects scheduled over the 10-year period. Detailed project budgets for Roads Capital are not included as a pilot project is in progress to assess if more competitive tender results will be achieved.

Roads and Bridges 2020 2021-2024 2025-2029 10-Year Total

Project Expenditures $12,417,804 $77,759,800 $83,537,700 $173,715,304

Other Services

130355/130314 Computer Equip Life Cycle Replacement $96,500 $464,900 $622,000 $1,183,400

130356/130315 Core IT Infrastructure Management $370,000 $1,513,000 $1,527,800 $3,410,800

130825/130809 Regular Fleet Acquisitions $454,600 $2,271,200 $3,568,500 $6,294,300

130826/130812 Heavy Fleet Acquisitions $858,400 $2,970,100 $741,600 $4,570,100

530035 West Paramedic Stations $4,571,500 $4,571,500

530033/530009 Ambulance Vehicles $396,400 $1,666,300 $2,277,400 $4,340,100

360026 Apron Major Repairs (Sealing & Repaving) 1,503,600 $1,503,600

Project Expenditures $2,175,900 $14,960,600 $8,737,300 $25,873,800

Summary

Total Major Projects > $1 million $14,593,704 $92,720,400 $92,275,000 $199,589,104

% of Total Capital Program 50.2% 83.5% 86.6% 80.9%

Other Projects $14,493,500 $18,313,100 $14,323,900 $47,130,500 Total Capital Expenditures $29,087,204 $111,033,500 $106,598,900 $246,719,604

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Capital Financing

The Tax Supported Capital Budget and Forecast is heavily reliant on its own Reserves and Reserve Funds to finance its capital projects. As shown in the

accompanying graph, financing from Capital Reserves represents 96.5% of the 2020 Capital Budget (96.0% in 2019), while Development Charges account for 3.1% and Grants 0.4%.

In general, reserve financing for capital projects is withdrawn from reserves that have been established for that particular service and have been accumulated from contributions from the operating budget. The Development Charges (DC) used to finance capital projects reflects the information contained within the DC Background Study completed in May 2014 and the reduction in approved DC rates. This information will be updated once the new DC by-law is

approved which is scheduled for December 2019.

The accompanying table shows the financing on joint projects between the District and the Area Municipalities for the Tax Supported Capital Budget and Forecast. In 2020, there are no projects with a Municipal Contribution.

The District is in a shared service arrangement for IT Services with Bracebridge and

Gravenhurst. The table shows the estimated allocation to the Towns for the forecasted core infrastructure renewal program based on the current allocation methodology.

The Municipal Contribution to Roads capital projects will be reflected at the time of contract award and may result in a budget amendment.

Year

ITS Core

Infrastructure Air Photos

2021 $75,400 $0

2022 $7,250 $0

2023 $68,440 $0

2024 $287,680 $14,600

2026 $31,900 $0

2028 $79,750 $0

2029 $331,412 $0

Total $881,832 $14,600

Joint Project Funding with Area Municipalities

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From 2020 to 2029, the District’s financing plan is reflective of its ongoing reliance on its own funds as the most significant source of funding at 96.5% (96.2% in 2019). Reserve funding accounts for $238.0 million of the total $246.7 million in financing required over the 10-year period.

The second largest source of funding throughout the 10-year period is Development Charges at 3.1% (3.7% in 2019). The total over the 10-year period is $7.6 million ($0.5 million for Hauled Sewage and $7.1 million for Roads) compared to $8.3 million in the

previous year’s forecast. It should be noted that the allocation of DCs to projects has remained consistent with prior years and will be updated based on the 2019 DC Background Study, once Council approves the rates for DCs for the next five years.

External Funding from Area

Municipalities represents only 0.4% of capital financing over the 10-year forecast (0.1% in 2019) which is a result of including the external funding requirements from its shared services partners for core IT Infrastructure. There is no requirement for external

debenture issues over the forecast period.

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Reserves and Reserve Funds

Reserves and Reserve Funds play a critical role in a municipality’s long-term financing plan. A series of schedules have been prepared showing the status of the District’s various Reserves and Reserve Funds along with the individual commitments stemming from the 2020 Draft Capital Budget and Forecast. Also included are the projected annual Reserve contributions for 2020 (based upon scheduled Reserve contributions contained within the Treasurer’s Report). These schedules are attached to this report in the Sources of Financing section.

The following chart shows the projected Reserve Fund balances into the future, if capital projects and Reserve contributions continue at the levels projected within these budgets. It should be noted that these figures do not include the balance in the Debt Reduction Reserve which is highlighted in the Debt and Debt Capacity section.

There is a significant increase in

uncommitted reserves between 2024 and 2029. This is due to a larger concentration of capital

requirements in the first five years of the 10-year forecast period. As part of the ongoing

improvements of the Asset Management Plan, staff will be refining capital

forecasts to align with condition ratings and ongoing preventative maintenance.

$0 $20,000,000 $40,000,000 $60,000,000 $80,000,000 $100,000,000 $120,000,000

2020 2021 2024 2029

Projected Uncommitted Fund Balances

Capital Funds Development Charge Funds Operating Funds

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