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Page No.
REPORT 2013-F-14
SECTION 1
Finance & Administration Committee Report ... 1-26
Attachments:
1. Summary ...
27-31
2. New Positions...
32-33
3. Tangible Capital Assets – New ... 34
4. Tangible Capital Assets – Replacements... 35
5. Capital Forecasts ...
36-52
SECTION 2
2013 BUSINESS PLANS & BUDGETS – SUMMARIES ONLY
Works Committee
General Tax ...
1-8
Solid Waste ... 9-16
Health and Social Services Committee
Health Department:
Public Health ... 17-22
Emergency Medical Services ... 23-27
Social Services Department:
Emergency Management and Program Support ... 28-31
Social
Assistance... 32-35
Children’s
Services... 36-41
Family
Services ...
42-46
Housing
Services ... 47-55
Long Term Care and Services For Seniors... 56-77
TABLE OF CONTENTS
2013 BUSINESS PLANS & BUDGETS
GENERAL PROPERTY TAX REQUIREMENTS
Page No.
Planning and Economic Development Committee
Planning Department... 78-85
Economic
Development
& Tourism... 86-94
Finance & Administration Committee
Regional Council ... 95
Regional Chair’s Office ... 96
Chief Administrative Officer ... 97-103
Legal ... 104-105
Legal – Provincial Offences Act ... 106-108
Corporate Services - Human Resources ... 109-112
Corporate Services – Information Technology ... 113-117
Clerk’s... 118-120
Durham Emergency Management Office ... 121-122
Emergency 9-1-1 Telephone System ... 123-125
Non Departmental... 126-129
Finance ... 130-136
Conservation Authorities... 137-165
Police Services Board ... 166-169
Durham Region Transit ... 170-179
Local Housing Corporation ... 180-181
TABLE OF CONTENTS
2013 BUSINESS PLANS & BUDGETS
GENERAL PROPERTY TAX REQUIREMENTS
2013 Regional Business Plans and Budgets for Property Tax Purposes
The Regional Municipality of Durham
Report to:
The Finance and Administration Committee
From:
R.J. Clapp, Commissioner of Finance
Report No.: 2013-F-14
Date:
February
5,
2013
SUBJECT:
The 2013 Regional Business Plans and Budgets for Property Tax Purposes, including
General Purpose, Solid Waste Management and Durham Region Transit.
RECOMMENDATIONS:
THAT the Finance and Administration Committee recommend to Regional Council that:
2013 GENERAL PURPOSE PROPERTY TAX BUSINESS PLANS AND BUDGETS
1.
The
2013 Business Plans and Property Tax Budgets for General Purposes
be approved, at a total net property tax requirement of $469,447,000, as detailed
within the 2013 Regional Business Plans and Budgets, which are highlighted in
Attachment #1 to this report and summarized as follows:
2013 Tax
Requirements
Regional Operations
($000s)
Departmental Operations
208,887
Regional Roads Reserve - Growth
12,549
Regional Roads – Rehabilitation Reserve Fund
14,945
Regional Bridges – Rehabilitation Reserve fund
4,220
Total Regional Operations
240,601
Police Services
172,120
Provincial Download Service Costs
45,055
Conservation Authorities
6,653
Special Contributions
Regional Land Acquisition Reserve Fund
958
Durham College
800
Hospital Funding
3,260
Total Special Contributions
5,018
TOTAL GENERAL PROPERTY TAX PURPOSES
469,447
Note: Excludes Durham Region Transit and Solid Waste Management
Report No.: 2013-F-14 Page No. 2
2013 Regional Business Plans and Budgets for Property Tax Purposes
2.
The 2013 Net Major Tangible Capital Asset Program for General
Property Tax Purposes
(excluding Solid Waste, Durham Region Transit
and Conservation Authorities’ requirements) in the amount of $65,001,000
be approved, and the 2014 to 2017 Capital Forecast in the amount of
$417,697,000 as detailed in the following table be received for information
purposes only.
3.
Financing for the 2013 Net Major Tangible Capital Asset Program for
General Property Tax Purposes
in the net amount of $65,001,000 be approved
as follows:
GENERAL PURPOSES
Police EMS Works Roads Total
Property Taxes 100 2,637 1,962 5,609 10,308
- - 19,913 19,913
- - 28,488 28,488 5,510
- - - 5,510 Other Financing - - - 782 782 Total Financing 5,610 2,637 1,962 54,792 65,001
2013 CAPITAL FINANCING ($000's)
Development Charges Capital Reserve Debentures
GENERAL PURPOSES
Recommended
2013 2014 2015 2016 2017 2014-2017
Police Service
Operations Training Centre - Phase 2 - - - 1,500 23,300 24,800 77 Centre Street, Oshawa 100 500 500 500 500 2,000
5,510
67,890 - - - 67,890 5,610
68,390 500 2,000 23,800 94,690
Emergency Medical Services
Ambulance Stations - Sunderland 500 3,800 - - - 3,800 309
- 510 - 510 1,020
1,828
1,776 1,634 1,803 3,328 8,541 2,637
5,576 2,144 1,803 3,838 13,361
Works Operations
Regional Roads Program 54,792 72,313 79,046 75,720 82,567 309,646 Depots 1,962 - - - -
-56,754
72,313 79,046 75,720 82,567 309,646
TOTAL TCA REQUIREMENTS 65,001 146,279 81,690 79,523 110,205 417,697 Works operations sub-total
EMS sub-total Ambulances & Equipment
Replacement
Centre for Investigative Ex cellence / Warehouse (Phase 2)
Ambulances & Equipment - Growth Related
Police Service sub-total
Forecast
MAJOR TANGIBLE CAPITAL ASSET REQUIREMENTS ($000's)
Report No.: 2013-F-14 Page No. 3
2013 Regional Business Plans and Budgets for Property Tax Purposes
4.
Capital project approval
be granted for expenditures and financing per the
2013 Capital Project Detail Forms within the 2013 Regional Business Plans and
Budgets where contract awards are consistent with Regional Budget
Management Policy.
CONTRIBUTIONS FOR REGIONAL ROADS AND BRIDGES
5.
A 2013 contribution of $12,549,000 to the
Regional Roads Reserve – Growth
be authorized to allow for financing of Road Capital Construction Projects.
6.
A 2013 contribution of $14,945,000 to the
Regional Roads Rehabilitation
Reserve Fund
be authorized to assist with roads rehabilitation requirements.
7.
A 2013 contribution of $4,220,000 to the
Regional Bridges Rehabilitation
Reserve Fund
be authorized to assist with bridge rehabilitation requirements.
FAIRVIEW LODGE LONG-TERM CARE HOME FUTURE OPERATION COSTS
8.
Based upon construction timelines, training and preparations for the opening of
the approved new Fairview Lodge Long-Term Care Home, the Commissioner of
Finance be directed to report back later in 2013 to confirm any associated
impacts to 2013 operational requirements from the hiring of the staff necessary to
ensure adequate training and preparation for occupancy, with report details to
include operating requirements and 2013 financing.
PROVINCIAL DOWNLOADED SERVICES COSTS
9.
The 2013 Provincial Download Services Costs Budget
be approved as part of
the 2013 Regional General Purposes property tax requirement in the total
amount of $45,055,000, including a provision of $4,427,000 for the 2013 Durham
Regional Local Housing Corporation Business Plan and Budget.
SPECIAL CONTRIBUTIONS
10. Existing
Regional Council commitments for special contributions
be
honoured, unchanged from 2012, as follows:
Lakeridge Health
$2,760,000
Rouge Valley Ajax and Pickering
500,000
Durham College
800,000
Total 2013 Special Contributions
$4,060,000
Report No.: 2013-F-14 Page No. 4
2013 Regional Business Plans and Budgets for Property Tax Purposes
CONSERVATION AUTHORITIES
11.
Funding totaling $4,089,000 for operations and $2,439,000 for 2013 Special
Projects be approved for
the Region’s five Conservation Authorities
with
Special Projects as summarized below:
Central Lake Ontario Conservation Authority
$616,000
Toronto and Region Conservation Authority
840,000
Ganaraska Region Conservation Authority
212,000
Lake Simcoe Region Conservation Authority
450,000
Kawartha Region Conservation Authority
321,000
Total Conservation Authority Special Projects
$2,439,000
12. A $125,000 contribution to the
Oak Ridges Moraine Conservation Plan
Reserve Fund
be authorized to finance the final costs related to the
development of Watershed Plans pursuant to the
Oak Ridges Moraine
Conservation Act, 2001
, an initiative undertaken by Conservation Authorities in
consultation with the Planning and Economic Development Department to ensure
conformity with the goals and objectives of the Regional Official Plan.
13. A contribution of $958,000 to the
Regional Land Acquisition Reserve Fund
be
authorized to assist in financing requests for funding received from the Region’s
five Conservation Authorities to acquire environmentally sensitive lands based on
eligibility criteria per the approved Regional Land Acquisition Reserve Fund
Policy.
14. The Central Lake Ontario Conservation Authority and Toronto Region
Conservation Authority additional special funding requests for the Heritage Hall
(Purple Woods) project, and the Claremont Outdoor Education Centre project,
respectively, be referred to staff for review and a subsequent report in 2013 to
Finance and Administration Committee and Regional Council.
SOLID WASTE MANAGEMENT 2013 BUSINESS PLAN AND BUDGET
15. The
2013 Business Plan and Budget for Solid Waste Management
at a net
property tax requirement of $37,589,000
be approved per the detailed 2013 Solid
Waste Management Business Plan and Budget.
16. The
2013 Solid Waste Management Major Tangible Capital Asset Program
in
the amount of $5,732,000 be approved and the Capital Forecast for the period
2014 to 2017 in the amount of $1,500,000 as detailed below, be received for
information purposes only.
Report No.: 2013-F-14 Page No. 5
2013 Regional Business Plans and Budgets for Property Tax Purposes
17.
Financing for the
2013 Net Major Tangible Capital Asset Program for the
Solid Waste Management Program
in the net amount of $5,732,000 be
provided from the Solid Waste Management Reserve Fund.
DURHAM REGION TRANSIT 2013 BUSINESS PLAN AND BUDGET
18.
The 2013 Business Plan and Budget for Durham Region Transit
be approved
at a total net property tax requirement of $46,500,000, as detailed in the 2013
Durham Region Transit Business Plan and Budget.
19. The
2013 Major Tangible Capital Assets Expenditure Program for Durham
Region Transit
be approved in the gross amount of $7,471,000 and the Capital
Forecast for the period 2014 to 2017 as summarized below and totalling
$166,249,000 be received for information purposes only:
20.
Financing for the 2013 Capital Expenditure Program
for Durham Region
Transit
in the gross amount of $7,471,000 be approved as follows: $1,276,000
from 2013 property taxation and $6,195,000 from Ontario Gas Tax Revenues.
FINANCIAL MANAGEMENT AND ACCOUNTABILITY
SOLID WASTE MANAGEMENTRecom mend ed
2013 2014 2015 2016 2017 2014-2017
4,232
-1,500
-500
500 500
500 500
500
TOTAL TCA REQUIREMENTS 5,732 500 1,000 - - 1,500
Br ock Landfill Remediation & C ompliance
Scott Landfill Attenuation Zone ( Buf fer land)
Fo recast
TANGIBLE CAPITAL ASSET REQUIREMENTS ($000's)
Oshawa Landfill Remediation Scugog Landfill Attenuation Z one ( Buf fer land)
Blackstock Landfill Attenuation Zone ( Buf fer Land)
# 2013 # 2014 # 2015 # 2016 # 2017 # 2014-2017
3
96 38 15,580 15 6,330 6 2,340 8 3,250 67 27,500
17
4,510 24 8,790 25 6,905 25 6,845 25 6,845 99 29,385
1,130
18,500 650 70,500 500 - 90,150
1,735
4,949 3,112 9,638 1,515 - 19,214
20
7,471 62 47,819 40 16,997 31 89,323 33 12,110 166 166,249 TOTAL TCA
REQUIREMENTS DURHAM REGION TRANSIT
Growth Related Vehicles
System Improvements
Forecast
TANGIBLE CAPITAL ASSET REQUIREMENTS ($000's)
Replacement Vehicles Facilities
Recommended
Report No.: 2013-F-14 Page No. 6
2013 Regional Business Plans and Budgets for Property Tax Purposes
21.
The Listing of 2013 Regional Fees and Charges,
as set forth in the 2013
Regional Business Plans and Budgets (a summary is provided on the enclosed
CD) be approved and made available for public inspection and all applicable
By-laws be amended accordingly.
22.
Based upon the 2013 Regional Business Plans and Budgets as recommended
herein, the Commissioner of Finance be authorized to set
2013 Regional
Property Tax Rates for General Purpose, Solid Waste Management and
Durham Region Transit
and approval be granted for the requisite By-laws.
23.
The 2013 Business Plans and Budgets Report Section 5.0 reporting of the
‘
Impact of Excluded Expenses
’ for tangible asset amortization, post
employment benefits and solid waste landfill closure/post-closure expenses be
adopted, per requirements under Ontario Regulation 284/09 of the
Municipal Act
2001
and the Public Sector Accounting Board (PSAB).
24.
For any Regional program change or capital expenditure included within the
2013 Regional Business Plans and Budgets which is proposed to be financed in
whole, or in part, from
Provincial subsidies or related revenues
, neither
staffing, capital nor other related Regional expenditures shall be committed until
such time as adequate written confirmation is received from the respective
provincial ministry to commit to the subsidy or related revenues (Finance and
Administration Committee and Regional Council will be advised accordingly,
consistent with Regional Budget Management Policy).
25.
All business case applications for subsidy or other related funding from senior
levels of government or external organizations with respect to Region-operated
programs be coordinated with the Region’s Finance Department to ensure
corporate financial accountability and requirements in expenditure management
and financial reporting.
26.
A decision on the provision of $150,000 ($50,000 a year for three years) in
Regional expenditures, as referred to the 2013 Business Planning and Budget
deliberations by Regional Council on October 10, 2012, be deferred until
Planning and Economic Development staff have had sufficient time to prepare
and submit their Business Plan for promoting the Region during the 2015 Pan
Am Games, based upon the Planning and Economic Development Committee
request for such plan (September 25, 2012) and which should outline proposed
promotional efforts, with estimated Regional costs and anticipated benefits.
Report No.: 2013-F-14 Page No. 7
2013 Regional Business Plans and Budgets for Property Tax Purposes
27. Funding totaling $77,000 be approved within the 2013 Risk Management
program of the Finance Department’s 2013 Business Plan and Budget for the
COMRA Marine Rescue Association
(up to $38,500)
and the Pickering
Auxiliary Rescue Association
(up to $38,500) to be administered by the
Finance Department in consultation with the Durham Regional Police Service
based upon services rendered.
28.
Based upon the Canada Budget 2012 ‘rounding guidelines’ to accommodate the
federal government’s phase-out of the Canadian penny, the Region’s cash
transactions only be rounded down, to the nearest five-cent increment, effective
February 4, 2013 (non-cash transactions e.g. cheque and electronic payments
will continue to use the cent as the smallest unit for pricing goods and services).
Report No.: 2013-F-14 Page No. 8
2013 Regional Business Plans and Budgets for Property Tax Purposes
HIGHLIGHTS
This report provides key recommendations regarding 2013 Regional Property Tax
Business Plans and Budgets for General Purposes, Solid Waste Management and
Durham Region Transit. The recommendations herein represent the culmination of a
significant effort by Regional staff to continue strategic priorities while meeting the
2013 property tax guidelines approved by Regional Council (Report 2012-F-68).
2013 Budget Guideline
2013
Increase
($ millions)
Tax Impact
(%)
Police
11.5
2.16
Transit
5.0
0.94
Regional Operations
3.5
0.65
20.0
3.75
Less: Estimated guideline assessment growth
1.00
Guideline Property Taxpayer Impact
2.75
Recommendations herein meet the guideline and represent a net property tax
increase of 2.35 per cent or approximately $54 for the Region-wide average
residential home, after assessment growth now estimated at 1.4 per cent.
The $20.0 million net budgetary increase in 2013 is the result of both base and
program changes. Approximately $11.7 million represents base budget changes
necessary to fund existing program service levels in 2013, based upon
enhancements approved by Regional Council within the 2012 Budget, including:
Existing Regional contractual cost increases;
Annualization of 9-1-1 Management staff hired in 2012; and,
The Ajax and Pickering Durham Region Transit route restructuring project.
Base budget changes also reflect an increase in the Ontario Works subsidy, removal
of long-term care debt payment, and removal of 2012 one-time capital expenditures.
Program changes accommodated within the recommended 2013 Business Plans
and Budgets include the following priorities and multi-year commitments:
A $7.1 million increase in annual debt servicing to accommodate Durham
Regional Police Service capital;
Additional priority road rehabilitation financing ($2.2 million);
Report No.: 2013-F-14 Page No. 9
2013 Regional Business Plans and Budgets for Property Tax Purposes
Eight Emergency Medical Services paramedics (four Advanced Care), one
support staff, two ambulances and three medical support vehicles and
equipment to support increased call demand and reduced response times
($1.3 million);
Land and design costs for the future Sunderland Ambulance station
($0.5 million);
Net costs ($1.0 million) to launch the Durham Region Transit (DRT) Bus
Rapid Transit Pulse service along Highway 2, including supporting route
adjustments and 48 new staff (operators, supervisors and support staff), net
of DRT fare increases and modification of the GO Fare Anywhere agreement
related to the route;
Four additional staff to meet compliance standards for the Region’s 9-1-1
Emergency Management system ($0.2 million);
Wide Area Network (WAN) capital, other information technology capital and a
new Health and Disability Officer in Corporate Services ($1.6 million);
Implementation of an expanded Blue Box program to include #3 to #7 plastic
materials for recycling processing and diversion, commencing April 2013;
and,
Funding from the Solid Waste Management Reserve Fund ($5.7 million) to
complete the remedial action plans for the Region’s existing solid waste
management landfills in the City of Oshawa and Township of Brock (Brock
Township landfill is scheduled to be contoured and closed by 2015).
Annual reviews of fees and charges are undertaken to ensure appropriate cost
recovery, maximize revenues and ensure fees are updated where possible to reflect
inflationary pressures. Changes to General Property Tax Purpose fees and charges
applicable to the 2013 Business Plans and Budgets include those highlighted in
section 4.5 of this report for Health, Social Services, General Works, and Durham
Region Transit. Impacts to 2013 Business Plans and Budgets include both 2012
revenue annualizations and 2013 changes.
In order to meet the guideline, Regional staff sought further efficiencies, postponed
several strategic program changes and delayed capital program plans. Staff is
cognizant that significant re-prioritization and re-examination of the timing for
program expansions and capital projects will remain a reality of business planning
over the forecast period to ensure financial sustainability and taxpayer affordability.
The reality, particularly in the near-term, is that more will need to be accomplished
utilizing fewer available resources. This challenge is compounded by additional
expenditure and financing pressures which lie ahead in terms of:
Multi-year
existing
commitments;
Long-term operational cost impacts;
Known, significant and currently unfunded financial pressures; and,
Financial risks and uncertainties with potential future cost impacts.
Report No.: 2013-F-14 Page No. 10
2013 Regional Business Plans and Budgets for Property Tax Purposes
Multi-year Commitments
Multi-year commitments and other long-term operational cost impacts which will
strain future budgets include:
Police debenture servicing requirements estimated to reach $21.4 million
annually by 2015 based upon capital commitments;
The Fairview Lodge Long-Term Care Home anticipated to add $1.2 million net
per year to operational requirements by 2014;
Other Long-Term Care commitments including the three-year implementation of
Voice Over Internet Protocol (VOIP) communications technology ($0.8 million
over three years);
The commitment to add staffing for 9-1-1 Emergency Telephone System (four
staff in 2013 to be annualized in 2014);
The new Durham Region Transit (DRT) Bus Rapid Transit Pulse launch
anticipated to increase net operating costs by over $3.0 to $4.0 million by 2017;
DRT annualizations which represent an additional net $1.0 million for 2014, with
comparable annualization increases anticipated for subsequent years; and,
The commitment to add staffing for EMS (nine staff in 2013 to be annualized in
2014).
Known Future Fiscal Pressures
Known and significant financial pressures to be financed over the forecast period
include:
Significantly increased funding requirements for road and bridge rehabilitation,
estimated at approximately $11 million for 2014;
Aging housing projects with declining capital reserves (estimated capital shortfall
approaching $200 million);
Potential cost pressures related to road construction for the Phase 1 BRT (2014
to 2016), including the widening of intersections in Pickering and Ajax;
The rebuild and expansion of Raleigh Durham Region Transit facility which is
projected to exceed the current budget;
Implementation of Phase 2 BRT estimated in the hundreds of millions of dollars;
Regional Road expansions to accommodate the construction of the Highway 407
East extension; and,
Funding an expanding infrastructure over time, based on life-cycle capital
replacements and repairs and funding for infrastructure deemed ‘critical.’
Despite known commitments and pressures, it will also be increasingly important to
maintain focus on financial risks and maintenance of financial flexibility to ensure the
Region can respond to unforeseen expenditures.
As an example, the Region faces assessment risk due to Assessment Review Board
(ARB) appeals. For every one per cent in assessment loss on outstanding ARB
appeals, the Regional taxation loss is approximately $1.4 million.
Report No.: 2013-F-14 Page No. 11
2013 Regional Business Plans and Budgets for Property Tax Purposes
Provincial Fiscal Restraint
In finalizing the 2013 Business Plans and Budgets, impacts from senior government
policy and subsidy restructuring initiatives, were increasingly apparent due to the:
The Ministry of Health and Long-Term Care Public Health Funding Review;
The Ontario Housing Policy Statement and new
Housing Services Act
regulations;
Senior government funding of the Social Housing capital shortfall which is
beyond the financial capabilities of Municipal/Regional governments;
Ontario Works caseload and availability of Provincial subsidies;
Community Homelessness Prevention Initiative (CHPI); and,
Waste Diversion Ontario/Stewardship Ontario solid waste diversion subsidies
and fluctuations of market prices for recyclable materials.
As an example, commencing in 2013, the Province will be providing annual block
funding to municipalities under the CHPI for the provincial share of consolidated
funding, including five former provincial programs which prevented and reduced
homelessness by supporting at-risk households. A portion of provincial funding will
contain the former Community Start-up and Maintenance Benefits, which were
mandatory benefits to Ontario Works (OW) and Ontario Disability Support Program
(ODSP) clients for homelessness prevention services. The Province’s decision to
terminate the Community Start-up and Maintenance Benefit program in 2013 will
result in ODSP recipients seeking assistance through the Regionally-administered
CHPI. However, ODSP costs were administered by the Province and funded 100
per cent by the Province prior to 2013.
The financial impact of the move from cost-shared funding based on actual service
costs to provincial block funding under CHPI may not be immediate. However, the
cost for delivering and administering the CHPI to ODSP clients will be a new cost
borne by the Region. The decision to terminate Community Start-up Maintenance
Benefits for ODSP clients is contrary to the Province’s policy commitment through
the
Provincial-Municipal Fiscal and Service Delivery Review
to upload all Ontario
Disability Support Program costs, and effectively will be a new downloaded cost to
municipalities.
A provincial funding shortfall could potentially exist if the demand for service
increases, as funding will now be capped by the amount of provincial block funding
available.
Best Business and Financial Management Practices
The Region’s best practice financial management policies/strategies ensure that the
Region maintains sufficient financial flexibility not only to weather a significant
economic downturn, but also to allow key Council priorities to move forward during
difficult economic times through a planned and phased implementation approach.
Report No.: 2013-F-14 Page No. 12
2013 Regional Business Plans and Budgets for Property Tax Purposes
In particular, recent major program successes were supported by Council’s on-going
commitment to maintain strong reserves and reserve funds, up-front financing of
significant portions of major capital project costs, maintain low and predictable levels
of debt, and ensure disciplined long-term financial plans. Based on long-term plans,
the Region has been able to apply savings, surpluses and/or reserve funding to
internally finance approximately $400 million in capital projects (including non-tax
funded water and sewer programs) that would have otherwise been debentured.
This has led to avoidance of an estimated $260 million in debenture interest costs
since 1998 and has ensured prudent and long-term benefits to the Region’s
taxpayers.
Furthermore, based upon periodic risk assessment, the Region maintains
commitments through the General Levy Stabilization Reserve Fund to provide
coverage of potential costs/risks identified beyond the Region’s control, including in
the areas of: social assistance caseloads; energy and commodity price fluctuations,
extraordinary claims and/or litigation, or other unanticipated financial requirements.
While the Region remains well positioned to accommodate future financial
pressures, Moody’s Investors Service recent review and confirmation of the Region’s
Triple A credit rating came with words of caution, given the weak economic growth
and associated revenue risks, combined with increasing expenditure pressures:
“…It is unlikely that conditions could deteriorate by a large enough margin in
the near term, to cause a downgrade. Nonetheless, a sustained loss of
discipline leading to a significant increase in debt and/or a significant
deterioration in the level of cash and investments could place downward
pressure on the rating.”
“If the capital plan is completed fully as planned, Durham’s net direct and
indirect debt should reach approximately (Canadian) $730 million by 2017, at
which point it would equal nearly 49% of total revenue and place Durham
close to the median debt level of other Canadian municipalities rated Aaa.”
While Durham Region remains in the high end of Triple A rated municipalities and
continues to have a stable outlook, this cautionary note reflects the bond rater’s
apprehension with the potential for reactionary decisions to short-term cost
pressures, when the Region needs to follow long-term plans and remain
conservative in terms of fiscal restraint.
Conclusions
The 2013 recommendations for Business Planning and Budgets for property tax
purposes as provided herein represent a net property tax increase of 2.35 per cent,
or approximately $54 for the Region-wide average residential home, after
assessment growth (now estimated at 1.4 per cent). The increase covers both
budgetary base changes necessary to maintain existing programs ($11.7 million) as
well as program changes, necessary to advance priority areas as described herein.
Report No.: 2013-F-14 Page No. 13
2013 Regional Business Plans and Budgets for Property Tax Purposes
To meet the guideline as directed by Regional Council in October, 2012 (a property
tax increase of 2.75 per cent), Regional staff sought further efficiencies, postponed
several strategic program changes and delayed capital program plans.
Significant
re-prioritization and re-examination of the timing for program expansions
and capital projects will remain a reality of business planning over the forecast
period (2014 to 2017) to ensure financial sustainability and taxpayer affordability,
based upon the economic environment and this current period of prolonged slower
growth and uncertainties. Challenges are compounded by additional expenditure
and financing pressures which lie ahead in terms of existing multi-year commitments
and long-term operational impacts already anticipated based upon capital decisions
already made (e.g. Fairview Lodge, Durham Regional Police Service, EMS
Sunderland Station, Durham Region Transit Bus Rapid Transit expansion and
Regional roads requirements to accommodate Provincial transportation system
expansions (e.g. 407 and GO Train extension)).
A challenge for Regional Council and staff will be to (re)prioritize Regional strategies
and infrastructure investments to ensure financial sustainability within a constrained
low-growth environment (anticipated to last until 2015).
R.J. Clapp, CA
Commissioner of Finance
Recommended for Presentation to Committee:
G.H. Cubitt, M.S.W.
Chief Administrative Officer
Report No.: 2013-F-14 Page No. 14
2013 Regional Business Plans and Budgets for Property Tax Purposes
DETAILED REPORT
2.0
BACKGROUND
This report provides key recommendations regarding 2013 Regional Property
Tax Business Plans and Budgets for General Purpose, Solid Waste
Management and Durham Region Transit. It represents the culmination of a
significant effort by Regional staff to meet Regional Council’s approved 2013
Property Tax Guidelines as set October 10, 2012 at a maximum overall
property tax increase of 2.75 per cent, after consideration of the estimated
assessment growth.
The Council approved 2013 Property Tax Guidelines were based upon
comprehensive analyses of funded program submissions in the context of a
still troubling 2013 to 2017 economic and financial outlook, as noted in Report
2012-F-68, the Region’s annual ‘Five-year Economic and Financial Forecast
(2013-2017) and Current Year (2013) Guidelines for the Regional Business
Plans and Property Tax Budget.’
Set during a prolonged economic downturn, the guidelines balanced
significant Regional program priorities, cost pressures and financial and
economic risks and uncertainties on the one hand, with increasingly
constrained taxpayer affordability and reduced tax competitiveness on the
other.
The following sections highlight the success in achieving a difficult 2013
guideline, while still ensuring existing service levels and the continuing and
focused expansion of priority areas as previously identified by Regional
Council. The report also highlights significant business/financial challenges
that remain ahead for both Regional staff and Council, based on the realities
of:
Multi-year financing commitments due to previous approvals, that have yet
to be accommodated in future budgets, including committed expansions,
significant annualizations in 2014 and debt servicing for new capital (e.g.
representing an estimated three per cent base increase for the 2014
Budget);
An economic environment which, at least over the early forecast, will
result in reduced revenues and higher costs to the Region; and,
Continuing population and associated service growth pressures, including
staffing, staffing accommodation, expanding equipment and capital
replacement requirements.
Report No.: 2013-F-14 Page No. 15
2013 Regional Business Plans and Budgets for Property Tax Purposes
3.0
2013 REGIONAL PROPERTY TAX IMPACT
The 2013 Regional Business Plans and Budgets for Property Tax Purposes
provide funding for the following program areas:
Regional Operations (including Solid Waste Management);
Durham Regional Police Service;
Provincial Download Services Cost;
Conservation Authorities;
Durham Region Transit; and,
Previously approved special funding contributions.
The net 2013 property tax impact before reassessment, based upon
recommendations provided herein, is 2.35 per cent, representing an increase
of approximately $54 for the Region-wide average residential home, after
assessment growth now estimated at 1.4 per cent.
4.0
BASE 2013 BUDGET WITH LIMITED AND TARGETED INCREASES
The 2013 Region’s Business Plans continue Durham’s adherence to
fundamental best financial management practices. Financial management
principles are recognized as core to the Region’s long standing Triple A credit
ratings, including support for low, manageable levels of debt, and only the
conservative and prudent use of the Region’s reserves and reserve funds.
The Business Plans and Budgets also advance the accountability and
transparency of the Region’s operations, supporting initiatives such as the
Ontario Municipal Benchmarking Initiative, and adhering to Public Services
Accounting Board changes, including reporting of capital assets.
The recommended 2013 Regional Business Plans and Budgets meet the
approved property tax guideline, maintain existing programs, advance key
Council-identified priorities and honour existing multi-year commitments
related to special contributions. Budgetary increases by major program area,
including base and program changes, are highlighted in the chart below.
Report No.: 2013-F-14 Page No. 16
2013 Regional Business Plans and Budgets for Property Tax Purposes
2013 Changes by Major Program Area
Expenditure Increases ($ millions) and Budgetary Percentage (%)
4.1
Durham Regional Police Service
The recommended 2013 Business Plan and Budget for the Durham Regional
Police Service, in the amount of $172.1 million, represents a net expenditure
increase of 7.2 per cent, or $11.5 million compared to 2012 (a 2013 Property
Tax impact of 2.16 per cent). The 2013 Business Plan and Budget includes
no new staff and a $7.2 million debenture servicing cost for new capital.
4.
2
Durham Region Transit
The recommended 2013 Business Plan and Budget for the Durham Region
Transit (DRT), in the amount of $46.5 million, represents a net expenditure
increase of 12.2 per cent or $5.0 million compared to 2012 (a 2013 Property
Tax impact of 0.94 per cent), related primarily to the implementation of the
Phase 1 Bus Rapid Transit (BRT) scheduled to commence operations as the
BRT ‘Pulse’ on June 29, 2013.
The DRT 2013 Business Plan and Budget had to first accommodate
significant base budget annualizations from 2012 expansions, including $0.5
million for 2012 staffing hires and $2.1 million for the annualized cost of 2012
Ajax-Pickering route restructuring, net of annualized revenues.
-$6.3
-$0.9
$1.0
$2.1
$0.3
-$1.7
$2.3
$1.2
$5.2
$5.0
$11.5
Other F&A Committee Human Resources & Information
Technology
Planning & Economic Development EMS Health Works (incl. Roads & Waste) Transit Police
8.1% 9.5%
11.7%
-2.1%
3.9%
15.8% 3.9%
7.2% 12.2%
Social Services
One Time Capital OW Admin Recovery
Report No.: 2013-F-14 Page No. 17
2013 Regional Business Plans and Budgets for Property Tax Purposes
In 2013, along with new buses and equipment included within the capital
program, the soft launch of the BRT Pulse includes the net addition of 48
full-time positions, including operators, supervisors and administrative and
mechanical support, effective July 1, 2013. These service and staffing costs
are anticipated to add approximately $1.0 million, offset by modification to the
One Fare Anywhere Agreement, increased ridership expected on the new
BRT Pulse, and increased student enrolment in the U-Pass. This 2013 cost
will be annualized in the 2014 Business Plan and Budget ($1.0 million),
contributing to an additional tax increase in 2014.
In order to meet all of DRT’s regular capital replacement and growth
requirements over the forecast period, an average $7.1 million property tax
increase is required to provide sustained annual funding.
4.3 Regional
Operations
The recommended 2013 Business Plans and Budgets will allow for:
Eight new paramedics (four advanced care) and one administrative clerk;
One new and eight replacement ambulances, one new and two
replacement emergency response vehicles, one replacement
management support vehicle and one replacement logistics delivery truck;
Wide Area Network (WAN) capital, mandatory software licences and a
new Health and Disability Officer for Corporate Services;
Four
additional
9-1-1
Emergency Telephone System operators to meet
compliance standards;
Works maintenance and repairs and a new Orono Works’ Depot (financed
one third property tax and two thirds water and sewer revenue);
Funding to complete solid waste management action plans for the
remediation of the Brock and Oshawa Landfill sites;
Implementation of an expanded Blue Box program to include,
commencing April 2013, #3 to #7 plastic materials for recycling processing
and diversion; and,
An increase of $4.8 million for the gross 2013 Regional roads capital
program, which includes road and bridge rehabilitations and road capital
expansions.
For 2013, several priority Regional roads projects are advancing,
including:
Widening and re-alignment of Bayly/Victoria streets in the Town of Ajax
and Town of Whitby;
Widening of Harmony Road from Rossland to Conlin Road in the City
of Oshawa;
Widening of Brock Road from Bayly Street to north of Brougham
(including the by-pass) in the City of Pickering.
Report No.: 2013-F-14 Page No. 18
2013 Regional Business Plans and Budgets for Property Tax Purposes
Structure
rehabilitation and bridge replacements, including McCully
Bridge (Township of Brock) and Main Street Bridge at Orono Creek
(Municipality of Clarington);
Land acquisition for the Gibb-Olive widening and realignment project;
Phase 1 Highway 2 Bus Rapid Transit (BRT), including road work,
intersections and traffic signal improvements; and,
Improvements to the north-south portions of the Phase 1 BRT
intersections (Whites Road, Westney Road, and Liverpool Road).
4.4
Special Funding Contributions
At the same level as 2012, special funding contributions are included in the
2013 Budget for the following:
Continued funding to Lakeridge Health ($2.8 million), the Rouge Valley
Ajax Pickering Hospital ($0.5 million) and Durham College ($0.8 million);
and,
Continued
funding
for
maintenance of the Regional Conservation Land
Acquisition Reserve Fund contribution ($958,000).
4.5
User Fees and Charges
Regional staff conduct annual reviews of revenues and fees to ensure full
cost recovery where appropriate, maximized revenues to the extent possible
and at a minimum, that all fees are updated to reflect changing
circumstances, including inflationary pressures and legislative compliance.
The following highlights changes made to General Purpose Fees and
Charges are applicable to 2013 Business Plans and Budgets:
Children’s Services
The per diem rate increase approved for directly operated child care
programs, effective annually on September 1
st;
New rates for before and after school child care services to support full
day kindergarten programs;
Development Charges
Implementation of a Regional Transit Service residential and
non-residential development charge against all lands within the boundaries of
the Region;
The Development Charges are indexed annually July 1
st;
Health and EMS
Approved sewage system inspection fee increases;
Fees on applications for and issuance of permits under the
Building Code
Act;
EMS special events rate increase;
Report No.: 2013-F-14 Page No. 19
2013 Regional Business Plans and Budgets for Property Tax Purposes
Fees and charges for services provided by the Health Department, under
the
Planning Act
;
Services for Seniors
Ministry of Health and Long-term Care adjustments to resident
co-payment rates;
General Works
Inspection fees and increased fees for engineering drawings, traffic
information and encroachment processing, to reflect costs and inflationary
increases; and,
Durham Region Transit
Recommended fare increases based upon Report 2013-F-15 (average
increase of approximately 3 per cent).
5.0 REPORTING REQUIREMENT REGARDING EXCLUDED EXPENSES
RELATED TO TANGIBLE CAPITAL ASSETS AS REQUIRED BY ONTARIO
REGULATION 284/09
In June 2006, the Public Sector Accounting Board (PSAB) of the Canadian
Institute of Chartered Accountants (CICA) approved revisions to Section PS
3150 of the Public Sector Accounting Handbook for the accounting of tangible
capital assets (TCA) for local governments. The purpose of these revisions is
to establish standards for the accounting treatment of tangible capital assets
acquired by local governments.
The Regulation requires municipalities to prepare a report for adoption by
Council if a municipality excludes provisions in its 2013 Business Plans and
Budgets of all or a portion of the following expenses:
1. TCA Amortization Expenses;
2. Post Employment Benefits Expenses; and,
3. Solid Waste Landfill Closure and Post Closure Expenses.
Since the Region’s 2013 Business Plans and Budgets exclude provisions for
all or a portion of the expenses relating to amortization of Tangible Capital
Assets, post employment benefits and solid waste landfill closure and post
closure, this report is provided as required by the Regulation.
Report No.: 2013-F-14 Page No. 20
2013 Regional Business Plans and Budgets for Property Tax Purposes
IMPACT OF EXCLUDED EXPENSES
FOR THE 2013 BUSINESS PLANS AND BUDGETS
($000s)
2012* 2013
PSAB Additions to Budget $
$
Tangible Capital Asset Amortization
99,100 101,923
Post Employment Benefits – Actuarial Valuation
6,535
14,600
Landfill Closure Costs – Reduction in Liability
4,224
500
Total PSAB Additions
109,859
117,023
PSAB Reduction to Budget
Tangible Capital Asset Acquisition
(357,267) (198,071)
Debt Principal Payments
(17,392)
(20,873)
Total PSAB Reductions
(374,659) (218,944)
Net Impact
(264,800) (101,921)
* restated
6.0
BUDGET CONSTRAINT: FUTURE IMPACTS AND BUSINESS PLANNING
The property tax guidelines were significantly below initial budget requests
made by Regional departments, Durham Region Transit, Durham Regional
Police Service and funded outside agencies. Forecast submissions to the
Finance department during the summer had identified much greater
requirements to meet strategic priorities and enhanced program delivery
objectives.
Based upon a difficult process of financial review, additional aggregate
reductions have been achieved by program areas since October 2012, when
the tax guidelines were set by Council, demonstrating a significant
commitment by all programs to achieve the deemed affordability level.
While detailed business plans and budgets were revisited as part of ongoing
efficiency and effectiveness reviews, it was also deemed necessary in 2013
to postpone several strategic program changes and capital program plans.
Furthermore, staff is cognizant that significant prioritization and
re-examination of the timing for program expansions and capital projects will
remain a reality of business planning over the forecast period to ensure
financial sustainability and taxpayer affordability. The reality, particularly in the
near-term, is that more will need to be accomplished utilizing fewer available
resources.
Report No.: 2013-F-14 Page No. 21
2013 Regional Business Plans and Budgets for Property Tax Purposes
7.0
MULTI-YEAR COMMITMENTS: STRAIN ON FUTURE BUDGETS
Adding to long-term financial planning challenges, the Region has, over
previous years, made significant multi-year financial commitments which must
be accommodated in a deteriorated economic environment, along with base
budget increases, staffing and accommodation requirements due to growth.
Multi-year commitments and long-term operational cost impacts which will
place further strain on future budgets include:
Annualizations for the proposed nine positions in EMS;
Police debenture servicing requirements estimated to reach a high of
$21.4 million annually by 2015;
The construction of the $50 million Fairview Lodge Long-Term Care Home
in the Town of Whitby, anticipated to add a net $1.2 million per year to
operational requirements by 2014 for nursing and expanded operating and
maintenance costs;
The 2012 and 2013 commitment to add staffing for the 9-1-1 Emergency
Telephone management system (five staff hired in 2012 will be annualized
in 2013 and four additional staff hired in 2013 will be annualized in the
2014);
Durham
Region
Transit
annualizations anticipated to add an additional net
$1.0 million to 2014 Business Plans and Budgets, with similar
annualization increases anticipated in years following;
The new Bus Rapid Transit (BRT) capital project and BRT Pulse launch
anticipated to increase net operating costs by over $3.0 to $4.0 million by
2017;
Commitments to Long-Term Care, including implementation of full Voice
Over Internet Protocol (VOIP) communications technology, representing a
three-year commitment of $0.8 million; and,
Additional estimated funding of $3.8 million for the EMS Sunderland
Station.
8.0
OTHER SIGNIFICANT FINANCING CHALLENGES
Although financing strategies have yet to be fully developed, other known and
very significant financing challenges include:
The identified requirement for additional property tax financing, starting
with a significant increase of $11.0 million in 2014 for additional road and
bridge rehabilitation requirements, which need to be prioritized in
conjunction with competing transportation needs also identified over the
2013 to 2017 forecast period;
Aging housing projects with declining capital reserves, resulting in an
estimated capital shortfall approaching $200 million;
Report No.: 2013-F-14 Page No. 22
2013 Regional Business Plans and Budgets for Property Tax Purposes
Road construction for the Phase 1 Highway 2 BRT project (2014 to 2016),
including widening of six intersections in Pickering and Ajax;
Increased financing to meet Works Depot requirements;
The rebuild and expansion of Durham Region Transit Raleigh Facility,
anticipated to require additional financing beyond the approved budget;
Road expansions related to the Phase One construction of the Highway
407 East extension to Harmony Road and the West Durham Link between
Highways 407 and 401 (targeted for completion by 2015);
Implementation of Phase 2 BRT, estimated in the hundreds of millions of
dollars; and,
Funding an expanding infrastructure over time, including life-cycle capital
replacements and repairs and adequate funding for infrastructure deemed
critical.
9.0
RISKS/UNCERTAINTIES: IMPACTS BEYOND THE REGION’S CONTROL
As part of the long-term business planning and financial management and control
processes, it is important to maintain sufficient focus on ensuring the continuing
adaptation to and mitigation of financial risks facing the Region.
In finalizing the 2013 Business Plans and Budgets, real impacts from
Provincial policy and subsidy restructuring initiatives were becoming
increasingly apparent after being identified in the Fall to include:
The Ministry of Health and Long-Term Care Public Health Funding
Review;
The Ontario Housing Policy Statement and new
Housing Services Act
regulations;
Senior government funding of the Social Housing capital shortfall which is
beyond the financial capabilities of municipal governments;
Ontario Works caseload and availability of Provincial subsidies; and,
Waste Diversion Ontario/Stewardship Ontario solid waste diversion
subsidies and fluctuations of market prices for recyclable materials.
Commencing in 2013, the Province will be providing annual block funding to
municipalities under the Community Homelessness Prevention Initiative for
the Provincial share of consolidated funding for five former provincial
homelessness programs. Although municipalities will have more flexibility
under the new provincial program to address local needs, provincial funding
will now be fixed, as opposed to cost-shared.
The financial impact of the move from cost-shared funding based on actual
service costs to provincial block funding may not be immediate. While it
appears that the provincial funding for homelessness programs in Durham is
approximately equal to the 2012 provincial funding levels, it is important to
note the following impacts of the new consolidated program:
Report No.: 2013-F-14 Page No. 23
2013 Regional Business Plans and Budgets for Property Tax Purposes
o The Province’s decision to terminate the Community Start-up and
Maintenance Benefit program will result in Ontario Disability Support
Program recipients seeking assistance through the Community
Homelessness Prevention Initiative administered by the Region.
Provincial payments to Ontario Disability Support Program recipients were
approximately $1.28 million for the year ended March 2012 and these
costs are over and above the costs of the Regional programs delivered in
2012. As the gross costs of the 2013 proposed budget have been held at
the same level as 2012, there is no provision in 2013 for these potentially
additional program costs.
o
Along with the potential for the direct costs of providing homelessness
support to Ontario Disability Support Program clients, the cost for
delivering and administering the Community Homelessness Prevention
Initiative to these clients will also be borne by the Region.
o A rising Ontario Disability Support Program caseload will place additional
cost pressures on the Region.
o The new 100 per cent annual Provincial funding for the new Community
Homelessness Prevention Initiative will now be provided to the Region in
‘block’ funding commencing in 2013. A Provincial funding shortfall could
potentially exist if the demand for homelessness services increases, as
funding will be capped by the amount of provincial block funding available.
Moreover, the decision to terminate Community Start-Up and Maintenance
Benefits for Ontario Disability Support Program clients (previously
administered and 100 per cent funded by the Province) is contrary to the
Province’s policy commitment through the
Provincial-Municipal Fiscal and
Service Delivery Review
to upload all Ontario Disability Support Program
costs, and effectively will be a new downloaded cost to municipalities.
Report No.: 2013-F-14 Page No. 24
2013 Regional Business Plans and Budgets for Property Tax Purposes
A sample of quantifiable policy and funding related risks and known financing
pressures over the forecast period include:
Risk Component Sensitivity Assumption Impact
($)
Property Taxes 0.1 per cent decrease in assesment growth (554,000)
Impact of Assessment Review Board (ARB) Decisions on Property Taxes
1 per cent decrease in assessment currently appealed to the ARB
1.4 million
Development Charges (all services)
100 single detached residential units decrease (2.1 million)
Expenditure
Ontario Works Caseload 1 per cent increase (net of subsidy) 118,000
Electricity 5 per cent annual price increase (existing rate structures) 950,000
Natural Gas 5 per cent annual price increase (existing rate structures) 105,000
Gasoline 1 cent price increase per litre 25,000
Diesel 1 cent price increase per litre 82,000
Notes:
1. Diesel and gasoline prices include all Regional fleets (e.g. Police, Transit, EMS, Works). 2. Commodity costs do not include the Durham Regional Local Housing Corporation.
Revenue
Report No.: 2013-F-14 Page No. 25
2013 Regional Business Plans and Budgets for Property Tax Purposes
