2011 Budget Presentation Dec 14 2010

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2011 Budget Presentation to Lake Country City Council

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2011 Budget Presentation Dec 14 2010

  1. 1. Lake Country Thinking Forward<br />2010-2011<br />2011-2015 Financial Plan and 2011 Annual Budget<br />
  2. 2. Process<br />Strategic Priorities and Corporate Plan<br />Staff Submissions:<br />Base Budget Increases<br />Operating Budget Increases<br />Capital Projects – 5-Year Plan<br />First Meeting with Council – Big Picture<br />Draft Budget Package to Council by January 7th, 2011<br />Second Meeting with Council – Details of Budget and Financial Plan – January 25th, 2011<br />Annual Budget and Financial Plan Draft prepared by Staff<br />Third Meeting with Council for final deliberations (To be rescheduled in February)<br />
  3. 3. First Meeting with Council<br />Provide Council with the Big Picture in terms of Finances and account allocations<br />Show the alignment with Strategic Priorities<br />Provide Council with comparables to quality of life<br />Provide Council with policy recommendations as to:<br />Options for tax increases<br />Options for fee increases<br />Options for reserve levels and replenishment<br />Options for funding capital projects and long term infrastructure deficit<br />
  4. 4. Elements of Budget<br />Year End Results for 2010 (not available)<br />Base Budget and Expected Variations for 2011<br />Operating Service Increases (Supplemental Requests)<br />Capital Expenses and 5-Year Capital Plan<br />Surplus and Other Reserves (estimates)<br />Proposed Budget, Tax Rates and Policy Recommendations<br />
  5. 5. Current Financial Situation - Revenues<br />
  6. 6. Current Financial Situation - Expenses<br />
  7. 7. Comparison Revenues-Expenditures<br />
  8. 8. Allocation of Property Tax and User Fees<br />
  9. 9. Analysis 2010 Budget<br />Direct Revenue from Taxpayers: $15.15M<br />Total Expenditures: $26.17M<br />Gap funded from Other Sources: $11.02M<br />The direct Taxpayers contribution is 58% of our entire budget<br />The other 42% comes from Grants, Borrowing, Reserves, and Other Sources<br />What does this mean?<br />Using more reserves<br />Using more surplus<br />Need to apply for more grants<br />
  10. 10. Budget Sustainability<br />Establish a reasonable annual tax increase for the next 5 years<br />Establish reasonable annual fee increases for the next 5 years<br />Establish an annual reserve allowance to replenish our reserves<br />Establish targets for asset management and new capital projects<br />Establish targets for a sustainable surplus<br />
  11. 11. 2011-2015 Financial Plan and 2011 Budget<br />New Growth is estimated to be $150,000 (Revenue)<br />1% Tax increase is equivalent to $79,000<br />The average residential assessed value in Lake Country is $502,000<br />The effect of a 1% tax increase on a $100,000 of assessed value is approximately $2.75<br />The additional cost of a 1% tax increase to a taxpayer owning an average assessed value home ($502,000) is $13.80<br />
  12. 12. Tax Increase in Perspective<br />1% Tax Increase to an individual owning a residence assessed at an average $502,000 represents the cost of a package of cigarettes plus a coffee at a convenience store;<br />In 2010, the tax increase was 3.48% or about $47 for the same taxpayer. In other words a dinner for two at a neighbourhood restaurant.<br />All this is a one time expense in July.<br />The benefits the taxpayer receives for the $47 a year are huge<br />
  13. 13. Tax Rate Increases for the last 5 Years<br />2010: 3.48%<br />2009: 3.93%<br />2008: 4.90% <br /> Election Year and <br /> Beginning of Recession<br />2007: 3.20%<br />2006: 4.50%<br />AVERAGE: 4.00%<br />
  14. 14. Funding Reserves<br />Usually we set aside 4.5% of the total operating budget for reserves. Let’s see the numbers:<br />
  15. 15. 2011 Base Budget Increases<br />Base Budget is the current budget approved by Council for 2010<br />The Base Budget is subject to increases:<br />Contractual Agreements<br />External Agencies charging more for services (RCMP for instance)<br />Collective Bargaining/Salary increases<br />Inflation<br />The Base Budget is also subject to possible reductions in revenue (charges/fees)<br />The estimated net increase of the current Base Budget is approximately $460,000<br />
  16. 16. Tax Rate Increases for the last 5 Years<br />2010: 3.48%<br />2009: 3.93%<br />2008: 4.90% <br /> Election Year and <br /> Beginning of Recession<br />2007: 3.20%<br />2006: 4.50%<br />AVERAGE: 4.00%<br />
  17. 17. 2011-2015 Supplementals<br />The question is: if just the base budget is going up $460,000, can we afford service increases?<br />What is Council expectation about services?<br />What are the factors that we should consider in order to introduce service increases?<br />Is it wise to cut services to make room for new services?<br />The estimated total for supplemental requests is $132,000<br />
  18. 18. 2011-2015 Capital Budget<br />The integrated Asset Management Program (IAMP) requires that we reach an acceptable level of revenue to fund for aging infrastructure<br />The acceptable level of funding to maintain current infrastructure conditions is an average of $4.2M a year (although ideally, in order to reduce the deficit, the funding should be an average of $6.4M)<br />In 2010 we allocated a total of $0.5M for capital projects<br />
  19. 19. 2011-2015 Capital Budget<br />The annual average funding needed in the budget to take care of the infrastructure deficit for roads and transportation is $2.2M<br />Water infrastructure will need an annual $3.5M<br />Sewer will need $80,000 a year<br />Stormwater will need $150,000 a year<br />Other infrastructure will need $450,000 a year<br />
  20. 20. 2011-2015 Capital Budget<br />Municipalities our size usually fund capital projects with an amount of $1.0M a year from General Revenue Fund<br />Our budget should increase to $1.0M in 2011 to begin meeting the targets of our IAMP (this is a $0.7M increase compared to 2010)<br />The Sewer Capital fund needed in 2011 is $1.15M<br />The Water Capital fund needed in 2011 is $0.57M<br />
  21. 21. Proposed Policy Recommendations - 1<br />That Council direct staff to prepare the 2011 Budget and the 2011-2015 Financial Plan, based on the following principles:<br />Maintain the current level of service provided to the residents and provide for necessary increases of services in areas identified in the Corporate Business Plan and in Council Strategic Priorities;<br />Reduce the current asset management maintenance gap by consistently providing the necessary funding to improve and maintain existing infrastructure<br />Maintain an acceptable level of reserves by balancing the use of reserve funds for projects with an adequate replenishment of reserves by adding an extra 0.5% annually to the current 4.5% of the total property taxes for the year<br />
  22. 22. Proposed Policy Recommendations - 2<br />That Council direct staff to prepare a 2011 Annual Budget based on the principles guiding the preparation of the 2011-2015 Financial Plan and with the following parameters:<br />A 4.0% tax increase to provide for inflation increase and to maintain the current level of services provided to the community. This percentage is also to provide sufficient funding to accomplish the strategic objectives of Council;<br />An allocation of 5% of the total property taxes to replenish the Capital Works Reserve;<br />An allocation of $1.0M from General Funds for capital expenses in order to deal with our aging infrastructure needs<br />An adequate water and sewer fee increase, if necessary, to:<br />Balance the Water and Sewer operating accounts;<br />Increase the sustainability of water and sewer infrastructure<br />
  23. 23. Alternative Recommendation for 2011 Budget<br />That Council direct staff to prepare three budget options to be considered at the January 25th Budget meeting<br />

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