City of Cornwall Operating and Capital Budget 2007 (Excluding water and waste water budgets) January 22 nd, 2007

2007 Operating and Capital Budget

The operating and capital budgets are considered the same budget as all expenditures are financed from the same source of revenue (tax base) Council will be asked to review and reconsider the “no debt” policy

Major Revenue Sources Major changes include a reduction in MCFCS revenues by ($1.5M) and best start revenues of ($2.1M), the related expenditure has been reduced by a similar amount

The tax levy represents the main revenue source (38%) of the 2007 budget. The tax levy is based on the assessment as provided by MPAC multiplied by the approved tax rate. The 2007 budget is based on the the tax rate approved in 2006 Essentially, the tax levy is the net revenue requirement based on approved expenditures less known and expected revenues

Tax Ratios Tax ratios define each property class’s rate of taxation in relation to the rate of the residential property class Municipalities cannot apply levy requirements to classes exceeding the provincial threshold

Year over year assessment growth

In the summer of 2006, the Province and MPAC agreed to freeze assessment until Property values will remain the same unless major alterations made to the property (supplemental) In 2006 the changes to current value assessment (CVA) provided additional tax levy allowing for a reduction in the tax rate (CVA growth of 5.9% and new growth of.9% allowed for a tax rate reduction of 3.4%) The “net new growth” as represented by the growth of $20M results in $441,054 in new tax levy at 2006 rates.

.88% 2.19%.96% 1.70% 2.35% 1.53% The growth rate in Ottawa is 2.30%, whereas the provincial average 1.91%.

The new growth as identified at.88% represents a tax levy increase of $441,054. (new 2006 tax rate) We are also anticipating supplemental taxation of $360,000 This can be compared to the general increase required for salaries and wages of $ 794,000. (excluding Police and funding from The Province and SD&G for shared services) The budget does not include any additional employees

Inflation averaged at 2.5% annually A residential tax rate of would have generated an additional $6,940M In 2006.

Taxes in 2006 compared to taxes required to balance 2007 budget (7.98% tax rate increase) and an inflation adjusted levy increase of 2.5% (1.57% tax rate increase)

Total expenditures of $134,326,290 Much of what the City is required to spend is either mandatory or regulated providing council very little flexibility in determining affordable spending levels (73:27) City council has little if any control over spending in the following areas: Policing Policing Fire Fire Social Services Social Services Social Housing Social Housing Land Ambulance Land Ambulance Glen Stor Dun Lodge… Glen Stor Dun Lodge… The City is also mandated to have certain positions and functions, Including a clerk, a treasurer, and a chief building official

Salaries and wages (excludes Police) Overall wage and benefit increase is approximately 3.1% Overall wage and benefit increase is approximately 3.1% Contractual agreements with unions establish pay increase of 2.5% Contractual agreements with unions establish pay increase of 2.5% Step increases account for additional increments. Step increases account for additional increments. No new staff No new staff Staff complement of: Staff complement of: 545 Full Time 130 FTE’s

Purchase of Goods and Services and Rents Increase of approximately 4.4% Primarily relates to utility Increases of $40,000, new equipment of $160,000 fuel costs of $55,000 and Salt, sand … $88,000 Overall requests have decreased by $2.5M. Major expenditures Include garbage collection and diversion, contracts for R&M Child care services, meals on Wheels, snow clearing, grass cutting…

Financial Expenditures Expenditures include transfers to Social service recipients ($33M) Contribution to reserves and capital ($6M), transfers to housing providers ($8.4M) and transfers to Outside Agencies ($3.5M) The Police Budget is still in draft and is an estimate at this time. The Police Services Board is presently reviewing the budget. Specific documents and the accompanying reports will be submitted at a later date.

Comparative Expenditure Groupings The financial statements provide analysis of expenditures based on functional groupings The following slides present the 2007 budget requests on a net expenditure basis along with the 2006 approved budgets

Overall expenses have decreased primarily due to the reduction in The cost of servicing debt in 2007 relative to 2006 ($1,824,739)

The Ministry of Health has increased the level of funding for Land Ambulance resulting in reductions to the City and County taxpayer. Funding, prior to downloading was shared 50:50.

Capital requests including paving, roof replacements… have resulted In an addition to capital of $544,000

Although total budgeted expenditures are expected to increase by $231,460., it is expected that revenues will increase by $206,020

The large increase is due primarily to the requested increase for capital projects l

The budgeted increase for Ontario Disability Support Program, cost shared with the province is expected to add $.778M in costs to the taxpayer. The increase in Ontario works is expected to add $.308M

The primary reason for the increase is due to the affordable housing initiative Projected to cost $300,000. Funding has been made available for this Initiative

A major capital project was budgeted in 2006 for repairs to the Complex.

Outside Agencies Health Unit funding has decreased due to increase in funding directly M of H The Airport commission is $363,500 in capital in 2007.

Internal recoveries and Corporate Costs represent internal charges from service departments to user departments Net expenditures are allocated to receiving departments based on a number of drivers including # of employees, % of time spent… This provides the true cost to operate each department Allows for meaningful comparisons with other municipalities Similar guidelines to those provided by the Ontario Municipal Bench Marking Initiative i.e. Human resources provide services to all departments throughout the Corporation. The City has been doing this for years through Municipal works and equipment rental

Corporate costs

Capital Project Funding 2006 expenditures included maintenance to the complex funded Through investment income from the Progress Fund

Annual Capital Expenditures These capital expenditures are exclusive of capital in the Water and Waste water systems

Transportation

Solid waste

General Government/ Facilities

Recreation

Glen Stor Dun Lodge

Municipalities are permitted to establish reserves and reserve funds. The balances can be established to finance future expenditures as well as to fund future capital purchases. They can also be based on accumulated surplus for use for stabilization purposes. Reserves and reserve funds are essentially the same with the following differences: Reserves Funds are established in separate bank accounts or investments and are credited with investment earnings and are typically established by regulation or By-Law

Cornwall has a number of reserves and reserve funds with the most recognizable being the Progress Fund and Debt Retirement Fund. These were established with the sale of Cornwall Electric. The Progress fund was established to fund “Quality of Life” expenditures. The debt retirement fund was organized in a fashion that as debt payments became due, the investments matured allowing the City to fund debt payments from sources other then the tax base.

Reserves and Reserve Funds

Tax Comparisons The City of Brockville completed an internally prepared “Tax Study” in the summer of 2006 and reported that the City of Cornwall has the highest taxes in the survey. The following slides represent the details of the survey.

The study provided comparisons based on a residential value of $100,000 There is no discussion on level of services being provided. The City of Cornwall provides full range of services including fire, policing, transit full recreational facilities…. Value of dwelling

BMA Municipal Tax Study The City engaged the services of BMA Management Consultants in 2001 to assist the community in understanding the tax burden relative to other communities. The original study provided details related to housing values and costs of comparable services. These consultants increased the scope of work across the province and now include 80 Ontario municipalities representing in excess of 80% of the population. Municipalities included in the analysis include: Population ranging from 6,300 to 2.4M Population ranging from 6,300 to 2.4M Land Mass Area ranging from 16km to 3,400km Land Mass Area ranging from 16km to 3,400km Population density ranging from 15/km to 4,100/km Population density ranging from 15/km to 4,100/km

BMA Municipal Tax Study Ajax InnisfilPrince Edward County Ajax InnisfilPrince Edward County Amherstburg Kawartha Lakes Richmond Hill Amherstburg Kawartha Lakes Richmond Hill Aurora King Sarnia Aurora King Sarnia Barrie Kingston Sault Ste. Marie Barrie Kingston Sault Ste. Marie Belleville Kitchener St. Catharines Belleville Kitchener St. Catharines Bracebridge Lakeshore St. Thomas Bracebridge Lakeshore St. Thomas BramptonLeamington Stratford BramptonLeamington Stratford Brantford Lincoln Sudbury Brantford Lincoln Sudbury Burlington London Tay Burlington London Tay Caledon Markham Tecumseh Caledon Markham Tecumseh Cambridge Milton Thorold Cambridge Milton Thorold Cavan-Millbrook-North Monaghan Mississauga Thunder Bay Cavan-Millbrook-North Monaghan Mississauga Thunder Bay Central Elgin Newmarket Timmins Central Elgin Newmarket Timmins Chatham-Kent Niagara Falls Toronto Chatham-Kent Niagara Falls Toronto Clarington Niagara-on-the-Lake Vaughan Clarington Niagara-on-the-Lake Vaughan Cobourg Norfolk Wainfleet Cobourg Norfolk Wainfleet Collingwood North Bay Wasaga Beach Collingwood North Bay Wasaga Beach Cornwall North Dumfries Waterloo Cornwall North Dumfries Waterloo East Gwillimbury Oakville Welland East Gwillimbury Oakville Welland Fort Erie Orangeville Wellesley Fort Erie Orangeville Wellesley Georgina Orillia West Lincoln Georgina Orillia West Lincoln Gravenhurst Oshawa Whitby Gravenhurst Oshawa Whitby Grimsby Ottawa Whitchurch-Stouffville Grimsby Ottawa Whitchurch-Stouffville Guelph Pelham Wilmot Guelph Pelham Wilmot Halton Hills Peterborough Windsor Halton Hills Peterborough Windsor Hamilton Pickering Woolwich Hamilton Pickering Woolwich Huntsville Port Colborne Huntsville Port Colborne

Net requirements to be raised through taxation (000’s)

Tax comparisons

Taxes on detached bungalow Total municipal taxes on a detached Bungalow. Values range from$101,250 to $491,594 in the survey Cornwall is at the mid range of the survey

Total municipal taxes on a walk-up. Properties ranged in value between $26,000 to $85,000 per unit Cornwall is at the high end of the survey Taxes on walk-up apartment

CVA ranged in value from $31 to $165/sq. ft Cornwall is at the high end of the survey CVA ranged in value from $17 to $92/sq.ft. Cornwall is at the low end of the survey

Comparable water and sewer charges Based on the above analysis, the cost of water and waste water is extremely low Compared to the provincial median and Our comparator communities

Total municipal burden as a % of income Total municipal burden Relative to average dwelling value

BMA Municipal Tax Study When the Province assumed responsibility for education finance in 1998, it "uploaded" much of the residential education portion as part of the “Who Does What" realignment of services and costs between the two levels of government. This allowed the Province to equalize the residential education tax rate across the province at a dramatically lower level. This created ‘tax room’ for the municipalities which were expected to pay for the services they assumed in the realignment—"downloaded" service. When the Province assumed responsibility for education finance in 1998, it "uploaded" much of the residential education portion as part of the “Who Does What" realignment of services and costs between the two levels of government. This allowed the Province to equalize the residential education tax rate across the province at a dramatically lower level. This created ‘tax room’ for the municipalities which were expected to pay for the services they assumed in the realignment—"downloaded" service. By contrast, business education taxes were not equalized. They continued to reflect the rates that existed in each municipality while local school boards were setting the rates. By contrast, business education taxes were not equalized. They continued to reflect the rates that existed in each municipality while local school boards were setting the rates.

BMA Municipal Tax Study Education Rates If the average rate across the Province was made available to Cornwall commercial and industrial taxpayers, their respective tax bills would be reduced by 30.69% and 23.08% respectively. The gross savings would be: Commercial Taxpayers$3,142,565 Industrial Taxpayers$ 523,470 Similarly, the median rate would have resulted in the following: Commercial Taxpayers$3,502,477 Industrial Taxpayers$ 461,074

10 Worst Education Commercial-to-Residential Tax Ratios with a comparison of Taxes on a $200,000 Property Municipality Ratio Commercial Education Taxes Residential Home ownerCommercial Kirkland Lake , ,9905,926 Thunder Bay , ,5455,283 London , ,3055,222 Blind River , ,4905,215 Elliot Lake , ,5355,157 Temiskaming Shores , ,5404,993 Cornwall , ,8094,942 Fort Frances , ,3694,931 Stratford , ,8174,808 Smith Falls , ,9794,761 CFIB Tax Study

Development fees represent the recovery of costs by Ontario Municipalities for capital infrastructure required to support new growth The City of Cornwall along with Sault Ste. Marie, Thunder Bay, Timmins and the County of Prince Edward County do not have any development charges 9 additional municipalities do not have industrial development charges and 3 do not have commercial development charges

In 2001 the Province introduced the Municipal Performance Measurement Program as an initiative to provide taxpayers with information on service delivery Similar to the University and College comparisons addressed by MacLean’s magazine Annually, municipalities provides relevant financial data to allow comparisons between themselves. This data is not truly comparable due to discrepancy in accounting and reporting practices used throughout the Province

Fire costs are dependent on a number of factors including: Size of municipality Size of municipality Mix of urban and rural coverage Mix of urban and rural coverage Volume of activity Volume of activity Composition of fire services Composition of fire services Specialized services Specialized services Accounting and reporting practices Accounting and reporting practices

Policing costs are dependent on a number of factors including: Location Location Incident of serious crimes Incident of serious crimes One-time special events One-time special events Geographic mix (urban vs. rural) Geographic mix (urban vs. rural) Specialized services Specialized services Accounting and reporting practices Accounting and reporting practices

Operating costs for paved roads can be influenced by: Weather Weather Age and condition of network Age and condition of network Volume and type of traffic Volume and type of traffic Pavement standard’s Pavement standard’s Accounting and reporting practices Accounting and reporting practices

The operating costs for winter maintenance can be influenced by: Weather Weather Accounting and reporting practices Accounting and reporting practices

Factors affecting land ambulance service costs: Service levels and standards Service levels and standards Dispatch Dispatch Urban Vs Rural Urban Vs Rural Age and condition of fleet Age and condition of fleet Accounting and reporting practices Accounting and reporting practices

Factors that affect General Assistance and Child care: Number of recipients Number of recipients Socio-demographics Socio-demographics Accounting and reporting practices Accounting and reporting practices