Budget/Taxes for 2013

Council is in the middle of 2013 tax assessment/budget discussions.  As expected there is tough debate as Council members have differing viewpoints:  sometimes the disagreement is on a specific issue and sometimes it is on the cumulative impact of all the items i.e. the tax increase required to support the plan.

You can read the draft budget presented at Council 12/10 here.  It includes a recommendation of an increase of 2.42 % (blended 1.67%) which would be an increase of $104 on the average residential property assessed at $616,000.

After some discussion Council gave direction to Staff to consider some alternatives with the objective of achieving an increase of 3.42% (blended 2%) which would be an increase of $125 on the average residential property.  This modified draft budget (which I call DRAFT 2) will be presented at Council on January 14.

With the benefit of the holiday “quiet time” I have been reviewing the budget and I find myself becoming more uncomfortable with DRAFT 2.

  • We are not setting ourselves up to deliver expected services to our parks & recreational customers.  At any time the latter would be concerning but given that we have just approved new rates as part of our move to a standard & fair subsidy level for these services it is particularly worrisome.
  • We are avoiding the scary black hole of reserves. To be fair we aren’t totally avoiding it as I will elaborate but first some context.  Our infrastructure is being consumed/amortized at a rate of $4.7 million/year.  Some day that infrastructure will need to be replaced; in fact, today some of our capital spending is on replacing old infrastructure.  It’s too bad that years ago the tax payers weren’t creating reserves to help the tax payer in 2013!

As I said we are putting a little money into the reserves.  1st budget includes $270,000 for infrastructure reserves. (This is same as included in 2012.)   DRAFT 2 includes an additional $173,000 to the reserves.

It seems to me that our small  reserves is particularly troubling as we have very limited ability to borrow money if there should be an emergency.  Our borrowing is capped by the Planning Act; and in fact we have been given a little more borrowing room to enable completion of Phase 1 of the Nobleton sanitary sewer project.  I believe that those debentures will not be paid off until well into the 2020’s.  How will we finance a response to an emergency in the Township?

The quality of our debate about magnitude of contributions to reserves will be much higher once Finance recommends a strategy for reserves.  Council has requested this and it will be presented in 2013; but, we need to deal with the 2013 budget now.  Given that we are consuming the infrastructure at a rate of $4.7 million I cannot imagine that the strategy will recommend an annual contribution less than $500,000 a year.  Hence I believe that we will be better off to start putting in some extra dollars in 2013; I suggest an additional $85,000-170,000 to what is in DRAFT  2.

I am interested in what you think about this very important issue.

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