Managing budgets

May 16, 2008


Normally,  Council finds out what the potential budget impact will be either at or just before having to make a decision on the budget.  Historically, this has not left a lot of time for Council to responsibly or constructively discuss ways to reduce a potential tax rate increase.  Instead,  Councils have increasingly dipped into reserves – specifically the rate stabilization reserve – to reduce tax rate increases on budget night.  It can be very difficult to wean yourself from this inappropriate and ultimately unsustainable use of reserves.  We have been working to wean ourselves from this dependency over the last two years but it will take us several more years to achieve.

We have changed this process by asking staff to present an early estimate of next year’s budget based on all available information, conservative thinking, and known pressures.

The estimate for 2009 – 6.5% – is going to Council on May 26th for their consideration.

The estimate breaks down in a number of ways.

First, there is a 5.5% proposed increase to maintain existing services and a 1% increase for new and/or improved services.  An example of a potential improved service for 2009 might be an enhanced level of maintenance of our sports fields.

There are several factors contributing to the 5.5% increase to maintain our existing services:

  • Final costs to fully implement 20 minute transit service (0.5%)
  • Final costs to enhance ambulance service to reduce response times (0.4%)
  • Loss in interest income due to declining interests rates (0.7%)
  • Reduced reliance on the rate stablization reserve ().3%)

Other factors include increased salaries, wages, goods (e.g. fuel costs) and services.

There is good rationale behind accepting all of these factors but we cannot ignore the ongoing concern in the community that this increase, and past increases, continue to exceed inflation.  We are not alone.  Municipalities across Ontario struggle with similar, and often higher, increases.  My brother-in-law lives in Calgary and his city is talking about a 10% increase.

I received a call today from a resident worried about the impact on seniors.  He advised me that the Old Age Pension went up a little over 1% and the Canadian Pension Plan about 2% in 2008. 

We can hope that the Province uploads social housing and social services which account for about 25% of our budget.  These were downloaded in the mid 90s and should never been placed on the property tax bill.   Discussions are ongoing with the Association of Municipalities of Ontario.

We can also hope that the Province and the Federal governments step forward with new infrastructure programs.  The cost of maintaining infrastructure is driving part of the property tax increases we are seeing across the country.

In the meantime, Council and City staff have 6 months to consider the base budget, potential efficiencies, and service level changes to help mitigate the increase for 2009.

About Karen Farbridge

An unwavering change maker seeking a just, democratic and sustainable world.

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One Comment on “Managing budgets”

  1. Robert Ackerman Says:

    Thanks you Karen for your email response and the suggestion to review your blog.

    It rightly appears that this subject is getting a little more press, namely letters in the yesterday’s Guelph Tribune’s issue .

    However to comment on your Managing budgets, I totally agree with the need to review well ahead of time.

    However for example the ‘ other factors’ you mention are critical to deal with, ie. the impact on rising fuel costs, oil with a $150 to $200 a barrel cost is not too far away and it’s impact on today’s city operating costs.

    Don’t loose Guelph Hydro !.

    Maybe the 20 minute transit service has to be reversed ! Departments to find innovative ways to become leaner ie., reduce their transportation costs immediately which may affect service and personnel. As mentioned previously , forget the artificial skating rink and splash pool in front of city Hall.

    Wage increases to be applied on what’s realistic and not cost of living as the latter is just going to skyrocket.
    The CAW are at long last realising that ! Their message has to be passed along ! Residents have to become more cost effective !

    What is happening in Calgary is being caused by extrodinary circumstances and is unique to them.

    The imact on seniors is real and as I mentioned in my email, my combined increases are less than one %, caused by a major part of my employee’s pension being non inflationary, namely what I received annually 10 years ago, I will get the same amount the year I die.

    Karen I realise the future doesn’t look great as we witness losing well paying jobs with service type ones, increasing # of workers without pensions, higher worldwide food costs , security concerns, increasing crime, etc . It certainly no doubt will require many unpleasant decisions.

    Hope the above is of value


    Bob Ackerman

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