2017 Tax-supported Draft Operating Budget

Presenters: Mike Mayes Wanda Bennett Bob Shelton January 30, 2017

Agenda

1. Where we are in the budget process 2. What we heard 3. Council priorities 4. How our taxes compare 5. 2017 budget challenges 6. Recommendation 7. Outcomes 8. Next steps

2

Background

November 14 – Workshop on the Budget Challenge • Introduced the concepts of Net Growth and

Extraordinary Items • Outlined 4 strategies for budget reduction

December 5 – Special Committee of the Whole (Budget) • Presentation of the Preliminary Draft Operating

Budget

December 5 – Committee of the Whole • Interim Appropriations

3

ACTIVITY DATE STATUS

Special Committee of the Whole Workshop – Operating Budget

November 14 1:30 p.m. Completed

Special Committee of the Whole Workshop – Financial

November 21 1:30 p.m. Completed

Committee of the Whole – remaining Fees & Charges

November 28 1:30 p.m. Completed

Special Committee of the Whole – Preliminary draft budget

December 5 10 a.m. Completed

Council approval of remaining Fees & Charges

December 5 7 p.m. Completed

Budget Schedule

4

ACTIVITY DATE STATUS

Draft budget information available to public and on website December 12 Completed

2017 Special Committee of the Whole – Capital Budget and Asset Replacement Fund

January 16 10 a.m. Completed

Special Committee of the Whole – Operating Budget

January 30 1:30 p.m. In progress

Committee of the Whole - Draft Capital and Operating Budgets

February 6 1:30 p.m.

Council approval of the Budget February 13 7 p.m.

Budget Schedule (cont’d)

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Business Planning / Budget Process

Recommendation for 2017 Budget

Process: April 18, 2016

SLT/OLT Budget + Business planning:

Jan – Nov. 16

Draft budget info available to public

on website: December 12, 2016

Special C.O.W. Workshop:

Operating Budget: Nov 14, 2016

Special C.O.W. Workshop: Financial

Sustainability: Nov 21, 2016

C.O.W. Workshop: Remaining Fees &

Charges: Nov 28, 2016

Special C.O.W. Preliminary draft

budget: Dec 5, 2016

Council approval of remaining Fees &

Charges: Dec 5, 2016

Special C.O.W. Capital Budget & Asset

Replacement Fund: Jan 16, 2017

Special C.O.W. Operating Budget:

Jan 30, 2017

C.O.W. Draft capital &

operating budgets: Feb 6, 2017

Council approval of Budget:

Feb 13, 2017

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2017 Budget Engagement: A Different Approach

2017 Budget Game Phase 1 and Phase 2 7

Overall Public Engagement • Website

• 101 page views

• Newmarket Town Page • Reach: 28,000 Newmarket Circ.

• Community Events • 2,000+ Community Open House • 1,000+ Farmers’ Market

• Internal Events • Social Media

• Twitter: 10.3K reach – Tweeted 30+ times

• Facebook: 9,000+ reach

• Insert in property tax bills • 28,000 households

• Media Releases • E-newsletters (Newmarket Now)

• 2,949 subscribers, 43 per cent open rate

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Event Corridors Streets Community Projects

OR 2020 Parking Other Totals

Community Open House

16 43 59.5 15 24.5 7 165

Newmarket Minute 8 7 18 24 -- 3 60

Garlic is Great 21 16 24 9 34 11 115

Website 30 40 39 12 36 19 176

Totals 75 106 140.5 60 94.5 40 516

Results – What we heard…

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2017 Budget Engagement Results

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Snapshot: Comments

• “More green space” • “Library open 7 days a week” • “Better municipal enforcement” • “Accessibility for seniors and more support (snow removal, etc.)” • ““Reduce taxes” • Better public transit” • “Less detached homes and more densification” • “No water rate increases” • “Ensure reserves are used for needed investment” • “Family programs and amenities” • “Poverty and homelessness” • “Safe drinking water” • “Curbing urban sprawl and environmental protection”

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Snapshot: Comments

• “New library/community centre as adjunct to a high-rise, mixed-use building”

• “Big, new outdoor pool” • “Better garbage and recycling” • “Cycling and more walkable Newmarket” • “Job creation, IT jobs, jobs that can support house cost” • “Better access (transit and cost) so all residents can afford to use

public facilities” • “Homelessness and drug addiction in Newmarket” • “Absurd to expand services” • “Help support children’s outdoor sports” • “Pay off debt, save for tomorrow” • “Free-flowing traffic”

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Council Priorities for 2017

1. Revitalizing our Community Centre Lands & addressing downtown parking needs.

2. Creating a strategy for vibrant and livable corridors along Davis Drive & Yonge Street.

3. Supporting community and neighbourhood projects.

4. Ensuring safe streets. 5. Organization Ready 2020.

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Newmarket’s tax rates are competitive

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% Change Net Levy per Capita Newmarket and its 9 comparators

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MUNICIPALITY 2010 2011 2012 2013 2014 2015 2016

Aurora 0.94% 3.54% 8.88% -3.22% 1.70% 3.19% 4.13%

Newmarket 0.58% 4.44% 12.48% -2.88% 2.79% 2.63% 2.41%

Markham -0.47% 2.18% 6.02% -3.23% 1.63% 2.84% 2.77%

Richmond Hill 0.27% 2.95% 5.72% -3.04% 1.78% 2.58% 3.08%

Vaughan 2.36% 3.17% 1.89% -5.00% -0.14% 1.08% 0.64%

Barrie 4.01% 4.99% 7.26% 0.16% 2.10% 4.11% 2.85%

Halton Hills 0.51% 2.25% 12.02% -1.52% 5.45% 2.67% 2.68%

Oshawa 1.25% 1.24% 8.48% -3.71% 2.82% 0.94% 2.85%

Pickering 2.16% 3.06% 13.29% 1.81% 0.80% -3.28% 9.49%

Whitby 2.70% 3.90% 4.33% -1.73% 1.34% 0.49% 2.90%

Change (%) in Tax Levy per Capita

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Over the last five years, the

funding for the base budget has

been shrinking.

17

Tax Increases: 2012 to 2016 & 2017 target as presented November 14, 2016

2012 2013 2014 2015 2016 2017 ARF - 0.80 0.74 1.00 0.80 0.60

Fire 0.60 2.18 2.17 1.09 1.30 0.68

Library 0.05 0.14 0.10 0.13 0.22 0.15

Town 3.30 1.42 -0.29 1.28 0.67 1.37

Total 3.95 4.54 2.72 3.50 2.99 2.80

-1%

0%

1%

2%

3%

4%

5%

2012 2013 2014 2015 2016 2017

ARF

Fire

Library

Town

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Net Growth as presented December 16, 2016

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2012 2013 2014 2015 2016 2017 tax impact

2017 $

ASSESSMENT REVENUE Expenses: 2.00% 1.50% 1.50% 2.00% 1.00% 1.23% $680,000

Decision Packages – Town 1.14 0.72 0.88 0.46 0.68 0.00 0

Decision Packages – Fire 0.00 0.01 0.00 0.56 0.25 0.50 274,735

Annualization of prior years 0.29 0.37 0.66 0.05 0.34 0.16 88,000

Operating impact of the growth-related capital budget

0.50 0.10 53,500

1.93% 1.10% 1.54% 1.07% 1.27% 0.75% $416,235

NET GROWTH Revenue less expenses: 0.07% 0.40% (0.04)% 0.93% (0.27)% 0.48% * $263,765

Estimated impact of growth on services - Public Works 0.15 0.14 0.42 0.11 0.19 0.20 110,000

Estimated additional ARF requirement for growth-related capital

0.05 0.06 0.12 0.10 0.16 0.17 95,000

True net growth position: (0.13)% 0.20% (0.58)% 0.72% (0.62)% 0.11% $ 58,765

Base Budget Tax Increases: 2012 to 2017 as presented November 14, 2016

2012 2013 2014 2015 2016 2017

Town 3.30 1.42 -0.29 1.28 0.67 1.37

Net Growth -0.08 0.27 -0.46 1.38 -0.21 0.51

Enhancements - - - -0.30 -0.34 -0.27

Extraordinary items -1.72 -1.84 - -1.65 -2.17 -1.78

Base 1.50 -0.15 -0.75 0.71 -2.05 -0.17

Base budget increases are not keeping pace with inflation.

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2017-19 Outlook (excluding Infrastructure Levy) as presented June 20, 2016

TAX INCREASE 2016 BUDGET

2017 2018 2019 Starting point based on known drivers, subject to

refinement

Base budget (Town) 1.49 1.50 1.50 1.50 CYFS – including growth 1.30 1.66 1.50 1.50 Newmarket Public Library 0.22 0.15 0.15 0.15 Phasing of 2015 enhancements 0.33 0.27 0.26 Growth expenses (excludes CYFS) 0.68 0.30 0.30 0.30

Growth revenue (1.00) (1.00) (1.00) (1.00) Enhancements 0.01 Revenue adjustments 1.59 0.23 Other one-time adjustments 0.43 Adjustments to capital financing (0.42) Other reductions (2.44) TBD TBD TBD TOTAL - prior to refinement 2.19 3.11 2.71 2.45

21 Projections will be updated during the 2017 budget process.

Extraordinary Items for 2017

Hydro-electric costs $ 471,592 Emerald Ash Borer (EAB) 262,000 Artificial turf field maintenance 20,000 Hydro SWM pond lease 15,000 Waste management - Revenue right-sizing, phase-in from 2016 130,000 Animal shelter contract 60,000 Cell phone costs 24,000

$ 982,592

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The 2017 Budget Challenge as presented December 5, 2016

Tax target 2.80% $ 1,545,026

Allocation to infrastructure levy (0.60%) (331 ,077)

CYFS (0.68%) (375,221)

Library (0.15%) (82,762)

Growth “surplus” 0.51% 281,415

Enhancements (0.27%) (150,000)

Extraordinary items (1.78%) (982,592)

Provision for base budget (0.17%) ($95,211)

This excludes fully addressing the growth of services, Council priorities, new service level enhancements and inflation.

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2017 Budget Target

THAT for the 2017 budget process, Council set a tax levy increase target of no more than 2.2% (Town portion), plus not greater than a 0.6% for the infrastructure levy or an overall town increase of not greater than 2.8%.

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Solutions for Consideration

If we were to run the Town like a private sector business, our options would be to: 1. Find efficiencies

2. Cut costs

3. Re-evaluate unprofitable business lines

4. Increase revenue

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Options A – Meeting the Target • achieves Council’s target 2.8% (0.2%) • defers $378,167 in expenses to 2018 • reduces some service levels and entails a higher

level of risk than is normally accepted A2 – Option A with some enhancements added • as presented to CoW on December 5 • 2.99% (0.39%) tax increase • includes additional expenditures

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Options (cont’d)

B – Sustainable alternative - to be sustainable financially and with regards to service levels • 4.88% (2.28%) tax increase • reverses budget cuts and service level

adjustments from Option A • maintains service levels and includes a

manageable level of risk

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Options (cont’d)

C – Meeting the target and being sustainable • Introduced at CoW on December 5 • details to be established for achieving these goals: • 2.8% (0.2%) tax increase • achieves Council’s target • removes deferral of expenses to 2018 • Additional reduction in levels of service with specific impacts to be determined

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A composite approach

Create more funding room for Council priorities by: 1. Revisiting the target 2. Refocusing the capital program 3. Reserve funding on an interim basis

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Revisiting the Target

THAT for the 2017 budget process Council set

a tax levy increase target of no more than 2.2%

(Town portion), plus not greater than a 0.6% for

the infrastructure levy or an overall town

increase of not greater than 2.8%.

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Refocusing the Capital Program 1. Reduce total Operating Budget impact from the Capital

program by maintaining the 2016 level of $500,000 2. Reduce Capital program accordingly

• Trails and Breathing Spaces – design only • Build reserves • Focus on strategic priorities • Meet the tax increase target • Complete previous years’ capital carryovers

3. More realistic phasing of the implementation of the Recreation Playbook with a focus on main projects – splash pads, basketball, design and planning

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No increase in contributions to the ARF is recommended

But the impact is mitigated by:

1. Substantial infrastructure grants are anticipated 2. Rate-supported ARF will increase by $287,842 3. 2016 capital carryovers will be closely reviewed

to re-allocate unspent funds from previously approved projects

4. Potential surplus in 2016

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Revisiting Funding

$ TAX % Defer increase in ARF contribution $ 331,000 0.60 Use of reserve funds 155,000 0.28 Maintain current level of funding for capital 46,000 0.08 Event sponsorship 6,000 0.01 Additional minor cost reductions 4,300 0.01

$ 542,300 0.98

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Initiatives to be Added Back In

$ TAX % Enhanced Emerald Ash Borer program $ 262,000 0.47 Maintain existing level of hiring gaps 110,000 0.20 Playground equipment enhancements * 75,000 0.14 Marketing Plan for Corridor Development * 50,000 0.09 Urban Design review * 30,000 0.05 Economic Development expenses 9.300 0.02 Public Works Special Events 6,000 0.01

$ 542,300 0.98

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* Funded from reserves

Enhanced Option

1. Add another $55,000 to sidewalk snow clearing to account for growth that has occurred since the original plan

2. Implement 3rd phase of Traffic Management initiative as an Enhancement for $50,000

Sum of $105,000 = 0.19% tax increase

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Revised Options

MEETING THE TARGET

ENHANCED OPTION (RECOMMENDED)

Base budget 3.14% 3.14%

Extraordinary items 1.78% 1.78%

Manageable reductions - Efficiencies and new revenue (0.57%) (0.57%)

Further reductions – service level and cost cuts (1.11%) (1.11%)

Net growth (0.62%) (0.52%)

Net before enhancements 2.62% 2.72% Enhancements 0.18% 0.27%

ARF 0.00% 0.00%

2.80% 2.99%

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Net Growth

MEETING THE TARGET

ENHANCED OPTION (RECOMMENDED)

Assessment growth 1.23% 1.23%

Growth expenses:

Town Decision Packages 0.00% 0.10%

Fire Master Plan phasing 0.51% 0.51%

Operating budget impact from growth capital 0.10% 0.10%

0.61% 0.71% Net Growth 0.62% 0.52%

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Tax Increase by Component

TOWN FIRE LIBRARY TOTAL

Base 2.85 0.26 0.13 3.24

Growth expenses 0.20 0.51 0.71

Assessment revenue (0.72) (0.51) (1.23)

Enhancements 0.27 0.27

Infrastructure levy 0.00

TOTAL 2.60 0.26 0.13 2.99

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Average Residential All-in Tax Increase

2016 2017 $ CHANGE

% CHANGE

Town Portion $ 1,719.46 $ 1,770.87 $ 51.41 2.99%

Region Portion 1,774.18 1,825.10 50.92 2.87%

Municipal Sub-total $ 3,493.64 $ 3,595.97 $ 102.33 2.93%

School Board Portion 839.83 839.83 0.00 0.00%

TOTAL $ 4,333.47 $ 4,435.80 $ 102.33 2.36%

• Based on an average assessment of $446,719 • No increase in the School Board is anticipated at this time • This does not factor in tax shifting

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Budget Policy: Moving Toward Sustainability 1. Base the budget target on a blending of the

Consumer and Construction Price Indices. 2. Match growth revenues and expenses.

3. The base budget needs to be maintained and as a consequence, service-level enhancements and extraordinary adjustments should be additional to the allocation for the base budget.

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2018 to 2020 Outlook of Projected Tax Increases

2017 2018 2019 2020

Base – Town 2.75 1.60 1.60 1.60 Base – CYFS 0.26 0.75 0.75 0.75 Base – Library 0.13 0.15 0.15 0.15 Manageable reductions (0.57) (0.25) (0.25) (0.50) Growth, net (0.52)

Net base 2.05 2.25 2.25 2.00 Extraordinary items 1.78 0.89 Further reductions (1.11)

Net before enhancements 2.72 3.14 2.25 2.00 Carryovers from 2017 0.00 0.00 0.00 Enhancements 0.27 Infrastructure levy 0.00 0.36 1.00 1.00

2.99 3.50 3.25 3.00

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Average Household’s Funding for Municipal Services

Property Tax

Water bill

SWM charge Total

2016 $ 1,719 $ 1,030 $ 0 $ 2,749

2017 - with increases of 2.99% for taxes and 6.5% for water 1,771 1,097 0 2,868

Adjusted for implementation of Stormwater Management Rate -43 -7 30 -20

2017 – revised $ 1,728 $ 1,090 $ 30 $ 2,848

2017 – net increase $ 9 $ 60 $ 30 $ 99

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Cut costs

COSTS CUT REDUCTION IMPACT / RISK

Reduce overtime budgets $ 149,800 Service level reduction

Training and general expenses 102,485 Risk will be managed through reserves if required

Reduce budget for fuel 40,000 Risk will be managed through reserves if required

Accountability officers 33,000 Done

Reduce facility maintenance 25,000 Service level reduction

Reduce janitorial contract 24,500 Service level reduction

Other 11,649 Service level reduction

De-annualization of new CYFS hires 66,167 Costs are deferred to 2021

Reduce CYFS overtime 11,880 May not be sustainable

Total $ 464,481

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Adjusted Service Levels

SERVICES ADJUSTMENT IMPACT / RISK

Reduce advertising budgets 28,000 May result in less community awareness and some lost revenue

Reduce Customer Service contract staff 25,368 Decrease in coverage at the Old Town Hall

Customer Service Kiosk

Horticulture 25,000 No large potted flowers outside of the Main Street / BIA area

Eliminate funding for some Community events 23,280 Would impact Holiday Nativity, Doors Open

and Around the World

$ 101,648

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Creating a strategy for vibrant and livable corridors along Davis Drive & Yonge Street

Deferred for future consideration: • Entrance signs (Service Clubs) - $30,000 • Corporate Communications Specialist -

$87,000

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Supporting community and neighbourhood projects

Deferred for future consideration: • Additional cleaning of public washroom -

$20,500

46

Ensuring safe streets

Deferred for future consideration: • Snow clearing of courts and elbows -

$70,000

47

Organization Ready 2020

Deferred for future consideration: • 2017 Asset Replacement Fund contributions have

only been increased in the Wastewater area ($287,842)

• Requests for additional staff - $410,000

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What we will be doing in 2017

1. Return to an earlier budget process: • targeting approval in December

2. Continuing to seek sustainable budget reductions: • Efficiency initiatives and innovation e.g. N6, other partnerships, energy reductions • Business reviews re: under-utilized assets, facilities, leases • Special service charges • Main St., parking, etc.

3. Financial policies and implementation plans: • Budget • Debt, reserves and reserve funds • Asset Replacement Fund

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ACTIVITY DATE STATUS

Special Committee of the Whole – Capital Budget and Asset Replacement Fund

January 16 10 a.m. Completed

Special Committee of the Whole – Operating Budget

January 30 1:30 p.m. In progress

Committee of the Whole - Draft capital and operating budgets

February 6 1:30 p.m.

Council approval of the Budget February 13 7 p.m.

Next Steps

50