Long Term Financial Overview - Thunder Bay2017/2017_LONG+TERM+PLAN.pdfLong Term Financial Overview...
Transcript of Long Term Financial Overview - Thunder Bay2017/2017_LONG+TERM+PLAN.pdfLong Term Financial Overview...
Long Term Financial Overview
2017 and BeyondPresented to: Committee of the Whole
January 25, 2017
Presentation Agenda 2017 Budget Overview Questions & Answers Infrastructure and Infrastructure Deficit Debt and Reserve Funds Questions & Answers BMA Study 2016 ‐ Taxation and Affordability Economic Environment Financial Projections 2018‐2022 Questions & Answers
BUDGET VIDEO
2017 BUDGET OVERVIEW
2017 Proposed BudgetCity Manager Direction
2017 departmental budgets to come in at 0% increase over 2016 level (not including wage increases)
Savings Target from budget directions of $1.8 million to be identified to mitigate impact of tax levy from operations
Expansions reviewed and minimized Review all corporate accounts for reductions Focus on Operating Budget Stabilization to address
unfavourable variances and begin to restore reserve fund contributions for sustainability
Investing in Canada Federal and Provincial Infrastructure Funding
2017 Gross Budget
2017 Projected Grant Subsidy
Public Transit Infrastructure Fund $8,129.5 $3,364.2
Clean Water and Waste Water Fund (Tax)
$5,487.0 $4,106.3
Clean Water and Waste Water Fund (Rate)
$6,197.4 $3,953.8
Social Infrastructure Fund $8,348.1 $3,800.8
Green Infrastructure Fund $5,279.0 $2,374.5
Total $33,441.0 $17,599.6
*
* Approval received
2017 2018 2019 3 Year Average
Comments
Budget DirectionTotal Municipal Tax Levy
4.41% 3.64% 3.87% 3.97%
Estimated Municipal Levy Impact on Existing Taxpayers (Net of Growth)
4.40% 3.10% 3.00% 3.50% Based on estimated Growth at $9K in 2017 and $1M in 2018 and $1.7M in 2019
Proposed BudgetTotal Municipal Tax Levy
3.53% 4.19% 3.85% 3.86% Revised 2018/2019 projections to be discussed later on
Municipal Levy Impact on Existing Taxpayers (Net of Growth)
3.07% 3.37% 3.07% 3.17% Based on Growth of $821K in 2017,$1.5M in 2018 and $1.5M in 2019
2017 – 2019 Proposed Municipal Tax Levy Increase
2.79%3.77%
2.67%
0.02%
2.22%
0.61%1.64%
4.56%
5.64%
2.35%
0.10%
0.22%
‐0.06%
2.38%
1.69%
1.99%
1.38%
‐1.82%‐2.62%
0.00%
1.10%
1.02%
1.18%
‐3.00%
‐1.00%
1.00%
3.00%
5.00%
7.00%
9.00%
11.00%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Proposed
City of Thunder BayMunicipal Tax Levy % Change (Before Growth)
How Spent
Net Operating Budget Increase % of Levy Capital (including EIRP) % of Levy Stabilization % of Levy
2017 Budget Key Drivers$ Municipal TaxLevy Increase
($000s)
% Change in TotalMunicipal Tax Levy
Comments
Base Increase $ 3,307.5 1.86%Mainly wages (75% of Depart.Gross Budget is Wages)
Stabilization Measures $ 2,295.6 1.29%Legal, Insurance Claims, Golf Revenue, Early Leave
Reserve Fund Contributions $ 1,244.4 0.70%Legal, Insurance, WSIB, Renew TBay, Prior Year one time
Debenture Payments $ 922.5 0.52%Golf Links, Waterfront, Construction Financing
Other Expansions $ 687.3 0.39% Solid Waste, Roads Quality, Material & Purchase Services $ 816.1 0.46% Energy costs, Snow Removal
Thunder Bay Police Service $ 1,098.4 0.62%Increase to deal with previous unfavourable variances
Total Before Reductions $ 10,371.8 5.84%
Operating Reductions ($ 2,776.1) (1.56%)City Manager Review Process, Insurance Premiums
Increased revenue ($ 1,314.7) (0.75%)Municipal Tax Levy Increase Before Growth
$ 6,281.0 3.53%
Taxable Growth ($ 821.0) (0.46)Total Municipal Tax Levy Increase Net of Growth
$ 5,460.0 3.07%
Budget Stabilization• 2011 to 2014 Focus on Capital – restraining increases to
Operating Budget• Very “tight” operating budgets faced increasing pressure
mainly related to:– Harsh Winters– Legal Expenditures (External Fees)– Insurance Claims
• Year End Budget Deficit in 2013, 2014 • Multi‐year budget stabilization strategy introduced in
2015 Budget, continued in 2016, and finalized in 2017
Surplus (Deficit) History• 2009 $2.2M Favourable Variance• 2010 $5.8M Favourable Variance• 2011 $1.6M Favourable Variance• 2012 No Significant Variance• 2013 ($8.2M) Unfavourable Variance• 2014 ($3.6M) Unfavourable Variance• 2015 ($1.1 to $1.7M) Unfavourable Variance ‐ Q3
Projection• 2015 $1.0M Favourable – Actual *• 2016 No Significant Variance (Projected)
* Actual variance would have been ($2.4) million unfavourable without additional supplemental tax revenue
Stabilization Measures Included in 2017 Budget
2017 Proposed
Legal Fees 682,000
Early Leave/Retirement Costs 187,900
Golf Revenue Adjustment 250,000
Insurance Claims 982,900
Remove Reliance on Other Reserve Funds 192,800
Total 2,295,600
Other Stabilization Measures Included in 2017 Budget
2017 Proposed
Legal Reserve Fund – One Time 500,000
Insurance Reserve Fund – One Time 250,000
WSIB Reserve Fund – One Time 500,000
Renew Thunder Bay Reserve Fund 250,000
Total 1,500,000
Cost Containment/Deficit Management Reduction (Tax Supported)
• 2012 ‐ $1.3 million (Report No. 2012.111)• 2013 ‐ $1.4 million (Report No. 2013.101)• 2014 ‐ $1.7 million (Report No. 2014.079)• 2015 ‐ $0.5 million (Report No. R138/2015)• 2016 ‐ $3.0 million (Report No. R136/2016)• 2017 ‐ $2.8 million proposed• Total $10.7 million from 2012 to 2016
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Cumulative Wage Increases Emergency vs Non Emergency Services
Emergency Groups Non‐Emergency Groups (including Non‐Union)
Average Increase Last 5 years:
Emergency Service Groups: 2.66%
Non‐Emergency Service Groups: 1.89%
City of Thunder BayMunicipal Tax Levy % Change
YEAR% CHANGE
% Net Growth% CHANGE
Before Growth Net of Growth2008 2.89% ‐0.42% 3.31%2009 4.00% 0.07% 3.93%2010 2.60% 0.68% 1.92%2011 2.40% 0.41% 1.99%2012 3.91% 0.70% 3.21%2013 2.60% 0.72% 1.88%2014 3.02% 1.33% 1.69%2015 3.83% 0.65% 3.18%2016 4.04% 1.94% 2.10%2017* 3.53% 0.46% 3.07%
10 Year Average 3.28% 0.65% 2.63%
* Proposed 2017 Municipal Tax Levy Increase
2017 Proposed BudgetWhat do my municipal taxes pay for?
$ Annual
Public Safety (Police, Fire, EMS) 331
Public Works (Roads , Transit, Waste , Asset Management/Engineering/Central Support )
164
Social Services (DSSAB , Homes for the Aged) 88
Parks, Recreation, Tourism 79
General Corporate 74
Administration 64
Outside Boards & Agencies (excluding Police) 63
Debenture payments (Capital Projects) 56
Enhanced Infrastructure Renewal Program 36
Development Services 15
Capital Programs 13
Tax Rebates and Write‐offs 17
TOTAL CITY SERVICES $1,000
Per $1,000of municipal
tax levy
Public Safety and
Public Works Is 50% of Total
Questions ?
INFRASTRUCTURE AND INFRASTRUCTURE DEFICIT
2017 Enhanced Infrastructure Renewal Program (EIRP)
Roads $2.8 Storm Water Management $1.3 Facilities $1.2 Parks $2.2 Bridges and Culverts $0.5 Sidewalk Replacement $0.3 Street Lighting $0.1
Remains at $8.4 million (Consistent with 2016)
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Proposed
Millions
Tax Supported Capital Financing
Capital out of Revenue Debenture Enhanced Infrastructure Renewal Program Total
Comprehensive Asset Management Plan V3 Tax Supported Deficit
Asset Category $ Millions
Roads $4.5
Sidewalks $3.7
Bridges & Culverts $3.0
Storm Sewers $3.6
Facilities $5.2
Fleet $4.0
Land Improvements $1.6
Machinery & Equipment $2.0
Total Tax Supported Deficit $27.6
• Projected to be eliminated in 16 years by:
• All Federal and provincial Gas Tax and OCIF funding dedicated to tax supported capital;
• Utilize debt of $7.144 million annually;• Maintain tax supported capital spending at the 2016 level in
2017, a slight increase of $0.7 million in 2018, an increase of $1.4 million in 2019;
• Further increases in tax supported capital year over year until 2014 spending levels are reached, followed by increases of 2.5% per year.
• Enhanced Infrastructure Renewal Program (EIRP) consistent with 2016 level until 2022 with increases in future years.
• Reinvesting net savings in debt services costs related to maturity of debt into EIRP.
Strategy to Eliminate Tax Supported Infrastructure Deficit
DEBT & RESERVE FUNDS
• Debentures a funding source for infrastructure renewal
• Ontario Ministry of Infrastructure – Municipal Infrastructure Strategy
Intergenerational equity Long term financing strategy Municipalities must be open to alternative
financing
Municipal Infrastructure & Debt
Debt Management Strategy
• Key components of Debt Management Strategy Reinvest debt servicing savings into EIRP 2013 annual capital level of $6.8 million adjusted
annually for inflation Establish debt service target ratios Long term financial plans for Wastewater and Solid
Waste Additional debenture financing for major capital
(new non‐recurring and significant, large legacy and special projects – multi‐generational and/or generate significant long term economic growth)
Debt Service Ratios
Debt Service Ratio 2014 Actual 2015 ActualMaximum Limit
(Note 1)% % %
Overall 5.5 5.6 10.0 Tax 4.7 4.8 7.5 Water 23.3 23.3 26.0 Wastewater ** 26.6 21.6 30.0
Note 1: Maximum Limits per Debt Management Strategy** Efforts are to be made to achieve a 15% in future years
189 200
190 182
170 169 177
169 170 179
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50
100
150
200
250
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Total Debt OutstandingIn $millions
Total Debt Outstanding
Tax Supported Debt
Rate Supported Debt(including Tbaytel)
Debenture Balance
Outstanding at December 31, 2015
Outstanding at December 31, 2016
Tax Supported $74,744,509 85,345,915
Wastewater $37,982,944 $38,230,020
Water Authority $56,004,585 $62,745,774
TBaytel $10,220,000 $6,400,000
Total Outstanding Balance $178,952,038 $192,721,709
‐
50,000,000
100,000,000
150,000,000
200,000,000
250,000,000
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
Total Projected Long Term Debt2016 to 2026
Tax Supported
Rate Supported
Tbaytel
Total
Purpose of Reserve Funds
Stabilize tax rates Financing for one‐time or short‐term
requirements
Internal financing
Acquisition of capital assets
Future liabilities
Fiscal challenges
Ensure adequate cash flows
Tax Discretionary Reserves as a % of Taxation(BMA Municipal Study 2016)
30.0% 29.0% 32.0%
57.0% 55.0%
72.0%
40.6%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
Sault Ste Marie North Bay Timmins Greater Sudbury Thunder Bay Survey Avg Northern Avg
Ratio of Total Debt to Total Discretionary Reserves(BMA Municipal Study 2016)
0.5 0.3
1.6 1.8
2.3
1.1 1.3
-
0.5
1.0
1.5
2.0
2.5
Greater Sudbury Sault Ste Marie Timmins Thunder Bay North Bay Survey Average Northern Average
Ratio of Total Debt to Total Discretionary Reserves(BMA Municipal Study 2016)
Reserve Funds vs Debt Tax‐Supported
0
20
40
60
80
100
120
140
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
$ in
milli
ons
Year
Tax-Supported Reserve Funds vs Tax-Supported Debt
Tax Supported RF's
Tax Supported Debt
For every dollar in Tax Supported Reserve Funds the City has $0.75 in Tax Supported Debt
Uncommitted Reserve Funds vs DebtTax Supported
Estimated UncommittedReserve Fund
Tax Supported Debt
Projected
Debt to Reserve Fund Ratio
2016 70.9 85.3 1.2
2017 70.0 80.7 1.2
Actual Ratio as at Dec. 31, 2015 ‐ 0.75
Questions ?
BMA STUDY 2016 –TAXATION AND AFFORDABILITY
Residential ‐ Single Family Detached Bungalow2016 Municipal Tax Per Household Municipalities > 100,000 population
Source: BMA Municipal Study – 2016Ontario Average includes all Municipalities participating in 2016 BMA Study (105 municipalities)
‐
1,000
2,000
3,000
4,000
5,000
Ontario Average $3,213
Ontario Average – Municipalities > 100,000 population $3,665
Thunder Bay $ 3,606
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2010 2011 2012 2013 2014 2015 2016
Residential Single Family Detached BungalowMunicipal Tax Per Household (2010‐2016)
BMA Municipal Study
Thunder Bay
Ontario Average
Ontario > 100,000population
• Detached 3 bedroom single story house with 1.5 bathrooms and a one car garage• Total area of house of approximately 1,200 sq. ft.• Lot size of approximately 5,500 sq. ft.• Weighted Median Value of a dwelling of $173,522 in Thunder Bay for 2016
‐
0.50
1.00
1.50
2.00
2.50
3.00
3.50
2010 2011 2012 2013 2014 2015 2016
Commercial – Office BuildingsMunicipal Tax Per Square Foot (2010‐2016)
BMA Municipal Study
Thunder Bay
Ontario Average
Ontario > 100,000population
Source: BMA Municipal Study ‐ 2016
‐
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
2010 2011 2012 2013 2014 2015 2016
Commercial – Neighbourhood ShoppingMunicipal Tax Per Square Foot (2010‐2016)
BMA Municipal Study
Thunder Bay
Ontario Average
Ontario > 100,000population
Source: BMA Municipal Study ‐ 2016
‐
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
2010 2011 2012 2013 2014 2015 2016
Industrial‐Standard IndustrialMunicipal Tax Per Square Foot (2010‐2016)
BMA Municipal Study
Thunder Bay
Ontario Average
Ontario > 100,000population
Source: BMA Municipal Study ‐ 2016
Affordability
2016 Median Value of Dwelling
2016 Estimated Average
Household Income
Median Value of Dwelling to Average
Household Income$ $
Thunder Bay 173,522 80,607 2.2
Ontario Average 292,279 97,825 3.0Ontario Average > 100,000 population 336,261 100,113 3.4
Source: BMA Municipal Study 2016
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
2010 2011 2012 2013 2014 2015 2016
Property Taxes as % of Income (2010‐2016) BMA Municipal Study
Thunder Bay
Ontario Average
Ontario > 100,000population
• Thunder Bay is 45th out of 105 Ontario municipalities in 2016• Thunder Bay is 12th out of 25 Ontario municipalities in 2016
(>100,000 population)
Average Municipal Tax, Water/Wastewater BurdenAverage Household ‐ 2016 BMA Municipal Study
Municipalities > 100,000 population
‐
1,000
2,000
3,000
4,000
5,000
6,000
Tax Water/Wastewater Ontario >100,000 Population
‐‐‐‐‐ Ontario Average‐Municipalities> 100,000 population $ 4,445
‐‐‐‐‐ Ontario Average‐All Municipalities $ 4,372
Thunder Bay $ 4,063
2016 BMA Study – Weighted Median Value of Dwelling‐Thunder Bay $173,522& average annual water consumption of 200 m3
ECONOMIC ENVIRONMENT
By the Numbers
Unemployment Rate – 6.3% (Nov 2016) {Canada – 6.8%; Ontario 6.3%} Vacancy Rate (apartments) – 5.0% ( CMHC ‐October 2016) Major Employers:
Top Public Sector
Thunder Bay Regional Health Sciences Centre Acute Care Hospital 2,824
Lakehead District School Board Elementary & Secondary Education 2,200
Lakehead University Education 2,103
Top Non‐Retail/Industrial/Service Sector
Bombardier Transportation Mass Transportation Equipment Manufacturing 1,100
Resolute All Operations 642
Tbaytel Telecommunications 400
International Students: Lakehead University 2018 projection: 1,000 (2016 actuals – 969) Confederation College 2018 projection: 500 (2016 actuals – 515)
Projected Economic ImpactMining Sector in NWO (2016-2021)*
4-7 new mines Estimated life 8-20 years 631 Kilometers road construction
required 363 Kilometers transmission construction
required 774.2 Megawatts power required 2,450 construction jobs created 2,018 operational jobs created
*Industry statistics compiled as at December 1, 2016, for CEDC
*Current employment levels at the 4 existing mines(Red Lake, Musselwhite, Lac des Iles, Williams) is 3,142
employees
Possible economic impacts listed below, but metal prices will slow the development of these projects
Forecasted Additional Assessment (Growth)
• Apartment Buildings and Condominiums former Hillcrest High School
• New Carpenter’s Union Office and Training Centre on Capital Way
• New two storey Commercial with Residential Apartments on Victoria Ave
• New commercial and residential building on Hodder Ave
• New Car wash at The Great Canadian Oil Change on Memorial Ave
• New Apartment bldg. Algoma St• New Aviation building at MNR Fire Base –
Arthur St
• Wacky Wings• New Tim Horton's – May St• New two storey Commercial
building on Cobalt Crescent• New two storey restaurant next to
Holiday Inn – Carrick St• New Beer Store – Fort William Rd• New Office Building – Balmoral St• Addition to The Keg• New Apartment Building – Oasis
Lane• Addition to Maltese Grocery
City of Thunder Bay Economic Environment
CMHC – Thunder Bay Total housing starts expected to be lower in 2017 compared to 2015
as apartment starts come in at levels more in keeping with longer term averages
Expected 1% increase in house prices in 2017 and 2018 Weaker Cdn $ good for export segment of Northwestern Ontario and
should deter out‐shopping
Standard & Poor's Revised rating for City to AA‐ positive
Thunder Bay Port Authority Handled 8.8 million metric tonnes of cargo – third highest volume in
the past 15 years
FINANCIAL PROJECTIONS 2018 ‐ 2022
Nature of Projections
Assist in future planning Future economic climate a factor Actual results will vary from projection – examples from
past years OMERS Fluctuations in commodity prices Arbitration & wage settlements Support from Canada and Ontario
Projected Municipal Tax Levy Increase
Total Net of Growth[1]2018 4.19% 3.37%2019 3.85% 3.07%2020 3.72% 2.99%2021 3.69% 2.99%2022 3.67% 2.99%
[1] – Based on estimated annual growth of $1.5 million
Assumptions – Operating
• No changes in service levels or complement• Removal of 2017 proposed one time items• Inflationary increases from 0% to 2.5% excluding
Insurance premiums, insurance claims and legal• OMPF grant expected be stable• No changes in service levels related to Boards• Debenture payments increase based on previous
approved borrowing and projections for future borrowing
Assumptions – Operating (Cont’d)
• CPP Reform Introduced • Solid Waste (Waste Diversion into Tax)• Roads Quality Objectives (R94/2016)• Reserve Fund contributions increased gradually:
• Post Employment increased annually by $102k• Community Partnership increased $25k in 2018 & 2019
• WSIB Reserve Fund Contribution increased by $250kin 2018
• Insurance Reserve Fund Contribution increased by $100k in 2018
• Renew Thunder Bay increased contribution by $250kin 2019.
Assumptions – Capital
• Capital out of revenue increases returning to 2014 levels by 2022 ($13.8 million)
• Annual debenture borrowing increased annually by 2.5% from 2017 proposed level of $7.3 million
• No new special one time tax supported borrowing • Future debt repayment over 10 years @ 4.0% • Enhanced Infrastructure Renewal Levy Increases:
– Consistent with 2016 and 2017 levels ($8.4 million)
– No increases until 2022 when Capital out of revenue returns to 2014 levels
– Reinvesting net savings in debt services costs related to maturity of debt into EIRP.
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
2014 2015 2016 2017 Proposed 2018 Projected 2019 Projected 2020 Projected 2021 Projected 2022 Projected
Millions
Tax Supported Capital Financing2014 to 2016 Actual
2017 to 2022 Projected
Capital out of Revenue Debenture Enhanced Infrastructure Renewal Program Total
2018 – 2022 Future Directions Continue to pursue senior government funding Support political efforts to reduce municipal costs (e.g.
AMO) Advocate for tax policy flexibility with Province Promote and aggressively pursue assessment growth
through economic development Explore new budget revenue sources Work closely with Boards and Agencies re: multi year
budgeting and restraint
Community Goals & Directions
Budget
Questions ?