1. 2009 Corporate tax Supported status report – q2
Rapport d’étape sur les services municipaux financés par les recettes fiscales 2009 – T2
1. Receive this report for information; and
2. Establish the debt authority for the specific Infrastructure and Recreational projects as outlined in Document 5.
RecommandationS du Comité
Que le Conseil:
cevoir le présent rapport à titre d’information; et
r l'autorisation d'emprunt pour les
projets récréatifs et d'infrastructure spécifiques tel que décrit dans le
1. City Treasurer’s report dated 8 September 2009 (ACS2009-CMR-FIN-0040)
and Council / et au Conseil
Submitted by/Soumis par : Marian Simulik, City Treasurer/Trésorière municipale
Contact Person/Personne ressource:Mona Monkman, Deputy City Treasurer – Corporate Finance/ Trésorière municipale adjoint – Contrôleur Finance
Finance Department/Service des Finances
(613) 580-2424 x41723, Mona.Monkman@ottawa.ca
Ref N°: ACS2009-CMR-FIN-0040
1. Receive this report for information; and
Que le Comité de la vérification, du budget et des finances recommande au Conseil:
1. de recevoir le présent rapport à titre d’information; et
2. d'établir l'autorisation d'emprunt pour les projets récréatifs et d'infrastructure spécifiques tel que décrit dans le document 5.
Since 2004, staff has been preparing “Quarterly Operating Status” reports on a corporate basis. These reports have been presented to Corporate Services and Economic Development Committee for information and then to Council. At the August 28, 2008 Council meeting, the following motion was carried:
Moved by Councillor D. Deans
Seconded by Councillor R. Jellett
BE IT RESOLVED THAT the Standing Committees of Council be provided with status reports to review the actual operating and capital results of their respective departments on a quarterly basis during 2009 and subsequent years.
In accordance with this motion, the second quarter status reports have been provided to each Standing Committee of Council for their respective departments.
This corporate status report summarizes the information contained in those reports in a corporate format. The Operating Status at June 30th and forecast to year-end are for the Tax Supported Budget only. These exclude the operations of the Ottawa Police Services Board and Ottawa Public Library Board, since they report directly to Council. A budget status report for the Rate budget was presented to the Planning and Environment Committee on September 8, 2009.
Document 1 to this report shows the actual revenues and expenditures compared to the same period budget for the 6-month period ending June 30, 2009. Document 2 shows the forecast position to year-end based on the results to date and an analysis of conditions that will continue to year-end.
June 30th results and 2009 Forecast (Documents 1 and 2)
Tax supported programs are in a $6.4 million deficit position at June 30, as shown in Document 1. Document 2 shows that at this time, based on results to date, the forecast is an $11.8 million deficit at year-end.
The present forecast anticipates that the City will be successful in its efforts to mitigate the effect of the loss of Payments In Lieu of Taxation that results when Federal Government properties are sold. The City of Ottawa is petitioning the Minister of Finance to restore this long-standing revenue source to the municipality, as losses already total $9 million to date and the potential loss to Ottawa taxpayers is $25 million annually. In terms of the impact on the 2009 position, if the City is unsuccessful, this will cause an additional $4 to $6 million deficit in the accounts this year.
The non-departmental section of the budget contains two revenue items that could result in significant changes to the forecast position. First, we have insufficient information at this time to project if the budget for supplementary taxes will be met or exceeded. Second, there is a $2 million budget for a Federal Grant for Police Services that is outstanding.
The forecast shortfall in tax supported programs results from three pressure points.
Cost of living adjustment settlements were at 2.5%. The budget was set a 1%, causing a corporate budget deficiency of $7 million.
Income earned on investments has declined in this low interest environment. Budgets were based on historical earnings levels. In 2008 the returns on our portfolio averaged 3.67%. This year they are forecast to average 2.04%. Low short-term interest rates are expected to continue into 2010. Solid Waste Services reduced fees is due to lower ICI volumes and poor recycling markets.
Management will be reviewing their operations to determine how the forecast deficits may be mitigated through deferred hiring plan, purchases and program curtailments.
In the event that there is a deficit at year-end in the tax supported budget, it can be funded from balances in the Corporate Fleet Reserve. This reserve is forecast to have a balance of $17 million at year-end. Any use of this reserve to fund a general operating deficit can be repaid to the reserve over 5 years with interest. An annual repayment would be made to the Vehicle and Equipment reserve fund by directing a portion of the annual pay-as-you-go contribution to the City Wide capital reserve fund. There would be no new budget pressure on the tax rate as a result of this funding plan.
At June 30th, Public Works had a $2 million deficit, primarily due to winter maintenance costs, and is forecasting to improve the situation to a $0.7 million deficit at year-end. Planning and Growth Management and Solid Waste Services are also in deficit positions at mid-year and are forecasting year-end deficits. Social Services is in a $3.7 million surplus position at June 30th, offsetting other departmental deficits, with a year-end forecast surplus position of $1.9 million. Emergency and Protective Services is at break even at mid-year and is forecasting a $2.3 million deficit at year-end, primarily as a result of delayed savings in productivity targets.
Compensation (Document 3)
Document 3 provides compensation information showing the actual salary / benefits and overtime costs incurred by department / branch to June 30th versus the full year budget. Overtime expenditures are ahead of budget, primarily for the transit area, as a result of accelerated return to service. These additional transit costs are projected to be offset by savings in fuel, plant maintenance, Para Transpo costs and transit revenues.
Reserve Fund Balances (Document 4)
Document 4 provides projected year-end balances for the various City capital and operating reserves.
Debt Authority for Specific Infrastructure Projects (Document 5)
On June 5, 2008, the Federal and Ontario governments provided the City with a list of approved infrastructure stimulus projects. Similarly, on June 26, 2008, the City was provided with an approved list of recreational stimulus projects. The staff reports "Financing of the City Portion of Infrastructure Stimulus Projects" and "Financing the City Portion of Recreational Infrastructure Projects" were approved by Council on June 24 and July 8 respectively. These reports established $58.7 million in debt financing to fund a portion of these projects. Since that approval, specific project numbers have been established in the City's financial system and the debt financing has been assigned to each approved project. The staff recommendation as contained in this report is of an administrative nature to ensure that Council has authorized the debt for each specific project.
There are no legal or risk management impediments to implementing the recommendations in this report.
The financial implications are detailed within the report.
Document 2 – 2009 Tax Supported Operating Budget Forecast to Year-End
Document 3 – 2009 Compensation Report
Document 4 – Reserve Fund Status
Document 5 – 2009 Infrastructure Stimulus Projects Debt Funding
Financial Services will make the necessary adjustments to reflect the decisions of Committee and Council.