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1. 2009 Corporate tax
Supported status report – q2 Rapport d’étape sur les services municipaux financés par les recettes
fiscales 2009 – T2 |
COMMITTEE RECOMMENDATIONS
That
Council:
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:
1.
reçoivecevoir le présent rapport à titre d’information; et
2.
établisser l'autorisation d'emprunt pour les
projets récréatifs et d'infrastructure spécifiques tel que décrit dans le
document 5.
DOCUMENTATION
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
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Ref N°:
ACS2009-CMR-FIN-0040 |
SUBJECT:
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OBJET :
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Rapport d’étape sur les services
municipaux financés par les recettes fiscales 2009 – T2 |
That the Audit, Budget and Finance Committee
recommend Council:
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.
BACKGROUND
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.
DISCUSSION :
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.
Departmental Programs:
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.
N/A
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.