Ingersoll Long Range Financial Plan (LRFP) Facilitated Session. Purpose of Session. Introduction to Long Range Financial Plan

Transcription

1 Ingersoll Long Range Financial Plan (LRFP) Facilitated Session Purpose of Session Introduction to Long Range Financial Plan Review and Discuss Financial Condition Assessment and Draft Policies Review and Discuss Forecast Assumptions Review and Discuss Options and Opportunities 1

2 Introduction to Long Range Financial Plan Municipal Challenges are Complex.. Increasing operating expenditures at a rate faster than inflation Changes in economic/business cycles impact municipal budgets Shifting Demographics Tax Resistance Desire to limit property tax and rate increases Revenue Pressures - Grants and subsidies are inconsistent and have been declining Most municipalities face significant infrastructure deficits 2

3 Municipal Challenges are Complex.. The unavoidable conclusion to be sustainable, municipalities will have to find ways to control costs, use available resources as effectively as possible and increase the tax base (to increase revenues) Challenge of allocating scarce resources among many competing public demands Ingersoll s Proactive Approach Ingersoll is taking a proactive approach by developing a Long Range Financial Plan (LRFP) to provide a financial roadmap for the future with financial sustainability being the destiny Focus of the LRFP is on improving the Town s financial sustainability, including strategies and policies that need to be implemented to achieve long term stability 3

4 What is a Long Range Financial Plan? A LRFP is a framework to guide a municipality in planning and decision making Measures the municipality s financial capacity to meet the overall strategic and business plans of the municipalities It is a strategic process that provides a municipality with the insights and information they need to make choices necessary to establish financial sustainability It identifies risks and challenges in delivering on priorities and outlines options to mitigate critical issues LRFP Objectives Build awareness of the Town s financial situation Identifies fiscal challenges and opportunities Spur the development of actions to favourably influence its long term financial future Reconfirm financial goals and strategies To provide a tool to evaluate progress toward improving financial sustainability 4

5 LRFP Layout Assessment of Financial Health/Condition Assessment Draft Policies Future Operating Budget Forecast Capital Requirements Strategies to Address the Infrastructure Gap Overview of Work Plan 5

6 Financial Sustainability Financial Sustainability is supported by: Flexibility - Able to respond to changing circumstances, without unplanned increase in taxes or disruptive cuts to services Efficiency - Using public funds in ways that are cost effective to provide services within the amount of funding available Sufficiency - Having sufficient resources to support the delivery of services for which the Town of Ingersoll bears responsibility Meeting the demands of the present without compromising future generations ability to meet their needs LRFP - Based on Financial Sustainability Financial Sustainability Financial Goals Flexibility Efficiency Sufficiency Financial Strategies Ensuring Prudent Asset Management Planning & Funding Providing for Contingencies Managing Expenditures through Continuous Improvement Using Debt Strategically Operating with Prudent Foresight Maximizing Diverse Sources of Funding and Revenues 6

7 Financial Condition Assessment Financial Condition Assessment Analyzing the historic trends: Provides insight on changes in the Town s financial health Shows how quickly a trend is changing Provides a basis for future forecasting Growth and Socio Economic Indicators Financial Position Indicators Municipal Levy & Property Taxes 7

8 Peer Analysis Peer analysis has been included to gain perspective on Ingersoll s financial health in relation to other municipalities Peer Municipalities 2011 Population Estimated Households Land Area sq. km. Municipl Tiers Location Meaford 11,100 5, lower Grey Orangeville 27,975 10, lower Dufferin St. Marys 6,655 2, single Perth Tillsonburg 15,301 7, lower Oxford Average 15,258 6, Median 13,201 6, Ingersoll 12,146 5, lower Oxford Financial Condition Assessment 1. Can the Town continue to pay for the services currently provided? 2. Is there sufficient financial flexibility to address unexpected events, uncertainty and future liabilities? 3. Is the Town s infrastructure network sustainable and adequately funded? 8

9 Financial Condition Assessment Growth and Socio Economic Indicators Population Building Construction Activity Largely external to the Town s control but Property Assessment important to understand from a planning and 1. Can the City continue to pay for the services currently forecasting perspective Household Income provided? Discretionary Reserves Financial Position Indicators 2. Is there sufficient financial flexibility to address Debt Helps determine unexpected if modifications events, are uncertainty and future liabilities? Financial Position needed to the Town s existing financial policies 3. and Is strategies the City s as infrastructure part of the network sustainable Asset and and Liabilities development adequately of the LRFPfunded? Taxes Receivable Municipal 4. Levy, Can Property the City s Taxes vision & Affordability and corporate initiatives be Municipal Levy achieved Indicators financially? Comparison of Relative Taxes Evaluation of the cost of municipal programs and services and how these costs translate into municipal property taxes from a taxpayer affordability perspective Municipal Property Taxes as % of Income Section 1: Growth and Socio Economic Indicators 9

10 Growth and Socio-Economic Indicators Analyzing growth and socio-economic indicators provide an overview of the internal and external factors that affect the community. An examination of economic and demographic characteristics can identify, for example, the following types of situations: The community s ability to pay for public services; A need to shift public service priorities because of demographic changes in the community; and A need to shift public policies because of changes in economic and legislative conditions. Growth and Socio-Economic Indicators Income Assessment Demographics Population Growth Continuous Cycle of Cause and Effect Construction Activity 10

11 Population Changes Ingersoll s Population Change ( ) Municipal Comparisons ( ) A gradually increasing population is considered favourable Ingersoll s population change from was 10.6% Over the past 10 years, Ingersoll s population increase was highest in the survey Over the past 5 years, Ingersoll s population growth was second highest in the municipal comparators (Orangeville highest) Town s population is projected to grow by about 2,400 over the next 10 years Age Profile Age Profile 2006 Ingersoll 2011 Ingersoll % Change Ingersoll Age % 18.8% -1.1% Age % 7.2% 0.2% Age % 30.7% -3.4% Age % 17.1% 1.7% Age % 12.0% 2.0% Age % 14.3% 0.6% Total 100.0% 100.0% Age Profile 2006 Ontario 2011 Ontario 2011 Difference Ingersoll vs. Ontario Age % 17.0% -1.8% Age % 6.7% -0.4% Age % 33.0% 2.2% Age % 16.0% -1.0% Age % 12.7% 0.7% Age % 14.6% 0.4% Total 100.0% 100.0% Ingersoll s population is aging Addressing the needs of an aging community will be a key consideration in planning for the future Ingersoll has a higher percentage of residents that are 19 years or under 11

12 Excerpts From Town s Strategic Plan Recreation, Leisure, and Sports Vision Statement The creation of a healthy and active community encompassing all individuals Expected Outcome Results A wide range of affordable and accessible programs and services are provided for all ages promoting a healthy and active community Construction Activity Town of Ingersoll (000 s) Ideal is to have sufficient commercial and industrial development to offset operating costs associated with residential development Over the past 7 years, residential/non-residential construction activity is 48/52, representing a good balance between residential and nonresidential development 12

13 2011 Construction Activity per Capita Construction activity per capita is second highest in the survey Household Income 2012 Avg. Gross Household Municipality Income St. Marys $ 65,362 Meaford $ 70,313 Tillsonburg $ 72,937 Orangeville $ 88,785 Peer Average $ 74,349 Peer Median $ 71,625 Ontario Average $ 87,400 Household income is one measure of a community s ability to pay for services 2012 average gross household income in Ingersoll is $77,716, second highest in the survey however lower than the Ontario average of $87,400 Ingersoll $ 77,716 13

14 2011 Weighted Assessment per Capita Assessment basis upon which the Town raises taxes Assessment per capita provides an indication of the richness of the assessment base Ingersoll s weighted assessment per capita is lowest in the group 2012 Weighted Assessment Composition Good balance of assessment in terms of residential and non-residential assessment base 14

15 Ingersoll s Financial Position Indicators Reserves Reserves are a critical component of the Town s long-term financial plan: Provide tax stabilization in the face of variable and uncontrollable factors Ensure adequate and sustainable cash flows Provide financing for one-time or short term requirements without permanently impacting the tax rates Provide for replacement of assets/infrastructure on a timely basis Provide flexibility to manage debt levels and protect the Town s financial position Provide for future liabilities 15

16 How Much Reserves Are Required? The level of reserves required will vary from municipality to municipality for a number of reasons including: Services provided by the municipality Age and condition of infrastructure Level of expenditures Internal reserve policies Targets, ranges established on a reserve by reserve basis Economic conditions and projections Types of Discretionary Reserves % Change Reserves/ Reserve Funds Capital $1,238,298 $2,201,520 $1,854,793 $1,734,033 $2,760, % Stabilization $192,278 $192,278 $192,278 $192,278 $192,278 0% Program Specific $175,210 $237,020 $225,112 $163,251 $142,082 19% Total $2,115,982 $3,156,305 $2,807,064 $2,674,346 $3,677,204 74% Stabilization used to offset extraordinary and unforeseen expenditures, revenue shortfalls and manage cash flows Capital assist in financing the replacement of assets Program Specific for specific programs and services 16

17 Discretionary Reserve Ratio Reserves as a % of own source revenues provide a measure of the financial health of a municipality Ingersoll s reserves as % of own source revenue is comparable to peer group Trend since 2009 has been upward Capital Reserve Funds Capital reserves have increased from 2010 to 2011 mainly as a result of gas tax proceeds 17

18 Capital Reserve Observations Numerous Capital Reserves but limited planned contributions Without planned contributions, maintaining separate capital reserves is challenging Potential to consolidate Capital Reserves to increase flexibility Capital Reserves 2011 Gas Tax Subsidy $ 841,916 Paratransit $ 399,119 Fire $ 319,190 Engineering $ 254,086 Museum $ 191,964 PW Machinery / Equip. $ 188,267 Capital Contingency $ 150,216 Ice Fee Increase $ 90,940 Industrial Land $ 90,512 I.T. Hardware $ 83,258 Public Buildings General $ 55,000 Administration Facility $ 52,548 Police Facility $ 30,000 Replacement Trees $ 7,400 Parks - Dog Park $ 5,000 Parks Equipment $ 1,530 Total $ 2,760,946 Asset Renewal is a Challenge According to the Federation of Canadian Municipalities, Canadian cities are facing a combined infrastructure deficit of $123 billion, based on a recent study by a McGill University engineering professor. This money is necessary for building, maintaining and repairing bridges, roads, and transportation and sewer systems in Canadian cities. 18

19 Asset Management A key part of the financial condition assessment is an analysis of the assets which includes developing an understanding of: Existing annual funding gap compare the annual contributions to capital program to the annual amortization Historical funding gap review the asset inventories, useful life, estimated time of replacement, replacement cost and the $ of assets that are past their useful life this will need to be taken into consideration in the development of a financially sustainable plan Asset condition assessment where available, the condition of the assets should be reported as part of the as is financial health of the municipality Existing Annual Funding Gap Analysis of Annual Capital Funding Gap 2012 Capital from Taxation $ 287,100 Reserve Contributions (Includes Gas Tax) $ 930,344 Total Contributions to Capital $ 1,217,444 Annual Historical Amortization (All) $ 2,241,000 Annual Estimated Replacement Amortization $ 4,706,000 Funding Gap Replacement Cost $ 3,488,556 Funding Gap Historical $ 1,023,556 In 2012, Ingersoll contributed approximately $1.2 million lower than historical amortization of $2.2 million Recognizing a replacement value factor of (2.1:1) to properly reflect cost of these assets as they are maintained or replaced in the coming year - the Town has an annual funding gap estimated at $3.5 million 19

20 Historical Funding Gap Accumulated Capital Histroical Historical Cost Amortization Reserves Funding Gap $87.0 million $30.7 million $2.7 million $28 million Ensuring Prudent Asset Management Funding 1. Capital Reserves would be used as the primary source to fund the replacement of existing assets. 2. Based on affordability considerations, a phase-in strategy will be developed to provide for contributions to Capital Reserves (based on amortization - historical cost) for inclusion in the annual preparation of the Operating Budgets. 3. A Business Case analysis will be prepared for new capital initiatives, including the operating cost implications based on full lifecycle costing. 4. To ensure that the infrastructure gap does not widen, new assets will contribute to replacement reserves, however, if they are funded through debt, annual contributions to the reserves will be made once the debt repayments have been completed. 20

21 Ensuring Prudent Asset Management Funding 6. A 5 year Capital Budget will be presented annually to Council, including anticipated funding sources. 7. The 5 year Capital Plan will include debt outstanding and Capital Reserve balance forecasts. 8. Proposed capital projects will be reviewed and prioritized by a cross Departmental team regarding accurate costing (design, capital and operating) and overall consistency with the municipality s goals and objectives. Stabilization Reserves & Reserve Funds By the end of 2011, the ratio of stabilization reserves to own source revenues was approximately 1.7% - below the GFOA recommended level of 5%-15% Reserve balance is $192,300, 5% would equal $ 710,000 in

22 Providing for Contingencies 1. Maintain a separate Stabilization Reserves with a target balance of 5%- 15% of tax own source revenues. 2. Use only for extraordinary type expenditures or one-time operating expenditures including previous years operating deficits. 3. When the Tax Stabilization Reserve balance is lower than 5% of own source revenues, transfer operating surpluses to the Tax Stabilization Reserve. 4. Once the Tax Stabilization Reserve Fund has reached the lower end of the target, transfer the operating surplus to the Capital Reserves. Program Specific Reserves Program Specific 2011 Corporate Sick Leave $ 87,153 Oxford N Parking Lot Paving $ 15,125 Health Recruitment $ 12,500 Election $ 10,500 Admin. Equip/Programming $ 9,547 Recreation Admin. Future Use $ 4,278 Police Services Board $ 1,467 Museum Artifact Donations $ 1,100 Squash Club $ 412 Total $ 142,082 Sick Leave Liability approximately $95,500 22

23 Proposed Policies Program Specific Reserves 1. A financial plan will be prepared for all Program Specific Reserves to ensure that there are adequate funds and avoid significant budget fluctuations and the plans be reviewed annually in conjunction with the budget process. Debt Debt policies are required to ensure that: Future debt payments do not jeopardize the provision of essential services Debt obligations will not threaten the long term financial stability of the municipality Debt indicators can reveal: Increasing reliance on debt Decreasing flexibility Sudden large increases or decreases in future debt service Amount of debt that the community can absorb 23

24 Debt Charges Ratio Tax debt charges as a percentage of own source revenues are below the survey average and below GFOA recommendation of 10% The Province regulates the amount of debt municipalities issue by setting an annual repayment limit for each municipality set at 25% of a municipality s own source revenues Using Debt Strategically 1. Debt Charges as a % of Own Source Revenues should not exceed a target of 10%. 2. Long-term debt financing should be restricted: New initiatives Projects supported by a business plan that show revenues will cover capital and interest costs Projects where the cost of deferring expenditures exceeds debt servicing Project costs not recovered from DCs Projects tied to third party matching funding Note: These restrictions may have to be phased in to meet short term budget challenges 24

25 Using Debt Strategically 3. An analysis will be prepared annually showing how new issues combined with current debt impacts the Municipality s debt capacity and conformance with debt policies. 4. Term of debt will not exceed the useful life of the underlying asset. 5. Special Circumstance Debt is debt issued by the Town that is repaid by non-tax revenues. Any Special Circumstance Debt shall be excluded from the overall Town debt guideline. Special Circumstance Debt is permitted when a detailed cost/benefit analysis shows projected net revenues exceeding anticipated debt charges. All Special Circumstance Debt shall be repaid annually from the proceeds of the capital project. Financial Position Ingersoll s Financial Position (000s) Municipality Financial Postion Per Capita St. Marys $ (1,338) Meaford $ (1,242) Tillsonburg $ (659) Orangeville $ (572) Ingersoll $ 263 Financial position is defined as the total fund balances less the amount to be recovered in future years Financial position has been trending down since

26 Financial Position Assets Difference % Difference Cash & Investments $ 10,365,056 $ 10,213,558 $ (151,498) -1.5% Receivables $ 2,541,435 $ 3,168,054 $ 626, % Other $ 86,847 $ 385,451 $ 298, % Total Assets $ 12,993,338 $ 13,767,063 $ 773, % Liabilities Accounts Payable $ 664,321 $ 2,845,026 $ 2,180, % Deferred Revenue $ 577,019 $ 1,879,491 $ 1,302, % Long Term Liabilities $ 628,000 $ 5,292,258 $ 4,664, % Post Employment Benefits $ 454,900 $ 550,111 $ 95, % Total Liabilities $ 2,324,240 $ 10,566,886 $ 8,242, % Net Financial Position $ 10,669,098 $ 3,200,177 $ (7,468,921) -70.0% Taxes Receivable Every year, a percentage of property owners is unable to pay property taxes. Credit rating agencies consider over 8% a negative factor 2%-5% is typical As uncollected property taxes rise, liquidity decreases 26

27 Taxes Receivable as % of Tax Levied One measure of the degree to which local ratepayers may be experiencing financial stress is the trend in taxes receivable Taxes receivable are 5.5%, below credit rating agency target of 8% Proposed Policies Receivables 1. The Town will follow an aggressive, consistent, but sensitive to the circumstances policy of collecting revenues. 2. Collection policy goal for outstanding taxes receivable to be no more than 8% of taxes levied. 27

28 Section 3: Budgeting and Cost of Service Indicators Net Municipal Levy Per Capita Levy per capita does not indicate value for money or the effectiveness in meeting community objectives. Net municipal expenditures per household may vary as a result of: Different service levels e.g. transit unique for size of Ingersoll Variations in the types of services Different methods of providing services Different residential/non-residential assessment composition Varying demand for services Locational, demographic and socio-economic differences Urban/rural composition differences User fee policies Age of infrastructure What is being collected from rates as opposed to property taxes As such, this is not an apples to apples comparison. Per capita spending reflects the expenditures relative to population 28

29 Municipal Levy Breakdown Ingersoll represents 51% of the total property taxes with the remainder under the responsibility of the County and Education Net Municipal Levy Ingersoll s net spending per capita is approximately at the survey average Includes upper and lower tier municipal programs and services 29

30 Maximizing Revenue Opportunities 1. User fees will be considered by the Town where: There is a clear relationship between the fees paid by users and the benefits received by the user. A member of the public has a choice as to the extent to which he/she uses the service. It is administratively feasible to collect the charge at a reasonable cost. The benefits can be quantified and attributed to the user. 2. The Town will review and update user fees annually taking into consideration the increase in all costs (direct and indirect), the current market situation, and minimizing the negative impacts to the public that would result in not limiting access to the service. 3. To the extent feasible, one-time revenues will not be used to finance ongoing programs. Operating with Prudent Foresight 1. The Municipality will maintain a Strategic Financial Plan to assess the long-term financial implications of current and proposed policies. 2. The Operating and Capital Budgets will be aligned with the Municipality s Strategic Financial Plan. 3. Financial trends will be monitored closely through the use of key financial indicators which will be reported to Council on an annual basis as part of the budget and financial planning process. 30

31 Managing Expenditures - Continuous Improvement 1. Program and service reviews will continue to be undertaken to ensure that they are provided in an efficient and cost effective manner and meet the needs and priorities of the community. 2. Service levels will be defined and will be included in departmental business plans and budgets. 3. The Municipality will evaluate and monitor new initiatives, budget results, and resource allocation, through the use of a mixture of output, outcome, and efficiency measures. 4. Efficiency gains will be directed to fund infrastructure programs. Summary Financial Condition Assessment Understanding the Financial Big Picture 31

32 Summary Financial Condition 1. Can the Town continue to pay for the services currently provided? Gradually increasing population Excellent balance of residential/non-res. development Taxes outstanding within acceptable range Potential to increase assessment through sale of industrial lands Net spending per capita reasonable Challenges Changing demographics different service needs Average income below Provincial average Resistance to tax increases Expenditures increasing faster than inflation Low assessment base User fees not keeping pace with expenditure increases declining provincial grants Summary Financial Condition 2. Is there sufficient financial flexibility to address uncertainty and future liabilities? Discretionary reserves increased from Low debt levels Challenge Stabilization reserves low at 1.7% of own source revenues recommended minimum 5% Net financial position trending downward 32

33 Conclusions 3. Is the Town s infrastructure network sustainable and adequately funded? Over $100 million in infrastructure Challenges Capital budget of $80+ million in next 10 years ($20+ million for replacement) Ingersoll s infrastructure contributions are not adequate to sustain future requirements underfunded by $1 million annually in comparison to historical amortization Development of the Long Range Financial Plan 33

34 Financial Model Development Developers Grants & Subsidies Asset Management Indexes CPI Salary Negotiations Operating Budget Expenditures/ Revenues Reserves Capital Reserves Dev Charges CAPITAL FINANCE DECISIONS Capital CAPITAL REQUIREMENTS Benefit Negotiations Population, Income Utilities External Services Debt Old Debt Property Tax Rates Assessment Etc. New Debt Tax Policies Key Operating Budget Challenges Contributions to capital are lower than required to sustain the assets OMPF is declining and is expected to continue to decline in the future Many of the Town s expenditures are not controllable Some costs are increasing at a rate faster than inflation 34

35 Budget Forecast Assumptions Existing programs and service levels 2% annual increase for the majority of expenditures including: Salaries and Wages Office Supplies Professional Services 23% increase in Benefits for 2013 for full time staff, 3% thereafter Full time benefits are equivalent to 37% of salaries 4% Maintenance and Repairs 3% Materials 5% Utilities 2% User Fee and Licence Revenues Other Forecast Assumptions in Base Model General Government Eliminated $40,000 in consulting fees (CAO s budget) Reduced legal fees from $135,000 to $35,000 as this was a one-time requirement Adjusted CAO salary line to reflect full time position (previously split with Fire) Other Revenues Reduction of $328,000 related to one-time refund for final installment of property apportionment Reduction in OMFP Grant assumed reduction in transitional assistance of $50,000 annually for another 3 years 35

36 Other Forecast Assumptions in Base Model Police Salary negotiations unknown assumptions made for contract contingency in Eliminated the budgeted revenues from out of town reimbursements as these are unpredictable and difficult to forecast - $90,000 $6,000 increase in revenues annually for court escort service Parks and Recreation Addition of two staff in 2019 for arena project Engineering & Streetlighting Reduction in studies of $35,000 LED operating savings in 2013, reducing the utilities and maintenance cost from $350,900 to $147,165. Debt charges offset the savings Other Forecast Assumptions in Base Model Debt Charges Assumes new debt charges related to the following projects (one year lag for debt charge): 2012 Street lighting - $2.1 million Phase I - Proposed Industrial Subdivision Street - $725, Solar Debt - $36 million 2014 Interpretive Centre 2017 Aerial Truck - $950, Construction of Ice Pad - $3.46 million 2019 CAMI soccer field replacement $2.5 million 36

37 Base Model vs. 3% Model Base Model reflects the assumptions included on the previous slides 3% Model - A second Model was run to smooth the tax increases annually at 3% through modifications to the transfers to reserves Net Levy Increase 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% Base Model 3% Increase 0.0%

38 5 Year Forecast Base Model Net Levy General Government $2,045,889 $1,722,536 $1,770,442 $1,819,583 $1,869,995 $1,921,716 Protection to Persons and Property $3,693,072 $3,929,672 $4,064,731 $4,145,719 $4,228,596 $4,313,407 Transportation Services $2,260,347 $2,115,020 $2,169,587 $2,225,718 $2,283,466 $2,342,882 Environmental Services $110,442 $113,271 $115,582 $117,942 $120,349 $122,807 Recreation and Cultural Services $2,163,864 $2,259,644 $2,325,636 $2,393,836 $2,464,325 $2,537,192 Planning and Development $242,016 $256,362 $262,457 $268,689 $275,063 $281,581 Reserve Contributions $ 1,249,344 $ 1,474,331 $ 1,299,817 $ 1,325,814 $ 1,352,330 $ 1,379,377 Debt Charges (Excluding Solar) $ 743,315 $ 855,820 $ 916,656 $ 937,926 $ 933,338 $ 928,672 General Revenues ($1,404,415) ($1,371,271) ($1,323,860) ($1,276,492) ($1,279,166) ($1,281,883) Net Levy Requirements $ 11,093,421 $11,355,386 $11,601,047 $11,958,735 $12,248,297 $12,545,750 % Change 2.4% 2.2% 3.1% 2.4% 2.4% 5 Year Forecast 3% Model Net Levy General Government $2,045,889 $1,722,536 $1,770,442 $1,819,583 $1,869,995 $1,921,716 Protection to Persons and Property $3,693,072 $3,929,814 $4,065,023 $4,146,169 $4,229,214 $4,314,200 Transportation Services $2,260,347 $2,111,687 $2,162,737 $2,215,162 $2,269,003 $2,324,305 Environmental Services $110,442 $113,271 $115,582 $117,942 $120,349 $122,807 Recreation and Cultural Services $2,163,864 $2,260,073 $2,326,517 $2,395,194 $2,466,186 $2,539,581 Planning and Development $242,016 $256,362 $262,457 $268,689 $275,063 $281,581 Reserve Contributions $ 1,249,344 $ 1,543,071 $ 1,468,329 $ 1,495,170 $ 1,593,651 $ 1,697,829 Debt Charges (Excluding Solar) $ 743,315 $ 855,820 $ 916,656 $ 937,926 $ 933,338 $ 928,672 General Revenues ($1,404,415) ($1,371,271) ($1,323,860) ($1,276,492) ($1,279,166) ($1,281,883) Net Levy Requirements $ 11,093,421 $11,421,364 $11,763,883 $12,119,343 $12,477,632 $12,848,807 % Change 3.0% 3.0% 3.0% 3.0% 3.0% 38

39 Base Model Budget Drivers Budget Drivers Change Benefits Increase $ 164,090 Salaries Increase $ 138,342 OPP Contingency $ 109,557 OMPF Reduction $ 50,000 Net street light impact (including Debt) $ 28,886 Elimination on Police Out of Town Work $ 89,700 Utilities Increase (Excluding Streetlights) $ 25,495 Other Inflationary Increases $ 78,877 Increase In Capital $ 205,742 Reduction in Tax Refund Abatement ($328,000) Debt Retirement ($125,724) Reduction in Legal Expense ($100,000) Reduction in Consulting/Studies ($75,000) Other Forecast Assumptions in Base Model Capital from Operating (Reserve Transfers and Capital from Taxation) Gradual increase in contributions to reserves and capital to address infrastructure requirements - Annual contributions increase from $1.2 million in 2012 to $2 million in 2022, close to the amortization expense 39

40 Debt Charges Ratio 25.0% 20.0% 15.0% Total Debt Charges Ratio Debt Charges Ratio Excluding Solar 10.0% 5.0% 0.0% Capital Requirements 40

41 Capital Budget % of Total 1 Statutory/Legal $3,176,500 4% 2Risk Mgmt/Health and Safety $3,728,525 5% 3 Replacement $19,647,349 25% 4 Growth $9,959,600 12% 5Expanded Service $6,753,250 8% 6Strategic Initiative $36,750,000 46% Total $80,015, % Staff prepared a 10-year capital budget based on identified requirements and corporate initiatives Priorities are identified as well as the rationale related to the project This provides an excellent foundation for future decision-making 10-year capital requirements identified is $80 million 46% is related to strategic initiatives 25% is related to replacement of existing assets 10 Year Capital Requirements (000's) Total Economic Development $36,025 $25 $25 $0 $0 $0 $0 $0 $0 $0 $36,075 Community Services $475 $1,702 $533 $1,035 $440 $8,105 $8,190 $30 $20 $0 $20,529 Roads and Bridges $3,711 $2,347 $3,888 $3,732 $3,319 $1,203 $0 $0 $0 $0 $18,199 Public Works $238 $319 $0 $240 $124 $293 $480 $156 $290 $305 $2,445 Fire $435 $150 $0 $0 $950 $0 $0 $0 $0 $0 $1,535 Public Buildings $92 $111 $10 $30 $30 $55 $30 $110 $40 $75 $583 General Government $88 $88 $126 $112 $100 $0 $0 $0 $0 $0 $514 Streetlighting $15 $15 $15 $15 $15 $15 $15 $15 $15 $0 $135 Total $41,078 $4,757 $4,597 $5,164 $4,978 $9,671 $8,715 $311 $365 $380 $80,015 Years 7-10 will require additional analysis 41

42 Departmental Highlights Economic Development Solar Farm Same assumptions as BDO Report Solar debt charges to commence in $36 million, 15 years at Infrastructure Ontario rates of 3.19% - $3 million debt payments Departmental Highlights- Capital Parks and Recreation ($20.5 million 10 year requirements) $5 million in 2019 for the Seniors Centre to fill gap when CAMI lease expires $2.5 million in 2019 for CAMI Soccer Field Replacement $8 million in 2018 for Arena - Construction of second ice pad 42

43 Departmental Highlights Roads and Bridges ($18.2 million 10 year requirements) Significant road reconstruction to potentially coordinate with County as sanitary sewer and water is replaced There are a number of co-ordinated capital projects in the 10 year capital plan that have been included - $2 million in 2013 identified The challenges is co-ordinating the timing and priorities of these projects to achieve efficient delivery of service Departmental Highlights Public Works ($2.45 million) Numerous large vehicles are scheduled for replacement over the next 10 years 8 of the trucks scheduled for replacement are $150,000 or greater each 43

44 Departmental Highlights Fire ($1.5 million) $0.44 million pumper truck $0.15 million breathing apparatus $0.95 million aerial truck 2017 will be debt financed Departmental Highlights Public Building ($0.5 million) - Ongoing maintenance requirements for the Town Centre and other Town owned facilities General Government ($0.5 million) $0.15 million in hardware upgrades $0.24 million in parking upgrades 44

45 Capital Budget Gap Funding gap of $18 million in Base Model Funding gap of $15 million in 3% Model Capital Budget Gap Funding gap of $18 million in Base Model Funding gap of $15 million in 3% Model 45

46 Prioritizing Capital Not all capital projects can be completed due to growing demands and increasingly tighter budgets Limited resources dictate making a choice between projects or increasing the tax levy Prioritization occurs after capital needs are identified and capital requests are made It is important that capital project funding decisions be made with clearly defined reasoning Other Potential Opportunities Additional departmental efficiencies E.g. Implementing online parking ticket payments Consider service level standards to hold the line on property tax increases: Service levels for winter maintenance currently higher than Provincial minimum standards Winter sidewalk clearing Capital and Operating Budget Prioritization Special Infrastructure Tax Levy e.g. 1% levy would generate $1.3 million over 10 years 46

47 Potential Opportunities User Fee revenue opportunities: Building permit fees low and not recovery full cost of service Recreation fee surcharge for facility replacement Review other fees such as Parkland dedication Planning and Engineering fees and cost recovery of all staff s time involved in the process Parking ticket revenues Solar revenues? Summary 47

48 Summary Ingersoll, like many municipalities is facing significant challenges which will require decisions to be made to meet the needs of the community and their willingness to pay for services: Increasing operating expenditures at a rate faster than inflation Revenue Pressures - Grants and subsidies are inconsistent and have been declining Tax Resistance Desire to limit property tax increases Shifting Demographics Assets are reaching the stage where they will require reviewing, replacing and upgrading New projects to meet the needs of the community The challenge is to find the right balance with limited resources to meet your community needs Summary Addressing a fiscal imbalance almost always requires a change to decision-making processes Achieving buy-in of plan is required at this stage remember it is an iterative process as new information becomes available, new decisions may be required 48

49 49