The first draft of the 2023 budget was presented to Council at their December 8th meeting.
The combined asks for operating and capital in that document would require a 9.4% municipal tax rate increase. These first drafts are starting points for financial discussion which usually result in significant reductions in the final municipal budget, but allows Council the opportunity to understand departmental priorities in order to clarify and rank them from a municipal perspective.
This was actually the second review of 2023 financial requests. The budget committee, consisting of the Mayor, the Chief Administrative Officer and the Director of Finance, reduced the first departmental estimates in a previous report that would have resulted in an 11.36% tax rate increase. To put this in perspective, a 1% increase in the tax rate generates an additional $106,900 in municipal tax revenue.
The second draft of the budget will be the subject of discussions in two meetings on February 2nd. The second one, beginning at 6pm, is open for public comment by providing advance notice to the Clerk. The budget documents that will be reviewed at that meeting are available on the township website. This draft reflects significant spending reductions, resulting in a potential rise in the Municipal Residential Tax rate of 5.1%.
On the operating side, expenditures have been reduced from an initial 10.3% increase over 2022 to a potential 9.1% increase. The total operating expenditures outlined in this document fall to $9.76 million, thanks to a $400,000 operating surplus roll over from 2022.
Most departmental operating budgets proposals reflect increased costs stemming from inflationary pressures, particularly in the wage department where grid indexing is mandatory. The exception is found in the Parks and Recreation Department, where net operating expenses are forecasted to fall by $57,012 or 4.8% thanks to a rise in rental and advertising revenue now that the pandemic restrictions have been loosened.
Cost savings are more easily achieved through cuts to capital expenditures, where the Second Draft of the budget reflects a net capital expenditure of $6.5 million after deducting rollovers, grants and pre-approvals. Roughly half of that total would be financed by grants, development charges and reserve transfers, with the remaining $3.9 million funded by the tax levy.
Some capital expenditures are cast in stone, such as the annual cost of completed capital projects such as the Millbrook Public Works Depot which has been completed, the Cavan Public Works Centre which is nearing completion, and the Fire and Ambulance Station where construction has begun. Council will review the planned capital expenditures to establish their fiscal priorities, balancing them against a desire to limit the increase in property taxes.
Municipal tax revenue is calculated by multiplying the municipal tax rate with the total Current Value Assessment (CVA) in the township. This value is established by the Municipal Property Assessment Corporation (MPAC). (see related story p __) The budget report indicated that the township’s tax base is anticipated to rise by 2.24% in the 2023 CVA portion of the calculation thanks to new builds which have come on stream, which are project to generate an additional $54,949 in municipal tax revenue this year. To put this growth in perspective, over the past five years Cavan Monaghan CVA’s have risen by as little as 1.5% in 2021 and as much as 10.8% in 2020. During that period, tax levy increases have ranged from a low of 1% in 2021 to a high of 3.2% in 2020.
The Public Meetings to discuss this second draft are scheduled for Thursday, February 2nd at 1pm and at 6pm and can be viewed in person or online. The 2023 Final Budget is scheduled for approval at the February 21st Council meeting. KG
