At last month’s Special Budget Meeting, Council reviewed a presentation of the first draft of the 2024 Operating and Capital Budgets.
Based on the preliminary requests, the report indicated that township would require a 7.9% municipal tax rate increase to fund the full Operating & Capital budgets as presented. This is a substantial reduction from the preliminary budget estimates that originally resulted in a 14% tax rate increase required to fund expenditures. Further reductions are expected as Council examines specific requests to find ways to bring down township spending. For reference, last year’s preliminary estimate began at 11.4% falling to a three percent was the rate increase at the conclusion.
This year saw marginal growth of 1.29% in the Current Value Assessment (CVA), stemming from new builds and property improvements that have been assessed by the Municipal Property Assessment Corporation (MPAC). This growth is expected to generate an additional $136,675 of municipal tax revenue in 2024. Under normal circumstances, MPAC re-evaluates all properties every four years, with value increases phased in over the subsequent following four years. These values are used by municipalities to calculate property tax levies. No reassessment has occurred since 2016, so municipalities will rely on 2020 CVA values for the vast majority of properties in their jurisdiction for 2024. MPAC values tend to be lower than current market values in part because of the four year delay between assessments, particularly in hot real estate markets. The median CVA for a home in the township used in property tax calculations is currently $400,000. An August amendment to the Assessment Act extended the postponement of the next reassessment for another year, resulting in an eight year delay between re-evaluations. This delay creates a growing imbalance of the property tax burden, as newer homes and properties with recent re-assessments have a more current and therefore higher value used to calculate their property taxes. This issue will not be addressed for at least another year.
At the end of this first meeting, there was a general consensus that the levy increase should be no higher than 3.5%. Staff will be using sharpened pencils to find ways to cut costs to allow that target to be met, with the understanding that it takes $111,550 in spending cuts to reduce the levy by 1%.
One unknown that will help in this regard is the funding from the Canada Community Building Fund (previously called the federal gas tax) which has not been included in the forecast to date. Last year the amount received from this source was $292,188. The other big ticket item that will likely be up for discussion is the amount to be transferred into the Township’s Asset Replacement Reserve. The auditor recommends that contribution represent 100% of the 2022 depreciation value, which would be $2.7M. According to the Special Budget Report, since this reserve was established in 2016, the municipality has transferred approximately 77% of the annual depreciation expense to this reserve fund, which now totals almost $26.5M.
The Public Meetings to discuss the second draft of the budget are scheduled for Thursday, January 25th at 1pm and at 6pm and can be viewed in person or through the township website. The 2024 Final Budget is scheduled for approval at the February 20th Council meeting. KG
