Final Budget Approves 3.4% Municipal Rate Increase

At the final budget meeting last month, Cavan Monaghan Council approved a residential Tax Rate increase just under 3.4 percent to fund the municipal operating and capital expenditures for 2024.  This is significantly lower than the first draft of the budget which reflected a potential 7.9% rate increase.

The Operating budget contains a consolidated department total expenditure of $10,697,850 representing a net increase of 6.1%. The 2024 Capital Budget is 12,070,663 net of 2023 capital roll overs and future year pre-approvals.  At the time of the presentation, there was an operating  surplus of $380,000 for 2023 which is subject to year-end reconciliations.  When finalized, surpluses are transferred into the general fund.

Increases in MPAC assessments stemming from new builds creates incremental tax revenue for municipalities.  In 2020, Cavan Monaghan received roughly $900,000 of new revenue as the bulk of the new builds in the Towerhill subdivision came on stream, but since then this source of incremental tax revenue has been declining.  In 2022 this revenue was roughly $340,000 and fell to $209,650 in 2023. In 2024, MPAC value used in tax levy calculation is projected to rise by approximately 1.1% as result of the new development and growth within the township in 2023, generating $114,285 in additional municipal tax revenues this year.

Since 2017, one of the major capital expenditures each year is a contribution to the Municipal Asset Replacement Reserves.  These reserves are used to finance the replacement of capital assets as they become obsolete over time.  In an ideal world, this contribution would be at least 100% of depreciation in order to prepare for replacing municipal infrastructure in the future.  The budget includes a transfer of almost $2.6 million to this reserve, representing 94% of the audited depreciation expense for 2022.  At the last minute there was a proposal to reduce the transfer of almost $2.6 million to the asset replacement reserves to reduce the levy increase, but the motion was not supported.

This tax levy increase is in line with recent rate hikes which have ranged from a low of one percent in 2021 to a high of 3.2 percent in 2020.  KG

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