Budget deliberations began a month earlier this year in part to facilitate early tendering for capital projects including road work which has proven to reduce costs. Council began their review of the township’s financial in November, where Director of Finance Kimberley Pope presented a preliminary draft of current budget to actual spending in all departments, as well as operating forecasts and capital spending requests across the township.
The Operating budget for the township has been very stable over the last few years, despite escalating external costs particularly in township electricity bills. The draft 2018 operating budget expenditures of $6,216,793 are 2% higher than last year, but more than $500,000 below their 2012 level. The township has made a concerted effort to stabilize its operating costs, which have hovered around $6.5 million for the past five years. The most significant components of the operating budget are Public Works with a draft budget of $1,722,448, followed by the Police Services contract for $1,244,075, Parks and Facilities at $653,616 and Protective Services at $640,475.
The main financial challenges for the township stem from the capital portion of the budget. Net new Capital requests outlined in Ms. Pope’s draft total $5,278,146, of which $1,296,631 has designated funding through grants or specific reserves. Ms. Pope is seeking direction from Council for ways to reduce the net capital expenditure by $903,422 in order to limit the required municipal tax levy rate increase to the 3.5%.
This transfer is the annual contribution by the township to their Asset Replacement Reserves, which are earmarked for the maintenance and replacement of core municipal assets and infrastructure including municipal roads and buildings. The township allocates roughly $1.5 million each year to these reserves. These have been funded by Casino revenues, but in recent years the burden has been shifted to municipal tax revenues, and the portion of funding from this revenue stream has been gradually climbing each year since 2016, and the 2018 budget allocation includes a contribution of 49% to this allocation. The final $750,000 scheduled OLG payment due in March will go directly into this reserve, as will any subsequent Casino payments. When the Casino leaves, the township will have to foot the entire bill on its own.
There are some obligatory capital expenditures this year applying higher than usual pressure. This year’s capital budget includes $607,040 for the reconstruction of the Millbrook Dam and an additional $350,000 for sediment removal that will occur during the project. While the project is controlled and managed by the Otonabee Regional Conservation Authority, as the benefitting municipality, Cavan Monaghan foots 90% of the bill. This project expenditure represents 38% of the capital expenditures funded through the municipal tax levy in the current proposal. Full details on the Millbrook Dam project are outlined on the front page.
Further budget discussions take place December 4th, followed by a Public Meeting in January seeking ratepayer input prior to the final approval. KG