Tough Decisions Ahead for Budget 2022

In the initial draft budget introduced on December 9th indicates a 2.5% increase in the municipal tax levy would be required to meet the operating needs and capital investment requests from all departments.

Upon further examination, Council soon understood that given the volume of unknowns on the capital side of the budget, this increase should be considered a “placeholder”.   Council has already expressed concern with increase, and this rate does not include any allocation for the three largest capital budget expenditures on the horizon: the new Fire Hall, the Public Works Operations Centre and the Parks and Public Works Building.  A tender has been issued for the latter project but responses have not yet arrived.  Tenders for the other items are currently being prepared.  Following a July directive to proceed with the tendering process, the expectation is to keep the budgeted construction costs to a limit of $4.2 million for the Fire Station, $1.2 million for the Public Works Operation Centre in Cavan and $800K budget for the Public Works Building.

Proposals for the largest two tenders are scheduled to be issued near the end of the month.  Bids would not be received for another month, and would then be evaluated, so the projects are hardly shovel-ready.  There is considerable pressure to proceed with all projects as soon as possible, but without bids, no project has been approved.

Township staff will examine sources of funding including external borrowing, development charge revenues, transfers from reserves as well as future grand and other revenue opportunities to finance these large projects.  Even if construction for any of the project begins in this calendar year, a financing loan would not be established until late 2022 or early 2023, pushing project costs into future budget years.

Recent residential growth has increased the tax base, which raises the amount of property tax revenue generated by levy increases.  This year, a 1% residential rate increase generates an additional $102,000 in municipal tax revenue, which is $6,300 more than last year.  For the ratepayer, a 1% rate increase raises property taxes by $6.85 per $100,000 of the current assessed value.

The Operating budget in the first draft reflected a consolidated department net increase of

4.4%, stemming from increased pressure on expenditures, maintaining efficiencies, improving online access/delivery of services, by-law, and provincial legislation requirements. Contractual inflation protection in wage grids is also a factor.

The pandemic has also applied pressure on municipal finances.  In the past two years, COVID-19 has resulted in additional operating costs and significant cuts in parks and facilities rental revenues, resulting in a hit of $554,772 over the past two years.  Lost penalty and interest fees that were waived during the pandemic account for $177,238 of the lost revenue, while lost Parks and facilities rental revenue shortfalls over the same period add up to $233K.  In addition, the township has incurred emergency operating costs of $154,522 over the two years.  These pressures were partially offset by COVID-related relief funding totalling $260K.

On the Capital side, the current draft outlines $1,117,979 in capital spending requests that are not covered by existing funding from roll-overs, pre-approvals and designated funding and Asset Replacement Reserve transfers. Included in this figure is an allocation of $110K for the design of the new Fire Hall.

A request for a $50K donation to the new Peterborough Animal Care Centre was declined, given the circumstances.

Mayor McFadden indicated that significant cuts are coming in the next budget review to keep tax rate increases as low as possible. The next budget discussions are scheduled for the regular Council meeting on January 20th at 1pm, followed by a 6pm meeting later that day where public comments will be heard.  The final budget will be adopted on February 22nd.  KG

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