2013 2017 Operating Budget Targets

Strategic Priorities & Policies Committee April 30, 2012

How the Municipal Budget Works

DEBT OPERATING BUDGET Salaries/Wages Utilities Supplies Fuel Contracted Services Annual Insurance Debt Payments Capital Levy (PAYG) Reserve Fund Contributions CAPITAL BUDGET New Arena New Fire Truck Road Widening New Bike Path Asset Rehab

Property Tax Grants User Fees

Outside: Development Charges, Grants, etc.

RESERVE FUNDS

Budget Focus
Expenditures

Non-Property Tax Revenues

Net Budget (Tax Levy)

From Assessment Growth

From Tax Rate Increase

Balancing the Budget

BASE BUDGET SERVICE GROWTH + + +
Current Services & Service Level What Exists Cost of Business Labour Materials Regulation Expanding City New homes New businesses More of Same! Service Changes New Services Higher Svc Levels

Expenditure Requirements
ONE-TIME REVENUE
(DEFERRAL) RESERVE FUND

OTHER REVENUE:
NEW: USER FEES, GRANTS, LICENSES, ETC

PROPERTY TAX FROM ASSESSMENT GROWTH

PROPERTY TAX

FROM RATE INCREASE

EXISTING: TAX LEVY, USER FEES, GRANTS, ETC

4

The Balancing Act Zero or not!

Labour costs & Collective Agreements (over 0%) Capital Financing Inflation - 3.1% Increased demand for new services (especially social, cultural and economic) New regulation (e.g. AODA) **Expanding City services & capital maintenance** $ New Opportunities
$700 m LIMIT to $100 m:
New City Hall 401/402 Corridor Development Green Bin Transportation Master Plan New initiatives (SOHO CIP, Downtown, OW decentralization)

$ Cost containment (operating efficiencies) Ontario Works Upload Operating Budget Contingency Reserve **Assessment Growth** Permanent Service Adjustments/Reductions

Acceptable Tax increase from rates

5

Background/ Perspective Residential Property Tax Comparison

( for2009 Property Tax - Residential Municipalities with Populations over 100,000) ( for Municipalities with Populations over 100,000)
For a three bedroom 1,200 sq ft detached bungalow with 1.5 baths and a single car garage, on a bungalow lot For a three bedroom, 1,200 sq ft detached 5,500 sq ft with 1.5 baths and a single car (Source: BMA - Municipal Study 2011) garage, on a 5,500 sq ft lot
$5,000 $5,000 $4,500 $4,500 $4,000 $4,000 $3,500 $3,500 $3,000 $3,000 $2,500 $2,500 $2,000 $2,000 $1,500 $1,500 $1,000 $1,000 $500 $500 $0 $0

2011 Property Tax - Residential

(Source: BMA - Municipal Study 2009)

SHIFTED 2 POSITIONS

2011 Group Average: 2011 City of London:

$ 3,293 (2009 $ 3,196) $ 3,079 (2009 $ 3,031)

Background/ Perspective Commercial Property Tax Comparison

2009 Property Tax - Commercial 2011 Property Tax - Commercial
( for Municipalities with Populations over 100,000) ( for Municipalities with Populations over 100,000) For prime location commercial office space, property taxes per sq ft of gross For prime location commercial office space, property taxes per sq ft of gross leaseable area leaseable area 2009) (Source: BMA - Municipal Study 2011)
$6.00 $6.00
$5.00 $5.00 $4.00 $4.00 $3.00 $3.00 $2.00 $2.00 $1.00 $1.00 $0.00 $0.00

SHIFTED 1 POSITION

2011 Group Average: 2011 City of London:

$ 3.28/sq .ft (2009 $ 3.38/sq. ft) $ 2.23/sq ft (2009 $ 2.61/sq. ft)

Background/ Perspective Industrial Property Tax Comparison

2011 Property Tax - Industrial 2009 PropertyPopulations over 100,000) Tax - Industrial ( for Municipalities with
( for Municipalities with Populations over 100,000) For standard industrial property under 125,000 sq ft, newer construction, flexible For standard industrial property under 125,000 sq ft, newer construction, flexible design - taxes per sq ft of floor area basis design - taxes per sq ft of floor area basis (Source: BMA - Municipal Study 2011) (Source: BMA - Municipal Study 2009)
$3.00 $3.50 $2.50 $3.00 $2.00 $2.50 $2.00 $1.50 $1.50 $1.00 $1.00 $0.50 $0.50 $0.00 $0.00

SHIFTED 4 POSITIONs

2011 Group Average: 2011 City of London:

$ 2.04/sq .ft (2009 $ 2.12/sq. ft) $ 1.51/sq ft (2009 $ 1.76/sq. ft)

Background/ Perspective 3 Year Comparison of Municipal Property Tax Levy Increases from Rates
Municipality
Toronto Ottawa Chatham Kent

2010
2.9% 3.8% 1.4%

2011
0.0% 2.4% 1.4%

2012
2.5% 2.4% 2.3%

3 Year Average 1.8% 2.9% 1.7%

Hamilton Sudbury
Windsor AVERAGE London Consumer Price Index
Based on change as of December
9

2.0% 2.5%
0.0% 2.1% 1.86% 3.3%

0.8% 3.5%
0.0% 1.3% 0.0% 2.0%

0.9% 2.8%
0.0% 1.8% 0.0% 1.7%

1.2% 2.9%
0.0% 1.75% 0.6% 2.3%

* Tax levy increases based on information identified on respective websites.

2011 and 2012 Tightening

To achieve 0% :
In 2011, $6.0 million in reductions were achieved through salary and wage freezes, position management and cost containment initiatives. In 2012, a further $18.1 million in adjustments comprising of:
One time funding sources Service changes and reductions Position Management Additional revenue Provincial Upload

10

$ 24.1 million

2013 2017 Operating Budget Forecasts

Updated Tax Levy Forecast (excluding impact of assessment growth) 6.0% Property Tax Levy 5.0% 4.0%
5.5% 3.8% 4.2% 3.6%

3.4%

3.0%
2.0% 1.0% 0.0%

2013

2014

2015 Years
2015
$ 533.1 m

2016
2016
$ 552.0 m

2017
2017
$ 571.0 m

2013
Forecasted Tax Levy 11 $ 493.0 m

2014
$ 511.8 m

Total

$ 2,661 m

2013 2017 Operating Budget Forecasts

Items included in forecasts are:
Impact of contractual settlements Financing costs associated with capital plans in keeping with Strategic Financial Plan Increase to complement (Policing Services) Anticipated increases in costs for fuel and energy Continued upload of Ontario Works Benefit costs and Court Security costs Moderate growth in transit Continued position management initiatives Increased contribution to Economic Development Reserve Fund (2013, 2014) Strategic reduction in the reliance on the Operating Budget Contingency Reserve for base funding
Additional funding for the Investment & Economic Prosperity Plan Increased investment in municipal infrastructure to close infrastructure gap Additional funding to meet targets as laid out in the Emerald Ash Borer Strategy New initiatives, or enhanced service delivery of existing services

Forecasts do not include:

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2013 2017 Operating Budget Forecasts Compared to Proposed Targets

5.5% 3.8% 3.8% 3.1% 4.2% 3.4% 3.6% 3.0% 3.4% 4.1% 3.2%

2.7%

2013

2014

2015 2016

Target
2013
Forecasted Tax Levy Proposed Tax Levy TARGET

Forecast
2014 $ 511.8 m $ 500.2 m $ 11.6 m 2015 $ 533.1 m $ 517.3 m $ 15.8 m

2017 AVERAGE

2016 $ 552.0 m $ 532.8 m $ 19.2 m

2017 $ 571.0 m $ 547.3 m $ 23.7 m

Total $ 2,661 m $ 2,583 m $ 78 m

$ 493.0 m $ 485.0 m $ 8.0m

13 Difference

Potential Impact of 2013 Targets

Somebody pays.either now or in the future. Two ways to achieve target:
Permanent service reduction (expenditures) Sustainable non property tax supported revenue sources
Increase/ Decrease 2013 Property Tax Levy Increase based on forecast $ 25.6 million

Reduction required to meet 3.8% target

Additional reductions required to achieve 0% Total impact to services in order to achieve 0%
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$ - 8.0 million
$ - 17.6 million $ - 25.6 million

2013 Operating Budget Targets

Service/Source of change
2012 Council Decisions London Police Service London Fire Services Land Ambulance
2013 Maintain Tax Levy Requirement in $ millions At 3.8% Levy Impact $ millions Cumulative At 2% Levy Impact $ millions Cumulative At 0% Levy Impact $ millions

4.1 4.3 1.6 0.3

-1.2 -

-0.1 -2.5 -0.5 -0.1

-4.1 -4.3 -1.6 -0.3

Conservation Authorities
Social Housing London Transit London Middlesex Housing Corp London Middlesex Health Unit

0.2
0.5 1.3 1.1 -

-0.3 -0.6 -0.3

-0.1
-0.3 -0.9 -1.0 -0.5

-0.2
-0.5 -1.3 -1.1 -0.7

Business Attraction & Retention

Capital Costs and Contingencies Social Support and Long Term Care All other Services

1.8
7.3 -2.5 5.7

-0.3
-1.1 -4.3

-1.7
-1.9 -1.1 -5.8

-1.8
-6.8 -1.1 -5.8

Total
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25.7

-8.1

-16.5

-25.7

2013 2017 Operating Budget Targets Next Steps

March

April

May

June

July

August

September

October

November

December

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