by John Brauneisen
On February 21, the Committee of the Whole recommended to Council that a bylaw be enacted to adopt the 2017 budget for General, Water/Sewer, Building Department, Library and Capital, representing an overall 2% tax rate increase. This increase will apply to residential, multi-residential, commercial, industrial and farm tax rates. Mayor Gordon commented on the tax rate increase: “a 2% increase is the new zero”, when it comes to fiscal management in North Grenville. Municipal staff had received direction from Council to not exceed a 2% municipal tax increase, as the Municipality’s 2015 Long Term Financial Plan required a 2% increase over assessment growth in order to achieve financial stability over the 10 year forecast.
At the same meeting, staff also reported to the Committee of the Whole that the Municipality had approximately $9.5M in reserves and reserve funds as of December 31, 2016, which was an increase of $2.5M from 2015. Reserves are an allocation of accumulated net revenues. They are discretionary in nature and are used for many purposes, such as planning for future equipment replacement, contingencies, carry forward balances for multi-year projects, etc. The available funds, as of December 31, 2016, for the reserve accounts was approximately $6.4M, of which $2.4M is included in the 2017 budget for capital expenditures and $0.7M is budgeted as transfers into reserves for future planning.
The overall Municipal Capital project expenditures total $10,295,726. General fund projects planned for 2017 are $5,937,622, and water/sewer capital projects account for another $4,346,104 in planned expenditures. For example, the planned general fund capital projects represent a 26% increase in capital spending from 2016 – an additional $1.1M. Is staff really confident that they will be able to spend this much on capital projects in 2017?
Consequently, taxation will experience a 2% increase in rates. The total tax levy will be $12,970,745, or an increase of approximately $390,000 over the taxes collected in 2016. This is actually an increase of 3%, and not 2% as advertised. The gentle reader might wonder how this could be the case. In 2016, the average assessment of a residential property in North Grenville was $316,189. Also, in 2016, the Municipal Property Assessment corporation [MPAC] reviewed the price of residential properties in our municipality and the average house appreciated in value by 1% from 2011. The average house in North Grenville in 2017 will be assessed at $319,109, and the 2% additional levy will be applied to this higher value. The result is a 3% tax increase, and not 2%.
One must keep in mind that the overall tax bill is made up of three components: the municipal part, the county part, and the education part. What would happen if these other two levels of government also decided that a 2% increase is the new zero? The overall increase to the residential home owner in North Grenville could be as high as 9% in 2017, while the Consumer Price Index is forecasting the inflation rate for 2017 to be on the order of 1.8%. The overall increase in property taxes could be as high as the anticipated jump in electricity prices.
What is being done to review costs and service delivery in operations of our municipal government, one might ask? The answer lies in the planned capital projects for 2017. Corporate Services, under the direction of the Chief Administrative Officer [CAO], will undertake a service delivery review, for which $30,000 has been budgeted. It is interesting to read the justification for this particular capital project: “In the past three budget cycles, members of Council have brought to the CAO’s attention the need to find efficiencies and effectiveness in the delivery of services. In addition, it is Council’s desire that financial sustainability/cost savings be achieved and if deemed necessary, redirect any new found resources to enhance current programs and their delivery or develop new ones. Since its creation in 1998, the Municipality of North Grenville has yet to conduct a detailed review of its service”.
Consider that Emergency and Protective Services would like to purchase two new four-wheel drive trucks for an estimated $110,000. One vehicle would be used by the by-law enforcement officers and, when needed, used for other operations, such as fire investigations. The second vehicle would be used during the day for fire prevention duties, and assigned on evenings and weekends to the On-Call Fire Officer. The rationale for the purchase of these two trucks was discussed at the February 21 meeting of the Committee of the Whole. Councillors supported the purchase of these two vehicles as budgeted, because they could also be used to carry emergency equipment, if needed. There is already a fleet of vehicles used by the first responders: do these vehicles not already carry sufficient protective equipment?
In conclusion, maybe members of Council should reconsider their support of a 3% increase in the municipal tax levy and ask staff go back and sharpen their pencils to look for possible cost savings where warranted.