BRUCE COUNTY – Council, as a whole, expressed satisfaction with the proposed 2021 budget that will see an increase of 3.95 per cent over last year.
However, the bylaw likely won’t be passed until the new year, with some information from the province still to come in.
The 3.95 per cent budget increase presented at the Oct. 22 meeting of the corporate services committee will give lower-tier municipalities a figure to work with as they discuss their own budgets.
Edward Henley, director of corporate services, explained that by doing a five-year budget for 2021-2025, with only the 2021 budget being approved and subsequent years being forecasts, staff were able to “smooth out” a substantial budget increase over a few years without cuts to services or a large hike in the levy.
Initially, council was looking at an 11.73 per cent levy increase for 2021. This was revised for the next budget meeting to 6.95 per cent. In his report to the committee, Henley said these levy increases “did not include an estimated property base growth rate of 1.50 per cent for 2021 or 1.00 for 2022-2025.”
The first presentation of the budget showed an 11.73 per cent increase for 2021 but less than one per cent increases for the next two years. By shifting some of the levy increase to 2022 and 2023, council would avoid a major increase in 2021 while rebuilding reserves. The latter was identified as a priority by council.
It remains unknown whether the Ontario Community Infrastructure Fund (OCIF) grant, which ends in 2020, will be continued for 2021. Some members of county council are confident it will be, but nothing official has been announced. The OCIF grant in 2020 was $566,000.
Henley said that shifting budget increases forward over two years could result in safety concerns for large projects such as bridges. What makes it work is temporarily borrowing from reserves – $750,000 in 2021 and another $750,000 in 2022. This avoids a large swing in the levy that would result from doing it in one year, he explained.
The two reserves to fund the internal borrowing would be the non-departmental facilities reserve ($910,000) and the working fund ($590,000). Henley said both reserves have been looked at and both have sufficient funds for proposed budgeted items. The drawback is there will be limited funds for unbudgeted items.
The cost of borrowing internally is only slightly less than what the commercial bank rate would be, but is more flexible and efficient than a formal infrastructure loan, Henley said. It has potentially fewer days to pay interest and no penalty for repaying the loan early.
Henley pointed out that the five-year budget aims to start correcting a trend seen over the past several years of using reserves to minimize levy increases.
“The downward trend was moving away from the median average of reserves held by other comparable counties and was not sustainable,” he said.
The 3.95 per cent increase in the levy for 2021 is not carved in stone. Henley noted that if OCIF funding comes through, the levy could be reduced to 2.82 per cent.
Henley said he wouldn’t have the final numbers until Dec. 15, when the Municipal Property Assessment Corporation (MPAC) provides figures on this year’s assessments.
County Coun. Anne Eadie, mayor of Kincardine, commended Henley for “the clarity you’ve provided. I’m pleased with the way you’ve smoothed it out.”
However, she expressed concern about reserves and stressed the need to replenish them.
Eadie also noted that next year, MPAC increases will come in.
“Shifting too much for next year is a concern – we anticipate substantial increases in both residential and agricultural (property assessments),” she said.
County Coun. Luke Charbonneau, mayor of Saugeen Shores, said he didn’t think the county should wait until 2023 to start rebuilding reserves. The idea of “borrowing from depleted reserves” didn’t sit well with him. He expressed confidence there’ll be an OCIF announcement coming and “this will be a three per cent budget.”
Charbonneau characterized the shifting of levy increases to other years as “a mitigation, not a solution. We’re not heading in the right direction.”
County Coun. Robert Buckle, mayor of South Bruce, said he liked one proposal that had been made – a special levy for infrastructure.
“People like to know,” he said.
Buckle stated his wish to keep the levy increase for 2021 as low as possible, noting that because of COVID-19, a lot of people have lost their jobs.
“We should try to keep it down as much as possible,” he said.
The state of the county’s reserves was a major concern for County Coun. Steve Hammell of Arran-Elderslie.
“At the end of 2021, Arran-Elderslie will have more in reserves than the county,” he said. What’s needed is a “team effort in spending less money,” said Hammell.
County Coun. Janice Jackson, mayor of South Bruce Peninsula, agreed that “delaying bad news to other years” is not the answer. “We need to sharpen our pencils” and “cut back on a lot of things.”
Eadie said she, too, didn’t like to “see reserves so low” but said OCIF funding would mitigate that.
The meeting closed with a discussion on growth in the county. Warden Mitch Twolan, mayor of Huron-Kinloss, said residential growth is up at least 25 per cent; there’s an opportunity to take that growth and replenish reserves.
“As a county, we’re growing,” said the warden,
Some of that growth has been fueled by COVID-19. Some urban people have seen the benefits of moving to rural Ontario.
“This is a good budget,” he continued, adding, “I think we’ll get OCIF. I’m supportive of this budget.”
He agreed with Eadie that there needs to be a discussion prior to the 2022 budget on what services are actually needed, and where cuts are possible.
The next meeting is scheduled for Nov. 5.
Pauline Kerr, Local Journalism Initiative Reporter, The Walkerton Herald Times