Proposed Adelaide Metcalfe budget over $8 million

The proposed $8-million budget for 2023 in Adelaide Metcalfe includes a 2.54 percent tax increase. According to treasurer Johnny Pereira, it could have been worse.

“The first draft of the 2023 budget was originally over 10 percent, but thanks to staff drastically cutting their budgets, finding efficiencies, utilizing our new investment policy, our new reserve and reserve fund policy and council’s commitment to focus in on a user pay system, we were able to find savings to decrease the tax rate. Staff is also recommending we make use of the newly created tax rate stabilization reserve fund in 2023 and use $45,000 of surplus from 2022,” read his report to council.

They are scheduled to vote on passing the budget at their Feb. 6 meeting.

That tax increase means for the average homeowner assessed at $290,000, that will be $51 more going to the Township this year. For the average farm assessed at $800,000, that will be $36 more.

Using that surplus from 2022 cut roughly one percentage point off the tax increase.

Most of those taxes are still coming from residential properties, followed by farms. With the commercial corridor north of Strathroy stalled by the sewer and water dispute with Strathroy-Caradoc, taxes from business properties is still far behind. For example, total residential assessed value was over $332 million. Commercial assessed value in all of Adelaide Metcalfe was under $40 million.

Farms were assessed at over $728 million, but get a discount to one-quarter of residential rates.

Property taxes make up about 74 percent of revenue, the rest coming from government grants, user fees and other municipal services.

Most of those taxes are still coming from residential properties, followed by farms. With the commercial corridor north of Strathroy stalled by the sewer and water dispute with Strathroy-Caradoc, taxes from business properties is still far behind. For example, total residential assessed value was over $332 million. Commercial assessed value in all of Adelaide Metcalfe was under $40 million.

Farms were assessed at over $728 million, but get a discount to one-quarter of residential rates.

That means homeowners will be chipping in over half the property taxes $2.375 million (up from $2.2 million last year), and farms will give $1.3 million (up from $1.28 million). Pipeline property is third at $378,231, commercial is $316,881, and industrial $206,752.

About $4.58 million total is coming from property taxes.

With the tax increase and new builds, the Township is bringing in over five percent more in tax revenue compared to last year.

More money needs to come from property taxes after the decrease of the Ontario Municipal Partnership Fund (OMPF) of $55,000, and the Ontario Community Infrastructure Fund (OCIF) of $29,000.

Not helping is the inflation rate of over six percent hitting everyone.

This is the first year money is being reserved for future projects at a fixed rate. The idea is to save money for big projects and avoid borrowing as much as possible.

Pereira gave an example homeowners could face to explain why reserves are needed under the provincially-mandated asset management plan:

“If you knew you needed a new roof — say you had to get new shingles in five years — it’s smart financial planning to start putting money aside every year so when it’s time to replace your roof, it’s not a big financial burden,” he explained.

It is why all capital projects this year will be funded from reserves built up by taxes. The next five years could see nearly $12 million in capital projects, according to this budget’s five-year plan.

The capital budget for this year is $1.845 million.

Splitting up the big $3-million Mullifarry Road rebuild over a few years means only $250,000 is being spent on it this year, with $2.75 million estimated for 2024 and 2025. Council made that decision to avoid County work on roads in the area this summer, and to use their expertise when they are available. This year will see culvert and drainage work, and trees taken out for future road widening.

Other road work planned this year is resurfacing 5.5 kilometres of Langan Drive from Townsend Line to Sexton Road ($140,000), and resurfacing 7.3 kilometres of Walkers Drive from Melbourne Road to Thames Road ($182,500). The sidewalk extension on Kerwood Road to the park entrance will be $36,000 not spent last year.

The culvert replacement at Scotchmere Drive will cost $200,000.

Along with the $400,000 snowplow that was already budgeted with last year’s money, another $420,000 from this year is set to go towards replacing a 20-year-old grader.

Kerwood Park phase two improvements worth $144,000 that were budgeted last year will be done this year. Another $35,000 from this year is dedicated for fixing up the park barn.

The fire department is set to get $37,500 in new gear.

Transportation makes up 88 percent of this year’s capital costs.

Operating expenses tend to go only in one direction for local governments, as they are the more baked in costs of salary and running any equipment or services.

That direction is up, and in Adelaide Metcalfe’s case it is up $1.45 million with most of that going into a new operating budget line item for reserves ($1.12 million).

Wages and benefits make up $1.57 million of these costs. Contracted services cost another $1.07 million, almost half of which is for police.

Pereira reminded council that wages and benefits making up 23.1 percent of the operating budget is not unusual.

“Without our great team, nothing would get done. So the team on our roads, fixing our roads, plowing our roads, dealing with our infrastructure; the firefighters working on those calls, responding to those scenes,” said Pereira.

Taxes going to pay for this increase are up $878,000, from $3.7 million to $4.58 million. Grants and other sources of revenue like bank ($80,000) and reserve fund ($382,883) interest help cover the rest.

There is another $70,000 budgeted for legal fees to deal with the Centre Road water and sewer servicing dispute with Strathroy-Caradoc now before the courts.

Total money in the bank when it comes to reserves for future costs will go up $616,482 from $7.87 million at the start of this year, to $8.49 million at the end of 2023.

“We tasked our new team in the last year-and-a-half to embrace a private sector mentality to realize efficiencies, go after grants, and look for monies we were leaving on the table with cash sitting in bank accounts,” said Mayor Sue Clarke, who praised the treasurer for seeking to take advantage of the rising interest rates.

Chris Gareau, Local Journalism Initiative Reporter, The Middlesex Banner