Increase of 2.12 per cent in 2021 budget

UPDATE: At the special council meeting Wednesday evening, council approved a final operating budget of $37,327,452, and a capital cudget of $10,404,287, with a 2.12 per cent increase after assessment growth. The following story was printed in this week's Local, which went to press before the meeting. A full story will follow regarding changes that were made to what was presented.

At a special council meeting Wednesday, council will be asked to approve the 2021 operating budget, including an operating levy of $13,126,772, a 2.12 per cent increase, or $440,621, after considering assessment growth.

That will allow staff to move forward with a tax rate for the municipality, and the regional and educational portion of the tax bill for 2021.

Council will also be asked to approve the recommendations from the audit and finance committee for a 2021 capital budget of $10,404,287.

There is also a recommendation for a special urban area levy for storm water of $456,998, an almost five per cent increase over last year.

For the average residential assessment of $533,482, this represents an increase of about $30 on the tax bill, and for those who are charged the storm levy, an extra $3.25 on top of that.

One discussion added to Wednesday’s special council meeting agenda is to have another look at a heritage tax rebate.

Robin Ridesic, owner of The Exchange Brewery on Queen Street and a heritage home on Prideaux Street, gave councillors a detailed account of money being left on the table if they don’t adopt the rebate, which has not been included in this year’s budget. Council referred the discussion to the budget debate Wednesday, cutting off any comments on her request.

A town working group charged with examining the rebate, debated as pandemic relief last year and at that time deferred to this year’s budget, recommended instead that the audit committee allocate $25,000 for facade improvements to designated heritage properties within the Heritage District, and maintain the existing heritage incentive program, providing up to $70,000 for improvement projects. That grant program is funded with $35,000 from the town, and $35,000 from the region. 

The audit committee agreed with the working group recommendations, with the increase of $25,000 funded from parking revenue.

Some items of the 2021 budget were discussed and given interim approval in December, says Coun. Allan Bisback, chair of the audit and finance committee, so the town could move ahead with increases to select payments, such as payroll and insurance, without waiting for full budget approval. Payroll increases of around two per cent are predetermined by a bargaining agreement, and municipal insurance is seeing a large increase for 2021, he says. The town’s premiums increased by 30 per cent or $118,650.

When the audit committee first started meeting in September, Bisback says, “we didn’t have a good sense of how the year was progressing. We thought we were going toward a deficit,” which is not allowed for municipalities, and without tax stabilization reserves to cover it.

By December, the decision was made to deferring the remainder of the budget apart from the select items, until January to give staff a chance to have another look at the $10 million capital budget, which is very close to last year’s costs, “to go through the details and ensure the budget is achievable and balanced.”

Municipal approval of some items, before the complete budget is passed, is typical at an amount of around 35 per cent of the total, he says, although this is the first time NOTL has done that.

Some rental and user fees were also approved in December, but without increases over 2020, he says.

Bisback explains that early direction of the audit committee to staff, when asking for departmental requests, was to look at it as a “maintenance” budget, holding the line of last year without reducing services. While last year the committee looked at several business cases for new expenses, he was looking at this year as a time for austerity, without any of the wish lists that have been entertained in previous years. 

“We said we were not going to entertain new business cases, instead kept an even keel with a maintenance budget.”

During early budget discussions of the 2021 budget last fall, the audit committee was first looking at an increase over last year of about 7.68 per cent, or $978,824. They were asked to reduce that to about three per cent, and the final recommended budget for council approval Wednesday is just a little more than two per cent increase over 2020, he says, even with COVID-related reduced revenues, such as from rentals, parks and recreations programs, and parking.

He remains concerned with the uncertainty of what the rest of the year will bring as a result of the pandemic, he added, especially with parking, which the town, as a tourism destination, has increasingly relied on as a revenue source, and is especially difficult to predict this year.

Despite raising parking fees last fall, revenue was down by almost $1 million in 2020, says Bisback. “Even without a pandemic, he says, he doesn’t see parking as a revenue stream to depend on, explaining the municipality could reach a ceiling of raising rates, and there is a limit to expanding the number of spaces.

One item parking typically funds is discretionary grants to not-for-profit organizations, and the audit committee’s recommendation this year was to reduce those grants from $100,000 to $30,000 until they know what to expect from parking.

One large expense last year was the town’s legal budget, which was approved in the amount of $1 million. This year’s budget recommendation report says 2020 saw the conclusion of some of the legal matters, and staff are recommending a budget of $500,000 for 2021. “The 2020 approved budget used a large transfer of $650,000 from parking to supplement the budget. Due to concerns over parking revenue performance in 2021, this transfer is being rolled back entirely, and results in a net increase of $85,000 to the operating levy. One large legal matter remains outstanding for 2021, with several planning appeals expected to continue. Other large legal matters are expected to be resolved in following budget years beyond 2021.”

“There will be lots of disappointed organizations,” he says, “but most of the grants are to support and sponsor events that are not likely to happen this year.”

Of presentations made to the audit committee in December, most were approved at the 2020 level, with the exception of the Chamber of Commerce and the Niagara District Airport. Due to the cancellation of the peach and ice wine festivals, the Chamber’s request for funding was reduced from $118,000 to $72,000. The difference of funds of $46,000 from the parking program has been used to support the operating budget. The Niagara District Airport was approved for a nominal increase of $667.

The largest capital expenses recommended for 2021 are equipment for the fire department, and the typical large ticket items such as road reconstruction, and water, waste water and storm water infrastructure projects.

Some of those projects have been put off in previous years as an attempt to keep tax increases low, says Bisback, and have caught up with the municipality. 

Two of the costly items in this year’s capital budget include $900,000 for new breathing apparatus for the fire department, almost half of which will be debentures, and a pumper replacement at a cost of $820,000, to be fully debentured.

Bisback says he was concerned to learn, especially during COVID, that some firefighters have to share breathing apparatus — the number of recruits has grown in recent years, but equipment has not been purchased to keep up.

“All budget decisions are about priorities,” he says. “I believe our fire department is important. As long as it’s affordable, and makes sense, I would fund whatever is needed.”

Another item is for a project that is now underway, the Mississagua Street culvert, at a total cost of $550,000, which has been on the books for a few years, and is also fully debentured.

“This is another project that has been kicked down the road a few times,” said Bisback.”

The problem with projects like this one that are deferred, he adds, is that the more often they are kicked down the road, the more expensive they’re likely to become.

“The balance of the capital program remains within available funding,” the report says.

Council approved projects in 2020 that were placed on hold and deferred to 2021, for a total of $1,131,344, the audit committee recommendation report says. Another $11.5 million in projects has been deferred to 2022 or beyond, including $11.2 million originally scheduled for 2021, and $311,000 approved in prior years’ budgets.

About $215,000 in capital projects has been cancelled, $87,000 originally scheduled for 2021 and $128,000 related to projects approved in previous years’ budgets.

Bisback says he was amazed to see the town “squeaked through” its first year of the pandemic with a small surplus, lauding town staff for that accomplishment. That has been passed on to the taxpayers, with a percentage of it going toward the tax levy. 

He cautions, though, that when they see their tax bill, it will include the regional portion, a small increase that goes to the St. Catharines Hospital site of the Niagara Health system.

He adds, too, that the costs of implementing recommendations of the Deloitte service review carried out in 2020, put on the “back-burner” while the town waited for the hiring of a new CAO, are not included in the budget, but may be considered later this year.

Councillors at Wednesday’s meeting can approve the audit committee recommendations, or send them back for another look at potential savings.

Once approved, the 2021 budget will be posted on the town’s website, along with a brief explanatory video.