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2014 to 2015 Operating BudgetsGovernance & Priorities Committee

March 7, 2013

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Council Budget Direction – April 2012

City will move to three year budget cycle

City will hold tax increases to 3.25% or below for 2013, 2014, 2015

The City will engage the public in budget process

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Budget Realities

To achieve a 3.25% annual tax increase for 2013 – 2015, the operating budget must be reduced by a minimum of $4.3M over the next 3 years.

These cuts must be ongoing permanent reductions, not one-time cuts.

These cuts are in addition to the significant cuts made over the past few years

The City has also been adding new inventory each year which increases operating costs, as well as the infrastructure burden (future costs to upgrade and replace).

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Status Quo Not Sustainable

The status quo is not sustainable

To keep tax rate increases at a maximum of 3.25% per year:

• The operating budget must be reduced

• Services must be reviewed and resources shifted

• New revenue opportunities must be explored

• Management requires the flexibility to adapt to evolving needs and council priorities by shifting resources to areas with increasing needs

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Steps Taken since April 2012

Council Strategic planning & priorities for 2013-2015 Departments were given detailed instructions to zero base budgets,

and allowance for inflation was removed from all budgets Vacancy Management - Identification of vacant positions that will

not be filled Organizational Review to identify potential changes to structure and

how services are delivered Council undertook a process to develop their ideas for budget

containment and reductions Budget Principles developed and approved Council supported a list of 10 budget reduction strategies to take

forward to the public for input prior to making final decisions Consultation completed and presented to Council

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Organizational Review

Findings from the Organizational Review are expected to be provided to the City Manager in March

Findings along with Recommendations from the City Manager are expected to be presented to Council in April

The five year financial plan can be amended at any time to reflect changes approved through the Organizational Review

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Proposed Budget Reduction Strategies for 2014 and 2015

• After several meetings in 2012, and consideration of over 30 potential cost reduction strategies, Council approved 10 budget reduction strategies for consideration and directed staff to inform the public and seek feedback prior to finalizing budgets for 2013, 2014 and 2015. Council has received all of the feedback collected.

• Of those budget reduction strategies, seven require decisions now in order to realize reductions in 2014 and 2015 budgets:

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Proposed Budget Reduction Strategies for 2014 and 2015

1. Limiting budget increases for library and police to 2%

2. Allocate 1.25% of the tax increase to capital work to maintain City infrastructure

3. Partial automation of some parkades during slow periods

4. Advertising in parkades, on parking machine etc

5. Shift from annuals to perennials in some beds

6. Reduction in City-led seasonal programming in Centennial Square

Totaling $1.9MLeaving $434K in reductions to be found through the Organizational Review

7. Organizational Review findings and recommendations are expected to be presented to Council in April

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Partial Automation of Some Parkades

• To automate some parkades during the slower periods to reduce expenses

• Ensure customer service level maintained at a high level

• To minimize any service impact during peak periods of arrival and exit, or special events, staff would be scheduled during peak periods

• Initial capital cost of approximately $500,000 for equipment, which would be funded by the equipment reserve fund

• The potential savings is estimated to be $300,000 annually

• The estimated savings of $300,000 would constitute between 30% to 40% of staff hours, predominately from auxiliary hours

• In addition, a parking service review will be completed in 2013

Council Approval in Principle is being requested. Staff will then review options in detail as noted above and report to Council before any final approval is requested.

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Shift from Annuals to Perennials

• Convert annual beds/planters outside of the downtown core and Beacon Hill Park to perennials

• Spring and fall plantings reduced

• 2 FTE reduction; positions eliminated through retirement or vacancies (no layoffs)

• Savings begin in 2014

Potential savings: $150,000 each year

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Reductions in City-led seasonal programming in Centennial Square

• Reduce lunchtime concerts to 3 a week (from 5)

• Eliminate winter programming– Technical support for the Christmas Tree light-up, Figgy

Pudding, Snow Day and any other seasonal programming

• Reduce programming and event support

Potential savings: $82,000 each year

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2014 to 2015 Budget Balancing

2014 2015 TotalShortfall as per the 2012-2016 Financial Plan 1,604,281 1,088,579Forced GrowthElections - 4 additional offsite voting places, staffing 16,000Pension 195,000 195,000Governance 10,000

1,799,281 1,309,579 3,108,860Reductions:Silver Threads lease - reduced space (50,000)Payment in Lieu of Taxes (PILTS) (265,600) (121,000)Construction permit revenue (140,000) (140,000)

1,343,681 1,048,579 2,392,260Budget Consultation Items:Reduce Capital Property Tax Levy to 1.25% (285,000) (290,000)Police reduction (459,711) (506,381)Library increases greater than original FP 64,424 50,794Shift from annuals to perennials in some beds (150,000)Reduce City led programming in Centennial Square (82,000)Partial automation of some parkades (300,000)Advertising on Parkdades, parking machines TBD

(1,212,287) (745,587)Further reductions required to meet 3.25% target 131,394 302,992 434,386

Reductions to be Identified through Organizational Review (131,394) (302,992) (434,386)

0 0 0

Sample 2013 – 2017 Five Year Plan

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2013 2014 2015 2016

Net City 70,788,458 69,485,572 72,984,208 76,814,838 80,434,141Net Police 36,985,839 37,699,203 38,382,102 39,371,158 40,388,091Library 4,275,183 4,393,350 4,505,431 4,612,970 4,722,631Reductions to be determined (131,394) (302,992) (434,386)

112,049,479 111,446,730 115,568,749 120,798,966 125,544,862

Property Tax Levy 108,366,728 107,454,460 111,446,730 115,568,749 120,798,966New Assessment Revenue 165,000 500,000 500,000 500,000 500,000

108,531,728 107,954,460 111,946,730 116,068,749 121,298,966

Property Tax Increase 3,517,751 3,492,270 3,622,019 4,730,217 4,245,897

Estimated Property Tax Increase 3.25% 3.25% 3.25% 4.09% 3.51%

2017

Recommendations

That Council approve the following budget reductions for 2014 and 2015:

• Allocate 1.25% of the tax increase to capital work to maintain City infrastructure

• Partial automation of some parkades during slow periods• Advertising in parkades, on parking machine etc• Shift from annuals to perennials in some beds• Reduction in City-led seasonal programming in Centennial Square

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Next Steps

March 8, 2013– Greater Victoria Public Library Budget Presentation– 2013 Capital Budget

April 2013– Public Budget presentation– Financial Plan and Tax Rate Bylaws preparation (adoption of

bylaws must be done before May 15th; the last regular Council meeting before this date is May 8th)

May 2013– Print and mail property tax notices (July 2nd due date)