11

2015 Budget

Council Workshop

February 2, 2015

2

Agenda

• Opening Remarks

• Response to Auditor General’s Report

• Budget Themes and Priorities

• Response to CD Howe

• 2015 Operating Budget Overview

• Level of detail required for budget deliberations

• Municipal service delivery – funding

• Property Tax Bills

• Drivers, pressures, relief

• 2015 Operating Budget – Property Tax Impact

3

Agenda

• Capital Program

• 2015 Capital Budget methodology

• Status of Capital Program

• Community Engagement and Communications Costs

• Community Grant Making

• Follow-up discussion from January 27 workshop

44

Response to Auditor

General’s Report

“Financial Review of the City of Brampton”January 26, 2015

5

Auditor General’s Report

• Address “Financial Review of the City of Brampton” by Jim McCarter (January 26, 2015)

• Discretionary reserve funds

• Maintaining infrastructure in a state of good repair

• Managing the rate of growth of operating expenses

6

Capital Reserve Funds

Payments to Contractors

Make payments to contractors from bank account as work is performed

Chequing / Savings Account

Put money into savings account

Personal Line of Credit

Draw from LOC to pay for renovations

Illustration: Home Renovations vs. City of Brampton Capital Program

Payments to Vendors

Make payments to vendors (designers, contractors, etc.) as work is performed

Unspent Capital

Allocate funds to capital projects

Reserve Funds

Draw from reserves to pay for capital projects

7

Maintaining Infrastructure

$543.2M

62% 62% 62%63%

63%63%

64%64%

65%65%

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

$200

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

($M

illio

ns)

Budget Year

Infrastructure Levy (1%) Federal Gas Tax

Contribution to Capital Annual Depreciation Expense (Est.)

Total Contribution

8

Growth of Operating Expenses

0

500

1,000

1,500

2,000

2,500

3,000

0

100,000

200,000

300,000

400,000

500,000

600,000

Brampton Full-Time Staffing Levels in Relation to Population

Population Full-time positions

2010: Introductionof Zum Bus Rapid

Transit (BRT)

* 2014 staffing number estimated based on approved additions

1994 - 2000: No tax increases =

reduced service levels

9

Budget Themes and Priorities

Potential Themes

• City-building

• Community facilities

• Maintaining infrastructure

• Managing growth

• Fiscal sustainability

1010

Transition to full accrual budgeting

• Existing budget method only includes annual cash (operating expenses) requirements

• Full accrual budgeting must include non-cash requirements (as on financial statements), such as:

• Depreciation

• Developer contributed assets

• Public Service Accounting Board (PSAB) adjustments for employee post retirement and other liabilities

• Interest earned on reserve and reserve funds

• This approach will provide stakeholders with a better reflection of the long-term financial health of the municipality for decision making purposes.

Response to CD Howe

11

Budget Variances – Two Views: CD Howe & Brampton

11

($ millions) Budget Actual Variance $ Variance %

Total revenues 626,377 732,994 106,617 17.0%

Items not included in budget

Developer contributed assets 80,681

Interest earned in reserves 8,373

Budgeted revenues 626,377 643,940 17,563 2.8%

Total expenses 450,655 550,176 99,521 22.1%

Item not included in budget

Depreciation 101,371

Budgeted expenses 450,655 448,805 (1,850) -0.4%

Source: City of Brampton 2012 Annual Financial Statements

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--

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1212

2015 Operating Budget

Overview

13

Level of Detail Required for Budget Deliberations

• 4 Levels of reporting available

• High level summary method

• Current method

• Line-by-line method

• Current method plus line-by-line for Mayor and Council

14

Municipal Service Delivery – Funding

Property Taxes & User Fees

• Fire Services• Public Transit• Planning New Developments• Enhancing Existing Neighbourhoods• Economic Development• Parks and Recreation• Arts and Culture• Road Maintenance• Snow Removal• Animal Control• By-law Enforcement• Infrastructure Maintenance

Development Charges

• Expanded Transit System• New/Expanded Roads• New Recreation Centres• Expansion of Existing Recreation

Centres• New Parks• New Libraries (limited)• New Fire Stations (limited)• Debt capacity allows infrastructure

ahead of growth• Debt service payments charged

back to developers

FUNDING

14

15

7-Year Historical Average – Property Tax Bill

$1,365 $1,445 $1,478 $1,526 $1,589 $1,733 $1,792

$1,457 $1,489 $1,502 $1,516 $1,515

$1,543 $1,570

$760 $753 $747 $739 $729

$736 $738 $3,583 $3,687 $3,727 $3,782 $3,834

$4,012* $4,100*

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

2008 2009 2010 2011 2012 2013 2014

Pro

pert

y T

ax

Budget Year

City of Brampton Region of Peel School Boards

*Includes Peel Memorial HospitalLevy: $52 (2013) and $50 (2014)

16

2014 Residential Property Tax Bill – Total

16

City of Brampton

$1,742

Hospital Levy$50

Region of Peel$1,570

School Boards

$738

* Based on 2014 average household with an MPAC assessed value of $364,000 (Brampton)

17

2015 Budget Drivers

• Provincially mandated as a high-growth municipality

• Ongoing capital spending required to provide existing services for growth areas

• Growing infrastructure inventory drives operating costs

• Need to balance:

• Spending

• Managing growth

• Changing demographics

• Limiting tax increases

• Limited financial resources

18

2015 Budget Pressures and Relief

Budget Pressures

• Compensation adjustments (Fire and Transit collective bargaining)

• New staff requests – address growth, maintain services, new service

• Inflation on non-labour expenditures

• Roads, parks and open space maintenance

• Operating costs for corporate facilities

• Reduced yield on investments

• Legislated requirements

• Infrastructure repair & replacement

Potential Budget Relief

• Fuel costs (diesel)

• Property tax assessment growth (new homes and businesses)

19

2015 Operating Budget – Property Tax Impact

• To maintain current service levels for the foreseeable future, annual budgets require a mid to high single-digit property tax increase

• To achieve a zero property tax increase, services would need to be reduced and/or eliminated and would include no new service enhancements

2020

Capital Program

21

2015 Capital Budget Methodology

• Historically - full budget approval

• All stages of projects funded up-front

• Prepare cash flow in current year for all approved projects

• Approvals exceeded capacity to deliver

• Increasing unspent capital balance

• Trend (see chart on following slide)

22

10-Year Budget Approval vs Spending Capacity

$50.0

$75.0

$100.0

$125.0

$150.0

$175.0

$200.0

$225.0

$250.0

$275.0

$300.0

$325.0

$350.0

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014*

Budget Actuals Forecast

$ M

illio

ns

* 2014 Actuals preliminary

23

2015 Capital Budget Methodology

• Capital budget methodology has changed from full project budgeting to capital contract budgeting

• Recommended target will be focused on projects where procurement (i.e. issuance of contracts) is feasible within the 2015 calendar year

• Review of unspent capital (including reallocation of funds) is ongoing

Capital Budget Priorities:

• Infrastructure replacement / maintenance

• To manage growth responsibly, infrastructure is required in advance of development

24

2015 Capital Budget Methodology - Reporting

• Keeping Council Informed

• Quarterly Capital Status Report

• As-needed reports for budget amendments in-year

25

Capital Budget Methodology – 2016 and beyond

• New Council and community priorities

• Staff are committed to resolving the current situation

2626

Status of Capital Program

27

Financial Review of the City of BramptonThree (3) Main Areas of Focus

• Small capital program for 2015 - focus on completing projects from 2014 and previous

• Building a strong infrastructure fund to leverage for future repair and replacement needs

• Regular status reports to Councillors and City Council

28

Context

Capital Program Status Reports to Committee of Council - March 5 and April 2, 2014

• Perception that funds were misplaced• Identified need for more detailed reporting – refine approach to defining

project and funding status

Summer 2014• Evaluation of all open capital projects• Confirmed that $826 million was in progress

Fall 2014• Team established a categorical breakdown approach for open projects• Analytical tool to monitor performance for each project• Provided the opportunity to identify projects experiencing issues and that

require review by senior management

2929

Capital Program Overview

0 0.5 1 1.5 2 2.5 3

$ billions

Capital Program 2004 – 2014(total fund = $2.648 billion)

DELIVERED($1.895 billion or 72%)

UNDERWAY($0.753 billion or 28%)

0 200 400 600 800 1000 1200 1400 1600

Number of Projects

(total projects = 1,468)

COMPLETED(912 or 62%)

IN PROGRESS556 or 38%

3030

Capital Program Current Status

31

Quantitative Review

Dedicated staff team continues routine review of “in-progress” projects utilizing status categorization tool and monitoring cash flow activity.

Staff team identifies projects for closure and return of funds, to address:

• Re-prioritization• Major change in scope

32

‘In Progress’ Analysis

* Values as of December 31, 2014

CategoryCapital Funds Projects

% $ % #Active Multi-Year Projects

66% $ 493,841,958 44% 243

Active One-Year Projects

2% $ 15,252,476 4% 20

Asset Purchases 6% $ 41,853,015 11% 60

External Partner Delivery

16% $ 120,028,009 12% 64

Projects with Closeout Issues

4% $ 33,033,260 15% 83

Delayed and Dormant

7% $ 49,381,353 15% 85

TOTAL =100% $ 753, 390, 070 100% 556

33

Qualitative Review

Staff continue business process improvement reviews in the following areas:

• Master planning

• Capacity and resource planning

• Delivery and project management

• Communication and stakeholder engagement

3434

Community Engagement

and Communications

35

Community Engagement & Communications Costs

• Community Engagement estimated costs $36,500 - $40,000

• Communications estimated costs $80,452 - $117,252

• Binder production/presentations estimated costs $10,000

3636

Community Grant Making