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$1.2M injection for reserves a hot topic at Town Council

September 30, 2015   ·   0 Comments

A topic that dominated Orangeville Council’s 2015 budget debates – the need to replenish the Town’s depleted reserves – was back as the hot topic in Monday night’s council session.

The issue surfaced in the form of a Treasury Department report recommending that a minimum $1,263,255 contribution to reserves be included in the proposed 2016 operating budget as well as a directive to staff to continue a cumulative contribution of 1% of the Town’s prior year’s tax levy, which was calculated at $298,623.

The report was prepared by Treasury at Council’s request at its September 14 meeting for information on the adequate amount of reserves for the Town.

The recommendation triggered concerns from Councillor Nick Garisto, Chair of the Town’s Finance Committee. “I can’t support this at this time,” he said. “I would like to see this postponed until we have all the numbers on the table.”

Councillor Don Kidd was quick to share his concerns, questioning how this recommendation could go on without Council having access to a full budget document to review before making such a decision. “We’re getting the cart ahead of the horse.”

Deputy Mayor Warren Maycock, who chaired the meeting in the absence of Mayor Jeremy Williams, who was in China on a trade delegation, reassured Council that typically is how the budget process begins. “Over the last several years, we have contributed from $1.5 million down to $1.2 million. So this is typically what happens.”

Councillor Scott Wilson, who spearheaded a drive to raise the reserves last spring, moved to adopt the report with the recommendations as written by Treasury, which passed with all members of council except Councillor Garisto in support.

The 39-page report explained that municipalities are required to build their reserves to:

• mooth the tax impact of capital projects by spreading out the funding over multiple years

• et aside funds for future asset replacements and rehabilitations over the life of an asset so funds are available when the asset reaches the end of its useful life

• educe the dependency on debt facilities for capital projects

• rovide for future liabilities

• rovide tax rate stability, and

• nsure stable adequate cash flows.

The report said that while the Ministry of Municipal Affairs and Housing (MMAH) has not imposed mandatory requirements or guidelines regarding adequate levels of reserves, it compiles an annual report based on each municipality’s Financial Information Return (FIR). The report benchmarks financial information and rates the risk or level of challenge the municipality faces with certain areas, reporting the challenge levels as low, moderate or high.

In the case of reserves and discretionary reserve funds as a percentage of total operating revenues, the challenge is high when the percentage is less than 10%, moderate between 10% and 20% and low if more than 20%.

In 2013 the Town was at 12.1%, but in August, water and wastewater reserves were reclassified from obligatory reserve funds to discretionary reserve funds, and as  a result, the total discretionary reserves and reserve funds as a percentage of revenues was restated to 16.3%.

The report noted that the rate of residential growth has dropped from 8.7 per cent between 2001 and 2006 to 2.5 per cent between mid-2011 and early 2014, but said it is expected to rebound in the next decade.

It went on to note that the Town faces risks in its aging infrastructure and such things as severe winter storms, ice storms and extreme cold.

“The exceptionally long and cold winter of 2014 had a negative impact on Orangeville’s infrastructure and the general road rehabilitation project had to be expanded beyond what was approved in the 2014 capital budget.”

An additional $461,150 of roadwork had to be funded from reserves.

The Treasury Department also presented Council with three alternative schedules for the 2016 budget. On a motion by Councillor Wilson, council adopted one that calls for a budget presentation by town staff on December 7, followed by budget discussions on Monday nights from 7 to 11 p.m. on January 11 and 25 as well as February 8 and 22.

Also on the agenda for Monday’s council was an item from the Economic Development, Planning and Innovation Department for the information of Council regarding new businesses that arrived in Orangeville during July and August. This sparked some unexpected discussion when Councillor Kidd suggested that perhaps the town was missing out on some revenue from new businesses that are not being registered through the SBEC (Small Business Enterprise Centre) resource centre. “We’re always under the gun when it comes to budgets. How much money would we be losing out on in a year?”

“We don’t charge any revenues for the registration of businesses, it is a service we provide,” Acting Treasurer Karen Mills answered.

Councillor Garisto was quick to respond in defence of local businesses in rebuttal to Councillor Kidd’s suggestion. “Businesses in this town pay quite a bit of money right now and in my opinion they contribute to the local economy and they create jobs. We have to do everything possible to make sure that we safeguard those businesses.”

The discussion got slightly heated when Councillor Kidd questioned how a councillor who ran for office on a platform of zero percent tax increases could not be in support of having businesses pay their fair amount, to which Councillor Garisto replied that he also ran on a platform that included  taking care of the existing businesses in town. No further discussions resulted on the subject.

At Council’s Sept 14 meeting, an update on the progress for Bravery Park, an expansion of the existing Mill Square Park at Church and Mill streets. The update included the phases of construction as well as the fundraising progress.

At Monday’s meeting, Shannon McGrady came to speak to Council to seek support from the Town. “As we raise the funds, we are asking Town Council if you would be willing to control the planning and the construction of the park throughout each phase.”

Councillor Sylvia Bradley had concerns about the Town taking on this project due to the current site plan. Despite an environmental study having been conducted on the site, she still had concerns over the possibility of encountering contaminated soil during the construction phase, knowing that many of the park’s proposed structures would require substantial foundations.

Council decided to ask the Bravery Park committee to come back with more information before Council would make any decision on the request for Town support.

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