Draft town budget calls for 3.3% tax increase in 2015

December 23, 2014   ·   0 Comments

Orangeville Council will be facing some difficult decisions if they try to make good on Mayor Jeremy Williams’ campaign promise of a zero percent budget and tax increase for 2015. The budget proposal presented by town staff at Monday’s public meeting called for a 3.33 percent increase in the local tax levy as the result of a 3.76 percent increase in proposed spending.

“The budget document speaks to the balancing of fiscal priorities while seeking to met the objectives of council,” explained Brian Parrott, Town Treasurer. “Our vision and our values are front and centre in the budget document. We believe that [they] inform the budget process; the values are woven throughout our budget document and we can incorporate [them] into the document.”

With relatively little new residential and commercial assessment coming on stream, the expected increase in 2015 revenues is only 1.85 percent, and that could be offset if the town’s biggest retailers win appeals against the Municipal Property Assessment Corporation’s re-assessments based on 2012 valuations.

As for industrial assessment, since 2012-2013 the industrial tax roll has decreased $25,353,847, equalling 31 percent less in taxes and producing only three cents of the overall tax dollar. This leaves the Town even more reliant on residential and commercial properties as the main sources of revenue.

According to the proposal, commercial property taxes make up just 15 percent of tax dollar distribution, while residential taxes make up the remaining 82 percent.

The full budget proposal sits at a total of $50.5 million in revenues, with $50.1 million in expenditures, dropping the estimated surplus for 2015 to a mere $418,236.

“Right now, to get to three percent, we could only propose putting $400,000 into reserves,” said Mr. Parrott. “Normally we would have put in 1.4 million.”

According to Mr. Parrott, a big part of that vast decrease came from the extra costs the town faced throughout 2014, including the harsh winter, additional roadwork, and cost overages for the Wellington Street Bridge project. These additional costs used up what would have gone into the reserves.

Since it became public, the proposed budget has received a flood of online criticisms and complaints from the public, some accusing Mayor Williams of breaking his campaign promise. However, the proposal is merely the recommendation of the staff; it will be up to council to make the changes they feel necessary to reflect the budget they feel is best suited.

The current Budget Timeline included in the proposal suggests that Council should be ready for budget approval by the January 19 council meeting, giving the new council less than a month to figure out what should go, what should stay, and whether this 3 percent increase is sustainable.

An overview on page 25 of the 400-page document outlines some of the challenges town staff had in coming up with their recommendations to Council.

“There are many pressures facing the Town impacting both the costs to deliver services and the revenues generated. Just as the downturn in the economy has affected taxpayers, it has also had an impact on the Town’s revenue stream,” it said. “Continued low interest rates limit the investment income that can be generated from Town reserves and working funds. Planning application fees have been trending below forecast and demand for some recreation programs has been reduced, creating revenue pressures. Assessment growth has also been impacted with little growth in 2014. On the expenditure side, negotiated contract wage contracts and property tax reclassifications have been granted that are beyond the control of the Town. Inflationary pressures continue to impact the 2015 budget on essential items such as fuel, utilities and winter control costs. As of October 2014 the Consumer Price Index for Ontario is an increase of 2.8 percent over the prior year.

“The Proposed 2015 Budget provides a balance between these pressures and meeting the service demands of the community. Included in the proposed budget is an Operating Budget of $51.4 million, of which $11.8 million is the water works and wastewater budgets funded entirely by user rates. The Proposed 2015 Capital Budget totals approximately $14.7 million including those projects above the minimum tax levy funding line and all mandatory and high projects with no impact on the tax levy. The minimum tax levy contribution is forecasted to be $1,285,822 in accordance with the most recent AMO Federal Gas Tax Agreement. Assuming, that the tax levy contribution to capital remains at the minimum level, the Proposed 2015 Budget reflects a potential municipal portion tax rate increase of 3.33 percent (after assessment growth) to fund current operations, extend essential service levels to growth areas. The ‘Net Tax Levy increase of $946,697 includes an estimate of assessment growth of $365,800 of taxes arising from 2014 assessment growth.

“The proposed 2015 tax levy requirement represents an approximate $26.93 tax increase per $100,000 of residential assessment, or approximately $91.56 a household impact based on a property with an average assessed value of $339,946.

“The Proposed 2015 Budget includes debt repayment in the amount of $2,434,492 (principal + interest). The Municipal Affairs and Housing (MMAH) calculated the 2013 annual repayment limit at $9,942,440.”

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