RECOMMENDATION:
THAT the report dated February 14, 2006 entitled, “2006 Operating, Capital, and Waterworks Budgets” be
received;
AND THAT Council approve the 2006
Operating Budget for Town services which
totals $152,034,677, (excluding prior years surplus) the principle components
of which are detailed on Appendix 1 attached hereto;
AND THAT gross operating expenditures of
$152,034,677, (excluding prior years surplus transfers to reserves) be funded
from the following sources:
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$
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Taxation Revenues
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93,618,151
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Grant & Subsidy Revenues
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840,831
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General Revenues (Investment Income, Fines,
Permits)
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26,646,591
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User Fees & Service Charges (User Fees,
Rentals, Sales)
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24,779,581
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Other Income/Recoveries
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6,149,523
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Total
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152,034,677
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AND THAT Council approve the 2006 Capital
Budget that totals $70,031,115, the funding details of which are listed in Appendix
2 attached hereto;
AND THAT Council approve the 2006 Waterworks Operating
Budget that totals $46,976,127, (excluding
prior years surplus) the principle components of which are detailed
on Appendix 4 attached hereto;
AND THAT upon finalization of the 2005 audited
financial statements, the 2006 Operating and Waterworks budgets be adjusted to
reflect the 2005 operating results;
AND FURTHER THAT a copy of the budgets be made
available to the public through the Clerk’s Department and each of the Markham
Public Libraries.
BACKGROUND:
A total of four Budget Sub-Committee meetings
were held in 2005 and 2006 to discuss, review and finalize the 2006 Operating,
Capital and Waterworks Budgets. Three Standing Committee meetings supplemented
the Budget Sub-Committee meetings. All
Budget meetings were open to Members of Council, Commissioners, Senior Staff
and the general public. Topics discussed
at the Budget Sub-Committee / Standing Committee meetings include:
- a review of Operating and Capital budgets for 2006;
- an analysis of the significant factors affecting both 2005 actual
performance and the 2006 Operating budget;
- Economic Environmental scans including economic trends and
budgetary pressures;
- Business Plan Presentations including Business Unit profiles,
accomplishments of the business units and business plans for 2006; and
- Background information and options for the use of the new Federal
Gas Tax grant for sustainable infrastructure.
The following exhibit reconciles the 2005
Approved Operating Budget to the 2006 Operating Budget (figures exclude prior
years surplus):
The 2005 Operating surplus is excluded from the
above figures as the Town’s audited financial statements will be finalized no
later than 90 days after the end of the year, in accordance with Public Sector
Accounting and Auditing Board recommendations.
Upon finalization of the 2005 audited financial statements, the 2006
Operating and Waterworks budgets will be adjusted to reflect the surplus, if
any, in revenues and offsetting expenditures (transfer of the surplus to
reserves).
The Town of Markham
continues to face inflationary pressures in many aspects of its operations.
General inflation, waste collection and winter maintenance contracts, other
contract renewals, wage settlements, and the continuation of higher fuel,
natural gas and insurance costs have resulted in increased operating
expenditures. Further, the Budget
Sub-Committee has approved the continuation of the Town's practice of
phasing-in future costs related to facility openings and funds have been
allocated towards the next Fire Station and Community Centre. In addition to inflationary pressures, Markham
continues to add to its inventory of parks, streetlights, and roads, each year,
thereby requiring additional resources for the maintenance and replacement of
these assets. The total impact of these
pressures on expenditures is $14.6M.
To mitigate the increased expenditures,
revenues were reviewed and increased by $10.5M in the areas of assessment growth,
additional investment income, recreational programs, and fee/fine revenues.
The increase in revenues however, does
not fully offset the pressures in operating expenditures of $14.6M. The resultant shortfall of $4.1M ($10.5M -
$14.6M) necessitates a property tax rate increase of 4.88%. For the average
household in Markham, valued at $403,000 (based on 2006 Current Value Assessment),
a 4.88% increase in the tax rate means a $36.04 increase in the municipal
portion of the property tax bill.
With the completion of the Town’s Reserve
Study in 2005, the Town’s capital requirements for major repairs and
replacement of aging infrastructure such as roads, park amenities, Town
facilities, and vehicles were primarily funded from the Town’s new Life Cycle
Replacement and Capital Reserve fund.
One of the major sources of funding of this Reserve is the Operating
Budget where the Town’s policy of increasing the Operating Contribution to
Capital Reserves by $500,000 per year has been maintained in the 2006 budget with
a total contribution of $17.2M to the Life Cycle Replacement and Capital
Reserve Fund.
The Capital Budget of $70.0M includes $18.9M
of funding from the Life Cycle Replacement and Capital Reserve Fund. The Operating Contribution to Capital of
$17.2M was topped up by $1.7M from the balance of funds in the Life Cycle
Replacement & Capital Reserve to fund the $18.9M of major capital repair
and replacement requirements for 2006.
The 2006 Capital budget also contains $3.5M of Federal Gas Tax grant
funded capital projects in the following areas:
·
Water Distribution &
Wastewater Systems – watermain construction and replacement;
·
Public Transit – bike
lanes/pathways and new/replacement of sidewalks;
·
Solid Waste/Waste Diversion –
Sabistan Landfill Site Management;
·
Community Energy Systems – a
provision for Markham District Energy projects and additional funding for a
Green Roof at the Civic Centre; and
·
Local Roads, Bridges – Bridge
repairs and additional funding for a bridge replacement.
Other significant Capital projects
include construction of the Fourteenth Avenue Watermain from Markham Road to
Boxwood Avenue, Midblock Crossings at Highway 404, Phase 2 of Rodick Road
Reconstruction, Cornell Neighbourhood Park Waterplay Facility, final phase of
funding for the Markham Village Library renovations and expansion, continued
roll-out of Mission Green, the Town’s waste diversion program, to
multi-residential buildings and to the Town’s two Business Improvement Areas, and
the completion of the Doncaster Watermain replacement project.
The proposed 2006 Budget reflects the
Town’s commitment to maintain service levels to the community and balances
social needs with fiscal prudence. This is a reflection of the Town’s
commitment towards fiscal stewardship. Further,
consistent with existing Town policies, one-time funding is not used to balance
the operating budget. The Town's
commitment to increase investment in Capital projects by $0.5M, funded from
assessment growth, is maintained. The
Town has also continued to ramp-up the Operating budget for future expenditures
related to new Community Centres, Libraries and Fire Stations.
ATTACHMENTS:
Appendix 1 – 2006 Operating
Budget
Appendix 2 – 2006 Capital
Budget by Commission & Sources of Funding
Appendix 3 – 2006 Capital and
Other Programs Budget
Appendix 4 – 2006 Waterworks
Budget
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Barb Cribbett,
Treasurer
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Andy Taylor,
Commissioner of Corporate Services
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Q:\Finance and Administration\Finance\SHARED\2006 COW
Council\0601 - 2006 Operating, Capital, and Waterworks Budgets.doc
