2012 Budget – Recorded Votes

Motion to reduce AODA (Accessibility for Ontarians with Disabilities Act) 2012 Reserve contribution by $500,000: PASSED
YEAS: J.F. Fontana, B. Polhill, J.B. Swan, S. Orser, M. Brown, D.G. Henderson, P. Van Meerbergen, D. Brown
NAYS: W.J. Armstrong, J.L. Baechler, N. Branscombe, P. Hubert, H.L. Usher, J.P. Bryant, S.E. White

Motion to reduce landscaping maintenance by $75K: PASSED
YEAS: J.F. Fontana, B. Polhill, J.B. Swan, S. Orser, D.G. Henderson, P. Van Meerbergen, D. Brown, S.E. White
NAYS: W.J. Armstrong, J.L. Baechler, N. Branscombe, M. Brown, P. Hubert, H.L. Usher, J.P. Bryant

Motion to reduce winter garbage collection in parks: LOST
YEAS: J.F. Fontana, B. Polhill, J.B. Swan, S. Orser, D.G. Henderson, P. Van Meerbergen, D. Brown
NAYS: W.J. Armstrong, J.L. Baechler, N. Branscombe, M. Brown, P. Hubert, H.L. Usher, J.P. Bryant, S.E. White

Motion to reduce hours and close wading pools: LOST
YEAS: P. Van Meerbergen
NAYS: J.F. Fontana, B. Polhill, W.J. Armstrong, J.B. Swan, S. Orser, J.L. Baechler, N. Branscombe, M. Brown, P. Hubert, D.G. Henderson, D. Brown, H.L. Usher, J.P. Bryant, S.E. White
Motion to increase business licensing fees effective July 2012: PASSED
YEAS: J.F. Fontana, B. Polhill, W.J. Armstrong, J.B. Swan, S. Orser, N. Branscombe, P. Hubert, D.G. Henderson, D. Brown, H.L. Usher, J.P. Bryant, S.E.
NAYS: J.L. Baechler, M. Brown, P. Van Meerbergen
Reduce budget by $1,500K (confidential item – unable to disclose what this relates to): PASSED 
YEAS: J.F. Fontana, B. Polhill, J.B. Swan, S. Orser, D.G. Henderson, P. Van Meerbergen, D. Brown, S.E. White
NAYS: W.J. Armstrong, J.L. Baechler, N. Branscombe, M. Brown, P. Hubert, H.L. Usher, J.P. Bryant
Motion to reduce the contribution to the New Affordable Housing Reserve Fund by $1M: PASSED
YEAS: J.F. Fontana, B. Polhill, J.B. Swan, S. Orser, D.G. Henderson, P. Van Meerbergen, D. Brown, S.E. White
NAYS: W.J. Armstrong, J.L. Baechler, N. Branscombe, M. Brown, P. Hubert, H.L. Usher, J.P. Bryant
Motion to approve the 2012 Operating Budget for the services within Culture Services: PASSED
YEAS: J.F. Fontana, B. Polhill, W.J. Armstrong, S. Orser, J.L. Baechler, N. Branscombe, M. Brown, P. Hubert, D. Brown, H.L. Usher, J.P. Bryant, S.E. White
NAYS: D.G. Henderson, P. Van Meerbergen RECUSED: J.B. Swan
Motion to request police budget remain at 3% target on not 4.2% requested: LOST
YEAS: J.L. Baechler, N. Branscombe, D.G. Henderson, P. Van Meerbergen
NAYS: J.F. Fontana, B. Polhill, W.J. Armstrong, J.B. Swan, S. Orser, M. Brown, P. Hubert, D. Brown, H.L. Usher, J.P. Bryant, S.E. White
Motion to allow the Reserve Funds be reduced by the amount required to achieve a 0% budget increase for 2012: PASSED
YEAS: J.F. Fontana, B. Polhill, W.J. Armstrong, J.B. Swan, S. Orser, D.G. Henderson, P. Van Meerbergen, D. Brown, S.E. White
NAYS: J.L. Baechler, N. Branscombe, M. Brown, P. Hubert, H.L. Usher, J.P. Bryant

City Hall – July 23-24

This will be the last week of meetings until August 20th, 2012 due to summer meeting schedule (One exception: Investment & Economic Prosperity Mtg. Aug. 14th).

July 23, 4:00 pm. Planning & Environment Cte.
Full agenda: http://bit.ly/QbBwlm
Nothing controversial on agenda. Items of interest include:
#4 – Municipal Support for Local Renewable Electricity Generation Projects.
#9 – Airport AreaTax Grant Program
#10 – Policy for consultation when telecommunication towers are proposed

July 24, 5:00 pm. Council Mtg. Full agenda: http://bit.ly/NSl2we A couple of items of interest. The most important item will be the deferred debate and decision on budget targets (Staff report can be found at the link above, click on Confirmation and Signing of the Minutes of the #13th …, click on 1st pdf file on right column). This item will be dealt with after all of the committee reports have been presented.
Finance & Administrative Cte. Recommendations:
#5 – Recommendation to solicit expressions of interest for the former Normal School on 165 Elmwood Ave.
Civic Works Cte. Recommendations:
#10 – Water, Sanitary & Storm Drainage Charges rate structure review. Sets out the process and principles to guide the review.
#2 – Outlines the planning process for the South St. campus lands.

Zero is Not a Vision

Zero Is Not A Vision

I dislike paying property taxes as much as anyone else. I want the lowest possible tax increase. I want value for tax dollars and efficient and effective service delivery reflected through good fiscal policy.  I also want to live in a city that is a vibrant regional hub, unique in urban design, environmentally conscious, progressive in innovation and cutting edge research, with centres of excellence, and low unemployment. When I examine the proposed cuts needed to achieve a 0% tax increase it does not reflect a vision for London’s future. Zero is not a vision.

The Facts: Important to Understand What Can & Can’t Be Cut

The former GM of Finance for the city succinctly bundled the services offered by the city into three categories to help Councillors discern their ability to control costs. The three categories include:

Category 1: Programs mandated by the province which includes Ontario Works, social housing, and associated social programs, Conservation Authorities, Middlesex London Health Unit. We have little to no flexibility in reducing these budgets. In addition, this bundle includes Boards and Commissions which have independent autonomy as confirmed through by-laws. Again, council’s ability to mandate substantial budget changes is very limited.

Category 2: Protective Services: Police, Fire and Ambulance. By provincial regulation, council is not able to direct the Police Services with respect to any aspect of policing. Once the Police Services Board has approved the police budget, council can alter the total amount requested and the police can appeal to the Ontario Civilian Commission on Police Services. The majority of the police budget is personnel. Reducing staff is the only way to achieve savings and council has not shown an interest in doing so. Similar comments can be made for fire and ambulance.

Category 3: City Hall Services. This is the category that directly affects programs to business and residents. The bundle includes garbage, recycling, road repair and maintenance, urban forestry, finance, legal, planning and development, parks, recreation and culture. Over the past five years we have cut $24 Million out of city hall. It has included salary freezes, reorganization, reduction in the work force and efficiencies. There is very little low hanging fruit remaining.

The Category 1 mandated programs, Boards & Commissions budget is approximately $107 Million, Category 2 Protective Services budget is approximately $144 Million and Category 3 budget which includes services council has direct control over is approximately $130 Million.

The Challenges

  • Almost two thirds of the budget is mandated, or includes services that council has little to no control over.
  • Over $300 million of the budget is attributed to contractual agreements. A 2% increase in salaries, wages and benefits equates to $6 million increase in property taxes, or approximately 1.4% tax increase.
  • The Ontario Works caseload is anticipated to remain at a high level given the uncertain economic factors.
  • The Ontario Municipal Employees Retirement System (OMERS) sponsor corporation identified a rate contribution increase that equates to .9% tax increase for 2013.
  • Utility costs are anticipated to rise 10 – 14% over the next 5 years.
  • The roads and transportation division have identified that road and infrastructure repair is falling behind by $5-6 million per year. This does not take into account any plan to tackle the $300 Million dollar infrastructure deficit. It is not anticipated that senior levels of government will assist with a substantial influx of tax dollars.
  • Emerald Ash Borer is devastating the urban tree canopy. Approximately 10,000 ash trees in declining health are on city boulevards. The removal and replacement will require an additional $1 million to the base budget each year.
  • The Mayor wants to establish an economic levy which will be used for new capital projects. How this will be funded is not known but may include a tax increase.
  • Diverting or using Reserve funds to achieve a 0% tax increase simply defers costs. It is short term financial gain with long term implications, usually felt after the next election.

So how do you get to 0% tax increase?

It can’t be done through efficiencies alone. $25.6 Million must be reduced from the budget to get to 0. Remember, the challenges noted above with our limited ability, and in some cases inability to cut mandatory programs, protective services, Boards and Commission. No matter what anyone tells you, it will require deep service cuts.

Questions for Councillors’

What services do you want to cut? To get to 0 means laying off 73 police officers, closing or cutting library hours, reduced recreation programming, reduced operations of swimming pools and community centres, a reduction in London Transit Service, grass cutting on boulevards, sidewalk snow removal etc. For full report: http://bit.ly/MKGC3e  Appendix A.

What is their plan? If you are told it will be easy to find $25.6 Million ask for the financial plan. No one on council has provided a financial roadmap to 0. Some have confused basic budgeting principles.

Ask if they plan on raiding/diverting funds from Reserves? If they say yes you should refer them to the Chamber of Commerce letter: item 2b http://bit.ly/MKGC3e . Ask them how the Reserve funds affects our Triple A credit rating.

If they point to a municipality in another province as the financial model, you can remind them that only Ontario municipalities have been downloaded social programs.

What is their vision for London

A recent staff report noted London taxes are ranked as the lowest to third lowest in the province across all categories; residential, industrial and commercial. The Chamber of Commerce recommends: “ tax growth rates should not exceed the combination of inflation plus an allowance for population growth” http://bit.ly/MKGC3e . Council needs to hear your feedback. If you want 0% tax increase, what services do you want cut? (Go to the listed items noted in Agenda item 2, Appendix A, second pdf file on right hand http://bit.ly/MKGC3e). If you are concerned about the drive to a 0% tax increase what do you recommend? Does the strategic vision drive the budget or is 0 the vision, because that is what you will get.

2013 Budget Targets

The city treasurer presented council with a report on projected property tax targets for the 2013 – 2017. The report indicates preliminary budget targets from city services, boards and commissions project a property tax increase of 5.5% for 2013. The treasurer through discussions with service sectors reduced the target to 3.8% with targets over the next three years of approximately 3.2% each year.

Challenges facing the city’s finances are numerous.  Over $300 million of the budget is attributed to labour costs. A 2% increase in salaries, wages and benefits equates to $6 million increase in property taxes, or approximately 1.4% tax increase. The Ontario Works caseload is anticipated to remain at a high level given the uncertain economic factors. The Ontario Municipal Employees Retirement System (OMERS) sponsor corporation identified a rate contribution increase of $1.4 million for 2013. The roads and transportation division have identified that road and infrastructure repair is falling behind by $5-6 million per year. It is not anticipated that senior levels of government will assist with an influx of tax dollars. Emerald Ash Borer is devastating the urban tree canopy. Approximately 10,000 ash trees in declining health are on city boulevards. The removal and replacement will require an additional $1 million to the base budget. The Mayor wants to establish an economic levy which will be used for new capital projects. How this will be funded is not known but may include a tax increase.

The report also outlines a comparison of London property taxes other cities as rated in the annual BMA Management Consulting 2011 report. For residential taxes London is below the comparable group average. For commercial property taxes London is the lowest of all comparable municipalities. In the Industrial class we are third lowest of the group comparison.

In response to the treasurers report council requested staff bring information as to the implications of a 3.8% budget increase, a 2% budget increase and a 0% budget increase. We expect to see this report in late June or early July.

The full treasurer’s budget report can be found at the following link: http://bit.ly/IhzA6s

History & the 2012 Budget

Sometimes knowing history is important so you don’t repeat mistakes of the past. When it comes to London 2012 budget a glimpse back a few short years ago is informative.

In 1999 and 2000 the city had a tax increase of 0%. This was achieved in part, by using a two year break in the OMERS – Ontario Municipal Employees Retirement Savings Plan contribution of $6M. Instead of putting the dollars in a Reserve fund in preparation for the next OMERS increase two years out; the money was given back to taxpayers by way of tax reduction. In turn, when the OMERS holiday ended, the municipality levied taxpayers for the additional $6M, which translated into 2% increase, plus any cost of living increase for that year.

Also occurring around this time was the move to debt finance life-cycle maintenance repairs coupled with massive spending of over $250 M on capital projects– all debt financed. A perfect financial storm was waiting to happen.

Debt financing is akin to maxing out the credit card. Payment in full is put off and the carrying costs escalate exponentially. It was no surprise when the tax increase steadily rose for the next few years. In 2004 the tax increase released was 11.2% and ultimately whittled down to 8.1%. In 2005 the increase at budget release was 8% which was reduced to 6.6%. In reviewing our triple A credit rating in the midst of this financial mess, Moody’s advised to get spending under control, or risk losing the triple A credit rating.

Financial staff, under a new City Manager, and a new General Manager of Finance, prepared a series of cost containment measures and policies which were adopted by council. They included: 1. Instituting a debt limit to curb new spending. 2. Instead of debt financing life-cycle maintenance for road repairs etc. incrementally move to levying for life-cycle maintenance. 3. Do not use “one-time” money, such as the OMERS example noted above, to pay for on-going annual costs as you are simply deferring a tax increase to artificially keep taxes low. 4. Pay down as much debt as possible. At present the city pays $60 M annually for principal and interest on the debt we are carrying (approx. $317M plus additional debt approved but not issued). Every $1 M in debt retired is $130,000 in permanent savings to the taxpayer. 5. Don’t use the reserve funds to lower taxes. The reserves are analogous to your bank account. It provides the city with working capital to carry out projects, repairs etc. Raiding the reserves for tax breaks means the cash flow is reduced requiring further borrowing of funds (issuing debt) which in turn costs taxpayers more. 6. Use a percentage of new assessment growth to pay down debt.

The institution of these fiscal policies has moved the city toward a solid financial foundation, but we are not there yet. We know our Reserve funds a substantially lower than the recommended threshold by multi-millions (we are awaiting a financial report on Reserve levels due by the end of the summer).

I have been very vocal about compromising the above principles to deliver a 0% tax increase. Let me be clear, we should always try to achieve the lowest possible tax increase. To get to a 0 % increase, it must come from permanent service cuts or increased revenue. To do otherwise means you have simply deferred a growing financial mess that someone else will have to clean up. I hope history will not repeat as we continue to dig London out of the fiscal hole created a little over a decade ago.

City Hall: July 16-20, 2012

Items to watch at City Hall this week.
July 16, 1:00 pm. Finance & Administrative Cte
. Full agenda: http://bit.ly/MaLsrF
#5 – Report concerning the “Normal School” in Old South. Recommendation to issue Expressions of Interest for potential reuse of the building.
July 16, 4:00 pm. Planning Cte. Full agenda: http://bit.ly/Ns6GTe
#2 – Information report regarding the processes underway for South Street Campus Lands.
# 12 – Concerns over the revenue streams and reserves for various building permit fees and costs.
July 17, 4:00 pm. Civic Works. Full agenda: http://bit.ly/NpIjoe
#15 – Summary of LTC Town hall meeting feedback.
#17 – Request for better lighting in Bradley Ave. underpass pedestrian tunnel.
July 17, 4:00 pm. Public Safety Cte. Full agenda: http://bit.ly/NpIzU7
#2 – only item on agenda – the outcome of the London Taxicab Owners & Drivers Application to Ontario Superior Court of Justice. Justice Rady dismissed the motion by Taxi Group.
July 17, 7:00 pm. Community Services Cte. Full agenda: http://bit.ly/PWCy3i
#5 – Approval to change the name of Riverside Park to M.A. Baran Park.
July 18, 2012 9am. & July 19, 2012 9am. Investment & Economic Prosperity Cte. Full agenda: http://bit.ly/PZFf5c & http://bit.ly/Nay3lc
Agenda of delegations over two days requesting funding and/or submitting ideas for economic development.