No Easy Task to Budget for 2018...

We are approaching the midway point of 2017, but the budget process for 2018 is officially underway at the City of
Peterborough.  The Director of Corporate Services has released the 2018 Budget Guideline Report and it was received as information by council earlier this week. The 2018 proposed tax increase currently sits at 2.85%, which
covers increased operating costs, an increase in sanitary and storm sewer operating and capital cost and an additional .5 % to continue to implement the city’s Capital Financing Policy.  Overall, that would add $109 to the combined municipal, education, storm and sewer surcharge levy on a house assessed at the median value of $243,500.  

What does it mean for our business community?
There are several points to note, including the following taken directly from the city report:
"That the revised Tax Ratio Reduction Program continues for the 2018 Draft Budget and reflects reductions: 
i) to the Commercial and Industrial Class Tax Ratios but not the Multi-residential Class, and 
ii) at the reduced rate established through the 2016 Budget process, and 
iii) for the Commercial Class only, accelerated by a one-time amount of $300,000." 

The Tax Ratio Reduction Program was collaboratively lobbied for by the Peterborough Chamber of
Commerce, the Kawartha Manufacturer’s Association and the Peterborough and the Kawarthas Association of Realtors.  The goal of the program is to have the commercial and industrial tax rate 1.5 times that of residential.  This result would make Peterborough more competitive on a tax basis with other mid-size cities in Ontario.  

The guidelines also lay out the City’s proposal to handle casino revenues and the monies from the sale of PDI to Hydro One.  In each case, city staff is proposing that these revenues be directed to future capital projects. 
That any additional investment proceeds in 2018 from the sale of Peterborough Distribution Inc., be directed towards enhancing Capital financing, and not be used for purposes of reduction in net tax levy. 

"That, regarding any potential gaming revenues to be received from a Casino in 2018, the draft budget contain recommendations that will: 
i) Direct the City’s share of all future municipal gaming revenues towards financing future Capital works, and not be used for purposes of reduction in net tax levy in the Operating Budget, and 
ii) Place any residual Gaming Revenues over and above the amount budgeted in 2018 in a new
Gaming Revenues Reserve to be used to finance future capital works."

The Director of Corporate Services also recognizes various outside pressures on the budget in the 2018 guidelines, among them are the uploading of Mandatory Benefits to the province and, changes to Children’s Services as management of the Ontario Early Years Centres is moved to the municipality.  Other outside pressures include: an increase in hydro costs of approximately 6% over 2017, with an estimated budget impact of $840,800 for heat and hydro when street light use is included; and the potential impact of an increase in minimum wage with preliminary estimates as high as a $200,000 for 2018. The budget guidelines also suggest there may be future implications for costs of contracts with suppliers such as security, courier and cleaning services due to potential minimum wage changes.  There is also concern that there may be budget impacts with other employment standards for equal pay for equal work for casual, part-time, temporary and seasonal employees.  

The document also highlights transfers to other organizations that the city is committed to, including Fairhaven, the Downtown Business Improvement Area and police services.   

For the 2018 Capital Budget, Council has pre-committed $11,392,500 in funding to nine different projects or initiatives. Almost $4.8 million is tax supported.  City staff also cites 2018 will be the last year of funding for Hospice, the second year of funding for the Humane Society’s Animal Care Centre, and they are also expecting a request for funding for the new Canoe Museum.  

The budget guidelines also explore how a casino opening in June 2018 will impact the budget.  A report from May 2016 estimated the construction value of a casino to be $49 million and a hotel $17 million with $1 million generated in tax revenue.  Because of the timing of opening and the difficulty of estimating gaming revenues, city staff are recommending the formation of a new Gaming Reserve Fund to be used to finance future capital works. 

In summary, city staff reiterates that given the number of unknowns supporting existing levels of service at a reasonable cost to taxpayers will be a difficult task.  

If you would like to comment or make a presentation on the 2018 budget, the first public meeting is June 28, 2017.   
 
Read the report

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