County councillors decided here on Nov. 29 to follow the recommendation of their finance committee and put a surplus from 2007 into property capital reserves.
That move came despite a plea from councillor Lou Maieron that some of the money, a set percentage, be placed into the 2008 operating budget in order to reduce taxes.
Maieron had tried to have the administration, finance, and personnel committee approve his plan, but it was voted down there.
He told council his idea is “to deal with our surplus in a more accountable manner.”
Maieron had moved at the committee to have the surplus, anticipated to be increased by over $2-million, be allocated so $1-million went to a Provincial Offences Act reserve to offset future debenture costs, and that $1.2-million be allocated to general revenues to offset the proposed tax levy and that the remaining surplus go to capital property reserves.
Maieron told council the money could be used to save and apply against anticipated debt. He added that he has “no problem with a conservative budget” that takes in more money than is actually needed each year, but some of the surplus should be used the following year.
He pointed out that in 2006, the surplus was over $5.5-million, which is about 10 per cent of the budget. He said the county should use $1.2-million to reduce the following year’s levy. “If there’s money left over, it should go to property reserve,” he said. “Paying off your debts and earning interest on the way makes more sense.”
Warden John Green corrected one part of Maieron’s statement, noting the 10 per cent is from the tax levy, and not the entire budget, which is close to $160-million.
Councillors, though, were skeptical about using a surplus for cutting taxes in the following year.
Councillor Chris White asked Treasurer Craig Dyer to consider the impact of such a move over a five year period.
“You might get whacked later,” White said of such a move, adding, “It might be a worthwhile exercise” to consider the long term implications of Maieron’s proposal.
Green pointed out that such things as the police contract are as yet unknown, and said now is not the time to make those decisions.
“We need time – and a number of things have happened since the five year plan [meeting]” that was held in early November.
Those meetings offer projections, and those are usually drastically altered by the time council starts discussing hard budget figures. The five year plan meeting does help to inform councillors of plans for the coming year.
Dyer confirmed that meeting’s results have already been altered, and since the Nov. 1 meeting, “a number of things have changed.”
The budgets will go to committees in January. Dyer noted the Ontario Works caseload continues to drop, and that could have an effect, and there are likely changes coming to child care funding and how to use the provincial Best Start grant. He added the OPP estimates are “a couple of hundred thousand lower than the five year plan.”
He warned about building in a general policy where a budget surplus is automatically used to help offset taxes the following year.
“As soon as you build it in, the expectation will be there,” he said, adding that when the budget comes in with a shortfall, there would have to be big tax increases.
Councillor Brad Whitcombe pointed out the committee had defeated Maieron’s motion, and, “When the horse is dead, it’s time to dismount.”
He said he is concerned that council might look at the budget only from a tax point of view, and not consider, long term, the best interest of the county.
He said putting the surplus in reserves is “a good way, and a balanced way. We can still handle downloads and uploads with reasonable increases.”
But Maieron argued, “We discovered this was a true surplus – beyond the requirements.”
He said the county should save the money, just like residents would.
He suggested his plan would mean the county is “covered in bad times, and can decrease taxes when things go favourably.”
Councillor Walter Trachsel said he could see Maieron’s argument, but he could also foresee a time when the county is “crying because you didn’t put it [the surplus] in reserves.”
But, Trachsel added, he has been hearing complaints about continued high county taxes. He said Maieron’s proposal is ‘too late for this year,” but “More councillors are getting more people contacting them [about high tax increases] and saying, ‘you can’t keep doing this.’ ”
Administration, finance, and personnel chairman Mike Broomhead said he credits his predecessor in the post, councillor Rod Finnie, with making sure everyone is fully aware of the budget process. “Not one person [around the horseshoe] can say they don’t understand the process.”
He said councillor Jean Innes had suggested a decrease in the proposed tax hike, from 4.8% to 4.5.
But, Broomhead said, that would have an effect on budgets in the third, fourth, and fifth years.
Dyer added that such a move would also have an effect in the second year.
Chris White said it seems to him it is “easy to see a surplus and say, ‘Reduce taxes.’ ” He asked what the best way is to handle a surplus.
He also asked that Dyer prepare a chart that would show the effects of using the surplus on budgets two to five years afterwards.
White said the chart “lays out very clearly – cause and effect.”
Broomhead said to Innes the county could easily act on her suggestion, but, “If there is a shortfall, we’re in a real jam.”
Council then voted to place all the surplus in the property capital reserve as the committee had recommended.
Maieron was the lone dissenting vote.
