Reserve funds were a point of discussion when Guelph-Eramosa council had its second special meeting on Feb. 5 to discuss the budget.
By the end of the seven and a half hour meeting, councillors tentatively agreed on a 5.14 per cent township tax levy, which results in an increase of about $13.44 per $100,000 of property assessment.
The township is also looking at introducing a 2% infrastructure levy, which would take the township tax levy increase to 7.1%. That would mean an $18.61 increase in township taxes per $100,000 of property assessment ($5.17 of which would be dedicated to infrastructure).
That would take the estimated blended tax rate increase, including Wellington County and education taxes, to 3.18% for the average home assessed at $401,592 in 2016.
All the above figures may change. Council was scheduled to discuss the infrastructure levy again on Feb. 10 at 2pm (results were not known by press time).
Infrastructure levy
The township currently has a $2.5-million capital plan for bridges over the next five years, in addition to annual road and bridge maintenance fees.
“If you’re paying the thousand dollars now (average 2015 township taxes) and we can’t do roads and bridges, if we need to be sustainable, maybe we need $1,500 a year to be sustainable in the township and nobody wants to come and say we’re jumping your taxes 50%,” councillor Corey Woods said.
“We have to try and get there because … our options are going to be what roads and bridges can we live without?”
This year’s draft budget suggests the township take a $1.2 million debenture to fund the Mill Road reconstruction and bridge rehabilitation. Additionally, the roads department is scheduled to transfer $741,391 into road reserves and $100,000 into bridge reserves.
“A big chunk of the debenture is being brought back into reserves,” said councillor David Wolk.
Cheyne explained reserves are not drawn from the debenture payment and the reserve deposit isn’t a new line. It has been collected and building for several years.
Approximately half of the reserve fund is from federal Gas Tax Fund, which is slowly increasing year after year.
“If you took Mill Road out of the scenario and get rid of the debenture we’d still have the 745(,000),” White explained.
The reserves are scheduled for specific projects so funds are available for future work.
“We need more reserves for roads and bridges and we need to continue to build them up,” Cheyne said.
Councillor Mark Bouwmeester said he didn’t think borrowing was the best option to fund road and bridge repairs. He suggested the township look at cost savings in other areas to make up some of the borrowed funds.
Wolk agreed.
“The fact is that if we do what we’re proposing to do this year, with the new debenture we will, by next year, have debenture payments of ballpark $400,000 a year,” he said. “I think it’s important to acknowledge that certainly for the last five years … the annual spent on roadwork has been … (about) a million dollars.”
He continued, “Without borrowing anymore money we could very quickly be in or will be in the situation where 40% of what we typically have spent on roads is now going to be on debt repayment.”
He said the township could eventually be in the situation where it doesn’t do any road work and is just paying its debt.
“In the big scheme of things, borrowing isn’t going to save us here,” Mayor Chris White said. “You’re trying to get a project that you should get done all at once but if you’re trying to finance your capital budgets through borrowing you’re dead.”
He continued, “A debenture … helps to smooth it out over … a period of time for a relatively large road with one of the last big bridges I hope we have to do in the short term.”
Woods said the option is to fix the bridges or close the bridges.
“We will not be closing bridges,” White said.
Councillor Louise Marshall agreed that is not an option.
“Of course it’s an option,” Wolk said. “You don’t have money to go to the grocery store, do you go to the grocery store?”
Marshall said that if the road in question is the way into town, the bridge must be fixed.
“The infrastructure [needs are] far greater than our ability to property tax our way out of it,” White said. “You can’t do it, so we just have to manage what we have as best we can.”
The infrastructure levy is one way to raise more funds specifically for roads and bridges for future work
“A levy really is reserves,” White said. “The bottom line is do you want to increase reserves by this amount annually to help take care of some of the stuff we’re facing?”
The infrastructure levy will be built into the base budget in subsequent years. However, there could be additional levies added in the future.
While council agreed a levy is necessary, there wasn’t a consensus on the amount.
Marshall was originally leaning toward a 1.14% infrastructure levy, but she agreed in the end that a 2% minimum was acceptable. Bouwmeester said he wasn’t ready to make a decision and asked for another meeting to discuss the options in more detail.
White said, “We are fundamentally roads and bridges; it’s what we do, but that’s not all we do. There’s all kinds of legislative things we have, there’s water management, there’s parks and rec, there’s services you provide through licensing, there’s fire so you’ve got to put it all in the pot to try to figure out where you’re going.”
Water and wastewater
The township underwent a water and wastewater rate study last year and much of the 2016 draft budget is based on the study, explained director of public works Harry Niemi.
However, Wolk asked about a $16,800 increase in salaries and wages.
Two students will be hired and shared among departments, Niemi said, noting that in the water and wastewater department their duties will be primarily dedicated to asset management inventory.
“We have all of our assets identified but in some cases we don’t know physically where they are,” he explained. The students will map the system over the summer and Niemi estimated the work wouldn’t cost more than $50,000.
“It’s a lot of money to go count some holes in the ground,” Wolk said.
When the system was built in the late 1970s it was not inventoried, White explained.
The municipality has records for the user-pay water and wastewater system, but there is no data on storm drains, a municipal service that will be identified this year.
Another major expense in the water and wastewater budget is the construction of a new well at 154 Milne Place for $1.1 million.
Legal fund
Wolk also asked about the $26,000 set aside in the draft budget for legal fees.
“Without discussing any legal issues I think we all know … we have some legal issues we’re dealing with and it seems to me that … I would have no hesitation in telling you that I am sure we will be over $26,000 on legal fees,” said Wolk.
“Are we showing … our best wisdom here putting only ($26,000) into the total budget … or should we in fact be bumping that number?”
Cheyne clarified there is actually $53,000 in the budget for legal fees.
The municipality will also use a portion of working fund reserves ($319,453 of surplus revenue) in the event that legal fees exceed the budgeted amount.
The budget originally had $125,000 removed from the working fund to repave the township office parking lot. However, with unknown legal fees, Cheyne suggested postponing the repaving project.
Councillor Mark Bouwmeester asked why the $72,500 scheduled for administration reserves is still required when the $125,000 scheduled to be removed is now remaining in the overall administration reserves. He asked why the $72,500 could not come from the unused $125,000 rather than from general taxation.
“The ($72,000) that Mark’s talking about is going into different reserves for administration,” Cheyne explained. It’s going into reserves for computers/equipment ($50,000), accessibility plan ($2,500), 2018 election ($10,000) and capital expenditures ($10,000). She explained it’s not affected by the working fund reserves and is there so taxpayers don’t see a steep hike when those items need replacement.
Council kept the $72,500 in the budget to for capital reserves and removed the parking lot project so the $125,000 can remain in the working funds for potential legal fees.
Skate park
One of the major projects for the parks and recreation
department is a skate park at Rockmosa Park. The project will cost $350,000 with $60,028 coming from reserves, $73,530 from development charges, $150,000 from a potential Trillium grant, and $66,442 potentially coming from community fundraising.
However, Woods said he would like to defer the skate park to give the township a better chance to receive the Trillium grant and fundraise.
“Based on what we heard from the public they want a skate park, so worst case scenario, if these things fell through we could always go back to the hydro fund which was sold in Rockwood to help develop that community,” White said.
He said it would show the community the park development is moving forward.
“My concern is, and I’ll express this as an area where I was somewhat disappointed, you (White) and I in particular had numerous discussions that the one thing we were in agreement on was that we would not build a budget that in any way shape or form came from any grants …” Wolk said.
“So when I saw your budget and you’d already built into it the expectation that this funding would come from the Trillium grant and from what the community might raise, I’m sorry but I regarded that as a violation of what we thought we were doing.”
White said even though the grant and fundraising may not come through, the skate park will be paid for through the hydro fund rather than taxes.
The skate park remained on the budget.
Fire
Bouwmeester asked Guelph-Eramosa Fire Chief John Osborne to speak to staff at the Rockwood fire station and ask if they could modify billing to reduce township costs.
“I think we need as much help as you can provide … and there are literally … hundreds of models for how volunteer departments operate,” Bouwmeester said.
He said council is committed to providing the best equipment and support.
“It doesn’t change the fact that this is a burden and we’re desperately looking for help to fix roads and bridges,” said Bouwmeester.
He asked that Osborne look at tweaking how firefighters are billed.
“Whether it’s they give up being paid for training nights or they’re paid for the first call out but yet there’s a way to cap (it),” when the fires are extended. He asked to “appeal to their sense of volunteerism.”
Osborne said he would bring this up to staff.
Next steps
The public budget meeting will take place on Feb. 18 at 7pm at the municipal office in Brucedale.
