Puslinch councillors are looking to pass a 2018 budget with a 3% increase to the local tax levy.
Up until now, council had managed to use assessment growth as a tool for slimming the budget.
In recent months, it came to the attention of township officials that there is a requirement to offer municipal employees classified by OMERS (Ontario Municipal Employees Retirement System) as an “other than continuous full-time employee” voluntary enrolment in the OMERS Pension Plan.
As a result, township council directed staff to work with its solicitor and representatives from OMERS to determine the participation date for affected employees.
Once the impending fiscal impact is quantified by OMERS, township staff will report back to council on the financial implications.
The change in the level of tax levy funding from capital to operating results from the township setting aside funds for the unknown financial implications associated with OMERS.
With an overall budget of roughly $3.75-million, council is considering a 17.84% ($150,017) drop to its capital budget, while increasing the operating budget by 15.61% ($412,476), leaving a 2018 budget increase of 7.54% ($262,459) over 2017.
Factoring in real growth (not simply assessment growth) in Puslinch dropped the potential local levy increase to just over 2%, but councillors are considering a larger increase to cover the unanticipated impact of OMERS coverage.
Councillor Matthew Bulmer said he believes staff did a good job being as creative as possible to address the remaining unknowns.
He expressed concerns about the transfer of money originally earmarked for capital reserves to the operational budget.
Bulmer asked if this could lead to a tax increase in a future year.
“It may not have an impact this year, but it will diminish the reserves available in the future. We will have to make it up sometime,” he said.
Mayor Dennis Lever agreed, saying, “If we transfer money from reserves – or year-end surplus – into a fund to deal with OMERS, it will have a future impact.”
Bulmer suggested there may be other options to save this money – perhaps deferring projects “so we can continue putting money into (municipal) reserves.”
He first wanted to hear what the public had to say, but still felt there may be additional ways to find savings.
Lever said one of the options before council was increasing the local levy to 3% to address the OMERS liability. He did not exclude the option of finding additional budget savings.
Councillor John Sepulis said regardless of any potential savings within the budget, “we still have a big hole to fill.”
He said potential OMERS costs may have a significant impact and added council should maximize the levy “as much as would be tolerable to constituents.”
“I would propose we go to 3%, because if we go less than that we will need to take out a loan (to cover OMERS),” said Sepulis.
He added that with a 3% levy increase, there will be a larger base to draw from during the next budget discussion.
Councillor Ken Roth asked when the township will know the full impact of the OMERS liability.
Director of finance/treasurer Mary Hasan explained the township is still working with OMERS and, “At this time there are still a lot of unknowns.”
Roth indicated the impact will be substantial.
At the same time, Roth said he did not believe all the costs could be added to the levy, nor could the township afford to deplete its reserves to cover the cost.
He did not favour obtaining a loan, “But for this amount of money, I am not sure we have a choice. We certainly want to get this cleaned up during this term of council … It has to be fixed and we know it is going to be expensive.”
Roth did not advocate depleting township reserves.
“We have to keep fixing our roads and bridges.”
Lever said the township will need to use a number of approaches to deal with the OMERS issue. Part of it will include an impact to the levy. He too, did not want to deplete township reserves.
Lever said the public meeting will focus on the available options.
“The potential of the problem we face is in terms of many hundreds of thousands of dollars – but we don’t know,” said Lever.
Lever too, acknowledged there will be a segment of the population which will not want to see a tax increase.
“It is impossible to reduce expenses enough to offset this liability,” he said.
Sepulis introduced a motion stating that in order to address the OMERS issue, council maximize the tax levy to 3%, consider allocating money normally directed to reserves and consider a potential loan.
Bulmer also asked that council re-examine existing costs. He stated council had approved a number of increased expenses before becoming aware of the OMERS issue.
“All of those have to be put on the table. Some of those costs were coming out of the levy – some were coming from reserves,” Bulmer said.
In a recorded vote, council unanimously voted to move ahead with this approach.
Councillor Susan Fielding was absent from the meeting.
