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Operating Budget – March 5, 2013 1 Council Budget Direction – April 2012 City will move to three year budget cycle City will hold tax increases to 3.25% or below for 2013, 2014, 2015 The City will engage the public in budget process 2 Budget Realities To achieve a 3.25% annual tax increase for 2013 - 2015, the operating budget must be reduced by a minimum of $4.3M over the next 3 years. These cuts must be ongoing permanent reductions, not one-time cuts. These cuts are in addition to the significant cuts made over the past few years The City has also been adding new inventory each year which increases operating costs, as well as the infrastructure burden (future costs to upgrade and replace). 3 Status Quo Not Sustainable The status quo is not sustainable To keep tax rate increases at a maximum of 3.25% per year: • The operating budget must be reduced • Services must be reviewed and resources shifted • New revenue opportunities must be explored • Management requires the flexibility to adapt to evolving needs and council priorities by shifting resources to areas with increasing needs 4 Steps Taken since April 2012 Council Strategic planning & priorities for 2013-2015 Departments were given detailed instructions to zero base budgets, and allowance for inflation was removed from all budgets Vacancy Management - Identification of vacant positions that will not be filled Organizational Review to identify potential changes to structure and how services are delivered Council undertook a process to develop their ideas for budget containment and reductions Budget Principles developed and approved Council supported a list of 10 budget reduction strategies to take forward to the public for input prior to making final decisions Consultation completed and presented to Council 5 6 7 Proposed Budget Reduction Strategies for 2013 In several Special Closed GPC sessions, Council developed a long list of ideas for budget containment / reductions. These were discussed and those items supported by the majority of Council were referred to staff for review and to prepare more detailed information for Council to consider. Council approved 10 budget reduction strategies for consideration in November. Council directed staff to inform the public of the reductions being considered and collect input prior to finalizing budgets. Of those 10 strategies, 5 would impact the 2013 budget 8 Proposed Budget Reduction Strategies for 2013 1. 2. 3. 4. 5. Limit Mayor and Council salary increases to 0% in 2013 Changing Council taxable remuneration Limit Exempt staff salary increases to 0% in 2013 Limiting budget increases for library and police to 2% Allocate 1.25% of 2013 tax increase to capital work to maintain City infrastructure Totaling $979,200 9 2013 Budget Balancing Additions/ Reductions 2013 Reduction Needed as per the 2012-2016 Financial Plan to Achieve a 3.25% tax increase Additions / Reductions to date Forced Growth (Hydro, postage, fleet costs, WCB, LTD) Increased insurance and claims Departmental reductions Vacancy management Council meeting webcasting Governance funding Increased lease revenues Increased payments in lieu of taxes Proposed Budget Reduction Strategies Library additional increase (including building costs) Police Department net budget reduction Capital property tax levy increase reduction to 1.25% No salary increases for Exempt No salary increases for Council Change Council Taxable Remuneration 10 March 5, 2013 1,684,700 620,000 101,500 (650,000) (500,000) 40,000 15,000 (95,000) (293,000) (761,500) 620,000 101,500 (650,000) (500,000) 40,000 15,000 (95,000) (293,000) 923,200 64,400 (503,600) (275,000) (200,000) (9,000) (56,000) (979,200) 64,400 (503,600) (275,000) (200,000) (9,000) (56,000) (979,200) 2013 Increase Explanation Capital Property Tax Levy (1.25%) Police Department CUPE – 2013 Salary increase Property Tax write-off increase Greater Victoria Public Library Property tax penalty revenue decrease Council meeting webcasting Governance Funding Various other adjustments 3.25% Tax Increase 11 $1,355,000 784,700 650,000 200,000 184,838 120,000 40,000 15,000 168,214 $3,517,752 Recommendations That Council approve the budget reductions for 2013: • Limiting Mayor and Council salary increases to 0%following • Changing Council taxable remuneration effective January 2013 • Limiting Exempt staff salary increases to 0% • Allocating 1.25% of 2013 tax increase to capital work to maintain City infrastructure Next Steps March 5, 2013 – Departmental Budget Presentations – 2013 Operating Budget approval in principle March 7, 2013 – 2014 to 2015 Operating Budget March 8, 2013 – Greater Victoria Public Library Budget Presentation – 2013 Capital Budget April 2013 – Public Budget meeting – Financial Plan and Tax Rate Bylaws preparation (adoption of bylaws must be done before May 15th; the last regular Council meeting before this date is May 8th) May 2013 – Print and mail property tax notices (July 2nd due date) 13