GGRA.ca
Municipal 2010 Budget – the final word
The municipal budget is the most important document issued annually by Council, both for the financial impact on the taxpayers and on the proposed projects and programs.Since later 2008 we have been in a period of a severe recession. No recognition of this has been made by Council in its budgets and spending for 2009 and 2010. These facts remain:
(1) Our present level of taxation is already too high. Gravenhurst's permanent residents per capita income is the lowest of the three towns in Muskoka. The tax levy in 2010 is up by 8.1% over 2009 – compare this to the rise in the Consumer Price Index of less than 1% (.37%).
(2) The impact on those taxpayers experiencing a large annual 4 year phase in of increased assessment (mostly lakefront properties) will be severe.
(3) Gross operating expenditures budgeted for 2010 are up 6.6% to $11,757,774 while the net expenditures after deductions for revenues increase by 9.2%.
(4) About 50% of gross expenditure arises from wages and benefits. In 2009 these increased by 11.1%, part of which was for additional personnel. The 2010 budget shows an increase of 4.8%. Had the Town implemented the Efficiency and Effectiveness Review, strongly promoted by the GGRA (and provided for in their 2009 budget) this useful tool might already be leading to major personnel changes.
(5) Long term debt, now at $17,653,489, will leap to $25,500,000 by 2012, the repayment of which will be in the tax levies over some 20 years. You will see rises in your tax bills of 3% in 2011 and 5% in 2012. \, due to these leaps.
(6) Our total municipal tax bill also includes a separate District of Muskoka tax levy. Although not relevant to our Town's taxation, one fact stands out showing the way municipal administrations are heading. Of the 60 non-union staff at District, 14, or nearly 1 in 4 receives an annual salary exceeding $100,000.
Lou Guerriero, Councillor and Chair of Corporate Services replied Feb. 16/10 to our 2010 budget observations, both of which you received electronically. Our observations were accurate. His lengthy response was defensive, often irrelevant, and sometimes not entirely technically accurate. We did not argue the merits of any major construction or renovation projects but only inferred their financial consequences.
Ross Ashforth
President, The Greater Gravenhurst Residents Association
March 8, 2010
We also commend your timing and process of the release of the budget this year to provide a longer period of public evaluation and input before passage by Council
Restraints
One year ago, in a time of recession, our submission to you regarding the 2009 budget indicated little restraint. This year's budget, still in a time of recession, shows practically no restraints and indeed shows a percentage increase in net spending not seen for years. These simple financial facts say it all:
2008 actual net operational and capital expenditure 7,198,860
2009 budgeted net operational and capital expenditure 7,459,642
Increase of 3.6% 260,782
2009 actual net operational and capital expenditure 7,086,377
2010 budgeted net operational and capital expenditure 8,131,064
Increase of 14.7% 1,044,687
The increase of 14.7% shows net expenditures close to becoming out of control. The only valid comparisons are from the previous year's known amounts to those budgeted. The building blocks for budgets start with the previous year's known actual revenues, expenditures and net surplus.
Salaries, Wages & Benefits
These represent approximately 50% of gross expenditure, the importance of which cannot be overstated in preparing a budget.
In 2009 (a recession year) you showed a budget increase of 8.5%. You actually exceeded this by 2.6% for an actual increase over 2008 by a whopping 11.1% or $576,216. In 2010 your budget exceeds the 2009 actual expenditure by a large 6.2% or $345,807, this despite the budgeted increase to the non-union staff in 2010 of only .4% (the approximate C.P.I. increase calculated by the Province). This all implies that, contrary to our recommendation to you to limit staff numbers except in emergencies, you have significantly done so in 2009 and plan to do so in 2010. You have not yet implemented an Efficiency and Effectiveness Review, strongly advocated by us. Had it been undertaken, increments to staff numbers would have been justified.
Reserves
This is an area that Council has listened to us by imposing a moratorium on the excessive use of reserves, and letting them grow once again. We welcome this new policy, and will be closely monitoring future changes to reserves.
Capital Budget
The capital budget again shows non-capital items buried there rather than being included in the levy. These are:
Zoning By-Law Completion and De fence 93,835
Efficiency and Effectiveness Review 25,000
Municipal Office Relocation Planning 15,135
It is an accepted municipal accounting practice to separate capital and operational expenditures.
Long Term Debt
This area greatly alarms us. As of Jan. 1/10 it is comprised of:
Existing debenture debt (P.51) 10,748,732
Internal financing from reserves (P.51) 6,904.757
By 2012 add additional debentures:
$1,800,000, for issue in fall 2010,
for levying in 2011 1,000,000 (A)
in fall 2010 for levying in 2011 1,900,000 (A)
issue in fall 2011, for levying in 2012 6,000,000 (B)
26,553,489
By 2012 principal repayments will have reduced this
total to say (disregarding other unaware projects
for debenturing) 25,500,000
The first year of repayment will add approximately
to the tax levy (A) + (A) 3%
(B) 6%
The inclusion of repayable internal financing from reserves of 6,904.759 (included above) is justified in that its affect on the tax levy is identical to that of the annual repayment on debentures.
Are we mortgaging our future?
Conclusion
We have made no specific recommendations for cutting expenditures, but, by inference in our comments we recommend that the 2010 tax levy be reduced substantially by eliminating some expenditures. This includes not hiring additional staff in 2010 until the Efficiency and Effectiveness Review is completed. We also suggest no further long term debenture debt until well after 2012. The ratepayers should expect nothing less than compliance with these recommendations.
Respectfully submitted by Ross Ashforth
for the Greater Gravenhurst Residents Association