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County’s 2023 budget coming in with challenges

Council approved several directions from municipal staff designed to ease challenges related to coming budget decisions.

During a special committee of the whole meeting Thursday, Amanda Carter, the County’s Director of Finance and IT informed council about key challenges that face the building of the draft capital and operating budgets for 2023.

Supply chain challenges, inflation, increases from external agencies and changes from upper levels of government have “put tremendous pressure on the operational budget, and ultimately the tax levy,” states Carter in her report to council.

“The County has been working with the principle that growth pays for growth, however, with the passing of Bill 23 this will be harder to achieve as more costs are to be borne by taxpayers,” said Carter. “This (provincial) bill represented various legislative changes aimed at increasing housing supply, but they shift the financial burden of infrastructure to support growth from the development sector to the municipality.”

The County typically collects $1 million per year in development charges, but due to mandated discounts, it is expected the new phase-in over four years will cost the municipality $1 million.

The municipality has made a formal request to the Ontario Lands Tribunal (under the Municipal Act) to seek an exemption for some of the debt related to the upfront financing agreements in Wellington and the annual payment of provincial construction grant that would accompany the long-term care build.

Two of the largest external agency increases so far include an 18 per cent overall levy from Quinte Conservation, and a 34.5 per cent increate from Quinte Waste Solutions in which the County has a proportionate share with surrounding municipalities.

Cost of living agreement increases the County has with six different payroll agreements will also impact the budget and tax levy.

Council agreed unspent Municipal Accommodation Tax (MAT) revenue from 2021, along with the 70 per cent of the municipal portion of the 2022 MAT revenue of $700,000 be transferred to the Reserve for Roads Construction. Council will later discuss continuing a distribution of 70 per cent of the County’s portion of MAT to roads and 30 per cent to the Tourism Management Plan for the balance of council’s term.

MAT revenue for 2022 is estimated to be $1.3 million which is shared between the municipality and the Destination Marketing Organization and StayPEC, as required by provincial legislation. After administrative costs, the municipal share is expected to be $600,000.

Council also approved waiving debt policy for 2023 to allow debt to exceed 15 per cent of the Annual Repayment Limit (ARL) for 2023. The ARL for the County is currently set to 25 per cent of own source revenues. This means the County’s annual debt servicing payments cannot exceed $15.7 million annually without the approval of the Ministry of Municipal Affairs and Housing.

In 2022, County policy was updated to state it would not exceed 15 per cent (internal) to maintain up to 20 per cent in flexibility to leave room to respond to emergencies, asset management pressures or to meet senior government funding opportunities.

“Prior to the adoption of this policy the County had incurred $3.9 million in annual debt servicing charges with an estimated $7.6 million in committed future debt servicing payments or 18.38 per cent of the 25 per cent maximum,” stated Carter. “As a result any debt incurred in the upcoming budget will need a secondary motion passed to remain in compliance with the debt policy.”

Seeking direction on priorities in the draft budget to come, staff sought a one per cent Capital Infrastructure Levy to be added annually for this term of council and a general Capital Infrastructure Reserve will be created as a secondary funding source for capital works and could be used to fund any capital infrastructure such as a roof replacement, trunk lines or road works. A vote on this, and a variation, both resulted in tie votes and therefore failed to be supported.

Filed Under: Local News

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