APPROVED ON DECEMBER 15, 2016 A Message from York Region Chairman and CEO and Members of Regional Council York Regional Council is pleased to present the Regional Municipality of York’s 2017 budget. The combined operating and capital budget for 2017 is $3.0 billion, with a tax levy increase of 2.87% in 2017 and an outlook of 2.65% for 2018. The budget updates the final two years of the multi-year plan for 2015 to 2018 that was approved by Council early in 2015. Multi-year planning remains key to the Region because it enables us to better align our financial and strategic plans, set goals beyond one year and improve fiscal discipline. All of this helps us and Regional staff make better decisions. Moody’s Investors Service and Standard & Poor’s have maintained their credit ratings of Aaa and AA+ respectively for the Region. Both agencies note as positives our sustained growth, exceptional levels of reserves and strong financial management. Critical elements of financial management include the Regional fiscal strategy and water and wastewater user rates that support long-term financial sustainability. This budget continues to make key investments, especially in transportation, to strategically address the needs of growth. Managing growth while enhancing financial sustainability will be a legacy of our service to the 1.2 million residents of York Region. Table of Contents Executive Summary i Key Plans and Policies 1 The Region: Economy and Demographics 5 The Budget Overview 11 Accrual Budget Presentation 23 Operating Budget 31 Capital Budget 45 Water and Wastewater User Rates 57 Departmental Budgets Transportation Services 63 York Region Rapid Transit Corporation 83 Environmental Services 93 Community and Health Services 117 Corporate Management and Governance 147 Court Services 173 Financial Initiatives 183 Boards and Authorities 187 York Regional Police 195 Financial Policies Achieving Financial Sustainability 205 TABLE OF CONTENTS Reserves and Reserve Funds 211 Debt Management Plan 219 Appendices Operating Budget 235 Capital Budget Transportation Services 239 York Region Rapid Transit Corporation 279 Environmental Services 283 Community and Health Services 327 Corporate Management and Governance 341 York Regional Police 359 Debt Management Plan 367 Glossary 371 TABLE OF CONTENTS EXECUTIVE SUMMARY This budget covers 2017 and 2018, the remaining years of a four-year plan approved by York Regional Council in early 2015. The 2017 operating budget will require increased tax levy funding of $45.3 million. After assessment growth, this translates into a tax levy increase of 2.87% for 2017. This is equivalent to an additional $66 on the average residential property tax bill. For 2018, the outlook is for a 2.65% increase in the tax levy. The budget includes total operating spending of $2,097 million for 2017 and an outlook of $2,178 million for 2018. The net tax levy for both 2017 and 2018 has increased slightly from the outlook in the multi-year budget. This reflects both a larger operating budget for York Regional Police and downward adjustments in expected assessment growth revenue. An updated 10-year capital plan provides for spending of $6.1 billion out to 2026, including $942 million in 2017. Capital spending includes record levels of investment in Transportation Services, in both roads and transit, during the current Council term. EXECUTIVE SUMMARY i Adjustment to approved budget outlook reflects greater police needs and lower assessment growth York Region departments collectively stayed within the approved outlook for 2017 and 2018. The previously approved outlook included increases that were mainly to serve a larger population and address changes in program needs triggered by greater urbanization in the Region. York Region services The York Regional Police Budget, which is reviewed and York Region provides important services approved by the Police Services Board, will see a net to residents, often working in concert with increase in funding from the tax levy of $13.4 million, its nine local municipal partners – or 4.52%, from 2016. This is higher than the increase of Markham, Richmond Hill, Vaughan, $12.1 million approved in the outlook. The increase Whitchurch-Stouffville, Aurora, King, includes the hiring of new officers to expand service Newmarket, East Gwillimbury and and prepare for expected retirements. Georgina. On the revenue side, forecast assessment growth It is directly responsible for policing, public revenue has been reduced by $0.8 million for 2017 and health, paramedic, social and community $1.2 million for 2018. services, arterial roads and bridges and public transit. It delivers drinking water to Other revenue sources benefited from increased local municipal systems and conveys provincial and federal funding, expected increases in wastewater from them, and shares in transit fare and other non-tax revenues, and a new responsibility for solid waste management water and wastewater user rate structure implemented and community planning. in 2016. The new user rates will ensure that starting in 2021, rate revenues will provide all funding needed to recover the costs of providing water and wastewater services. Budgeting continues to reflect and benefit from the Region’s fiscal strategy introduced in 2014. The strategy builds key reserves and reduces the need for debt. Since its introduction, reserves have grown by $381 million and are expected to increase by a further $619 million by 2020. The fiscal strategy significantly enhances the Region’s financial sustainability. Over the next 10 years, the Region will issue $1.3 billion less debt than without these measures, and will not issue any debt supported by the tax levy or user rates. The budget, like all Regional activities, is guided by Vision 2051, which sets out the long-term goal of creating strong, caring and safe communities. It also aligns with the related four-year strategic plan covering this Council term. These plans are discussed in more detail in the section starting on page 1. ii EXECUTIVE SUMMARY The Operating Budget 2015 2016 2017 2018 ($ Millions) Approved Approved Approved Outlook Gross Expenditures 1,901 2,003 2,097 2,178 Non‐Tax Revenue 963 1,022 1,071 1,108 Net Expenditures 938 981 1,026 1,070 Assessment Growth Revenue (%) 2.15 1.76 1.75 1.63 Tax Levy Increase (%) 2.97 2.85 2.87 2.65 The operating budget Almost all the spending in the operang budget goes to core service areas, including policing, community and social programs, environmental services, and roads and transit. A key goal is providing mely, high‐quality services in the most efficient ways. Aer approval of the mul‐year plan in early 2015, pressures on both costs and revenues emerged. Regional departments were able to fully manage spending pressures in both 2016 and the current budget. As noted, however, the York Regional Police budget increased by a greater‐than‐planned amount, mainly to provide more front‐line officers. As well, growth in assessment in 2016, 2017 Total Revenue which translates into incremental $2,097 Million property tax revenues in 2017, was below forecast. Assessment growth revenues in 2017 are expected to be $17.2 million instead of $18.0 million. User Rates Because the trend is expected to 18.3% connue, the outlook for 2018 is reduced to $16.8 million from $18.0 Tax Levy Grants & 48.9% million. These changes reflect trends Subsidies that are discussed in more detail starng 15.4% on page 5. The result of the changes in spending and revenues are tax levy increases for Development Charge Reserve the remaining two years of the four‐year Draws plan that are slightly higher than Fees, Charges 11.7% Contributions & Other originally approved. from Reserve Recoveries 1.8% 3.9% EXECUTIVE SUMMARY iii Services provided through the operating budget need to keep pace with population growth, as well as other changes. The budget reflects population growth, which is expected to increase by 2% a year on average out to 2031. Other changes to which the operating budget responds include increasing urbanization as land use intensifies, demographic trends and higher resident needs and expectations. The operating budget also funds the Region’s fiscal strategy, which is intended to improve long-term fiscal health. Externally, new or changed provincial and federal policies, programs and legislation continue to have impacts on operating budgets, and these are often difficult to predict. The operating budget is supported by the annual tax levy and several other sources of revenue, such as development charge reserve draws and grants from other levels of government. The “net operating budget” refers to the portion funded just by the tax levy. The tax levy of $1,026.1 million will support 48.9% of the total operating budget for 2017, with other revenues funding the balance. The share of the operating budget supported by the tax levy is projected to remain fairly stable in 2018. The capital budget York Region continues to invest in such major assets as roads, transit, water and wastewater systems, police stations and housing, with a capital plan for 2017 of $942 million. This represents the first year of a 10-year plan of $6.1 billion, among the largest in Ontario. Capital Spending Authority, which allows multi-year capital commitments, is $2.6 billion. Transportation and transit capital investments remain strong through 2018 $ Millions 1,000 900 800 700 600 Other* 500 Transportation Services 400 Environmental Services 300 200 100 - 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Note: Other includes Community and Health Services, Information Technology Services, Property Services, Planning and Economic Development, York Region Rapid Transit Corporation and York Regional Police. iv EXECUTIVE SUMMARY The new 10-year plan aligns with the 10-year plan in the 2016 budget, which was also $6.1 billion.