Meeting #2/11

INDEX TO BUDGET/AUDIT ADVISORY BOARD MEETING #2/11 Friday, October 14, 2011 MINUTES Minutes of Meeting #1/11, held on April 8, 2011 70 PRESENTATIONS Dillane, Jim, Director, Finance and Business Services, TRCA re: 2012 Preliminary Capital Estimates and Operating Budget Guidelines 70 2012 PRELIMINARY CAPITAL ESTIMATES AND OPERATING BUDGET GUIDELINES 71 PARTICIPATING MUNICIPALITY FUNDING New Municipal Funding Arrangements Policy 82 PLANNING AND PERMIT ADMINISTRATION COST RECOVERY 82 MEETING OF THE BUDGET/AUDIT ADVISORY BOARD #2/11 October 14, 2011 The Budget/Audit Advisory Board Meeting #2/11, was held in the Victoria Room, Black Creek Pioneer Village, on Friday, October 14, 2011. The Chair Maria Augimeri, called the meeting to order at 12:00 p.m. PRESENT Arrival Time Departure Time Maria Augimeri 12:00 p.m. 1:30 p.m. Member David Barrow 12:00 p.m. 1:30 p.m. Member Bob Callahan 12:00 p.m. 1:30 p.m. Member ABSENT Gerri Lynn O'Connor Chair Dave Ryan Member RES.#C9/11 - MINUTES Moved by: Bob Callahan Seconded by: David Barrow THAT the Minutes of Meeting #2/11, held on April 8, 2011, be approved. CARRIED _________________________________________ PRESENTATIONS (a) A presentation by Jim Dillane, Director, Finance and Business Services, in regard to item BAAB7.1 - 2012 Preliminary Capital Estimates and Operating Budget Guidelines. RES.#C10/11 - PRESENTATIONS Moved by: David Barrow Seconded by: Bob Callahan THAT above-noted presentation (a) be heard and received. CARRIED _________________________________________ 70 SECTION I - ITEMS FOR AUTHORITY ACTION RES.#C11/11 - 2012 PRELIMINARY CAPITAL ESTIMATES AND OPERATING BUDGET GUIDELINES Recommends approval of 2012 preliminary capital estimates and operating budget guidelines Moved by: David Barrow Seconded by: Bob Callahan THE BOARD RECOMMENDS TO THE AUTHORITY THAT the preliminary estimates for Toronto and Region Conservation Authority's (TRCA) 2012 - 2021 participating municipality capital budgets, as outlined in Attachment 1, be approved for submission to the respective municipalities; THAT the preliminary estimates for the 2012 operating budget make provision for a cost of living adjustment of three per cent (3%) effective in April, 2012; THAT the preliminary estimates for the 2012 operating budget include municipal levy increases consistent with the guidelines determined by the respective participating municipality; AND FURTHER THAT staff be directed to submit the 2012 preliminary estmates to the City of Toronto, the regional municipalities of Peel, York and Durham, the Town of Mono and the Township of Adjala-Tosorontio in accordance with their respective submission schedules. CARRIED BACKGROUND TRCA has begun the process of submitting preliminary estimates to its municipal funding partners. The process began in May and submissions have been made to staff of the various participating municipalities commencing in July. TRCA staff has met with staff of the regions of Peel, Durham and York and the City of Toronto to present TRCA budget requirements. Meetings with Peel, York and Durham included representatives of the other conservation authorities which have jurisdiction in those regions. Meetings with the participating municipalities to finalize the budget will occur over the next five months. Each jurisdiction has its own unique process to be followed for the budget submissions which ultimately must be approved by the respective municipal councils. Staff is presenting the summary level information on the capital budget requests submitted to each jurisdiction. Staff has not provided details of the operating estimates because the detail is subject to considerable change between now and the end of February when TRCA has the results of the funding decisions of its municipal partners and TRCA's 2011 year end results. 71 RATIONALE Operating Budget Staff is in process of completing the preliminary estimates for the 2012 operating budget. As always, staff will recommend a final budget in which expenditures are equal to the revenues including revenue from operations, grants and municipal levy. Municipal levy accounts for about one third of the annual operating budget. Expenditures At this time, staff estimate an increase in expenditures of 4.9% or about $1.7 million. Pressures on the operating budget include an increase in OMERS contributions of 1% (about $285,000), health benefit cost increases of 1.8%, property insurance costs, rising energy costs as well as annualization of salary changes in 2011. Cost of Living Adjustment (COLA) TRCA salary and wage COLA adjustments have been: 2009 0% 2010 2% 2011 0% in 2012, staff recommends a 3% COLA effective the first pay in April of 2012. This will cost an estimated $439,000. The effect of the 3% increase averaged over 5 years is about 1% annually. This is well below most municipal increases over the same time frame. Preliminary estimates provide for maintenance of existing programs and services at the 2011 level of service. Any additional new services to be introduced in 2012 will be funded from non-municipal levy sources. Additional staffing is for the most part in area of seasonal and part-time staff or in programs that have additional, non-levy funding. Revenues MUNICIPAL LEVY As a separate report, staff has described a proposed change to the traditional funding arrangements which would result in additional municipal levy from the Regions. Provision is made for a modest levy increase in 2012 of $225,000. To date, staff at the City of Toronto are recommending a flat lined TRCA levy (0%) in 2012. Staff at the regions of Peel and York are considering increases in 4 to 4.5% range. The guideline at the Region of Durham for conservation authority operating funds is 2%. PLANNING AND DEVELOPMENT FEES As a separate report, and at the direction of the Authority, staff has recommended a program to increase planning and development fees to achieve 100% recovery of costs to process development applications. In 2012, the preliminary estimates make provision for a 5.8% increase in planning fees. If the Authority approves the planning fee proposal, staff project that additional funds will be available and those projections can incorporated in the 2012 final budget. 72 CONSERVATION (THE LIVING CITY) FOUNDATION In previous budgets, TRCA has relied on up to $800,000 in unrestricted revenue from the Foundation. The 2012 operating estimates include no funding from the Foundation which is a pressure since in past years such funding has been included (although not realized). In future, staff will apply unrestricted funds from the Foundation in the year following the year in which the funds are secured. These funds will be applied first to offset any cumulative deficit. OPERATING REVENUES In total, about $1 million of additional operating revenue from planning fees, interest earnings, various parks fees and other programs is included. This represents an increase of about 4.4% over 2011. These estimates will be refined when staff complete the 2011 year end results. PROVINCIAL TRANSFER PAYMENTS Staff aniticipate that once again there will be no increase in provincial transfers estimated at $846,000. This issue has persisted for more than 10 years. Conservation Ontario continues to meet with the province and lobby for additional funding. ROUGE NATIONAL PARK In 2011, the Government of Canada announced support for creation of the Rouge National Park. Representatives of Parks Canada have met with the Rouge Park Alliance, Rouge Park staff and TRCA staff to initiate the process to create the National Park. Staff is hopeful that some level of funding for this work may be available in 2012 but nothing is budgeted. Capital Budgets Staff has completed the municipal portion of the 2012-2021 capital program. Participating municipalities usually require that TRCA provide 10 year capital budget projections and each municipality has their own requirements and format for this information. Obviously, most attention is paid to the 2012 and 2013 capital programs. Attachment 1 includes summary tables for each of the following: City of Toronto, regions of Peel, York and Durham. Staff prepares for the City and Peel and York Regions, budget binders which include detailed information on each capital project and program. These binders are in the process of being finalized and will be available to Members who require them. CITY OF TORONTO The capital submission is based on core funding for longstanding programs which meet the existing City of Toronto targets. The City funds TRCA capital programs from both debt and water reserve funding, in roughly 50/50 proportions. The City annual debt guideline for TRCA is $3 million and has remained unchanged for many years. The portion of the capital from water reserves has increased marginally, about 2 to 3% annually. Funding from the City remains inadequate to meet critical state of good repair and infrastructure requirements of TRCA's work within the City. Erosion sites, shoreline protection and repairs to waterfront parks require additional commitment from the City. Accordingly, in 2010, staff prepared a prioritized list of critical infrastructure needs which are additional to the core funding request. This list was extensive and reflected the fact the capital funding from the City has been inadequate in terms of asset maintenance for many years. 73 In 2011, the City of Toronto agreed to fund an additional $5 million in critical erosion and flood management works. This work is being completed and TRCA asked for the same amount in 2012 to continue to deal with the back log of state of good repair projects in the City. The City determined that $2 million could be made available for erosion work on the Meadowcliffe project and flood work in Hogg's Hollow, although this amount has yet to be finalized. REGIONAL MUNICIPALITY OF YORK The capital submission is based on core funding for longstanding programs. York Region guidelines provide for an increase in core programs of no more than 4.5%.

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