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Department Levy Supported Operating Budget

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Department Levy Supported Operating Budget Working together with our community Page 1 of 20 Budget Committee – January 28 & 29, 2020 Subject: Proposed 2020 Levy Supported Operating Budget Report Number: FS 20-03 Division: Financial Services Department: Financial Planning and Reporting Purpose: For Decision Executive Summary: The review and approval of the Proposed 2020 Levy Supported Operating Budget will determine the amount of property taxes to be levied in 2020. The budget proposes a tax levy of $100.9 million dollars to provide funding for the daily business of Norfolk County, and its boards and agencies. A number of service level Options have been proposed for the Budget Committee’s consideration. These options outline creative ideas that support Norfolk County in moving forward strategically and efficiently with long-term financial sustainability in the forefront. If the budget is approved as presented, this will result in an average residential tax impact of 8.4%, which equates to an average monthly tax increase of $19.53 (based on an average household assessed value of $240,000). Discussion: Section 290 (1) of the Municipal Act, 2001 requires that each year local municipalities prepare and adopt estimates for the purposes of operating the municipality including amounts sufficient to pay all debts falling due within the year, and amounts required for any board, commission or other body. Preparing and adopting annual budget estimates determines Norfolk County’s revenue requirements that will need to be collected through taxation and user rates. The Levy Supported Operating Budget is the final of four annual budgets presented to the Budget Committee for review and adoption. The Budget Committee (Committee) reviewed the Proposed 2020 Capital 10 Year Plan on October 29, 2019. At that time, the Committee approved the 2021-2029 Capital Forecast and deferred a number of 2020 capital Date Report Template Last Revised: August 14, 2019 FS20- 03 Page 2 of 20 projects to the 2020 Levy Supported Operating Budget deliberations. Following the capital presentation, the Committee reviewed and approved the 2020 Rate Supported Operating Budget on November 19, 2019. At this time, the Board of Health review and approval of the Proposed 2020 Haldimand-Norfolk Health Unit Operating Budget and the Committee’s review and approval of the Proposed 2020 Levy Supported Operating and 2020 Capital Budgets is the final component of the 2020 budget process. The Levy Supported Operating Budget outlines the business priorities and service levels for levy supported operations in Norfolk County and sets the level of taxation required to support those activities. Developing the Proposed 2020 Levy Supported Operating Budget Developing the Proposed 2020 Levy Supported Operating Budget (Proposed 2020 Budget) has not been a simple exercise, however, it has been a collaborative process involving staff input from every Division and Department within the County. Staff across all Divisions worked with Financial Services staff to undertake the tremendous effort required to develop the Proposed 2020 Budget. The starting point for developing the Proposed 2020 Budget is the underlying principle that levels of service, in the Approved 2019 Levy Supported Operating Budget, will remain. Staff review these services for the most cost efficient service delivery method when preparing the budget requirements for 2020. Changes in levels of service come from two sources: firstly, from reports approved by Council throughout the year, referred to as Council Approved Initiatives (CAI’s), and secondly, from proposals presented as New Budget Initiatives (NBI’s) in the Proposed 2020 Budget. The Proposed 2020 Budget is prepared in a number of identifiable components and segments that are each reviewed independently by the Senior Leadership Team (SLT) during the initial budget review. Upon completion of the initial review of all the budget segments, Financial Services staff consolidates all of the components and provides SLT with the Preliminary Budget for review. It is at this point that the overall impact of the budget is seen, including the potential impact on the Net Levy Requirement and an estimate of the tax rates required. For 2020, once presented with the Preliminary Budget and given Norfolk County’s financial position, SLT and staff continued to work collaboratively and took additional steps when developing this budget with an emphasis on sustainability. These steps included: 1. Further reviews of budgets to better align prior budget estimates with actual requirements. 2. Reviewing various service-delivery models. 3. Improving reserve contributions. Date Report Template Last Revised: August 14, 2019 FS20- 03 Page 3 of 20 4. Potential land and facility sales. 5. Reviewing service levels. 6. Aligning and restructuring staffing. As a result, this additional process in development of the budget has initiated the first step to address Norfolk County’s financial position and challenges and has also begun to better align operating and capital budgets with Norfolk County Council’s strategic plan. Recommendations have been brought forward by staff in the form of “Options” from the work completed in this review. The proposed options are presented in TAB 2. The Proposed 2020 Budget, and the Haldimand-Norfolk Health Unit Budget (under separate cover) presented herein, is as approved by SLT and recommended to the Budget Committee and Board of Health for consideration. Proposed 2020 Budget Format The Proposed 2020 Budget Reports have a very similar format to prior years and is presented under TAB 3 of the budget document. A summary report is provided for each Division and Department. Detailed descriptions on the report column and row meanings has been included in an attachment directly following this report (TAB 1, Attachment A). However, the overall Norfolk County Summary Report has been revised to include the net financial impact of the Options proposed for the Committee’s consideration and decision. This was completed by adding additional rows at the bottom of the report to show the net levy and staffing complement impact. Please note that the net financial impact of the Proposed Options are excluded from the Division and Department level reports. The proposed options for the Committee’s consideration have been outlined and provided under TAB 2, and will be discussed further within the main body of the Budget Committee Report. Requisitions from Boards and Agencies Consistent with previous years, the Proposed 2020 Requisitions from Boards and Agencies are being presented separately from Norfolk County Divisional Budgets. As the budgets for these Boards and Agencies are the responsibility of the appointed Board, and not within the purview of County staff, staff thought it would be appropriate to present them separately. This would allow representatives of the Boards, if they so wished, to attend the Budget Review to present their budget and to be available to respond to questions from the Committee in a timely manner. Proposed 2020 Budgets for the following Boards are included in this separate presentation: Date Report Template Last Revised: August 14, 2019 FS20- 03 Page 4 of 20 1. Haldimand Norfolk Health Unit – to be presented to the Board of Health on January 28-29, 2020 2. Norfolk County Police Services – Norfolk County Police Services Board 3. Norfolk County Public Library – Norfolk County Public Library Board 4. Grand River Conservation Authority and the Long Point Region Conservation Authority: a. The 2020 Requisitions from the conservation authorities are levied against the municipal members of the Authority under the authority of the Conservation Authorities Act and Regulations. The net amounts of requisitions from these Boards and Agencies are included in the Proposed 2020 Budget. Details of the Haldimand-Norfolk Health Unit are presented in a supplemental package, and details of all other requisitions are presented under TAB 4. Summary of the Proposed 2020 Budget Net Levy Requirement The Net Levy Requirement is the amount that is required from property taxation to fund the net cost of the Proposed 2020 Budget. Table 1 provides a comparison of the Net Levy Requirement for the Proposed 2020 Budget compared to the approved Net Levy Requirements for 2018 and 2019. Table 1: Comparison of Net Levy Requirements for 2018 to 2020 2018 2019 2020 Proposed 2020 Proposed Details Council Council (no Proposed (incl. Proposed Approved Approved Options) Options) Net Levy Requirement 84,261,800 89,874,100 102,869,600 100,851,800 % Increase Over 2018 Approved 6.7% % Increase Over 2019 Approved 14.5% 12.2% Major Base Budget Drivers Table 2 presents a summary of major base budget drivers impacting the Proposed 2020 Adjusted Budget and does not include any impacts as a result of Council Approved Initiatives, New Budget Initiatives, or Proposed Options. The Date Report Template Last Revised: August 14, 2019 FS20- 03 Page 5 of 20 Proposed 2020 Adjusted Budget, or Base Budget, is the cost, net of revenues, of providing the levels of service approved by Council in the approved 2019 Budget. This is, essentially, a “business as usual” budget with no provision for new services or for increases in levels of service beyond what was approved by Council in the 2019 Budget. The impact on the Proposed 2020 Adjusted Budget, or Base Budget, on the Net Levy Requirement is $12,251,600 and represents a 13.6% increase in the Net Levy Requirement over the approved 2019 Net Levy Requirement. The drivers summarized below include costs related to previous
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