Report to: General Committee Report Date: April 30, 2007

SUBJECT: Town of Markham 2007 Budget

PREPARED BY: Joel Lustig, Director of Financial and Client Services

Fuwing Wong, Manager of Financial Planning

RECOMMENDATION:

That the report dated April 30, 2007 entitled, “Town of Markham 2007 Budget” be received;

And that Council approve the 2007 Operating Budget for Town services which totals $151,419,368, (excluding prior year surplus) the principle components of which are detailed on Appendix 1;

And that gross operating expenditures of $151,419,368, (excluding prior year surplus transfers to reserves) be funded from the following sources:

And that Council approve the 2007 Capital Budget that totals $91,467,300, the funding details of which are listed in Appendix 2;

And that Council approve the 2007 Waterworks Operating Budget that totals $50,146,462, (excluding prior year surplus) the principle components of which are detailed on Appendix 4;

And that Council approve the 2007 Building Standards Budget that totals $8,045,000 the principle components of which are detailed on Appendix 5;

And that upon finalization of the 2006 audited financial statements, the 2007 Operating and Waterworks budgets be adjusted to reflect the 2006 operating results;

And that a copy of the budgets be made available to the public through the Clerk’s Department and each of the Markham Public Libraries;

And that Staff be authorized and directed to do all things necessary to give effect to this resolution.

EXECUTIVE SUMMARY:

Not applicable

FINANCIAL CONSIDERATIONS:

Not applicable

1. Purpose 2. Background 3. Discussion 4. Financial

5. Others (Environmental, Accessibility, Engage 21st, Affected Units) 6. Attachment(s)

PURPOSE:

To obtain Council approval of the Town of Markham’s 2007 Budget.

BACKGROUND:

A total of five Budget Sub-Committee meetings were held in 2007 to discuss, review and finalize the 2007 Operating, Capital and Waterworks and Building Standards budgets. Standing Committee meetings supplemented the Budget Sub-Committee meetings. All Budget meetings were open to the general public, Members of Council, Commissioners, and staff. Topics discussed at the Budget Sub-Committee / Standing Committee meetings include:

• a review of Operating and Capital budgets for 2007;
• an analysis of the significant factors affecting both 2006 actual performance and the 2007 Operating budget;
• economic forecasts including economic trends and budgetary pressures;
• the Town’s asset lifecycle replacement methodology and reserve fund;
• the Town’s development fee model implemented as part of Bill 124, the Building Code Statute Law Amendment Act;
• background and updates on the Federal Gas Tax grant for sustainable infrastructure.

The following exhibit reconciles the 2006 Approved Operating Budget to the 2007 Operating Budget (figures exclude prior years surplus):

With the implementation of Bill 124 - Building Code Statute Law Amendment Act, the Building Standards department’s operating budget is shown separately from the Town’s Operating Budget. Accordingly, the approved 2006 budgeted revenues and expenditures, above, have been adjusted for Building Standards.

In addition, the 2006 Operating surplus is excluded from the above figures until the Town’s audited financial statements are finalized and approved by Council. Upon finalization of the 2006 audited financial statements, the 2007 Operating and Waterworks budgets will be adjusted to reflect the surplus, if any, in revenues and offsetting expenditures (transfer of the surplus to reserves). This will have no net impact on the operating budget as the Town’s policy is to transfer operating surpluses to reserves.

The Town of Markham continues to face inflationary pressures in many aspects of its operations. General inflation, waste collection and winter maintenance contracts, other contract renewals, wage settlements, and the continuation of higher fuel, natural gas and maintenance costs have resulted in increased operating expenditures. Further, the Budget Sub-Committee has approved the continuation of the Town's practice of phasing-in future personnel costs related to facility openings and funds have been allocated towards the next Community Centre and Library, and the next two Fire Stations. In addition to inflationary pressures, Markham continues to add to its inventory of parks, streetlights, and roads, each year, thereby requiring additional resources for the maintenance and replacement of these assets. The total impact of these pressures on expenditures is $8.8M.

To mitigate the increased expenditures, revenues were reviewed and increased by $5.2M in the areas of assessment growth, additional legislative services revenue, recreational programs, and fee/fine revenues.

The increase in revenues however, does not fully offset the pressures in operating expenditures of $8.8M. The resultant shortfall of $3.6M ($8.8M - $5.2M) necessitates a property tax rate increase of 3.98%. For the average single family detached household in Markham, valued at $403,000 (based on 2006 Current Value Assessment), a 3.98% increase in the tax rate means a $40.20 increase in the municipal portion of the property tax bill.

The proposed Capital Budget of $91.5M includes funding from various sources, as outlined in Appendix 2. A complete listing of the proposed 2007 Capital budget is included in Appendix 3. The 2007 Capital budget also includes $1.6M of Federal Gas Tax grant funded capital projects in the following areas:

· Don Mills Culvert Rehabilitation;

· Enhanced Bike Routes and Pedestrian Pathways;

· Additional Sidewalk Requests; and

· Bullock Road Widening.

Other significant Capital projects include Phase 1 of the Birchmount Road Extension from 14^th Avenue to Enterprise Drive, widening of Rodick Road from Miller to 14^th Avenue, a Markham Transportation Planning Study Model, construction of a new fire station, three additional hybrid vehicles, enhanced tree planting initiatives, community mailbox recycling pilot project, continued roll-out of Mission Green (the Town’s waste diversion program) to special events, and watermain replacement on Steeles Avenue from Yonge Street to Henderson Avenue.

The proposed 2007 Budget reflects the Town’s commitment to maintain and enhance service levels to the community and balances social needs with fiscal prudence. This is a reflection of the Town’s commitment towards fiscal stewardship. Further, consistent with existing Town policies, one-time funding is not used to balance the operating budget. The Town's commitment to increase investment in Capital projects by $0.5M, funded from assessment growth, is maintained. The Town has also continued to ramp-up the Operating budget for future expenditures related to new Community Centres, Libraries and Fire Stations.

OPTIONS/ DISCUSSION:

FINANCIAL TEMPLATE: (external link)

Not applicable

ENVIRONMENTAL CONSIDERATIONS:

Not applicable

ACCESSIBILITY CONSIDERATIONS:

Not applicable

ENGAGE 21^ST CONSIDERATIONS:

Not applicable

BUSINESS UNITS CONSULTED AND AFFECTED:

Not applicable

RECOMMENDED

BY: ________________________ ________________________

Andy Taylor, Commissioner Barb Cribbett, Treasurer

Corporate Services

ATTACHMENTS:

Appendix 1 – 2007 Operating Budget

Appendix 2 – 2007 Capital Summary by Commission & Sources of Funding

Appendix 3 – 2007 Capital and Other Programs Budget

Appendix 4 – 2007 Waterworks Operating Budget

Appendix 5 – 2007 Budget Standards Operating Budget