Report to: General Committee Report Date: February 9, 2009

SUBJECT: Town of Markham 2009 Budget

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

Andrea Tang, Manager of Financial Planning

RECOMMENDATION:

1) That the report dated February 9, 2009 entitled, “Town of Markham 2009 Budget” be received;

2) And that Council approve the 2009 Operating Budget for Town services which totals $161,770,042, (excluding prior year surplus/deficit) the principle components of which are detailed on Appendix 1;

3) And that gross operating expenditures of $161,770,042, (excluding prior year surplus/deficit) be funded from the following sources:

4) And that Council approve the 2009 Capital Budget that totals $117,614,100, the funding details of which are listed in Appendix 2;

5) And that Council approve the 2009 Waterworks Operating Budget that totals $64,266,839, (excluding prior year surplus/deficit) the principle components of which are detailed on Appendix 4;

6) And that Council approve the 2009 Building Standards Budget that totals $6,970,563, (excluding prior year surplus/deficit) the principle components of which are detailed on Appendix 5;

7) And that upon finalization of the 2008 audited financial statements, the 2009 Operating, Waterworks and Building Standards budgets be adjusted to reflect the 2008 operating results;

8) 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;

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

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 2009 Budget.

BACKGROUND:

A total of eight Budget Sub-Committee meetings were held in 2008 and 2009 to discuss, review and finalize the 2009 Operating, Capital, Waterworks and Building Standards budgets. All Budget meetings were open to the general public, Members of Council, Commissioners, and staff. Topics discussed at the Budget Sub-Committee meetings include:

• a review of the Operating and Capital budgets for 2009;
• an analysis of the significant factors affecting both the 2008 actual performance and the 2009 Operating budget;
• fiscal scan including economic trends and budgetary pressures;
• the Town’s asset lifecycle replacement methodology and reserve fund impacts;
• a review of the funding allocations from the “Investing in Ontario” Provincial infrastructure grant, the “2008 Municipal Roads & Bridges” provincial grant and the Federal Gas Tax grant;
• a review of the Building Standards, Planning & Design and Engineering Operating Budgets;
• a review of the projected 2009 Building Standards, Planning & Design and Engineering reserve balances;
• a forecast on the 2010 operating budget;
• Water & Wastewater Reserve Study.

On February 4, 2009, a 2009 Budget Public Information Meeting was held in the Council Chambers. Questions raised by the public are addressed in a separate presentation to General Committee at this February 9, 2009 General Committee meeting.

In 2008, a new initiative “Excellence through Efficiency and Effectiveness” (E3) was implemented and incorporated as part of the business planning and budget process. With the commitment to demonstrate improvements with a sustained focus on quality and wellness, the Mayor & Members of Council championed the idea to look for a sustainable process to deliver the lowest possible tax increases in the years ahead. The E3 project was launched in March 2008 and endorsed by Council in June 2008. E3 involves a corporate wide business transformation through the review of services to find as many efficiencies as possible, maximize revenue opportunities and minimize tax rate increases.

DISCUSSION:

Operating

The following exhibit reconciles the 2008 Approved Operating Budget to the 2009 Operating Budget from $158,041,402 to $161,770,042 (figures exclude prior years surplus/deficit):

The 2008 Operating surplus/deficit is excluded from the above figures until the Town’s audited financial statements are finalized and approved by Council. Upon finalization of the 2008 audited financial statements, the 2009 Operating, Waterworks and Building Standards budgets will be adjusted to reflect the surplus/deficit, if any, in revenues and offsetting expenditures.

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 higher 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 Cornell Fire Station and the next Library/Recreation facility. 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 $6.6M.

To mitigate the increased expenditures, revenues were reviewed and increased by $2.1M in the areas of assessment growth and investment income.

In addition, the E3 initiative has been successful in achieving expenditure reductions of $2.9M (personnel $1.4M and non-personnel $1.5M) and revenue increases of $1.6M to offset the remaining budget shortfall of $4.5M to a balanced budget; or a net tax rate increase of 0%

Capital

The proposed Capital Budget of $117.6M includes funding from various sources, as outlined in Appendix 2. A complete listing of the proposed 2009 Capital budget is included in Appendix 3. The 2009 Capital budget also includes $2.7M from the Federal Gas Tax grant funding capital projects in the following areas:

· Pathways & Trails and Bike Paths

· Green Print Community Sustainability Plan

· Centennial CC Green Technology Upgrades

· Civic Centre Conversion to MDE Connection, and

· Thornhill Storm Sewers Upgrades

In addition, the Town received a Provincial Infrastructure Grant of $8.1M which is being used to fund projects such as erosion & storm water improvements ($2.6M), new park construction ($1.2M), pathways & trails and bike paths ($0.6M), Main Street Unionville South road construction ($1.6M) and the Varley Art Gallery expansion (0.9M). The 2009 Capital Budget also includes funding of $3.3M from the Provincial Roads and Bridges grant for capital projects related to the rehabilitation of municipal road and bridge capital infrastructure.

Other significant Capital projects include the continuation of the tree planting initiative, travel demand management program, purchase of three additional hybrid vehicles, continued roll-out of the Organic Collection program at high-rise buildings and community mailbox recycling project, Rodick Road extension, Enterprise Drive Phase 2 construction, the design of the Cornell Fire Station, budget uplift for the East Markham Community Centre & Library, and the construction of a permanent public washroom.

The proposed 2009 Budget reflects the Town’s commitment to maintain 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 and the Town's commitment to increase contribution to the capital program by $0.5M 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. In addition, the Town has continued the contribution of $0.5M to each of the Land Acquisition and Environmental Land Acquisition Reserve Funds.

RECOMMENDED

BY: ________________________ ________________________

Andy Taylor, Commissioner Barb Cribbett, Treasurer

Corporate Services

ATTACHMENTS:

Appendix 1 – 2009 Operating Budget

Appendix 2 – 2009 Capital Summary by Commission & Sources of Funding

Appendix 3 – 2009 Capital and Other Programs Budget

Appendix 4 – 2009 Waterworks Operating Budget

Appendix 5 – 2009 Building Standards Operating Budget

Appendix 6 – February 4, 2009 Public Meeting Presentation