On Tuesday, January 10, Chatham-Kent administration presented the draft 2012 budget to CK Council for their consideration. Back in September, Council asked administration to develop scenarios that would give them options to achieve a 0% tax increase for 2012. This doesn’t necessarily mean that the only option Council will work towards is 0%. However, they do want to understand the ramifications of considering it.

The documents tabled on Tuesday deliver on that request. Those documents can be found on our website through this link http://goo.gl/JMcmw. At a high level, the presentation made that evening outlines the following tax pressures:

Required to maintain existing services……….4.1%
Consideration of new levels of service:
…Infrastructure deficit phase-in…………..2.0%
…New initiatives…………………………1.5%

Total…………………………………….7.6%

Obviously, the requirement to accomplish all of the above is too high. As a result, tough choices are going to be made over the next few weeks as Council works through the budget review process. To help them through this process, the CK Executive Team has developed options (ranked by priority) to consider a lower number. Again at a high level, the options to get all the way to 0% would entail the following:

Choose to implement no new initiatives……….1.5%
Delay the infrastructure deficit phase-in…….2.0%
Consider closed session items……………….1.1% (note 1)
Consider service level reductions……………3.0%
Total…………………………………….7.6%

Note 1 … closed session items relate to personnel, property and legal matters.

Council’s tough choices over the next few weeks will include consideration of service level reductions that could total 3% … that’s the equivalent of $3,600,000 of existing services. Tuesday’s presentation included a matrix that gives options in tax increments of 0.5% along with schedules that show which services would be affected by each increment. A summary of the options can be found on pages 21 – 23 of that presentation (download at bottom right of page at the above link) and details are on pages 24 – 26 (an “x” beside a service indicates that it would have to be acted on to achieve the tax impact option listed in that column). A summary of the financial pressures on existing services can be found on pages 19 – 20 of the presentation.

“Assembling the draft 2012 budget has been an especially difficult task,” says Councillor Art Stirling, Budget Committee Chair. “To get to the Council mandated zero percent tax increase, staff have prepared multiple options. These options have the potential to dramatically impact service levels and individual communities across Chatham-Kent. Council’s challenge will be to strike the appropriate balance between municipal fiscal responsibility and the community’s overall expectations and aspirations. As Chair of Council’s Budget Committee, I encourage you to provide us with your comments and ideas in this dialogue forum. We will monitor this forum, answer questions where possible and add your suggestions for consideration in Council’s upcoming deliberations. I only ask that you please keep your commentary constructive and respectful. Please assist us.”

Community information meetings are scheduled for January 17, 18 and 19 and budget deliberations start on January 24 (see details at the above link). Between now and the finalization of the 2012 budget, we would like to hear from you. Send us an email at ckfps@chatham-kent.ca, give us your suggestions by way of this discussion forum or, even better, come out to one of our community meetings and have a conversation with a member of our Council or senior staff.

Gerry Wolting, B.Math, CA
General Manager of Corporate Services
Municipality of Chatham-Kent

Seven and a half hours later, I have given the average work day to working through the information provided to us as citizens, and have come to the following conclusions:

1) Despite my having a background in banking and being an Associate of the Chartered Institute of Bankers, the information is mostly just a jumble of figures, and confirms my view that I could not be a counselor because I don’t have the patience to deal with it.

2) Back in my banking days I would want a lot longer than a day to digest the information and come to any worthwhile conclusions.

Having come to those conclusions, I do have some observations:

a) This is the first year in my 4+ year tenure in C-K that I have felt obliged to look at councils budget and process. I put this down to the fact that council is being much more inclusive of citizens.

b) There are items which are outside councils control which would increase the budget. These are either legislated or contractual and to reach a zero increase, would require cuts elsewhere.

c) There must be a sustainable base, so that reductions now do not necessitate even larger increases next year, and in years to come. ie. building cannot be allowed to deteriorate, it is a false economy.

d) Staffing is the largest single item in the budget, which is not really surprising, this is a service business. We should have properly trained staff working for the Municipality, but we should also recognise the fact that living in C-K is a lot cheaper than living in most other areas of the province. We are within a few hours drive of Toronto, and therefore attracting people to C-K should not require a premium as it would say in the north. These facts should mean that staff costs in C-K should be lower than average.

e) We are in a period of restraint, when both senior levels of government are trying to reduce their costs without increasing taxation (excepting Federal payroll taxes which increased Jan 1/2012), The municipality should be setting itself the same goals. Council has intimated that it realises this.

f) Municipal taxes are a fixed cost to businesses, unlike both senior levels of government, municipal taxes are not linked to profits. Increases to businesses have to be offset by cutting costs elsewhere, or increasing prices. All to often the competitive situation makes increasing prices impossible except for necessities, and so costs are cut by reducing wages. I have seen nothing to show that municipal employees have born any of the cost of the recession in C-K.

g) According to the BMA study, the tax per capita is approx 10.5% below the study average, and puts us fourth lowest out of twelve. However the average household income is 15% below the SW Ontario average. To me this says that the burden on the average C-K citizen is higher than it should be. I recognise that this statement does not take account of lower living costs in terms of rents and average home values, but a carton of eggs is a carton of eggs.

My conclusion and recommendation to council is that they should try and keep the assessment the same as last year. I know this will mean that there will be some cuts in service, but I ask you to recognise that the majority of residents will not be seeing a pay increase this year. Maybe those who will be seeing an increase in their income can do a Buffett, and voluntarily increase their contribution to the well being of us all.

With an operating budget of over $250 MILLION, even a 1% increase would mean a tax increase of over 2.5 million. A 7% increase would be well over $10 million. Divide this by a population base of 100,000 and you are going to hear some serious complaints.
Council only has control over 30% of the budget – the other 70% being non-negiotiable such as salaries, equipment, vehicle replacement and maintanence to name a few items. Rent and mortgage on buildings and other structures has to be included in there as well.
(these figures and percentages are not exact)
Since the population can’t absorb a Ten Million Dollar increase in property taxes, it comes down to decisions regarding what services will be provided via increased taxes, cut to save taxes, or passed on to users.
I don’t envy the job of councillors at this point. These are going to be some tough decisions, and very few people are going to be happy with the end result.
To belabor a point, if 70% of the operating budget is out of the control of councillors, ie. roughly 7 million, they need to decide how to pay for this or what to cut to compensate for this.
People need to get involved in the decision making and get a fundemental understanding of what it costs to run a “city” like Chatham-Kent and to keep it attractive to potential investors – developers who would hopefully increase the industrial tax base, which we seriously need! Sometimes you need to spend now, to save in the future.
It’s not an easy job, and there are no easy answers.

Hi Michael … thanks for taking the time to review our information. We can identify with your comment about the presentation containing a lot of numbers. Unfortunately, all we can post is the slide deck behind a presentation that took over an hour to go through with Council last week. What’s missing is the commentary given on each slide and the Q & A session that lasted well over an hour after the presentation was completed. Hopefully you can make it out to one of the community meetings where we’ll be presenting a shorter version followed up by a Q & A session. If you have any comments on the specifics of the options or if we’ve missed some options, we’d appreciate hearing them. Thanks again.

Gerry
Many people on this site spoke about Wage Freezes. Is this an option that has been presented?

Hi Larry. I’m assuming you’re referring to the BMA study slides that we included in pages 6 to 8 of our presentation. This study is done by BMA Management Consulting and includes only those municipalities that choose to participate. This year, 84 municipalities participated representing 85% of Ontario’s population. The full report was presented to Council last night and will be on our website later today. Our share of the cost is around $7,500 … a reasonable amount with the added benefit of coming from an independent and objective source.

BMA categorizes those 84 municipalities based mainly on population ranges with some local municipalities included as well. In CK’s case, we’re put in the 100,000+ category. This is not ideal but it’s the best independent information presently available. In reality, there are very few direct comparators to CK due to our urban/rural mix and single tier nature. Municipalities like Sudbury and Kingston (both are amalgamated communities with a rural mix) come close but BMA can only include comparators that choose to participate in the study.
To address the other points:

a) Our assumptions:
Like all assumptions, they certainly are not perfect but they are based on the best information available and, as that information changes, the assumptions evolve.

b) Our tax levies:
The selected slides of the BMA study indicate a couple of things:
- our current tax levies compare favourably to other municipalities
- when you take into account the lower per household income levels in CK, our municipal costs as a % of household income is equal to the survey average for our group.

Having said that, our geography is challenging and results in our number of bridges (800+), km’s of roads (7,000 lane km), etc, etc per capita being very high. So, as we move to a fully funded infrastructure program that will necessarily be above average in cost, we’ll have to continue to manage our other services carefully if we want our overall tax levy to remain in the average or less range.

c) Provincial funding:
We could always use more funding from senior levels of government. However, we need to recognize they have financial limitations as well. Having said that, our concerns include the following: senior government funding policies should continue to treat all municipalities equally; funding programs should be both quantifiable and long term to enable better long term planning at the local level.

d) Viewing urban and rural issues differently:
Our basic philosophy is that everyone in CK should pay the same tax rate for the same service. For example, it may be less expensive to run an arena in community X than in community Y due to the age of the facility or user uptake but, since it’s the same service, everyone pays the same tax rate for that service. The litmus test for paying is not whether you use the service but whether it’s available for use.

We do use area rating for a number of services that are delivered at different levels meaning that different levels of service attract different tax rates. Examples include horticulture, transit, street lights, urban vs. rural policing, full time fire service vs. volunteer fire service, curbside garbage/recycling vs. travelling to a depot, etc. So, for example, Chatham has a transit system but only Chatham pays the net cost for that system; those communities that don’t have street lights don’t contribute for those who do; etc.

I hope this helps. Sorry that the response is so lengthy but there were a number of questions. Thanks for taking the time to participate in this discussion.

As a worker in the private sector, I have had my benefits and pension decreased dramatically during these hard economic times. (As have almost everyone I know in the private sector.) Is this a consideration in the Chatham-Kent budget process? Why would civil servants not have to make concessions like the rest of us in the private sector? How do you expect people to be comfortable with a large increase in their taxes, when they don’t see the public servants having to absorb the same kind of cuts. Especially when the public employees get paid (as a whole) much better than the private sector already.

John … the slide on the bottom of page 21 shows the numbers behind the various options (22 through 26 give details). Options relating to our closed session provisions (personnel, legal & property matters) are quantified on the last line entitled “Provision for closed session items”. Unfortunately, because they are closed session in nature, we can’t discuss the details behind these options publicly.