Huron East Council begins budget process in stable position
BY SHAWN LOUGHLIN
Huron East Council has initiated its 2022 budget process, much earlier than usual for the municipality, on more stable ground than council and staff have faced in previous years.
At council’s Nov. 16 meeting, Treasurer Paula Michiels presented the first draft of the budget, the first since the hiring of new Chief Administrative Officer Brad McRoberts. While Michiels’ first draft included a shortfall of nearly $1.3 million, she and McRoberts presented a handful of small cuts that will bring that down to a much more manageable number.
In addition, the municipality is not facing the drastic funding cuts from the provincial government and policing cost increases that have plagued the process in recent years. Instead, this year’s budget will include an increase in money from the Ontario Municipal Partnership Fund (OMPF) of $16,000 above last year’s amount and a decrease of $12,639 in policing costs when compared to the 2021 budget.
Michiels also noted that hindering the budget is the fact that property values have remained frozen by the provincial government, so they are still at 2016 values. That means that current assessment values will remain stagnant until the 2023 taxation year.
“This position has and will continue to have a significant impact on municipal taxation rates,” Michiels said in her report.
Michiels has proposed a 10.5 per cent increase to the general municipal levy (which is an average of 7.56 per cent when area-rated items are included) and included several cost increase estimates, including a 4.4 per cent increase to the cost-of-living adjustment (COLA), a 10 per cent increase in utilities costs and a 15 per cent increase to the municipality’s liability insurance costs. She has also increased the levies for the municipality’s three community centres by five per cent, while reducing the deficit reduction levies by $3,701.
Michiels also noted that the Brussels, Morris and Grey Community Centre renovation and expansion project will be going ahead next year, but with funding coming in from various sources, it shouldn’t be a budget draw. She did note, however, that she would have to keep her eye on cash flow issues throughout the year related to the renovations, and nothing should affect the municipality’s actual budget. (Both Huron East and Morris-Turnberry Councils approved a funding agreement between the two municipalities that night for Huron East to debenture Morris-Turnberry’s portion of the cost, with Morris-Turnberry to be responsible for the principal and interest on the full amount.)
In Michiels’ first draft of the budget, the Brussels, Morris and Grey Community Centre is projected to end 2021 with a deficit of $102,956. She has proposed a deficit-reduction levy of $40,750 for 2022 and projected that the centre will end 2022 with a deficit of $138,860.
The Seaforth and District Community Centre is projected to end 2021 with a deficit of $100,399 and receive a deficit-reduction levy of $37,500 in 2022 and then end 2022 with a deficit of $212,583.
The Vanastra Recreation Centre is projected to end the year with a deficit of just under $9,000 and receive a deficit-reduction levy of $17,647 in 2022, ending next year with a projected deficit of $5,636.
Michiels said the carry-forward deficits at the three recreation centres need to be eliminated and their budgets need to be reconciled annually with the municipalities that co-fund them alongside Huron East. McRoberts also spoke to this at the meeting, saying he hadn’t seen a model with a year-over-year, carry-forward deficit that the municipality employed for its recreation centres. That way, he said, one or more of the centres may end a year in a deficit position, but that shortfall should then be settled ahead of the next budget year so the centre can begin again with a clean slate.
He said this proposal hadn’t been incorporated into the first draft of the budget, but that he and Michiels were planning on including it in the second draft, along with the methodology for the elimination of the carry-forward deficits.
“Recreation facilities are not expected to generate a surplus, but rather to operate within their allotted annual budgets,” Michiels said in her report.
McRoberts also noted that approximately $40,000 has been allocated for the municipal election in 2022. Going forward, he suggested putting about $10,000 a year aside to raise the $40,000 necessary to run the election every four years, rather than having to include it all in one budget year.
Though Michiels presented the budget with a shortfall of nearly $1.3 million, she suggested a handful of proposed changes that brought that number down significantly.
First, Michiels suggested reallocating $500,000 from the aggregate resources portion of the municipality’s bridge reserve to be used either for a roads project or to purchase equipment for the public works department. She then suggested splitting the paving of Hensall Road to cut approximately $400,000 from the 2022 budget, shifting it to 2023. The road was scheduled to be paved from Highway 4 to Staffa Road. Phasing that project - paving the first half in 2022 and completing the project in 2023 - would create the savings next year. In addition, she said, that made sense because the municipality had proposed doubling the amount of rural paving it does every year, so this change would bring Huron East back in line with its traditional service level for rural paving.
In addition, she also proposed waiting another year to replace a trackless vehicle for the public works department, saving another $100,000.
With those changes implemented into the second draft of the budget, it would only have a deficit of just under $300,000.
Those changes will be included in Michiels’ second draft of the budget to council at a future meeting.
During the discussion surrounding the first draft of the budget, McRoberts told council he would be bringing forward a report on the municipality’s waste management contracts, proposing a unified approach for all of Huron East.
He said he found it odd that waste management was an area-rated service in the municipality and said it would be much more straightforward if waste management was handled through a municipality-wide contract and paid for through taxation with the same level of service offered in all five wards.
McRoberts said that some of the municipality’s contracts are five-year commitments that were just renewed, so any proposed changes wouldn’t take effect until 2024 at the earliest, but it would be a good opportunity to get ahead of the issue.
He said he would prepare a report for council and present it at a future meeting.