County of Simcoe council has set its sights on a tax levy increase of 3.7 per cent for 2024.
County councilllors were initially presented with a proposed budget hike of 4.7 per cent at a special budget committee of the whole meeting on Nov. 2.
However, after councillors posed several questions on possible ways to reduce that figure, a staff report presented during Tuesday’s committee of the whole meeting was presented that could have seen it reduced to 4.2 per cent.
Staff found those savings by identifying potential revenue opportunities related to fees that can be increased in line with cost escalations. The fees assist with cost recovery. It could result in a total of $450,000 in additional revenue.
As well, the county could look at funding the $50,000 cost increase related to a new age-friendly study from the general contingency reserve, as well as reducing the human resources administration centre space redesign by $50,000, phasing the project over two years.
On their own, these changes, if approved, would result in a reduction of the levy increase by .25 per cent to a total increase of 4.2 per cent and reducing the net capital requirement by $284,000.
Many councillors felt it did not go far enough, and they ultimately voted in favour of including an amendment to reduce the levy transferred to the economic development and planning reserve to .5 per cent, from one per cent. This, if approved and ratified by council, would reduce the levy to 3.7 per cent.
“I can’t sit here and support a budget of this increase right now. I need to see some reductions,” Bradford West Gwillimbury Mayor James Leduc said prior to council voting on his motion for the amendment.
Collingwood Deputy Mayor Tim Fryer said he was also struggling with the idea of a 4.25 increase.
“I think there are other areas that will come in better than what we are forecasting. We have to keep our pencils sharpened. It’s hard being the first out of the gate and not knowing what everybody else is passing,” he said.
Prior to the motion being approved, Trevor Wilcox, the county’s general manager of corporate performance, provided council with what he called a “budget snapshot,” noting the county has a projected operating balance of $8.1 million, similar to what was seen last year.
“From a gross capital perspective, we are projecting a $160-million capital program, with a net capital requirement of almost $58 million. We do not expect the need for external debt next year. Our cash position is sufficient to cover the needs we have. We are using internally financed debt at this point in time. Ideally, we will be needing to use debt for some of the larger projects we have going and, hopefully, rates will be dropping by that point,” he said.
Looking at the five-year trends, Wilcox expressed concerns about where the budget was initially sitting, noting county expenses have outpaced revenues for many years, which means the county’s operating budget has dropped substantially.
“As a percentage of revenue right now, we are down to 1.3 per cent. That, in my mind, puts us in a little bit of a red zone, which I characterize as being a little concerning in that it’s 1.3 per cent of revenue," Wilcox said. "If we drop below, we are going to have to use reserves to maintain our operating balance.
"We cannot have a negative balance from a Municipal Act point of view, so we would have to cover that,” he explained, adding the $8 million is enough to cover the county’s needs from a short-term capital perspective so it is not using financing for short-term capital.
From an affordability standpoint, Wilcox reiterated where the county currently stands related to the levy increase from the budget revenue perspective. Each one per cent levy increase represents about $2 million.
“I realize that, from a resident’s perspective, that is a little different because we are asking them to fork over this money,” he said, adding a $100,000 assessed value equates to about $2.89 per year.
“I understand that this is not trivial. It is not zero, but it is, in terms of the magnitude, significantly different from some of the other increases I have seen in other areas and other things. I wouldn’t say it’s unaffordable.”
The proposed budget, Wilcox explained, enables much-needed strategic programs as well as straight operational programs.
“There are significant budget challenges and risks. There is continued inflationary pressures. We have seen pressure from prior years’ constraints that are coming back now in terms of needs. Bill 23 will impact capital ... Loss of (development charges) revenue and the labour outlook does look concerning.”
As initially presented, the budget commits an additional $8.5 million in reserves, dropping the uncommitted amount to $48.1 million. The county’s operating budget is at $8.1 million or 1.3 per cent of revenue, but that is still in what Wilcox called “the red zone.”
“Overall, I am not saying we are in a dire position. We are in a strong financial position and we are able to shoulder that at this time,” he said.
Council is still required to ratify the 2024 budget recommendation at its next meeting on Nov. 28, but if passed, the 3.7 per cent levy increase would equate to a $10.69 annual impact per $100,000 of home assessment.
The county’s total budget for 2024 is proposed to be $622 million, with $212 million (34 per cent ) coming from Simcoe County residential property taxes and the remaining amount from other funding streams.
“Because we knew the pressures families were facing during lockdowns and throughout COVID, the county had previously held a modest tax increase over that time to ensure that we were helping our residents as much as we were able to during the height of the pandemic, even holding at zero per cent in 2021, which has reduced some of our financial flexibility today,” Warden Basil Clarke said in a statement.
“What stood out to me through our discussions are the wide-reaching benefits of our regional system and the critical services provided by the County of Simcoe to our residents, particularly as we continue to recover," he added. "When there are more people contributing to these services and projects, the impact is less on each of us.”