Kingston City Council - 15 Jan - Budget Meeting Part 1

The city council meeting on 15 Jan 2024 discussed the following points. Meeting details can be found here.

Members present: Councillor Gary Oosterhof, Councillor Wendy Stephen, Councillor Lisa Osanic, Councillor Jimmy Hassan, Councillor Brandon Tozzo, Councillor Don Amos, Councillor Ryan Boehme, Councillor Gregory Ridge, Councillor Cony Glenn, Councillor Jeff McLaren, Councillor Vincent Cinanni, Mayor Bryan Paterson

1. Introduction of the 2024 Budget:

• The mayor described the budget as a result of a collaborative process with city staff, even under the strong mayor power legislation.

• Emphasis was placed on the challenging nature of the budget process due to various cost pressures affecting cities across the province.

3. Budget Preparation Guidelines:

• The budget aimed for a property tax increase capped at 3.5%, intending to be one of the lowest among large cities in Ontario.

• It included additional investments for housing, transit, recreation, electrification, and healthcare solutions, reflecting priorities from strategic planning and council discussions.

4. Challenges and Strategic Responses in Budgeting:

• The CFO discussed starting with an $11.5 million gap due to inflation and strategic plan resourcing.

• Strategies to bridge this gap included revising projections, utilizing provincial funding, managing investment income effectively, and deploying one-time funds for 2024.

5. Detailed Revenue and Expenditure Analysis:

• Revenue sources were analyzed, including fees, charges, and provincial contributions. Notable increases in transit recoveries and investment income were highlighted.

• On the expenditure side, the focus was on wages, benefits, materials, supplies, and contracted services. Specific challenges like rising insurance premiums and investment in staff resources for council priorities were discussed.

6. Capital Budget Overview:

• The proposed capital budget was $131 million, emphasizing asset management and life cycle investments in roads, parks, facilities, technology, and strategic projects like housing and employment lands.

• Discussion on the use of capital reserve funds and development charges to fund the capital budget.

7. Multi-Year Operating Forecasts:

• Forecasts for future years were presented, showing an anticipated tax rate increase and the need for ongoing strategic financial planning.

• The discussion included the need to align these forecasts with council's strategic priorities and the challenges in projecting future years accurately.

8. Asset Management Planning:

• The city's asset management plans were reviewed, showing investments and highlighting the gap between what is funded and what remains unfunded in areas like roads, parks, fleet, and technology.

9. Utility Costs and Facilities Management:

• The council discussed a $1.2 million increase in utility costs, partly due to taking over the management and budget of the police building and the Leon Center. These costs are offset by recoveries from the police budget.

• They emphasized investment in facilities to reduce greenhouse gas emissions and improve utility efficiency.

10. Fuel and Material Costs:

    • A half-year of the provincial gas tax holiday was factored into the budget, resulting in a 1.1% increase in overall gas expenses.

    • There were substantial inflation impacts on fleet parts, supplies, and public works materials like salt and sand, totaling an additional half million dollars.

11. Insurance Premiums and Contracted Services:

    • The council noted a significant 15% increase in insurance premiums, a common challenge across municipalities.

    • Contracted services expenses increased due to garbage and waste diversion contracts, which include inflation and fuel escalation clauses.

12. Grants and Transfers:

    • The grants and transfers to others category decreased by about $1 million due to the one-time federal business support funding not being continued into 2024.

    • Significant funds were still allocated for housing, homelessness, emergency support, and child care transfers.

13. Multi-Year Operating Forecasts:

    • The council forecasted a 6.6% tax rate increase for 2025, expected to decrease in subsequent years. They emphasized that these are starting points and subject to change.

    • Growth projections were discussed, with anticipated increases due to housing targets.

14. Capital Budget and Investment Strategy:

    • The 2024 capital budget was proposed at $131 million, with a focus on asset management and life cycle investments.

    • The budget included no new recommended debt funding, indicating a shift towards using capital reserve funds for asset management.

15. Capital Reserve Fund Management:

    • All capital reserve funds were in a healthy position, with no deficits. This was seen as a positive sign of financial stability.

    • The council also focused on cleaning up the Works in Progress (WIP) list to make it more user-friendly and reflective of current priorities.

16. Long-Term Investment and Debt Management:

    • Emphasis was placed on the long-term investment models and the locked-in status of all city debt, which positions the city well in terms of interest rate changes.

    • The city's debt levels are high compared to peers but are part of a strategic decision made post-amalgamation to fund asset management through debt.

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