Kincardine scraps proposed 8.7-per-cent tax-rate increase

By a narrow 5-4 recorded vote, Kincardine council has decided to scrap its proposed 8.7-per-cent tax increase and is going back to the drawing board on the 2015 budget.

 

In committee-of-the-whole last night (Jan. 26), council spent an excessive amount of time debating the capital budget, only to dispense with most of the projects in order to hammer out the 8.7-per-cent increase.

Treasurer Roxana Baumann urged council to give proper consideration to the Asset Management Plan which should have as high a priority as other items in the budget.

Baumann noted the following updates since the last budget meeting Jan. 12:

• $6,000 included for Lake Street winter maintenance costs

• $17,000 reduction in revenue from Huron-Kinloss for physician recruitment and health services support

• Funding of the $1.5-million shoreline pipeline debt from the health care reserve fund (no tax rate impact)

With these changes, the proposed tax-rate increase was 8.55 per cent, said Baumann.

She stressed the need to put aside more money for the municipality's aging infrastructure, including roads, bridges and storm sewers. Right now, 2016 capital projects total $9.1-million, with total reserve funds available of $1.7-million, leaving a shortfall of $7.4-million, she said. This excludes water and wastewater projects.

Council has the option of a 1.5-per-cent or three-per-cent solution, said Baumann.

The three-per-cent solution would see the following:

• Allocate all future hosting payments for the Deep Geologic Repository (DGR) for low- and intermediate-level nuclear waste at the Bruce site, to the lifecycle fund beginning next year
• Increase the tax rate by three per cent each year for the next 10 years, and dedicate these funds entirely to the lifecycle reserve fund
• Provide funding for ALL assets, including infrastructure, fleet, equipment, buildings, landfill, airport, cemeteries, etc.
• 2015 reserve fund contribution would be $1.08-million

The 1.5-per-cent solution would see the following:

• Allocate all future DGR hosting payments to the lifecycle reserve fund beginning in 2016
• Increase the tax rate by 1.5 per cent each year for the next 10 years, and dedicate these funds entirely to the lifecycle reserve fund
• Provide funding for core infrastructure only: roads, bridges, culverts and storm sewers
• 2015 reserve fund contribution would be $930,000

Baumann said the full three-per-cent allocation for the Asset Management Plan was included in the 8.55-per-cent tax-rate increase. She also noted that there is no guarantee that Huron-Kinloss will pay the $17,000 for physician recruitment.

When asked how other centres are dealing with asset management, Baumann said the biggest struggle is convincing councils that asset management is important. “Big centres are dealing with this as well, phasing in the Asset Management Plan increase.”

Councillor Randy Roppel said there is no way that Kincardine can afford to put aside the funds required for asset management, and complete all the required capital projects.

Baumann clarified that putting money into the lifecycle reserve fund doesn't mean it disappears for the next 10 years. That money can be used for the capital works, as required, she said.

Council then discussed several other capital projects and initiatives, such as the Inverhuron Pavilion, the Whitney Crawford Community Centre, the traffic engineering study at the Davidson Centre parking lot, rehabilitation of the Kincardine tennis courts, Phase 2 renovations at the arts centre, the airport runway, and trail development along the B-line (Bruce County Road 23).

During discussion of the arts centre project, chief administrative officer Murray Clarke said that money from the sale of the annex building (north of the arts centre on Queen Street) would be used to off-set the costs. That sale is expected to close at the end of April.

Mayor Anne Eadie explained that if council agreed with the three-per-cent Asset Management Plan option, no capital projects would be added to the current budget. However, if the 1.5-per-cent option is selected, there would be money in the budget to complete the arts centre renovations.

“The past council raised the taxes 28 per cent in four years,” said councillor Gordon Campbell. “I was hoping for a two-per-cent rate increase this year, for a total of 30 per cent over five years.”

Eadie said the municipality has seen too large of a drop in revenue this year to warrant such a low tax increase.

Baumann said if council goes with the 1.5-per-cent option, it would still not have enough in the budget to cover the arts centre renovations.

“But we will have the money from the sale of the annex,” said councillor Maureen Couture, “plus there is about $600,000 in the development agreement with Samsung-Pattern (Armow Wind). I really want to see the arts centre project completed.”

Baumann clarified that an eight-per-cent increase in taxes equates to $104 in the municipal portion for the average residential assessment of $250,000. An 8.7-per-cent increase would equal $113.

“So, the cost to fix up that building is about $9-$11 per person,” said councillor Jacqueline Faubert.

Following a break, council attempted to determine whether it wanted to go with the 1.5-per-cent or three-per-cent option for asset management.

A motion was then proposed for an overall 8.7-per-cent tax increase in the 2015 budget, which was defeated, 5-4. In the recorded vote, those in favour were Couture, Faubert, Eadie and councillor Andrew White; against, were Campbell, Roppel, and councillors Laura Haight, Mike Leggett and Linda McKee.

From there, the discussion deteriorated as councillors argued about whether they should have a four-per-cent tax-rate increase or seven per cent or two per cent.

“Why don't we just close the swimming pool and save half-a-million dollars?” said Couture.

“We need suggestions if council wants to cut the budget,” said Eadie.

“There's nothing in capital to cut, so we would be looking at services,” said Leggett.

Haight reminded council that an eight-per-cent tax-rate increase is only $108 for the municipal portion which is about $9 per month.

“It's easy to say you want a four- to five-per-cent increase,” she said, “but what do you want to cut? How are you going to get to that four per cent?”

“It isn't me I'm worried about,” said Roppel. “It's the people I represent. An 8.7-per-cent increase is going to be a hardship on a lot of people, once you add in the Bruce County levy and the education tax.”

“So, what do you want to cut?” asked Haight again.

“Look at staff,” said Roppel. “Send this back to management and bring back a four-per-cent increase.”

Clarke said staff has already cut the budget, and reduced spending in all departments by a total of about $1-million. “If you want to reduce the operating budget, you're looking at people – who do not you not want working for us anymore?”

He said Kincardine inherited a legacy of using windfall money to off-set expenses. “We are obligated to maintain sidewalks to a minimum standard. When we went through the IOR (internal organizational review), we agreed there would be no layoffs in the municipality. The net cost to add a second mechanic is $30,000.”

Eadie said council should think about suggestions for reducing the tax-rate increase and give those ideas to staff and the policy chairpersons, to bring back at another budget meeting.

Back in council session, more ideas were tossed about until Eadie called a halt to the discussion.

On a final note, Couture said that Kincardine is getting hit hard every year with reductions in revenue, and it's not going to get any better. “I'm devastated that we're not putting money into capital projects. And we're not going to get anywhere by beating the operational budget to death.”
 

Council will debate the budget again at a future meeting.