Notes from First 2019 Budget Meeting

Council has now had their first public Budget meeting for 2019 and although the gallery had only one citizen and there was only one media person (me), it was an interesting session.  Maybe a good number were watching online since the sound now works well (as of 10:30 am Feb 6, there were 55 views). This first meeting reviewed budget requests from General Government Services, Planning and Development and Economic Development departments.  The goal for the budget increase for 2019 has been set at 2% – that compares to the recent 2.3% increase approved by the County.  The meeting format was per Committee of the Whole rules so a Q & A Forum was allowed but no-one took advantage of it.  There were no decisions made at the meeting but a number of things were “announced”.

Mayor John Henderson
Mayor John Henderson

A good part of the increase will go to salaries since non-union employees were given a 1.9% increase.

General Government Services

Includes costs of Council itself, Finance, Clerks, Communication and IT departments.

  • Mayor John Henderson wants $20K for “Citizen Engagement” – that’s $10K for software for online engagement and $10K for a monthly newsletter.
  • An extra person will be hired in the communications department
  • The IT department is concerned about the possibility of a hack – e.g. someone holding the town to ransom as has happened at other Ontario municipalities (e.g. Wasaga Beach and Midland last fall). $75K is wanted to spend on a package to hopefully prevent such a thing.  John Henderson spoke in favour of the IT department preparing a strategic plan (finally) after such a thing had been denied in budget planning for the last 4 years.
  • A new IP (Internet) based phone system is proposed for the Town which would save $4K/month but cost $80,000.  It would also provide improved features.
  • The roof for Dressler House needs replacing and to restore the existing roof would cost $100K.  This building has Heritage designation so should stay owned by the Town although any action may have to wait for completion of the Cultural plan.
  • The Victoria Square project is still on hold pending grants.  The cost would be $1.5M with $500K coming from each of the Town, Province and Federal Governments.  So far the Federal contribution has been least forthcoming and with an election this year, a grant from them is not expected this year.

Planning and Development Services

  • The long postponed Zoning By-Law review is now proceeding.
  • Per the Heritage Master Plan recommendation 1c, a new Heritage District is being planned for implementation over the next 3 years.  Described as “Corktown, John St., Walton St., Henry St.”
  • Once again $150K would be allocated for the Community Improvement program (C.I.P.)
  • The Building permits department is self-sustaining – fees equal or exceed their $410K budget.  In 2018, income was $734K due to the TVM development on Hibernia and ongoing work by FSD Pharma (the Cannabis company at the old Kraft plant).  Fees exceeding the budget go into a reserve to fund years with a shortfall.

Economic Development Services

  • With Economic Development Officer Wendy Gibson retiring early in 2019, CAO Stephen Peacock asked that in their Strategic Planning Exercise on Feb 12 and 13, Council should decide on the direction that Economic Development should take. This will determine what to do about a replacement for Wendy.
  • The net cost to the Town of the Venture 13 initiative in 2019 will be $197K
  • Miriam Mutton recently asked Council to improve signage for Venture 13; Stephen Peacock said she was “absolutely correct” and money is in the budget to correct this (offset by a Federal grant).

Chair Suzanne Séguin commented that because a new Strategic Plan could impact actions in 2019, the budget will not be completed until after the Strategic Planning Session.

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Doug Weldon

There are many studies that indicate the best dollar we spend is our tax dollar. Just imagine if you hired someone to plow the road in front of your house. That contractor would probably want half of your tax dollars. Then hire some one to take your garbage away, fix a broken watermain coming to your house. We wouldn’t have any parks or community centers if we relied on the ‘small’ amount most of us pay the municipality. The same generally applies to Provincial and Federal taxes. We would never pay our debts for the hospitals we are born in, the schools we were educated in and on and on to the old age homes and hospitals we die in.How could any of us pay our share for all the roads we drive on? Airports we fly out of? Police? Military? I will have to work to about 150 years old to pay all my health bills. I’ve had major repairs along the way that have cost more than I could ever afford. I am not saying we should not be vigilant in our overview of governments and taxes … just that we should ALL probably spend a little more… Read more »

Ken Strauss

We would never pay our debts for the hospitals we are born in, the schools we were educated in and on and on to the old age homes and hospitals we die in.

I will have to work to about 150 years old to pay all my health bills. I’ve had major repairs along the way that have cost more than I could ever afford.

If you are typical then how does spreading your expenses over all taxpayers make the expenses affordable?

Ben

” The goal for the budget increase for 2019 has been set at 2% ”

Is this after the increase in Assessment has been factored in. If that is the case then the actual spending increase will be nearer 5%. We should capture the Assessment increase and hold the actual rise at 0% and we can still get a 2% increase!

Suzanne Seguin

The 2% goal is before any assessment for growth.

Ben

Good, if you are successful then we can expect a 0% tax increase – never seen that in Cobourg since I have been living here!

manfred s

Ben, setting a limit on expense increase through the budgeting process is relatively straight forward BUT not so for the revenue side. Simply applying a percentage makes the assumption that revenue from external sources not under the control of the town will also be subject to the percentage increase being anticipated. That is a risky strategy in today’s climate. Property taxes are a big question mark until that external revenue is confirmed and hence, even in your scenario, Ben, taxes are just as likely to go up as stay where they are.

Ben

Manfred, budgeting is basically an estimating exercise. I can remember one year, when we only needed a few thousand to break even on the estimates we lowered the estimate for Municipal Insurance – problem solved. Of course when the actual bill came in we never heard about it. But we did balance the budget!

Frenchy

Just to be clear, if you are successful at holding spending increases at 2% and if the assessment increase comes in at 2 or 3%, we can expect a 0% increase in our taxes. Right?

Ken Strauss

The result depends on the cause of the 3% assessment increase. Cobourg’s population has grown by about 1% a year over the last 5 years. Most of the 3% assessment growth will probably come from increases in the MPAC assessment of existing homes. In that case the taxes of current residents will increase.

Walter L. Luedtke

Exactly, Ken.
We have taxes on income and taxes on spending.
Property taxes tax ‘wealth’.
The more valuable your property, the more you pay.

Ben

Not necessarily true Ken, the Town could always lower the assessment rate to capture the assessment increase and thus no tax increase.

Ken Strauss

They cannot both reduce the mill rate *AND* garner the expected revenue increase due to increases in valuation.

manfred s

and round and round we go …again. It seems the discussion hinges on the several meanings of the word ‘assessment’.
MPAC assessments redistribute the tax loading, they do not increase the overall tax to be collected, as far as I know anyway. The total tax to be collected is determined by the expenditures as they are estimated, ergo, the budgeting process. If you add new properties, the MPAC assessments, or values, of existing properties are not affected BUT the mill rate applied to them IS. Budgeted expenditures and the total value of assessments determines the mill rate. It’s the combined affect of mill rate and total assessed properties that results in the individual property tax Bill’s. Saying that “increases in the MPAC assessment of existing homes….taxes of current residents will increase” is unsupported.

Ken Strauss

My use of “assessment” was intended to mean the property valuations as determined by MPAC. There are two aspects to changes in the total MPAC assessment for Cobourg: people move to Cobourg and buy recently constructed houses and existing houses are deemed have increased in value due to inflation. If the housing stock in Cobourg were to increase by 3% due solely to newly built homes and older places maintained a constant value then you are correct. However, if the increase in total assessment resulted from both factors then “increases in the MPAC assessment of existing homes….taxes of current residents will increase” is certainly supported.

manfred s

Ken, I still disagree. You could double or triple the MPAC ‘assessment’ value across the board and that still would not change the total tax to be collected. If you increase the number of contributors (tax payers), you get a decrease in individual tax bills. If, on the other hand, you increase spending, you then get a change in taxes to be collected and depending on the number of taxpayers and the change in expenditures, you would see a decrease or increase in individual tax bills. The MPAC assessments would distribute that change over the tax base according to the valuations of all the contributing properties. So, imho, that original statement is still not supported.

Ben

“Ken, I still disagree. You could double or triple the MPAC ‘assessment’ value across the board and that still would not change the total tax to be collected.”

It will if you don’t change the multiplier tax rate!

We have an increase in MPAC value; in order to maintain the existing tax rate the multiplier has to be reduced. It usually isn’t, thus we get a captured tax increase, that Council proceeds to spend. Council should be honest calculate the MPAC increase value, express it as a percentage and all would know the tax increase without a reduced multiplier. Because if we don’t adjust the budget to the ‘capture’ then we wrap it in and 2% increase is actually 2% plus the capture.

The only way to stop this overspending is to keep the budget to a zero increase and use the MCAP capture as it is intended – to enrich the taxpayers due to continued growth and property values.

manfred s

BUT the amount of tax to be collected is whatever is required to cover the expenditures (estimated through the budgeting process), nothing more and nothing less, if we adhere to the rules that I think are in place (no deficit financing by municipalities) Ben. How that amount set by the budget is apportioned among the taxpayers is a separate issue. If we budget for no additional spending, the total amount of taxes to be collected does not change (unless we also want to set aside for future use, more, or less ((haha)), than we did the previous year). In this scenario, individual tax bill’s will only change if the assessed value of a property changes, BUT, those changes would be reflected by increases and decreases netting out at a zero total overall. It’s like cutting up a pie (total taxes to be collected as described above), if the size of the pie doesn’t change and the number of pieces to be cut (taxpayers) doesn’t change, no matter how you cut it, the only thing that changes is the size of the pieces (individual tax bills) and those sizes are determined by applying a valuation process (mill rate) to the properties.… Read more »

Walter L. Luedtke

Great to see FSD Pharma’s permit fees flowing into Town coffers.
FSD Pharma is pondering partnership with SolarvestBioEmergy LTD. in its quest to transform its current headquarters in the Kraft plant in Cobourg, Ontario into the largest hydroponic indoor grow facility in the world.
More on Solarvest here: http://www.solarvest.ca/

Mrs. Anonymous

Very happy to see the town showing some concern about the real issues around cybersecurity.

I’m curious. What is the reasoning for requesting another person for the communications department?

Ben

Rugranking, a person becomes a Supervisor – higher pay grade, if they have subordinate!!