North Grenville municipal staff presented a draft budget to council last week which included a zero per cent tax increase. Director of Finance, Brad Brookman, gave council a high-level overview of both the suggested operating and capital budgets at the council meeting of January 12. He also explained the budget process, which will include community outreach and consultation.
The proposed 2021 budget was developed in recognition of not only municipal service level and capital investment, but also taking into account the COVID-19 pandemic and its effect on the broader community. According to the report prepared by Director Brookman, early steps were taken by council and staff in 2020 to prepare for a year of uncertainty and financial hardship. This proactive approach included the delay of certain capital projects and the creation of the municipality’s COVID-19 Response Reserve, which helped the municipality prepare for costs and losses associated with the pandemic.
The municipality also received $436,000 from phase one of the COVID-19 relief funding from the province, and $987,000 in phase two funding, most of which has already been spent to cover the costs and losses of COVID-19.
“Despite all the steps we’ve taken, the costs of COVID on this municipality have resulted in it being necessary for us to use those funds,” Director Brookman said. “I just want to make sure that it’s clear that it’s a side to our budgeting process. It certainly is going to help us in terms of our fiscal management, but it’s not a significant point for us.”
This year, staff continues to focus on the modernization of municipal operations. Director Brookman explained this year’s operating budget as a “transitional document”, which they are going to use to modernize the municipality and reset things in terms of municipality operations. “The realignment of the budget and the associated reporting documents are meant to significantly increase the administrative and fiscal transparency and accountability of the organization. And you’re going to see that, both through the budget process, and through future reporting.”
The proposed operating budget for 2021 is $22.5 million, which is an increase of $700,000 over last year. Municipal salaries and benefits take up a large chunk of the budget, with costs sitting at $8.3 million, which is $1.3 million more than the budget for 2020. Director Brookman said this is due to the hiring of new staff needed to be able to execute and provide the service level that is necessary for the municipality, as well as cost of living increases, changes in titles and roles, staff moving up the wage grid, and some increases in benefits and premiums.
“It looks like a big increase, but really it’s part of that modernization. It’s about bringing us up to speed, getting the right people in the right roles, and making sure that we’re able to provide the service that is necessary for the municipality to operate effectively and efficiently.”
Other significant items in the proposed operating budget include contract services- waste management, roads, insurance, software/IT ($4.9 million – $500,000 increase), the police services contract ($2.4 million – no change), program materials and supplies ($900,000 – $200,000 decrease), transfers to reserve funds ($2.5 million – $1.2 million decrease), external transfers – North Grenville Library grant, community budget requests, RVCA, accessible transit, Kemptville District Hospital ($1.2 million – $300,000 increase) and utilities ($700,000 – no change).
The greater part of the revenue for the operating budget will come from taxation, with the rest coming from user fees and charges, grants and government transfers, fines, penalties and interest, investment income, and other revenues like lease agreements. Staff have been taking into consideration the potential impact of COVID-19 on the municipality’s finances for 2021, and will use anything left from the COVID-19 government funding to help recover any costs and/or losses.
The proposed capital budget includes many of the projects that were put on hold last year due to COVID-19. This means that the draft capital budget is sitting at $9.9 million, which is an increase of $1.8 million over last year. “A lot of that is driven by capital projects that were halted, either consciously by council in preparation for COVID, or we had some budgetary concerns, because some of the costs that came in for what we were expecting to move forward with were well in excess of what we were prepared to accept,” Director Brookman said.
A large chunk of the capital budget is scheduled to be spent on roads (about $4.7 million), which includes the municipality’s portion of the redevelopment of County Road 43 and the rehabilitation of Wellington Road, which was a project that was deferred from last year due to cost. Other capital projects include parkland rehabilitation ($700,000), fleet and equipment ($600,000), buildings ($400,000), streetlights ($200,000), parks ($100,000), sidewalks ($100,000), other capital projects ($200,000) and more carry-over projects from last year ($2.9 million).
As part of municipal modernization, staff will also be looking at creating a multi-year plan for capital projects, to improve management and ensure projects are properly funded. “We’re going to create a new capital planning process, and that will be introduced and presented to council in 2021,” Director Brookman said.
The water/wastewater system will continue to operate on a user-pay system in 2021, as set out by legislation. The municipality is currently in the planning stage for the much-needed expansion of the wastewater treatment plant, which is set to occur over multiple years. The cost to the municipality for this year will be $2.6 million, which is eligible to be funded through development charges. However, the municipality will have to secure alternate funding through debt servicing to pay for the entire project. There will also be a $500,000 impact on the water/wastewater budget this year, due to the County Road 43 expansion.
Even with the significant capital expenditures on the books, and another uncertain year in terms of municipal revenues, Director Brookman says a zero per cent tax increase will not negatively impact the municipality. “It’s not going to require inflated tax increases in future years,” he said. “It’s there to allow us to increase our strategic use of our existing financial reserve balances. That’s why we’re aiming for a zero per cent increase. It’s going to improve the economic stability of the municipality, allow us to continue operations in this municipality, and allow us to continue with growth and investment in 2021, despite the challenges we are going to be facing.”
Staff will now be looking at engaging community stakeholders and residents in the budget process. They will be holding two public engagement sessions on January 27 and 28. The budget will come back to council on February 2 for further discussion and approval. “This is a very high-level glance at the budget as it’s been developed to date,” Mayor Peckford said at the meeting. “The guidance provided by both the community and council in the forthcoming weeks will shape the ultimate budget.”