Council spends like a drunken sailor, Butland gets bored

It took just 107 minutes last night for Sault Ste. Marie City Council to spend $128.4 million of your money.

By our ciphering, that adds up to more than a million bucks a minute.

Or, if you wish, a cool $20,000 every second.

Budget night

It was Council's annual budget night, but it didn't set a record for high-speed draining of the public purse.

City staff recall another meeting, something like eight years ago, at which the budget was decided in just 45 minutes.

The bottom line is a 2.72 percent hike in the urban residential tax rate.

Ward 2 Councillor Terry Sheehan called it a "good news" budget.

Ward 1 Councillor Steve Butland termed it a "boring" budget, which he said means it's also a "good" budget.

How, in real-dollar terms, will this budget affect the average homeowner?

What you'll pay

Under recent reassessment, 70 percent of residential properties experienced no change or a reduction in assessement.

The average assessment decline was $2,750.

That homeowner will get a tax bill that's $4.19 (0.23 percent) less than last year.

A typical property owner who had no assessment reduction will find $50.12 (2.72 percent) added to this year's tax bill.

A ratepayer whose assessment went up five percent will experience a $144.92 (7.85 percent) tax hike.

Any property whose assessment went down by 2.85 percent will get a corresponding decrease in property taxes.

***************************** Joe explains the budget

The following is a four-page summary of this year's City budget prepared by Chief Administrative Officer Joe Fratesi:

We are very pleased to submit to you the 2004 Budget which has been prepared by Bill Freiburger, Commissioner of Finance and Treasurer and Scott McLellan, Manager of Budgets and Revenue. As Council is aware, all City department budgets were to be prepared based on a global allocation approach that has been in use now for several years.

Instructions were given to each department that there would be no increases over the 2003 allocations, save and except for wage increases negotiated in previous years and benefit cost increases.

All of staff were very mindful of the report which was prepared last July for City Council advising of some fairly significant budget increases which would apply automatically going into this year.

These included levies expected to be passed on by outside agencies, reinstatement of full OMERS pension premiums and wage adjustments previously negotiated.

Council was warned that the automatic increases in the budget could result in tax increases of as much as 8%, an amount deemed to be unacceptable by both Council and staff. As we present this budget to City Council, we are aware that other Northern Ontario communities, facing similar negative budgetary issues, have already passed their municipal budgets and settled their tax rates.

It appears that these communities have struggled and cut some services to arrive at tax increases that they believe are both necessary and palatable.

Sudbury has passed a budget with a tax rate increase of about 7%. North Bay ended up just below 7%. Timmins has settled at 6% and at the time of this writing, Thunder Bay was still struggling to get its increase to below 12%.

The global allocation approach to budgeting continues to serve us well in Sault Ste. Marie.

In essence, this approach has driven our organization to the application of best practices and efficiency efforts in providing high levels of service within a fairly static level of budgetary resources.

City departments have again done an excellent job this year in adhering to this approach to the budget and each are thanked for their hard work, cooperation and diligence that has gone into the preparation of this budget.

This current budget process (i.e. global allocation) makes for a more realistic and manageable budget being presented to Council at the outset.

There should be no real surprises for City Council in terms of requests being made as City staff and outside agencies are encouraged to bring forward during the year, any proposals or items that could impact in future years on the budget.

Our budget process in fact is ongoing and is something that Council really is involved in throughout the whole of the year by way of decisions which will have budgetary implications.

As a matter of fact, based on the report that went to Council right after the finalization of the 2003 budget, staff received a very clear message from Council that it was to look for even further efficiencies and cost savings measures prior to the next budget. The budget which has been prepared and presented does contain some components which are indeed beyond Council's control and which significantly impact the end result.

These are highlighted in both the message from the Treasurer, as well as the overview prepared by the Manager of Budgets and Revenue. While there has been a loss in assessment overall, the impact this year is somewhat softer than in the past. The 2004 Budget has a levy increase of about 5.54% which results in a municipal tax rate increase in the urban residential category of about 4.74%.

Based on a recent provincial announcement of a reduced education tax rate, the resultant combined urban residential tax rate increases by 2.72%. For many people who have had the average reduction in their assessment of about 2.8%, municipal taxes will not change. The budget certainly is good news for many who expected either a large tax increase or a significant cut in municipal services.

The 4.74% rate increase compared to Sudbury's rate of 7% or North Bay's rate of almost 7%, or Timmin's rate of 6% is especially a good outcome in that services have not needed to be pared back, nor has the capital work earlier discussed by Council, been required to be significantly reduced.

Council will note that while a one-time CRF grant reserve has been applied to assist in this year's budget, the City continues to wean itself off of reliance on reserves or previous year's surpluses to arrive at an acceptable tax rate.

These actions are in keeping with the longer term financial plan which was recommended by the Treasurer some years ago and which drew positive comments from the City's bond raters in our recent rating reports. We believe that the tax rate increase, which will be about 2.72% for urban residential taxpayers, is very respectable in the circumstances and certainly is recommended for Council's consideration. Turning to the surplus from the 2003 Budget, the year-end audit indicates a surplus of almost $2.3 million.

The Treasurer has recommended that $200,000 of this be used in the 2004 Budget and that just under $400,000 be used to satisfy the last payment to the Algoma District Homes for the Aged as operating levy.

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