Date: January 30, 2021
MRA – Comments on The Township of Muskoka Lakes 2021 Operating Budget & 2022 and 2023 Operating Forecasts
The MRA would like to thank Treasurer Donaldson, staff and Council for their early presentation of the 2021 Operating Budget and the operating forecasts for 2022 and 2023. This multi year approach to forecasting the operating expenses for the Township is much appreciated. It provides taxpayers with some level of assurance that longer term integrated financial planning has been considered at both the Capital and now the Operational level in our Township. MRA assumes that forecasts for 2022 and 2023 are done on the basis of 2021 dollars and inflationary increases will be incorporated as the forecasts morph into budgets?
The MRA understands the Township’s desire to finalize a budget early in the calendar year, however we find several holes in the process that make it difficult to provide real constructive recommendations or comments. For example, we believe as presented there is probably a one to two million dollar gap in funding the capital budget. This will no doubt impact the operating budget and levy – more on this later. Staff has also made several suggestions to committee for extra spends, that if all implemented could have a huge impact on taxes going forward. MRA also believes it is unreasonable to expect any citizen or group to provide meaningful input at a public meeting, just three days after committee meets to consider many of these items. This is not the type of meaningful engagement the MRA would expect.
The MRA is not going to comment on every line item in the Operating Budget and Forecast, but we would like to provide some high level suggestions and comments for staff and Council to consider going forward:
- Council has allocated $3.5 million in the 2021 Operating Budget for capital projects. This leaves a shortfall of $3.3 million to balance a $6.8 million dollar capital requirement. As stated in the Budget Presentation, funding this gap is yet to be determined. It is hard to comment on the unknown.
While grants from upper levels of government can be spotty, however if past history is repeated, $ 1.8 million of the gap can be filled from grants. That still leaves about $1.5 million to come from reserves, the levy or financing. The MRA does not recommend further depleting reserves that are currently below Ontario Government guidelines, and even worse, 40% of the reserves are restricted. This leaves the option of a ten plus percent further increase on the levy, financing or reducing the spend. Looking at the ten year capital needs it would appear prudent to start realistically covering the actual costs of running our Township – two percent tax increases no matter how you slice it won’t deliver on the Strategic Plan Council has set.
- The MRA looked at “The Nice to Have List – if the Taxpayers have a Few Spare Bucks” with alarm. If all the recommendations were adopted the levy for 2021 would increase 2.5 percent and another 0.5% the following year. This excludes any contributions to MAHC, however at some point Muskoka Lakes will probably be required to fund new hospitals, but at this juncture it is not an immanent expenditure. The MRA based on comments from councillors and citizens concedes that some increase in by-law enforcement is required. However, we believe this could best done at least cost with two summer seasonal employees, rather than one full time enforcement officer, because most of the demand for enforcement is generated by summer noise and parking complaints.
- Insurance premium escalation is a huge concern to the MRA. The 2021 insurance premium without deductibles is $950,000 per annum or about 8% of the total levy. Over the past three budget cycles this has jumped about 50%. By way of comparison the District of Muskoka last year paid less than $800,000 and this year the Lake of Bays is paying $210,000. The MRA realizes joint and several liability and a reduction in insurers is driving many increases, however it does not explain the huge disparity above. The MRA was very disappointed this past Spring where in a ZOOM call with your insurance broker – BFL, not one councillor or the mayor raised a single question on what our Township needs to do to control these spiralling costs.
The MRA believes the large disparity in premiums for liability and errors and omissions insurance can only be attributed to the claims experience and payouts. MRA believes it behoves this Council to review the claims history, analyze the risks and start to mitigate the causes. We also believe that some of Council’s decisions have been ill advised and fanciful rather than realistic, thus further driving up claims and potential claims. In the current hard insurance market, the MRA is very concerned that the Township with this current track record, might become uninsurable and obligated to self fund all liabilities. repercussions on taxpayers could be horrific.
The MRA is very pleased that the 2021 Operating Budget also contains operating forecasts for 2022 and 2023. Council and staff are to be complimented for this improvement. Thank you for this opportunity to allow the MRA to present our comments.
Don Furniss Doug Bryden Peter Long
Director Director Director