Ratepayers’ Comments on Draft 2023 Budget – Reserves
Thursday, January 19th, 2023
Comments for Special Council to Receive Public Input
Re: Draft 2023 Budget – Reserves
Good evening your worship and councillors.
My name is Doug Bryden. My address is Tondern Island, Beaumaris, Ontario. I am commenting on the Reserves and historical spending trends as outlined in the Draft 2023 TML Budget on behalf of the Muskoka Ratepayers’ Association.
In 2014 the Township consumed 16 cents of every taxpayer dollar, in 2020 it was 20 cents and this year, it is proposed to be 22 cents. The MRA finds this ten year trend to be very disturbing.
The MRA for over a decade has repeatedly expressed alarm that the TML has inadequate Unrestricted Reserves to properly maintain our current infrastructure and allow a cushion for catastrophes. However, the MRA also believes that taxpayers today should shoulder current costs of running our municipality and not be taxed to squirrel away monies that will benefit future taxpayers.
Council in 2017 and 2018 increased the levy by 5% in both years specifically to bolster TML Reserves. This proactive action for 2 years should have continued to provide around one million dollars in each subsequent year to augment Unrestricted Reserves. Unfortunately, tax rates for the past 4 years have been suppressed, cannibalizing monies that were intended for reserves. So today , the TML’s Unrestricted Reserves to operating expenses ratio still sits well below the average of all municipalities and what the province deems appropriate.
The MRA must reiterate our comment from the 2022 Budget. As a minimum we want to see in the 2023 Budget, the actual year ending reserves for 2021, the 2022 Budgeted reserves as well as the 2022 end of year forecast. This has been provided for the Operating Budget and we believe it is an absolute must for both Reserves and Capital. If there is not adequate space on the spread sheet then the guestimates for the last 6 years can be converted to 3 biannual columns.
In prior years, reserves were expressed in current year dollars. Future projections of funds in and out of reserves and capital requirements were done in constant dollars for that budget year.
The MRA believes that accurate and responsible multi-year Capital Budgets and Asset Management Plans are essential to the health and financial vitality of the Township. However, our experience has been that TML forecasting precision and accuracy needs to be significantly improved i.e. in 2017 the Ten Year Capital Requirements were $37 million, in 2019 it was $51 million and this year it is $99 million. If council wants to conduct an interesting exercise the MRA suggests comparing the Capital Forecast by line item for the year 2028, in both the 2019 and 2023 Budgets. The expenditures of $ 3.24 million and $7.31 million respectively, as well as the capital projects listed provide a glimpse of this problem and the MRA’s frustration.
The Director of Finance Mark Donaldson has assumed a 6% inflation rate in each of the next 9 years for capital expenditures and hence reserve requirements. The MRA believes this is a major departure from the constant dollar costing model of the past and is unrealistic going forward. The vagaries of TML capital forecasting history, especially going past three years, with unknown rates of inflation, exchange rates, labour rates etc. provides minimal value and introduce huge errors to any forecasting model.
Our last point is concern regarding Mayor Kelley’s comment during your budget deliberations which was to reduce contributions to Reserves in order to reduce the levy for 2023. Council needs to run a fiscally responsible ship. It is grossly unfair to give current taxpayers tax holidays, while expecting future taxpayers to pick up the tab.
If reducing the levy is this council’s primary objective, the MRA suggests eliminating capital and operating expenses and not just postponing them.
Thank you for letting the MRA provide our comments on the reserve portion of this year’s budget.
The Muskoka Ratepayers’ Association Board of Directors
For our comments on the 2023 Draft Operating Budget – Click Here
For our comments on the 2023 Draft Capital Reserves – Click Here