Today is crunch day at city hall.
City councillors will once again be gathering to discuss the 2020 budget - it’s their fourth and final day of deliberation over a two-week period.
Heading into today's discussions, the projected tax rate sits at just over 4 per cent, but that could go higher or lower.
Last week, councillors spent two days going through the approximately $60-million operating budget.
On Monday, it was the capital budget that was discussed. And once again, city politicians recieved some bad news.
A request for $32,000 to replace flooring at the Orillia Public Library has now ballooned to a need for $270,000.
Treasurer Jim Lang told coucillors that following a regularly-scheduled steam cleaning of carpets, it became obvious "the glue has broken down and deteriorated over time partially due to wear and traffic."
Lang said the carpet tiles now "present a health and safety risk." He also noted the carpet, which has a lifespan of eight to 10 years, is eight years old and no longer covered by warranty.
Staff are leaning toward replacing the carpeting with a "hard surface", such as vinyl flooring, but no final decision has been made. The $270,000 includes $30,000 to move the books and shelves during the installation.
Fortunately, council did begin putting funds into a major facilities capital maintenance reserve, so the money can come from that - not from the tax levy.
It's the second straight week of budget talks that began with bad news. Last week, council learned the new contract for waste collection was $1 million higher than expected - a $500,000 hit in both the 2020 and 2021 budget years.
During eight hours of deliberations Monday, politicians went through the 76 capital projects recommended for approval by staff - item by item - and asked questions.
The 76 projects have a total price tag of almost $27 million. However, only about $1.5 million of that total impacts the tax levy - how much you pay for taxes. The remainder of funding for those capital projects comes, primarily, from various reserves.
In the end, as expected, each of those was approved, although no decisions are yet final.
Then, councillors began wading through 15 other projects that were not deemed top priorities by staff. These have a total price tag of $7.75 million and could be funded through reserves, debentures or the capital tax levy.
Treasurer Jim Lang says the city’s total capital tax levy for 2020 is $1,950,000. That means heading into today, there is only about $450,000 available in the capital tax levy. Anything over that would cause taxes to rise - unless the projects are funded by reserves or debentures.
So, today, as council ponders those “discretionary” projects - such as the $3.18 million skate trail at Centennial Park - they will have to be wary of the appetite in the community to raise taxes.
The other key part of the picture comes into focus when council, also Tuesday, decides how much money to put in its reserves, many of which have become depleted and have large negative balances due to large-scale capital projects in recent years.
Council could go against the wishes of staff and opt to put less money into reserves to bring the tax rate down.
Councillors are also trying to be creative.
On Monday, Coun. Ted Emond suggested the city, essentially, go into debt to fund the $2.4 million upgrade of the city’s 3,200 street lights to LED technology.
“This is a perfect opportunity to borrow money externally,” said Emond, who noted the project’s payoff period - staff predict expected savings will pay back the cost over six years - can be married to the term of the debt.
Lang said Infrastructure Ontario, which would loan the city money for the project, currently charges 2.4% interest; he estimated the city would pay approximately $58,000 in annual interest payments over the duration of the loan.
“To my way of thinking, debt is not inherently bad,” said Emond, adding such a strategy would allow the city to complete an important project while “mitigating” the impact on taxpayers this year.
Here’s some of the highlights of projects councillors supported Monday as part of its capital budget deliberations:
- $9.5 million for second phase of Front Street reconstruction;
- $3.4 million to cap four disused ‘cells’ at waste diversion site;
- $2.8 million for expansion of Horne Business Park;
- $1 million for design and reconstruction of Bleeker Street;
- $240,000 to replace playground equipment at Victoria Park and West Ridge Park;
- $200,000 for upgrades to Rotary Aqua Theatre;
- $90,000 for three new transit shelters and bike racks for buses;
- $200,000 for smart pay transit fare system;
- $720,000 for road resurfacing;
- $459,000 for sidewalk replacement;
- $350,000 for two digital Highway 11 Gateway signs;
- $70,000 for a citizen self-service web portal; and
- $200,000 for brick and window repairs at the Orillia Museum of Art & History
It should be noted some councillors suggested they hope to raise the amount of money devoted to roads and sidewalks when deliberations resume today.
All decisions made during budget deliberations are subject to ratification at a special meeting of council Dec. 9.
Watch for more stories about some of these and other capital projects in the days to come.