City of Niagara Falls 2021 Tax Supported Operating Budget

February 9, 2021

City of Niagara Falls2021 Tax Supported Operating Budget

A GREAT CITY…FOR GENERATIONS TO COME

Introduction

1. Review revised 2021 Tax Supported Operating Budget

– Council was introduced to a rough draft January 19, 2021 through report F-2021-10 for discussion purposes only.

– Staff have since made some corrections and changes to mitigate the COVID impact.

2. Review various options for Council consideration to further mitigate the COVID impact and other increases.

3. Recommendation for Approval


Operating Budget Status at February 9, 2021

Draft as at Jan. 19/21

As at Feb. 9/20

Variance ($)

Proposed Revenues 128,811,187 125,836,987 (2,974,200)

Proposed Expenses 132,668,320 128,503,595 (4,164,725)

Proposed Deficit (3,857,133) (2,666,608) 1,190,525

Impact on average household* = $51.65/year or $4.30/month

Net levy increase after growth to balance budget = 3.67%

*Average household = $279,854 (no reassessment in 2021)


Adjustments made after January 19, 2021

Revenue ExpensesSurplus/(Deficit)

As at Jan. 19, 2021 128,811,187 132,668,320 (3,857,133)

Reduction in Curling Club lease (7,100) 7,100

Removal of YMCA Pool Rental (11,000) 11,000

Adjustments to Insurance (29,725) 29,725

Reduction in hosting fee (30,000) 30,000

Fee for Service corrections per Agreements

(3,252) 3,252

Casino revenue and reserve revisions (2,730,000) (2,730,000) 0

Policing contract services and reserve revisions

(1,575,000) (1,575,000) 0

Prov. Gas Tax Funding re: Transit 1,365,600 1,365,600

Small Business BIA Grant 27,500 27,500

YMCA Impact re: MacBain (62,300) 221,352 (283,652)

Total 125,836,987 128,503,595 (2,666,608)


OLG Revised Estimates – Revenue

As at January 19, 2021• Assumed Opening Date: April 1, 2021

• Assumed Revenue*: $8,625,000 ($23,000,000 * 9/12 months * 50%)

*Assumes: $0 for January through March and 50% for April through December

Revised estimates February 9, 2021• Assumed Opening Date: September 1, 2021

• Assumed Revenue*: $3,830,000 ($23,000,000 * 4/12 * 50%)

• Current Tax Subsidy: $5,895,000 Est. Funding Deficit: ($2,065,000)

• Mitigation: Council has already mitigated by only committing $2,147,968

of the $4,200,000 transfer to capital included in the budget thus leaving

buffer room of $2,052,032.

*Assumes: $0 for January through August and 50% for September through December

Jan. 19, 2021 – Council asked staff to review casino estimates and have a contingency plan if no OLG funds are received in 2021.


OLG Funding History

Spending allocations approved by Council and reported annually.

7 year spending history - June 23, 2020 meeting (F-2020-24)

Property Tax Relief

Future Hospital

Debt Avoidance/Capital Investments

Economic Development

Policing

OLG contribution agreement effective April 1, 2013

Council established priorities to use funding:

Presently tax subsidy of $5,895,000 = 8.12% levy impact


OLG Revised Estimates – Policing

OLG Funds For Casino Policing

As at January 19, 2021

• Assumed Opening Date: April 1, 2021

• Assumed Expense*: $1,575,000 ($4,200,000 * 9/12 months * 50%)

• Approximate OLG Funding Level: 18%

*Assumes: $0 for January through March and 50% for April through December

Revised estimates February 9, 2021

• Assumed Opening Date: September 1, 2021

• Assumed Expense: $0

• Mitigation: All amounts for casino policing have been removed as staff

is anticipating an OLG funding deficit for the tax subsidy built into the tax

supported operating budget


OLG Revised Estimates - NFRIH

Niagara Falls Ryerson Innovation Hub (NFRIH)Funding Year 3 of 4

As at January 19, 2021• Total Expense*: $770,773

*Cost has never been levied to taxpayers as OLG funding used previously

Revised estimates February 9, 2021• Total Expense: $770,773

• Mitigation*: Staff proposing one-time increase in dividends for both year 3 and year 4 in 2022 from the City’s wholly owned subsidiary Niagara Falls Hydro Holdings Corporation of $770,733. OLG Funding not required for 2021.

• This would continue the practice of not having these costs levied to the taxpayer.

*Current annual dividend $670,600, the $770,733 is in addition to the annual dividend


OLG Revised Estimates – Capital Transfers

OLG Funds For Future Capital Investment

As at January 19, 2021

• Assumed Funding*: $384,227

• Approximate OLG Funding Level: 18%

*Assumes: Amount Remaining From Casino Revenue Budget: $8,625,000 less

$5,895,000 (tax subsidy) less$1,575,000 (policing) less $770,773 (NFRIH)

Revised estimates February 9, 2021

• Assumed Funding: $0

• Mitigation: All amounts have been removed as staff is

anticipating an OLG funding deficit for the tax subsidy built into the

tax supported operating budget


OLG Contingency Plan - Summary

Proposed Plan (using revised estimates):• Revise OLG revenue estimate to $3,830,000 (reduction of $2,065,000)

• Leave tax subsidy budgeted at the $5,895,000 (annual Council approved amount)

Mitigation:

• Estimated funding deficit of $2,065,000 is mitigated by Council’s decision to only commit $2,147,968 of the $4,200,000 transfer to capital (buffer room of $2,052,032).

• I.e. leave the revenue budgeted at $5,895,000 and the transfer budgeted at $4,200,000 knowing the funding deficit and uncommitted capital amount offset.

Worst Case Scenario:• Casino does not open at all in 2021 and the City would need to make up

$3,830,000

• Available reserve balances would cover a portion, but cannot cover it in full.


OLG Tax Subsidy Recommendations

1. Council redefine the OLG priorities to exclude property tax relief.

2. Council commit to a strategy of reducing the OLG tax subsidy by 50% of the new taxation growth each year beginning in 2022.

• For example in 2021 growth represents $923,259. With this strategy the OLG subsidy would be reduced by $462,000.

• Every OLG dollar removed as a tax subsidy will be converted to future capital investment thus aiding long term planning and reducing the growing infrastructure deficit.

• Even with this strategy, depending on the strength of the growth figures annually, it will take over 10 years to fully wean off the OLG funding in the tax supported operating budget.


Operating Budget Comparison - Revenues

2021 2020Increase/ (Decrease)

$ %

Taxation - General 71,409,311 70,486,052 923,259 1.31%

Taxation - Waste Management 7,802,521 7,465,141 337,380 4.52%

Taxation - Other 1,150 11,000 (9,850) (89.55%)

Payment in Lieu of Taxation 7,291,411 7,178,041 113,370 1.58%

Grants 3,472,889 1,607,436 1,865,453 116.05%

Other Municipalities 2,579,424 3,305,500 (726,076) (21.97%)

Casino 5,895,000 23,000,000 (17,105,000) (74.37%)

Licences/Permits/Rents 2,047,569 2,422,567 (374,998) (15.48%)

Service Charges/User Fees/Fines 4,279,106 6,194,605 (1,915,499) (30.92%)

Penalties & Interest 1,710,000 2,010,000 (300,000) (14.93%)

Investment Income/Donations 2,567,373 2,986,600 (419,227) (14.04%)

Sales/Other Revenue 6,992,187 8,799,242 (1,807,055) (20.54%)

Internal Transfers 5,561,014 4,710,289 850,725 18.06%

From Reserves/Reserve Funds 4,228,032 7,285,789 (3,057,757) (41.97%)

Total 125,836,987 147,462,262 (21,625,275) (14.66%)


Operating Budget Comparison - Expenses

2021 2020Increase/ (Decrease)

$ %

Salaries & Wages 51,774,385 51,082,141 692,244 1.36%

Employee Benefits 14,059,640 13,570,178 489,462 3.61%

Overtime 1,087,118 1,120,389 (33,271) (2.97%)

LTD Interest Charges 1,811,311 1,770,519 40,792 2.30%

LTD Principal Payments 3,263,329 3,286,645 (23,316) (0.71%)

Materials 15,187,495 15,906,125 (718,630) (4.52%)

Utilities 3,585,102 3,523,660 61,442 1.74%

Contracted Services 23,765,659 25,910,499 (2,144,840) (8.28%)

Rents & Financials 870,767 932,721 (61,954) (6.64%)

External Transfers 3,607,106 4,986,960 (1,379,854) (27.67%)

To Capital 3,208,371 3,197,189 11,182 0.35%

To Reserves & Reserve Funds 1,558,105 18,104,169 (16,546,064) (91.39%)

Internal Transfers 4,725,207 4,071,067 654,140 16.07%

Total 128,503,595 147,462,262 (18,958,667) (12.86%)


2021 Budget - New Position Requests

Department PositionRecommended

(✔ )

Building Senior Plans Examiner ✔

Mun. Enforcement Officer – 6 month contract ✔

Facilities Technologist

Facilities Plumber

Finance Senior Financial Analyst (turn contract into FTE) ✔

Fire 4 probationary firefighters for Station 7 ✔

Fire Plan Examiner

Emergency Management Program Specialist

Info. Systems Web Services Administrator

Rec & CultureCultural Development Coordinator (turn 24hr/wkcontract ending July 31, 2021 into FTE)

✔

Planning Senior Planner – Policy Planning

Senior Planner – Current Development


Average Household Taxes Comparison to LAMs

Municipality Total Tax Bill City Levy

Port Colborne $ 4,752 $ 2,456

Welland $ 4,478 $ 2,216

Fort Erie $ 4,140 $ 1,897

Thorold $ 4,065 $ 1,850

Wainfleet $ 3,990 $ 1,781

St. Catharines $ 4,008 $ 1,776

Pelham $ 3,654 $ 1,476

Niagara Falls $ 3,605 $ 1,411

Lincoln $ 3,417 $ 1,249

Grimbsy $ 3,291 $ 1,131

West Lincoln $ 3,206 $ 1,034

NOTL $ 2,886 $ 647

Average $ 3,791 $ 1,577

• 2020 tax rates of Local Area Municipalities (LAMs) using Niagara Falls average household assessment of $279,854


Average Commercial Taxes Comparison to LAMs

• 2020 tax rates of Local Area Municipalities (LAMs) using Niagara Falls average commercial assessment of $3,082,042

Municipality Total Tax Bill City Levy

Port Colborne $ 112,813 $ 46,918

Welland $ 107,586 $ 42,334

Fort Erie $ 101,128 $ 36,255

Thorold $ 99,696 $ 35,353

Wainfleet $ 98,265 $ 34,031

St. Catharines $ 98,602 $ 33,931

Pelham $ 91,845 $ 28,202

Niagara Falls $ 90,902 $ 26,951

Lincoln $ 87,316 $ 23,862

Grimsby $ 84,893 $ 21,604

West Lincoln $ 83,281 $ 19,756

NOTL $ 73,662 $ 12,359

Average $ 94,166 $ 30,130


Utility Residential Charges Comparison to LAMs

Municipality 84 m³ (Annual Cost)



Port Colborne $1,161.47 Port Colborne $1,414.19 Fort Erie $1,732.98

Fort Erie $1,093.03 Fort Erie $1,413.01 Welland $1,697.27

NOTL $851.43 Welland $1,230.84 Port Colborne $1,666.92

West Lincoln $793.28 NOTL $1,105.64 West Lincoln $1,387.60

Welland $764.41 West Lincoln $1,090.44 Lincoln $1,368.26

Thorold $741.02 Thorold $1,035.98 NOTL $1,359.86

Niagara Falls $680.17 Lincoln $945.79 Thorold $1,330.93

St. Catharines $584.99 Niagara Falls $894.81 St. Catharines $1,202.68

Pelham $575.03 St. Catharines $893.83 Niagara Falls $1,109.44

Lincoln $523.33 Pelham $819.71 Pelham $1,058.40

Average $776.82 Average $1,084.42 Average $1,391.43

Note: 2020 rates of Local Area Municipalities (LAMs) compared to proposed 2021 rates for the City of Niagara Falls at the low, average and high consumption scenarios.


2021 Local Area Municipality Budget Results

MunicipalityMunicipal Tax

Increase

Fort Erie

Grimsby

Lincoln

Niagara on the Lake 2.12%

Niagara Region 1.80%

Pelham 1.98%

Port Colborne 2.44%

St. Catharines 1.86%

Thorold

Wainfleet

Welland 1.96%

West Lincoln

Average 2.03%


Mitigation Option #1

Revenue ExpensesSurplus/ (Deficit)

Impact on Net Levy

after Growth

Annual Impact on average

Household*

As at Feb. 9, 2021 125,836,987 128,503,595 (2,666,608) 3.67% $ 51.65

Increase Seniors' Property Tax Rebate from $40 to $80

27,200 (27,200) 0.04%

Keep Library increase to 1.9% (28,001) 28,001 (0.04%)

Keep YWCA funding to 2020 amount

(5,133) 5,133 (0.01%)

Reduce Core building expenses (15,000) 15,000 (0.01%)

Bring in tax rate stabilization reserve funding to cover estimated COVID user fee impacts and vehicle rentals

775,000 775,000 (1.07%)

Revised 126,611,987 128,482,661 (1,870,674) 2.58% $ 36.18



Further Mitigation Options for Consideration

Revenue ExpensesSurplus/ (Deficit)

Impact on Net Levy

after Growth

Annual Impact on average

Household*

Revised deficit if Option 1 chosen

126,611,987 128,482,661 (1,870,674) 2.58% $ 36.18

Use HR rate stabilization reserve funds to cover 4 probationary fire fighters in 2021 (would need to remove in 2022)

340,000 340,000 (0.47%) $ (6.59)

Use winter maintenance reserve funds to cover new sweeper/loader rentals

300,000 300,000 (0.41%) $ (5.84)

Revised 127,251,987 128,482,661 (1,230,674) 1.70% $ 23.75

These two above options are not recommended by Staff as they are not one-time or COVID related expenses and will continue to exist in the 2022 budget.

Important Note: If these mitigation options are chosen it is a one-time assist to the 2021 budget. The increase must be realized in the 2022 tax levy.


Service Level Decision – Indoor Aquatics

Expression of interest for available space at the MacBain Community Centre currently posted on the City’s website. Closes: February 11, 2021

Staff will report back to Council in March, 2021

If no interest from any groups to run indoor aquatics Council will need to consider whether they would like the City to run indoor aquatics


Service Level Decision – Indoor Aquatics

Anticipated Opening Date: September 1, 2021

Outdoor pools used during summer if allowed under COVID rules

Budget Impact: Amendment to 2021 approved budget would be required prior to June tax billing in order to fund this service, cost not currently built into budget.

Estimated Cost: $300,000 (September 1 to December 31)

Estimated Levy Impact: 0.41% increase (2021)

Household Impact*: $5.66 increase (2021)

Factors To Consider if City Runs Indoor Aquatics:



Recommendation

1. That Council approve the recommended changes in option 1 as presented resulting in an annual increase of $36.18 to average household.

2. The Council approve the long term strategy of reducing the OLG tax subsidy of $5,895,000 by 50% of the taxation growth annually beginning in 2022 with the dollars being removed from the operating budget being converted into future capital investments.


Questions?

City of Niagara Falls 2021 Tax Supported Operating Budget

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Transcript of City of Niagara Falls 2021 Tax Supported Operating Budget