Central Huron Council eyes five per cent levy increase for 2024 budget
BY SHAWN LOUGHLIN
Despite staff coming in recommending a year-over-year tax increase of nearly 14 per cent, Central Huron Council is opting for an increase closer to five per cent, choosing to cut a number of big-ticket purchases.
Director of Finance Jeff Boyes presented council with his first draft of the consolidated budget on Tuesday, March 5. This came after several budget meetings that were focused on the operational budgets for specific departments.
Boyes recommended a tax levy increase of 13.85 per cent, representing a tax rate increase of 13.51 per cent. He told council that staff was aware of the “significant” nature of a 13.85 per cent increase, but underlined the importance of keeping up with the “growing operating and capital needs” of the municipality. He noted that the biggest reason for the proposed increase was wages.
“The primary driver of the operating increase is wage increases resulting from the collective agreement negotiations. This was expected, as unionized annual wage increases were only 1.5 per cent from 2020 to 2023,” Boyes said in his report. “In addition, the interest, capital and operating costs for the Bluewater Youth Centre have increased without any lease revenue to offset them. As noted at the previous council meeting, this cost could be offset in future years with an increase in leasing revenue.”
He added that spending in facilities and equipment is also increasing as both continue to age, requiring further maintenance and repairs.
Boyes did, however, prepare a number of scenarios for council to cut items in order to incrementally decrease the potential tax levy increase, bringing it all the way down to 5.06 per cent, which would represent an overall tax rate increase for Central Huron residents of 4.3 per cent.
He proposed removing three events from the economic development/community improvement co-ordinator budget in the Sip and Savour and Wine and Cheese events at a cost of $1,000 and $850, respectively, as well as elimination of the annual Mayor’s Mingle at a cost of $8,500.
However, four large-scale purchases being removed from the budget were the real needle-movers in Boyes’ recommendations.
While removing the Sip and Savour and Wine and Cheese events would only serve to reduce the tax levy by less than 0.01 per cent each and the Mayor’s Mingle by 0.1 per cent, four proposed removals would have a much greater impact. The four items combined would have an impact of more than eight per cent on the tax levy. The removal of repairs to the facilities storage building, at a cost of $225,000, would reduce the levy by 2.54 per cent; the removal of the Maitland Line bridge repair, at a cost of $198,000, would reduce it by 2.24 per cent; the removal of paving on Telephone Road, at a cost of $117,000, would reduce it by 1.32 per cent, and not replacing a backhoe, at a cost of $200,000, would reduce it by 2.26 per cent.
If council were to remove all seven line items from the budget, Boyes said it would result in a 5.06 per cent increase to the levy and an overall tax rate increase (including Huron County and education rates) of 4.3 per cent.
A 5.06 per cent levy increase would result in an additional tax of $36.37 per $100,000 of residential assessment. It would also represent an increase of $76.71 on the average single-family home in Central Huron, which is currently valued at $211,000.
In regards to assessment, Boyes also noted that the Municipal Properties Assessment Corporation (MPAC) has not reassessed homes since 2016. When that time comes and assessments are raised, rates will come down, he said, noting that, regardless of assessment, it only takes so many dollars to run the municipality. So, if assessment rises, the tax rates will fall to compensate.
On that note, he told council that, under the proposed budget (with the tax levy increase of 13.85 per cent), the levy requirements this year would be just over $10 million, compared to $8.8 million in 2023.
Boyes also noted a number of pressures expected on the budget in the coming years. He said there is no money in the budget to operate a pool (options for a new pool are currently being considered), which account for a savings of between $70,000 and $90,000 per year. He also said that Central Huron may incur “significant” costs related to the Dodds municipal drain, adding that nearly $300,000 in costs relating to the drain have yet to be recovered.
Furthermore, Boyes noted that capital requirements for 2025 will exceed those of 2024 by nearly $2 million. He then told council that, if changes were made to the budget (that council would eventually make) to put off a number of capital purchases, that would add another $1 million to the 2025 capital requirements. That means the budget will require $9.1 million in general capital needs in 2025, compared to just $6 million in 2024.
As for a jumping-off point for the budget, Boyes also told council about a bit of an accounting note that resulted in a deficit for the 2023 budget of nearly $1.35 million.
He told council that over $3.2 million in debt was not utilized in regards to the Bluewater Youth Centre. If the loan was fully drawn down, he said, the budget would have ended in a surplus position of nearly $2 million. He said he wanted to note that for council to provide full context to the deficit being presented.
Once the floor was turned over to council, it was clear that councillors were not in favour of the proposed tax levy increase and endeavoured to bring it down.
Councillors Alison Lobb and Everett Smith spoke first, both in favour of Boyes’ lowest proposed increase of 5.06 per cent. Lobb, however, wanted to keep the Mayor’s Mingle alive calling it a “signature event” for the municipality that is always well attended.
Mayor Jim Ginn also spoke in favour of keeping the three events in the budget. First, he said, they would barely impact the bottom line with their relatively small costs, and second, he agreed with Lobb that the Mayor’s Mingle has become an event that people anticipate and make a point to attend.
Council directed Boyes to return with a budget that included a 5.18 per cent increase to the tax levy (his proposed 5.06 per cent increase, but with the three aforementioned events returned to the budget) to be considered at council’s April 15 meeting. Furthermore, council opted to cancel the next scheduled budget meeting on March 19 (at least for budget deliberation purposes - council did float the idea of keeping it as a time to discuss some economic development opportunities) and move ahead on April 15.