Round one of Saugeen Shores budget talks held Monday, January 30th (2023) is over, with department heads bringing in their business plans for the coming year.
The result at the end of the day is a proposed 7.1 per cent tax increase that would add $1.2 million to the overall budget, however the blended rate with the County of Bruce and the Board of Education is yet to be determined.
The proposed rate would mean an increase of $146 to the average property tax for residents based on a property assessed at $314,000, bringing the total property tax to just over $2,200.
Jim Bundschuh, Director of Corporate Services, said that although there is an increase of almost $500k in revenue due to a population growth of 1.2 per cent from 13,000 to 17,000, “… it also drives the demand for services that reflects in costs, due in part to staffing increases of 7.8 per cent in order to keep up”.
Saugeen Shores has two primary reserves, the Tax Stabilization Reserve (TSR) and the Future Capital Reserve. According to Bundschuh, all tax revenue flows through the TSR and Council uses the funds to transfer to other reserves as needed.
The TSR has been used in the past to lower the tax levy for residents. In 2021, $360,000 was used to bring in a flat zero increase and, in 2022, $355,000 reduced the tax rate to 4.5 per cent. This year, 2023, it has been recommended that $355,000 again be used to maintain the 7.1 per cent. Without the reserve funding, the tax increase would be 8.9 per cent or an additional $37 on the average household.
Bundschuh reminded Council that while a temporary use of the reserve can be used to lower taxes, it is not a “never ending pool” and at some point in time the fund cannot be used to consistently lower taxes, and it will also reduce council’s financial flexibility in the future.
Saugeen Shores capital budget of $32.8 million is a 68.5 increase over last year with the operating budget coming in at a 2.1 per cent increase.
The large increase in the capital budget is primarily due to two large investments, Lamont Sports Park phase 2 and the proposed Aquatics and Wellness Centre in addition to a major Water Treatment plant expansion, although they are expected to be funded through reserves.
When looking at risks, Vice-deputy Mayor Mike Myatt also questioned why the Westario dividend has been classified as a ‘risk’ in that it appears to be at a loss of $100,000 for 2023, and whether or not the loss may be permanent. Mayor Luke Charbonneau said that the Westario Board has not made any decision as yet and that the question of the dividend is “… still up in the air. As a 24 per cent owner of Westario Power, we don’t want to lose that dividend.”
Councillor Dave Myette also asked if the Lakeland ball diamond at the Port Elgin Tourist Camp would eventually be used to expand the tourist camp. “The tourist camp is one of our most lucrative sources of revenue and, once the Lamont Sports Park comes online, will that diamond be used to expand the revenue source at the tourist camp?” Kristan Shrider, Director of Community Services, said that it will be considered as part of the town’s surplus lands.
Mayor Luke Charbonneau pointed out that it was also discussed at the County level that the Tax Stabilization Reserve (TSR) should “not be used to stabilize taxes”. “I don’t get it. I was around when the reserve was created and it was created to stabilize the tax rate. That was the only reason the reserve was to exist. We are looking at increasing the reserve by $600,000 so my question is, how big does the Tax Stabilization Fund have to get, and why shouldn’t we use it to stabilize the taxes? It keeps going up and up and we have consistently used it for a decade and it keeps on increasing because we generate surpluses. So, had the budget been adjusted to eliminate the $2.6million surplus being generated this year or, if we are generating a surplus, why shouldn’t we use the Stabilization Reserve to stabilize the tax?
Bundschuh agreed that the TSR could be used to “smooth the tax rate”. He said it’s up to Council as to how much they want to see in the reserve fund. “We raise $17/18 million in taxes and $1.3 million in the reserve is not a huge percentage … but each year, the surpluses take a little of the pressure off .”
Following the first-day round of budget discussions, all departments submitted their 2023 business plans, with the exception of Corporate Services, which will be added to the next budget discussions to be held February 7th.