South Dundas council gets down to business

MORRISBURG – Members of South Dundas council, fresh from Christmas vacation, had visions of sugar plums dancing in their heads replaced by a tidal wave of numbers as they took a deeper dive into the financial status of the municipality Thurs., Jan. 3.

Auditor James Pollock from CKDM LLP walked council, a few of them seeing municipal figures and financial policies for the first time, through recent financial reports while CAO Shannon Geraghty provided insight into future policy changes and projects that would require significant funding.
Development

One of the issues raised by Geraghty to council was the lack of development fees charged by the municipality.

Large projects, such as the Dutch Meadows development in Morrisburg, would ordinarily require a large development fee to be paid to the municipality. That money would then be used to build new infrastructure or enhance the services already in place, ultimately benefitting the community as a whole.

“People say that development charges halt growth. I don’t think that’s the case. If you look at the neighbours in North Dundas, they’ve had development charges for years and it hasn’t stopped growth from happening in North Dundas. I could be wrong but they have development charges over a million dollars. So they do finance anything pertaining to growth,” said Geraghty. “It’s basically growth paying for growth.”

As it stands right now, any new infrastructure that is required for new development comes out of the general tax base. Whether South Dundas does as its neighbour to the north did more than a decade ago remains to be seen.

Reserves
Pollock, stated that South Dundas has a healthy reserve level exceeding 50 per cent of the operating expenses. However, when asked how he felt about the state of reserves by Mayor Steven Byvelds, Geraghty saw it a little differently.

“I agree and I disagree in a way because when you look at asset management and what we need to put away for annual basis for asset management, we’re well under-funded. We need a lot more money in our reserves to cover our infrastructure down the road, but every municipality is facing that challenge,” he said. “In a perfect world, if you look at our asset management plan we need to be putting four to five million dollars away every year just for asset management. If you put four or five million dollars on top of our tax rate, that’s a thousand per cent tax rate and people just can’t afford that.”

Reserves have dipped in recent years from $2.9-million to $1.6-million, which concerned Byvelds.

Part of the issue is the continued downloading of services and infrastructure from provincial and federal levels and a push for municipalities to be self-sustaining. That means reduced direct funding for municipalities.

“It’s up to council and municipalities across Ontario to continue to advocate to the government that we can’t afford to be self-sustaining when it comes to our infrastructure. There’s been a lot downloaded to us in the past few years that we are now paying for. We continue to need to have grants to come down to us,” said Geraghty.

Asset management plan
Part of what could make up a budgetary shortfall and chart a clearer path forward is a well-structured and thorough asset management plan.

The municipality has had one in place since 2013, but it is, according to Geraghty, “very bare bones.”

“It will be something that comes back in the budget this year that we’re looking for some funds to update or enhance our asset management plan. It’s something that’s been identified through the province that some of the reason we aren’t getting our funding is the fact that we need all the different levels of health and safety and plus our asset management plan is very weak. We want to look at enhancing that so we can strengthen our chances of getting funding from the province or the feds,” he said.

Several deadlines for updates to the asset management plan are fast approaching including policies, core assets, municipal infrastructure and financial strategies and levels of service.

Geraghty went on to advocate properly utilizing the.

“To me the asset management plan is a road map,” he said.

Different financing strategies to pay for larger projects, including an increase in taxes, debt financing, increased user fees or new revenue sources, can also be identified and properly put in place using the asset management plan.

Taxation/budget
Over the last five years, revenues have risen an average of 4.3 per cent in the municipality and expenses have mirrored that increase at 4.4 per cent.

As a result of the increase in tax revenue, grant revenue has gone down.

Councillor Archie Mellan suggested to try to address some of the shortcomings immediately.

“I think build in a percentage for growth and start to address some of the issues like asset management shortcomings,” he said.

Currently the Consumer Price Index (CPI) stands at 1.8 per cent but Byvelds believes growth and tax assessments haven’t been considered and a more thoughtful approach is needed when determining the proper taxation level.

“The numbers over the last four years have gone up exponentially too fast. As much as we need the money, and I told people I can see that we need extra funding, I’m not going to expect it out of our tax base in the first year. I think we need to be more prudent. I think the two per cent number is okay, however the first thing we need to do is find out what the average residential unit has gone up assessment-wise and then revise the tax rate downward because of it,” he said. “The last two or three budgets have not addressed the assessment increases. They took it.”

While he didn’t recommend a zero increase as he didn’t believe it was prudent, Byvelds suggested they take a look internally to determine if the money is being spent properly.

“Yes, we need the money but maybe we have to start looking at how we do things and do things a little differently than we did in the past to save a few dollars. That’s where I would like to go,” he said.

Deputy-Mayor Kirsten Gardner agreed.

“We heard lots during the election that the residents wanted to actually look at how we do things and see if the savings could start there,” she said.

Councillors Don Lewis and Lloyd Wells wanted a more specific break down of each department.

“I agree with Lloyd, we need a detail of every department. I honestly think that maybe some departments are spending money foolishly. I’d like to look at the details,” said Lewis.

With a greater understanding of the financial position of the municipality, council agreed to set Wed., Feb. 13 and Thurs., Feb. 14 as the first two days of budget deliberation.