Budget talks start on a positive note
What a difference a year makes.
Through the 2017 budget deliberations, Orillia city councillors were faced with a precarious financial situation. Though showing some signs of improvement, development in the city wasn't bringing in the increased assessment expected. With a bevy of major capital projects, including the Orillia Recreation Facility, a $30 million loan was staring the city in the face.
Chief financial officer Bob Ripley provided much better news Friday morning.
During the city's first 2018 budget committee meeting, the CFO explained the city has about $36 million as of July 7 to fund ongoing projects and operating costs. Combine that with the $10 million line of credit it has with TD Bank, and there is no longer a need to go into debt for another $30 million.
Ripley said there are a lot of different reasons for the change in fortunes, but the building boom is one of the main ones.
"In one reserve alone, we saw a $7 million increase over what we expected to see," he said, referring to the city's development charge reserve, which has been the beneficiary of the increase in construction activity, such as the Costco location opening July 25. "So, $7 million extra cash flow right there."
He also mentioned the recent $2.2 million grant for the city's wastewater facility which was not included in projections. While staff expected the grant application to be successful, it decided not to rely on external funding when costing the project out.
Equally important was a change in the timing of certain projects. Several items from the capital plan approved in 2016 have seen revisions, including $6 million of 2016 spending on the rec centre split into 2017 and 2018, another nearly $6 million in spending on the waterfront pushed back from 2017 to 2020 and delaying nearly $4 million in landfill spending to 2020-2021.
"It makes a huge difference in your cash flow," Ripley said. "Last year, when we went through the plan, we had a crunch in 2018. If we could defer anything until after 2018, we were golden, because we had lots of cash flow."
With the city's debt for the Orillia Public Library and Rotary Place included, there remains a shortfall in capital funding for 2018 and 2019 of about $8.7 million, to be covered by the line of credit. The city's debt per capita will go above $400 again in 2018, but that's about $900 less than originally predicted last year.
"Bottom line is, we're not borrowing long-term any longer," Ripley said. "The one debenture we have will be paid off in 2022 and we don't see any need to borrow long-term again in the future."
Until then, about $2 million each year is allocated for that debt.
The budget committee meeting Friday also allowed councillors the opportunity to discuss items on the major capital plan and make suggestions or adjustments.
In a move that had some councillors feeling a sense of deja vu, the looming repairs needed at Brian Orser arena were brought back for discussion.
"I have a little bit of a problem spending $1.5 million between now and 2020 to do Brian Orser upgrades and everything else, when we could look at Phase 2 of the rec complex on West Street for the arena," Coun. Ralph Cipolla opined.
The second phase at 255 West Street South has an estimated price tag of $25 million, including $17 for new arena facilities. Coun. Sarah Valiquette-Thompson was having none of it.
"This conversation is kind of like Groundhog Day, because it keeps coming back to haunt us," Valiquette-Thompson quipped. "We have discussed this multiple times. The last time we discussed it -- and closed the book completely -- was at our corporate planning session," where the up-to-date price tag was revealed.
Given the city's better financial footing, Mayor Steve Clarke argued the conversation is certainly one for a council to have, but perhaps better suited for the next council, elected in 2018.
Added to the capital plan was a placeholder figure of $4 million for a transit hub in 2020. Ripley suggested in consideration for current bus services which will move from 150 Front Street South when that building is sold and the future intercounty transit system likely to launch in the coming years.
As well, a transit hub is recommended in the city's recently completed transit study. Many of the service upgrades recommended in that study will be discussed further by council during this year's budget process.