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2012-10-09_Supplemental Agenda Packet--Dossier de l'ordre du jour supplémentaire r� ' ��tJ -'�� Ct«tr,..=�� `jl�, . -,�-� -=r, � �� - City of Saint John Common Council Meeting Monday, October 9th,2012 Location: Common Council Chamber Supplemental to Agenda 8.1 City Manager: Financial Framework Presentation 13.3 Committee of the Whole: Nominating Committee Appointment to SJ Port Authority Board 13.4 Committee of the Whole: Appointment of Auditor City of Saint John Seance du conseil communal Le Mardi 09 octobre,2012 Lieu : Salle du conseil communal Ordre du jour supplementaire 81 Directeur general : Presentation relative au cadre financier 13.3 Comite plenier : Nomination du Comite des candidatures au conseil de 1'Administration portuaire de Saint John 13.4 Comite plenier : Nomination du verificateur I I � • � .�. - ,,. ,�, _..� . r � �;, �� 2� • � � , _ , .. ;. _ , � _�' - - :, , � . ir �I �� ."�� ..�::* .:p.` '��. � �, �� r �,Y�� _ �� _�t,� ��, � _ s ��y� � � �` x� �� ... . • ��4',-�� _ r- .. .a � .. . -,� �:�' . , � �� -G,�- . . � � . �� .,� � ' �� ` � . � � . �� .r ..�Tf�r .�i �� - � .�._ � I � � y�^ �� r�7irR� ,.��. ..�,_� �`. a�.. � : � ��i ' �� ".; : ' i .1°.3:� . l t _ . Common Council October 9, 2012 � ,� �r_ - � � � • Context • Budget Process / Operating versus Capital • How the Tax Rate is Set • Reve n u es • Expenses • Pension Liability Impact • What does all of this mean in terms of the Budget r.�-�. SATAIT JC)lih3 ��_ � �►`�;, � � • To provide Common Council and the citizens of the City of Saint John with a framework under which the budget is being prepared . • Highlight the opportunities and challenges that are being faced ! r.�-�. SATAIT JC)lih3 ��_ � � _r* ` � • �1r � • Is actually the development of four budgets — General Fund Operating Budget — General Fund Capital Budget — Water & Sewerage Utility Operating Budget — Water & Sewerage Utility Capital Budget • Operating versus Capital r.�-�. SATAIT JC)lih3 ��_ � . �►`\'�� 3 �" lr � � I � � • Expenditure requirements • Subtract — Non-Tax Revenue • Subtract — Unconditional Grant • Equals the Net budget to be funded through property taxes • Divided by the tax base multiply by 100 • Equals the tax rate 2012 calculation follows : r.�-�. SATAIT JC)lih3 ��_ � ! � '�r►. • �� i I � • Total expenditures 144 , 642 ,653 • Subtract — Non-tax revenue ( 11 ,219 ,478) • Subtract — Unconditional grant � 18 , 918 , 728� • Net budget to be funded Through property taxes 114 , 504 ,447 • Tax Base 6 ,414 , 814 , 937 • Tax rate (per $ 100) 1 . 785 r.�-�. SATAIT JC)lih3 ��_ � �r1;� � � � ' � � • Total Percent • Property Taxes - 114,504,447 79. 16% • Unconditional Grant - 18,918,728 13.08% • N o n-Tax Reve n u e - 11 ,219,478 7.76% • Tota I reve n u e 144,642,653 r.�-�. SATAIT JC)lih3 ��_ � � �►�', / I� �� + � • Sale of Goods & Services 2012 Budget — HAZMAT Funding 70,000 — Point Lepreau 40,000 — Taxi Licenses 50,000 — Sports field fees 56,700 — Arena rentals 551 ,453 — Planning Department Services 53,000 • Emergency Dispatch Service 739 ,248 r.�-�. SATAIT JC)lih3 ��_ � � ��, i ►� �� • Administrative Services 2012 Budget — Saint John Transit 48,000 — Saint John Non-Profit Housing 48,000 — Saint John Pension Plan 150,000 — Water & Sewerage Uti I ity 1 ,832,000 • Short-term Interest 135 , 000 r.�-�. SATAIT JC)lih3 ��_ � � ��, i ►� �� • Other Revenue from Own Sources 2012 Budget — Licenses & Permits • Building Permits 900,000 • Plumbing Permits 90,000 • Rezoning Applications 25,000 — Parking and Fines • Market Square Parking 1 ,085,815 • Parking Meters 1 ,085,000 • Traffic By-Law Fines 375,000 — Rentals 782,569 r.�-�. SATAIT JC)lih3 ��_ � �r tir ` 1 • � � � • Unconditional Grant — Transfer from PNB (Equalization mechanism based on fiscal capacity) • 2012 2011 2010 • 18 , 918 , 728 19 , 304 , 825 19 ,499 , 820 • I n 1990 — 29 , 024 , 917 • I n 2000 — 21 ,245, 578 r.�-�. SATAIT JC)lih3 ��_ � • �. �, � - I s- � � - � � • Is a function of Assessed Value of Properties and th e Tax Rate • Tax Base I ncrease Percent • 2012 6 ,414 , 814 , 937 318 , 733 ,277 5 .25% • 2011 6 , 096 , 081 , 660 206 , 910 , 782 3 . 53% • 2010 5 , 861 , 160 , 628 • (Teach In — PNB if desired) r.�-�. SATAIT JC)lih3 ��_ � �! '��' � :� � � • � � � . � � • Each 1 . 00% change in Grant results in a change in revenue of $ 189 , 187 . • Each 1 . 00% change in Tax Base results in a change in revenue of $ 1 , 145, 044 . • Schedule analysis of changes to Tax Base & Grant r.�-�. SATAIT JC)lih3 ��_ � �! '��' � :� � � • � � � . � � • Each 1 cent change in the tax rate results in a $640 , 000 change in funding available • Change of 1 . 00% in operating expenses in the General Fund results in a change of $ 1 ,446 ,426 in funding requirements r.�-�. SATAIT JC)lih3 ��_ � �"� � + �� / � • � � � • Wag es 61 ,506,868 • Benefits 14,878, 157 • Debt service costs - Principal � 0,298,000 • Debt Service Costs — Interest 4,2 � 9,951 • Regional Facilities � ,572,000 • Market Square Common Area 2,089,000 • Street I ig hti n g 1 , 158,000 • Insurance 969,000 • Property Assessment fee � ,244,000 r.�-�. SATAIT JC)lih3 ��_ � II,� c s � � � � � � � � • Service Area 2012 Budget • Transportation & Environment 35 , 802 , 596 • Urban Environment 51 , 811 , 646 • Growth & Development 9 , 756 , 518 • Ad m i n istrative Services 9 , 683 , 584 • Strategic Services 4 ,406 , 000 • Legislated Services 2 , 665 , 593 • Saint John Water 36 , 927 , 000 r.�-�. SATAIT JC)lih3 ��_ � >A� _ � �arr � .� I _ : _ _ , • _ � • Revenue Sources 2012 Budget — Residential customers 16,076,000 — Industrial/Commercial Institutional 17,377,000 — Fire protection & Storm Sewer 2,200,000 — Other 225,000 • Operating expenditures — Drinking Water Service 8,374,000 — Industrial Water Service 1 ,402,000 — Wastewater Service 9,015,000 — Infrastructure Management 1 ,306,000 r.�-�. SATAIT JC)lih3 ��_ � �,'�.� _ .� �'A�� ' ... � • _ � � • Fiscal Charges 2012 Budget — Debt service costs 9,833,000 — Capital funded from operating 5,605,000 • Pension Fu nd i ng — Past Service costs 883,000 r.�-�. SATAIT JC)lih3 ��_ �� _ s —► � � s � � .�. - ,,. ,�, _..� . r � �;, �� 2� • � � , _ , .. ;. _ , � _�' - - :, , � . ir �I �� ."�� ..�::* .:p.` '��. � �, �� r �,Y�� _ �� _�t,� ��, � _ s ��y� � � �` x� �� ... . • ��4',-�� _ r- .. .a � .. . -,� �:�' . , � �� -G,�- . . � � . �� .,� � ' �� ` � . � � . �� .r ..�Tf�r .�i �� - � .�._ � I � � y�^ �� r�7irR� ,.��. ..�,_� �'. - . � � : � ��i ' �� -'j ".; : ' i �. �' .1".3:� . l t a=-.i .., � � � � � �� '.�V - �� I I � • Revenues Budget Actual — Property taxes 108,815,058 108,815,058 — Unconditional Grant 19,304,825 19,304,825 — Sale of Goods & Servs 3,059,545 2,811 ,201 — Other revenue from own sou rces 5, 183,930 5,371 ,430 — Conditional grants 300,000 263, 108 — Miscellaneous revenue 1 , 195, 113 3,251 ,542 — Total revenues 137,858,471 139,817, 164 r.�-�. SATAIT JC)lih3 ��_ � � � � � �� '.�V - �� I I � • Expenditures Budget Actual — General Government 14,239,962 13, 199,501 — Protective Services 51 ,212, 189 51 ,437,950 — Transportation Services 27,896,685 28,795,215 — Environmental Health 4, 104,942 4, 189,348 — Environmental Development Services 10,592,735 9,915,570 — Recreational & Cultural Services 8,941 ,020 8,658,644 — sub-total 116,987,533 116, 196,228 r.�-�. SATAIT JC)lih3 ��_ � � � � � �� '.�V - �� I I � • Expenditures Budget Actual — sub-total forward 116,987,533 116, 196,228 — Fiscal charges 14,281 ,414 13,693,861 — Excess of reve n u es second previous year (664,587� (664,587) — S u b-tota I 130,604,360 129,225,502 — Pension funding 7,254, 111 13,895,371 — Total expenditures 137,858,471 143, 120,873 — Surplus (deficit) for year --------- (3,303,709� r.�-�. SATAIT JC)lih3 ��_ � � � � � ,r� '•��► -� �� I I � • Revenues Budget Actual — Charges to Customers 32,332,665 32,325,686 — Charges to General Operating Fund 3, 142,655 3, 142,655 — Total revenues 35,475,310 35,468,341 — Total expenditures 35,475,310 35,542,947 — Surplus (deficit) ------- �74,606� r.�-�. SATAIT JC)lih3 ��_ � � � � � ,r� '•��► -� �� I I � • Expenditures Budget Actual — Operating 19,495,221 19,081 ,468 — Fiscal charges 15, 152,909 14,808,983 — Excess of expenses over revenues 127,404 127,404 — S u b-tota I 34,775,534 34,017,855 — Pension funding 699,776 1 ,525,092 — Total expenditures 35,475,310 35,542,947 r.�-�. SATAIT JC)lih3 ��_ �� "' �, • _ _ ,�r� l � � � .�. - ,,. ,�, _..� . r � �;, �� 2� • � � , _ , .. ;. _ , � _�• - - :, , � . ir �I �� ."�� ..�::* .:p.` '��. � �, �� r �,Y�� _ �� _�t,� ��, � _ s ��y� � � �` x� �� ... . • ��4',-�� _ r- .. .a � .. . -,� �:�' . , � �� -G,�- . . � � . �� .,� � ' �� ` � . � � . �� .r ..�Tf�r .�i �� - � .�._ � I � � y�^ �� r�7irR� ,.��. ..�,_� �'. - . � � : � ��i ' �� -'j ".; : ' i �. �' .1".3:� . l t a=-.i .., ! � . . , ' : �. .� � • � �, � �� . • � � � • Revenues Budget Projected — Property taxes 114,504,447 114,504,447 — Unconditional Grant 18,918,728 18,918,728 — Sale of Goods & Servs 3,385,258 3,281 ,559 — Revenue Own Sources 5,483,284 4,744,026 — Conditional grants 240,000 240,000 — Miscellaneous revenue 2, 110,976 2,605,917 — Total revenues 144,642,653 144,294,677 • P ro j e cte d s u rp I u s ---------- � ,o � 4,7 81 li'-�. SATAIT JC)lih3 ��_ ! � . . , ' : �. .� � • � �, � �� . • � � � • Service Area Budget Actual — Transportation & 35,802,596 36, 121 ,785 — Urban Environment 52,350,461 51 ,811 ,646 — Growth & Development 9,756,518 9,603,516 — Admin Services 9,683,584 9,592,086 — Strategic Services 4,406,000 4, 100,214 — Legislated Services 2,665,593 2,638,312 — Fiscal Charges 15,757,821 15, 192,257 — Pension Funding 14,220,080 14,220,080 — Total Expenditures 144,642,653 143,279,896 r.�-�. SATAIT JC)lih3 ��_ � � � I � / � � � � I � � �� • Revenues Budget Actual — Charges to Customers 33,667,000 33,532,000 — Charges to General Operating Fund 3,260,000 3,260,000 — Total revenues 36,927,000 36,792,000 — Total expenditures 36,927,000 36,294, 130 — Surplus (deficit) ------- 497,870 r.�-�. SATAIT JC)lih3 ��_ � � � I � / � � � � I � � �� • Expenditures Budget Actual — Operating 20,606,000 20,012,865 — Fiscal charges 15,477,444 14,753,935 — Excess of reve n u es over expenses (39,444� (39,444� — Sub-total 36,044,000 34,727,356 — Pension funding 883,000 1 ,566,775 — Total expenditures 36,927,000 36,294, 130 r.�-�. SATAIT JC)lih3 ��_ � • ' "' ` • C''1 • �� • Two components — Current Service Costs — Past Service Costs • Current Service Costs are the contributions required to fund the current years earned service • Past Service Costs are the contributions required to fund the going concern deficit • What created the Funding Situation? (Schedule) r.�-�. SATAIT JC)lih3 ��_ � • -�,� � - A � • I I I I I � • Going Concern Valuation Results — Assets 370,733,000 — Liabilities (566,633,000� — Unfunded Liability 195,900,000 • Solvency Valuation Results — Assets 370,483,000 — Liabilities (754,846,000� — Solvency Deficit 384,363,000 r.�-�. SATAIT JC)lih3 ��_ � • � � � � ' � �! • • � • � • . • �� • Annual Contributions for 2012 based on 2010 Actuarial Valuation — 13 , 193 , 800 • Annual Contributions for 2012 based on 2011 Actuarial Valuation — 19 , 098 , 900 • Budgeted for 2012 - 15 , 648 , 530 • Shortfall with No Reform - 3 ,450 ,270 • Impact of Pension Reform — unknown at this time . r.�-�. SATAIT JC)lih3 ��_ � �,, • � ��t � • . • i • • ' �� • Long-term Commitment — Debt service costs — Service levels • Long-term Impact — Expenditures — Budgets — Flexibility • Schedules r.�-�. SATAIT JC)lih3 ��_ � ,� .� i ' ,� . .. � i � � i . �� • Significant Challenges in Budget Preparation • Budget input components — Council Priority Setting Sessions — Core Service Review — Public Consultation Sessions — IPSOS Reid Survey Results — Function Mapping r.�-�. SATAIT JC)lih3 ��_ � ,� .� i ' ,� . .. � i � � i . �� • Risks/exposu re — Tax base growth — Unconditional Grant Funding — Pension Reform • Deferral of 2011 additional expenditures • Additional funding required to no reform — Fire Arbitration r.�-�. SATAIT JC)lih3 ��_ � ! � � + � ' � • Service Based Decision Making — Retain or eliminate — increase or decrease level • ABCs — Hear from Economic Development Agencies • Departments — Hear from specific departments re Priority Areas • Community Grants — Current Envelope to Start • What are your information needs r.�-�. SATAIT JC)lih3 ��_ � � ' uestions I �� G.�'� � ��I� � - �'� .s '.�F+•� 'ffie�ity oP Saint John October 9�", 2012 Deputy Mayor and Councillors: Subject: Committee of the Whole— Recommended Appointments to Committees "RESOLVED that the Committee of the Whole having met on October 9th, 2012 recommends the following appaintment to a committee: Saint John Port Aufihority Board: to appoint Patrick McCaffrey for a three year term from �ctober 9�', 2012 to October 9th, 2015. Sincerely, . � Mei Norton Mayor :'��iC�'�-� � �.��_�?*c•�'�C,�,r,'f.`:'� �'�)_��:��c ir3�`� �°��t�t..:9:��>r� :.k.r°.:�;i;�; F�L�i�l I rn�.�rv��7iFi+;��`�c�.ca � C"_:��!!��i '��:�s,��isjr�d�-�_t��:�i�s E:�f_��_d �,�,�c � ,,�`- n ,.�,� .,�; a '`:';'.� The Cifi�y oF saint John October 9, 20'!2 His Worship Mayor Mel Norton And Members of Common Council Your Worship and Councillors: Subject: Appointment of Auditor Backcaround; On October 7th, 'i 996 Common Council appointed the Firm of Ernst & Young as auditors for the City of Saint John General Fund, the Ci#y of Saint John Water & Sewerage Ufility, the Saint John Parking Commission, and the City of Saint John Sinicing, Reserve and Trust Funds for a six year period that expired with the completion of the audit for the year ended December 315t, 2001. Based on a recommendation of the Finance Committee, this appointment was extended for one year. In 2003 Council, following the issue of an Expression of Interest for auditing services, reappointed Emst & Young as the auditor's for the City of Saint John General Fund, the City of Saint John Water & Sewerage Utility, the Saint John Parking Commission, and the City of Saint John Reserve and Trust Funds. The appoint was extended by Common Council for an additional three years. Analvsis: Since the appointment of Ernst & Young has expired witF� the completion of the 20'!1 audit, a request for proposals (RFP) was issued for the provision of auditing services for the City of Saint John General Fund, the City of Saint John Water & Sewerage Utility, the Saint John Parking Commission, and the City of Saint John Reserve and Trust Funds for a four year term with an option for two one year extensions. �'i%.�� — - ,.�� ' — ��A'°\�k'�'�.)Hi�' F.�.��•�'i�71 �:tie�[�c:h��,hIB i,��d:� E��-�L1 ►nrwrv�;ai��.��e�.c� , C;.E 7�?a�i �in��hr�,N.-�,l.:�tt�rcdra E2L 4t_i Subject: Appointment of Auditor October 9, 2012 Page 2 As a result of this Request for Proposal for Auditing Services, submissions were received from fi�e firms as follows: 1. Deloitte & Touche 2. Ernst & Young 3. Grant Thornton 4. KPMG 5. Beers Neal A meeting of the Finance Committee was held on September 25t", 2012. At this meeting the members of the Finance Committee along with the Commissioner of Finance and Administrative Services reviewed the responses to the RFP. The outcome of this review was to invite four of the firms to make a presentation to the Finance Committee. The presentations took place on October 5t�, 2012. As a resulfi of this �rocess ! am pleased to make the following recommendation to Common Council, which is fhe unanimous decision of your committee. Recommendation: It is recommended that firm of Deloitte & Touche LLP be appointed auditors for t�e City of Saint John General Fund, the City of Saint John Water & Sewerage Utility, the Saint John Parking Commission, and the City of Saint John Reserve and Trust Funds for a four year period commencing with the year 2012 with the option for two one year extensions. RespectFuily submitted, unciflor David Merrithew Chairperson Finance Committee