2016-06-20_Agenda Packet--Dossier de l'ordre du jour
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June 20, 2016
Kevin Fudge
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Commissioner
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Finance and Administrative Services
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Keep Everyone Awake You Learn Something
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Two Main Objectives for this session: 2
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Council Priority Session Long Term Financial Planning Budget Basics Service Based Budgeting Asset Management Budget Challenges Budget timeline Audited Consolidated Financial Statements
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1.2.3.4.5.6.7.8.3
SETTING
COUNCIL PRIORITY
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-sizes-sizes
multi-purpose recreation facility multi-purpose recreation facility
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investment in our roadways and sidewalks investment in our roadways and sidewalks
Implement internal processes to facilitate investment and development Deliver an integrated approach to economic development Cooperate with neighbouring municipalities to advance the
True Growth 2.0 Invest wisely to build our community while maintaining a healthy financial position Implement an affordable and sustainable plan to address pension issues Implement
policies that create a livable community Implement policies that create a livable community Continue to invest in key community recreation facilities Continue to invest in key community
recreation facilities Work with community partners to develop/maintain Work with community partners to develop/maintain Build a more robust transit system Build a more robust transit
system Implement policies that maintain the integrity of all our infrastructure assets Implement policies that maintain the integrity of all our infrastructure assets Execute an equitable
city-wide strategic road improvement plan Execute an equitable city-wide strategic road improvement plan Implement a city-Implement a city-Secure funding for projects to deliver quality
drinking water to our citizens Secure funding for projects to deliver quality drinking water to our citizens Strategic communication Strategic communication Accountability for service
results Accountability for service results Responsive customer service Responsive customer service Service-based decision-making Service-based decision-making
Improve Improve
Health
Choice
Economic
Sustainable
Council Priority Setting
Infrastructure
Community of
Citizen-Focused
Service Delivery
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Based
Budget
Service-
Plan
Annual
Report /
Strategic
Corporate
Scorecard
Priorities
Council Priority Setting
Strategic Decision-Making
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Refine and
Adopt Priorities
September
2020
Define
How and Success
Identify
July
Council Priority Setting
Outcomes
Priority Setting 2016-
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PLANNING
LONG TERM FINANCIAL
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capacity
Service wants
Funding
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Performance Reporting
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Find other sources of revenues (Revenue Generation Program) Find ways to provide service more efficiently (Continuous Improvement Program) Demonstrate Value (Key Performance Indicators)
Control costs Use available resources strategically, wisely and effectively Achieve growth in assessment base (Development incentives)
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Challenges of allocating scare resources among competing priorities To be sustainable, municipality has to:
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Long term financial planning
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Capital Budgets
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Annual Operating &
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Corporate plans
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Asset Management
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Long-term financial planning is the process of aligning financial capacity with long-term service objectives LTFP is a financial roadmap toward sustainability
position
Sustainable debt
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Sustainable
Infrastructure
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Financial Policies
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services
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Sustainable &
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Provide Council and Staff with a financial lens in making effective long-term decisions and priorities to ensure financial sustainability management
Benefits of long term financial planning
Long term financial plan will: 12
BUDGET BASICS
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General Operating Budget $151.5M General Capital Budget $21.9M Utility Operating Budget $43.9MUtility Capital Budget $10.1M
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All 2016 budgets can be found at: www.saintjohn.ca/en/home/cityhall/financeadmin/financialmanagement/2011budgetreport/default.aspx 14
Rates)
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Sewer Rates
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Council sets the Water &
by User Fees (Water & Sewer
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Utility Services funded primarily
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Accounts are Separately Tracked
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by Property Taxes &
Unconditional Grant
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Council sets the Property Tax
General Services funded primarily
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balanced (surpluses or deficits cannot be retained) General Operating fund surplus/deficit: To be included in the W&S Utility Operating fund surplus/deficit: To be included in one
or more of the Operating budgets of the four subsequent years, commencing with the second next ensuing year.
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67,609
110,104
113,675
210,566
253,254
2016 Budget/Road KM
265,096
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50,000
300,000 250,000 200,000 150,000 100,000
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1.4211
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2016 Tax Rate
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1.6497
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1.785
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Compare Saint John 2016 tax rate and Budget/Road KM to other municipalities
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1.81.61.41.20.80.60.40.2
58,898
69,919
74,041
86,271
86,571
93,979
Residential Tax Base per Capita
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80,000 60,000 40,000 20,000
100,000
72,808
92,143
96,065
103,500
Capita
112,805
Municipal Tax Base per
123,321
2016
Municipal and Residential Tax base per Capita
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80,000 60,000 40,000 20,000
140,000 120,000 100,000
2016
769,510,100
4,126,543,200
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2014
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Assessment Base - Residential
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2011
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2007
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650,915,000
2006
2,579,233,800
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Assessment Base - Industrial (excluding LNG)
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500,000,000
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4,500,000,000 4,000,000,000 3,500,000,000 3,000,000,000 2,500,000,000 2,000,000,000 1,500,000,000 1,000,000,000
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Property TaxesUnconditional GrantOther Sources
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R 92% - Property Tax Revenue & Grant
$151.5M
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$120.1M
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79%
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General Operating Revenues
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13%
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$11.5M
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$19.9M
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or
3.72%
$5.6M
Or
41.5M
27.41%
$
Corporate Services
Transportation & Environment
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$13.5M
or 8.92%
$29.2M
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or 19.22%
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Other Charges
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Finance & Administration
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Expenditures - $151.5M
2016 Budgeted Operating
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Or
52.1M
6.37%
$9.6M
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34.36%
$
Public Safety
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Growth & Development
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Goods & Services
$75,962,739
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ABCs & Grants
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Fiscal Charges
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$10,455,415
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Pension & LTD
$36,166,491
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2016 General Operating budget $151.5 Mil
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$16,031,173
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$12,926,366
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Salaries & Benefits
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4.39%
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20.54%
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Growth & Community Development servicesFinance & Administrative services
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4.78%
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58.05%
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12.24%
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2016 Salary & Benefit allocations by Services (%)
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TransportationPublic Safety ServicesCorporate services
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2B
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Municipal Financing Corporation advises the City of the
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Step 1. Notice of motion: Council gives notice of intent to borrow after 30 days from the day of Council resolution Step 2. After expiration of 30 days, Council authorizes staff to issue
and sell to the NB Municipal Financing Corporation debentures at such terms and conditions recommended by the Corporation Step 3. Application form filled out and submitted to the NB
Municipal Financing Corporation Step 4. actual bond issue Step 5. Staff reports back to Council regarding terms of the issue, coupon rate, price, average yield and settlement date.
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Approval process 26
Saint JohnFrederictonMoncton
13.50%10.58%5.28%
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2016
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Service Ratio
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Debt
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14.90%
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5.20%
10.43%
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8.00%6.00%4.00%2.00%0.00%
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16.00%14.00%12.00%10.00%
Debt perCapita
Debt per Capita
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$800 $600 $400 $200
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ƚƷğƌ 5ĻĬƷ ķźǝźķĻķ ĬǤ tƚƦǒƌğƷźƚƓ
$1,800 $1,600 $1,400 $1,200 $1,000
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LTD
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$80,000 $60,000 $40,000 $20,000
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$140,000 $120,000 $100,000
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Contributions from 3Contributions from the operating fund Borrowing (debt)
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.ƚƩƩƚǞźƓŭ ΛķĻĬƷΜ ğŅŅĻĭƷƭ ƷŷĻ Ʒğǣ ƩğƷĻ ĬĻĭğǒƭĻ ƦƩźƓĭźƦğƌ ğƓķ źƓƷĻƩĻƭƷ ƦğǤƒĻƓƷƭ ƚƓ ƷŷĻ ķĻĬƷ ğƩĻ ĻǣƦĻƓƭĻķ źƓ ƚƦĻƩğƷźƓŭ ŅǒƓķ
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Capital Expenditures are budgeted by the City through the General Capital Budget There are several methods to fund capital expenditures
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1% increase in tax base equals $1.2 Mil in revenue 1 cent increase/reduction in tax rate equals $673,000 $10 million in new debt amortized over 15 years at 4% average yield costs $3.2
million in interest over that period; $10 million in new debt amortized over 20 years at 4% average yield cost $4.7 million in interest over that period; Interest expense impacts the
tax rate
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15,323,800
Growth & Community DevelopmentPublic Safety
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1,865,000
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4,060,000
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677,500
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Transportation & EnvironmentFinance & Administrative
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Flat Rate AccountsMetered AccountsFire Protection LevyStorm Sewer LevyOther Revenue'sPrevious Year's Surplus
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$43.947 Mil
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$19.758M
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Revenue
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$1.014M
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$0.567M
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2016 Utility Operating
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The Utility is Saint John Water
$2.4M
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$0.995M
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$19.213M
2016
$1,224
2015
$1,152
2014
$1,080
2013
$1,008
2016
$972
2012
$936
2011
$864
2010
Annual Flat Water Rates
$830
2009
$696
2008
$696
2007
Flat Water Rates 2006-
$658
2006
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1400-1450
1,364
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1,296
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1,224
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1,152
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20202019201820172016201520142013
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2016 Approved Budget = $1,224 per year Flat Rate Customer. Increase of $6 per month over previous year. Anticipating rates to reach $1,400 - $1,450 per year once Safe Clean Drinking
water treatment plant is fully operational in 2019.
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$1,410,000
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Fiscal ChargesReserves
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$7,874,000
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$10,460,090
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$2,779,000
Pension & LtdGood and Services
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$12,923,910
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2016 Utility Operating Budget $43.947 Mil
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Salaries and BenefitsCapital from Operating
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Drinking Water - 9.69MIndustrial Water - 1.634MWasteWater - 10.132MInfastructureManagement - 1.278MInternal Charges/Pension -2.06MFiscal Charges/SCDWReserves - 19.153M
$43,947,000
%
4
Budget
23%
22%
3%
2016 Approved
5%
43%
2016 Approved Utility Operating Budget - Expenditures
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Infastructure RenewalWaterInfastructure RenewalSanitaryWatershed ProtectionSafe, Clean DrinkingWater Project
$10,055,000
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Water 54.6%
SCWP 1.0%
Utility Capital Budget
2016
Watershed 0.8%
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2016 Approved Utility Capital Budget
Sanitary 43.5%
City Funding - 6.2MOther Funding - 3.855M
$10,055,000
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City 61.66%
Budget
2016 Utility Capital
2016 Utility Capital Budget - Funding
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Other 38.34%
SERVICE BASED BUDGET
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Service
Delivery
Sustainable
Customer Focused Results Oriented
Performance Driven
What is Service-Based Budgeting?
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Metrics
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Resource
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Levels
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2011 Example evaluated by Common Council
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Note:
- 3.98 lane
66.9
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Funding
Lane Km
$3,737,300
Scenario C
Target: PCI = 77.5
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Funding
Lane Km
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$3,237,300
Scenario B
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Target: PCI = 75.6
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Funding
Lane Km
$2,237,300
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Scenario A
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Target: PCI = 71.8
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An adjustment in funding in increments of $250,000 results in
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Funding
Lane Km
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$2,737,300
Status Quo
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Note 2012 Analysis: kilometres of asphalt resurfacing. The effect on the PCI is +/- 0.945
Target: PCI = 73.7
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Results depend on
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$1.3 million added funding in roadway maintenance (all maintenance) PCI increased to 76.5 from 73.4 in the previous year Number of streets with a poor or lower rating (PCI < 55) decreased
to 7.5% from 12.56% the previous year Note: contract costs and weather
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Continued
investment
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maintenance needs, not an indicator of ridability maintenance needs, not an indicator of ridability
in PCI
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Impact on decision
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PCI determines condition of pavement and rate of deterioration to identify PCI determines condition of pavement and rate of deterioration to identify
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Council
Priorities
Outcomes
Community
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Based on service planning and financial Lower priorities give way to higher priorities when resources are limited
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mprovement
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Policy document that supports accountability for results and transparency in decision making Tool for making services more effective and efficient through planning and iFlexibility to
respond to a changing environment
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ASSET MANAGEMENT
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Total replacement costs: $1.2 Billion (Estimate using NRBCPI & CPI) Total historical costs: $853 Mil
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Combined Sewer NetworkSanitary Sewer NetworkWater and WastewaterNetworkWater Network
$336,164,213
Sanitary Sewer
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$30,614,060
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Network
Combined Sewer
Water and
Wastewater
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$214,860,770
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Total replacement costs: $1,085 Mil (Estimated using NRBCPI & CPI) Total historical costs: $551 Mil
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$502,938,886
Water Network
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Transportation - 1246 KM Lane Vehicles -Buildings- 75, 10 ABC(s) Water and Wastewater Facilities- Water Distribution Networks-567 KM Sanitary Sewer Distribution Networks-340 KM Combined
Sewer Network Pipes-65 KM Parks/Land Improvement-Machinery & Equipment-Transit Buses-Land
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Line Breaks, Potholes High Costs, Overtime, etc. Reconstruction of Roads Increase deterioration of pipes, equipment and roads impact capital costs Emergency Contractor fees, staff overtime,
unplanned repairs, inefficiency , etc..
Increase Risk of Failure Increase in Capital Costs Increase in Maintenance Repairs and Operating Costs
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Snow removal Poor road conditions Water Quality Recreation Facilities Health and safety
Assets provide a the customers Consequences on the LOS
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To provide an optimum Level Of Service (LOS) at the
Asset Management is an integrated business approach involving planning, finance, engineering and operations to effectively manage existing and new infrastructure to maximize benefits,
reduce risk and provide satisfactory levels of service to community users in a socially,
What is Asset Management? National Roundtable for Sustainable Infrastructure Mission: lowest Life Cycle Cost (LCC) through the management of current and future assets in effective,
efficient and sustainable manner
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Comply with the Gas Tax Fund Agreement Dec 2017 deadline and secure other grants/funding Reduce risk exposure to the City Understand the costs of providing services (i.e. LOS) Demonstrate
investment accountability to residents and business Make better decisions on when to replace, renew or decommission assets with long term sustainable investment plans
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Asset LOS Vs. Customer Link Asset to LOS ( Level Of Service) Asset Condition Risk =Likelihood * Sum of Impacts
Level Of Service ( Current Vs. Desired) Asset Renewal Strategies Robust Capital Investment Planning (CIP) Long Term Financial Planning Asset Maintenance Strategy Decision Making process
Robust Risk Assessment
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ISO 55000 (International standard for asset management) International Infrastructure Management Manuel (IIMM)
Develop and Implement a Comprehensive AMP Based on Best Practices:
General Fund
FINANCIAL CHALLENGES
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Operating expenditures are outpacing revenue growth Tax resistance: No desire to increase tax rate Reliance on unconditional grants: Grants have been inconsistent Significant infrastructure
deficit Need to manage existing debt load
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2016
2015
19,923,206
2014
2013
2012
2011
2010
2009
2008
2007
18,742,621
2006
UNCONDITIONAL GRANT
30,000,00020,000,00010,000,000
2016
2015
120,141,178
2014
2013
2012
118,239,743
2011
2010
2009
2008
PROPERTY TAXES
2007
80,140,223
2006
Property taxes and unconditional grants
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Property taxes: modest increase since 2013, projected to be flat or negative in 2017Unconditional grants: inconsistent
90,000,00080,000,00070,000,00060,000,000
130,000,000120,000,000110,000,000100,000,000
2016
0.58%
1.45%
2015
2014
0.33%
2013
2.55%
2012
4.14%
2011
3.22%
2010
5.36%
2009
6.98%
2008
6.54%
Property taxes & Unconditional grants (Year over Year Increase %)
4.53%
2007
Property taxes & Unconditional grants
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8.00%7.00%6.00%5.00%4.00%3.00%2.00%1.00%0.00%
Expenditures
2021
Revenues
Revenue growth is not keeping pace with expenditure growth Wages & benefits are increasing by an average of $2.3 Mil/year Fiscal Charges increase by $700K/year and will become stable
if capital expenditure is under control (not more than $12 Mil/year)
5 Year Financial forecast 2017-
61
Key findings:
Wage trends by employee groups
62
2015
117,930,000
2014
d
2013
n
u
F
l
2012
a
r
e
n
2015
2011
e
G
2010
5
1
0
2
-
2009
6
DEBENTURE BALANCE
0
0
2
2008
t
b
e
d
2007
m
r
e
54,788,800
2006
t
g
n
-
o
L
63
Outstanding debenture balances 2006-
80,000,000 60,000,000 40,000,000 20,000,000
140,000,000 120,000,000 100,000,000
2025
129,107,008
102,707,003
2024
2023
5
2
2022
0
2
-
6
2021
1
0
2
2020
t
s
a
c
2019
e
r
o
f
2018
t
b
e
d
Projected Debenture Balances (12 Mil - City Share/year)Projected Debenture Balances (16 Mil - City Share/year)
2017
m
r
e
117,593,000
2016
t
g
0
n
o
L
64
80,000,00060,000,00040,000,00020,000,000
140,000,000120,000,000100,000,000
Jan-16
Jul-15
2.822%
Jan-15
Jul-14
Jan-14
Jul-13
Jan-13
Jul-12
Jan-12
Jul-11
Jan-11
Jul-10
Jan-10
Jul-09
Jan-09
Jul-08
Jan-08
Jul-07
AVERAGE YIELD
Jan-07
Jul-06
Jan-06
Jul-05
Jan-05
Jul-04
Jan-04
Jul-03
Jan-03
5.630%
Jul-02
Average yield from 2002 to 2016
65
6.000%5.000%4.000%3.000%2.000%1.000%0.000%
2016
Budget
16,031,173
2015
Budget
2014
Budget
2016
2013
Budget
2012
Budget
2011
Budget
charges budget
2010
Budget
Fiscal
General Fund 2007-
2009
Budget
2008
Budget
2016
2007
11,625,571
Budget
-
Fiscal charges
66
Fiscal charges: Escalated fast during 2008-2012, slowed down and stabilized from 2013-
8,000,000 6,000,000 4,000,000 2,000,000
18,000,000 16,000,000 14,000,000 12,000,000 10,000,000
2025
17,779,053
20,420,720
2024
5
2023
2
0
2
-
7
2022
1
0
2
d
2021
n
u
F
l
a
2020
r
e
n
e
2019
G
s
e
2018
g
s
r
n
a
o
i
h
t
c
16,615,026
c
2017
l
16,698,026
Projected Fiscal Charges (3.5% Interest rate, $12 Mil Capital Expenditure (City Share)/Year)Projected Fiscal Charges (3.5% Interest rate, $16 Mil Capital Expenditure (City Share)/Year)
e
a
j
c
o
s
r
-
i
Fp
67
5,000,000
25,000,000 20,000,000 15,000,000 10,000,000
UTILITY FUND
FINANCIAL CHALLENGES
68
2015
68.0 M
2014
2013
2012
2011
56.8 M
2010
2009
Outstanding Debt
2008
2007
44.3 M
2006
0
Water Utility Outstanding Debt 2006-2015
69
80,000,00070,000,00060,000,00050,000,00040,000,00030,000,00020,000,00010,000,000
2025
60,257,000
2024
2023
5
2
0
2022
2
-
5
2021
1
0
2
2020
t
b
e
2019
D
d
e
2018
Owing and Future Debt
t
c
106,583,000
e
j
2017
o
Debt
r
P
2016
d
n
a
2015
t
n
0
e
r
r
u
C
70
80,000,00060,000,00040,000,00020,000,000
120,000,000100,000,000
Harbour Cleanup Completed in 2011 > $100MSafe Clean Drinking Water Project est. completion in 2018 >$200M These projects are Capital intensive and has increased the financial pressure
on rate payers.
Long Term Debt and Debt Management
71
Debt has grown and will continue to grow until 2018/19 Contributing factors to increase in debt:
t
n
e
m
e
g
a
n
a
M
t
b
e
D
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n
a
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b
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D
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T
g
n
Debt will peak at approx. $107 Million in 2018 upon completion of the Safe Clean Drinking Water project. The Utility will manage debt retirement strategically. Future capital investment
will be part of the yearly capital renewal expenditures. Importance of developing a Long term debt and debt management plan. Need to link long term financial planning with debt and
asset management.
o
L
72
2016
7,874,000
2015
2014
6
1
0
2013
2
-
7
0
2012
0
2
d
2011
n
u
Fiscal charges stable, benefit from
F
2010
y
t
i
l
i
2016
t
-
2009
U
lower interest environment
2007
s
2008
e
g
r
a
8,595,357
2007
h
C
l
0
Fiscal Charges
a
c
s
i
F
73
8,000,0006,000,0004,000,0002,000,000
12,000,00010,000,000
2025
8,209,088
2024
2023
5
2
0
2022
2
-
7
1
0
2021
2
d
n
u
2020
F
y
t
i
10,366,755
l
i
t
2019
U
s
2018
e
g
s
r
n
a
7,695,538
o
h
i
t
2017
C
c
l
e
a
j
0
c
o
s
3.5% Interest rate, $45 Mil Capital 2018 SCDWP, Pay as you go for future expenditures
r
i
FP
74
Projected Fiscal Charges
8,000,0006,000,0004,000,0002,000,000
12,000,00010,000,000
g
n
i
n
n
a
l
P
l
a
i
c
n
a
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i
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m
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T
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L
c
i
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a
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t
financial road map over 10-25 years Asset management plan will bring evidence based decision making on how City spends it Capital to ensure money is being spent in most effectively
and efficiently. Debt Management plan and a Debt Management Policy will ensure that the City maintains a sound debt position that supports the long term financial objectives of the
community
S
75
BUDGET TIMELINE
76
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G
7
1
June 1, 2016: General Operating budget submission to Finance June to August 2016: Budget reviewSeptember 15, 2016: First draft budget to Council October 31, 2016: Second draft budget
to Council November 30, 2016: Assessment information released by Province of New Brunswick (Estimate only) December 5, 2016: Third draft budget to Council December 12, 2016: Final budget
to Council for approval
0
2
77
2017
Review submission
Submitted to Council for information purposes Submitted Council for final approval
Budget submission to Finance
September
Capital Budget Timelines General and Utility
June 30 July October 17 October 31
78
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Third Reading
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u
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Budget Review
g
n
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Submitted for Council questions and Council
a
r
Submitted to Council for information
e
p
Draft Budget Submission
O
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t
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i
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U
June 30 July to September October 31 purposes November 14 approval. (First and Second Reading) November 28
7
1
0
2
79
Statements
Public Sector Accounting & Consolidated Financial
80
)
s
t
Control of Municipalities Act
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m
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t
a
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S
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a
i
c
n
a
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F
81
Compliance with Legal Provisions Maintain an adequate system of Internal Control Full Disclosure of financial operations of Municipality Conform with Public Sector Accounting Standards
Accounting & Reporting objectives (Municipal Financial Reporting Manual issued under the
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7
City of Saint John General Operating fund
City of Saint John Capital and Loan fund City of Saint John Water & Sewerage Utility Operating fund City of Saint John Water & Sewerage Utility Capital and Loan fund Saint John Parking
Commission Saint John Transit Commission Saint John Non Profit Housing Inc. Saint John Development Corporation Saint John Industrial Parks Inc.
1
82
1.2.3.4.5.6.7.8.9.10. Harbour Station Commission 11. Saint John Aquatic Centre Commission 12. Saint John Trade & Convention Centre 13. Saint John Energy 14. Lord Beaverbrook Rink 15.
Saint John Police Commission 16. Saint John Free Public Library 17. Saint John Jeux Canada Games Foundation, Inc.
f
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FR
83
activities (annual financial statements, budget analysis) Monitor the audit process Assess the existence and adequacy of systems of corporate control and management of business risk.
Administrative powers and duties:
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Annual municipal operating and capital budget recommendation to Common Council Long term financial planning
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FE
84
Giving due consideration to and making recommendations to Council on the following subjects:
Opportunity to expand the Finance Committee terms and conditions to include:
; reducing
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FT
85
Developing financial expertise among members of the Finance Committee Giving direction to staff and working with staff to develop budgets and financial policies
!
86
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