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2016-09-15 Finance Committee Minutes Open SessionFinance Committee Meeting Open Session September 15, 2016 MINUTES - OPEN SESSION FINANCE COMMITTEE MEETING SEPTEMBER 15, 2016 AT 5:15 PM 11t" FLOOR BOARDROOM, CITY HALL Present: Mayor D. Darling Councillor D. Merrithew Councillor D. Reardon Councillor S. Casey Councillor G. Sullivan Regrets: Councillor G. Norton Also Present: City Manager J. Trail Commissioner of Finance and Treasurer K. Fudge Commissioner Saint John Water B. McGovern Comptroller C. Graham Senior Manager, Financial Planning H. Nguyen Commissioner of Transportation & Environment Services M. Hugenholtz Deputy City Manager N. Jacobsen Manager Facility Management T. Gamblin City Solicitor J. Nugent Fire Chief K. Clifford Assistant Comptroller Finance C. Lavigne Common Clerk J. Taylor Administrative Assistant K. Tibbits 1. Meeting Called To Order Mayor Darling called the Finance Committee open session meeting to order. (S. Rackley -Roach and S. Ranson entered the meeting) 1.1 Approval of Minutes—August 16, 2016 Moved by Councillor Reardon, seconded by Mayor Darling: RESOLVED that the minutes of the Finance Committee meeting of August 16, 2016 be approved. MOTION CARRIED. 1.2 Continuous Improvement (CI) — Program Overview and Project Results S. Rackley -Roach reviewed the submitted report and commented on the City's Continuous Improvement Program, results achieved through the first cycle of projects, and potential Finance Committee Meeting Open Session September 15, 2016 projects for the second cycle. The goal of the project is to produce cost savings and service improvements throughout the organization. Training of permanent staff cost approximately $60,000 but the project is expected to generate estimated savings of approximately $387,000 annually with an overall target of $500,000. Moved by Councillor Reardon, seconded by Councillor Sullivan: RESOLVED that the presentation entitled, "Continuous Improvement (CI) — Program Overview and Project Results", be received for information. (S. Rackley -Roach and S. Ranson withdrew from the meeting) 1.3 2017 Draft General Operating Budget Mr. Fudge reviewed the 2017 Draft General Operating Budget. Referring to a comment regarding service areas and/or ABC's that are regularly off budget, Mr. Fudge stated that there are controls in place to monitor the budget including a monthly reporting process whereby actual results are reviewed and questions asked respecting the variances. Commenting on the 0% budget increase for 2017, Mr. Fudge commented that this is not sustainable. The budgets have reflected a decrease in goods and services to offset the salary and benefit increases. To determine sustainability, it is necessary to look beyond one year and understand that it becomes a question of desired service levels. Mr. Trail encouraged the committee not to spend an inordinate amount of time discussing the allocation of grants given the small allocation in comparison to the overall operating budget. Depending on the size of the envelope, it may or may not be prudent to have a committee evaluating these requests and Council must decide on the mechanism to use when deciding on the allocation of grant money. Mr. Trail noted that goods and services have been reduced across the board and this will create organizational challenges in order to maintain the same level of services. This is not a sustainable formula. He suggested that if it is determined that there has been growth in the tax base, that the bulk of the money be directed to the capital budget. The Committee discussed communicating clear mandates to the various ABC's with respect to a change in business practices as well as addressing the need to change or reign -in community expectations. Moved by Councillor Sullivan, seconded by Mayor Darling: RESOLVED that the 2017 Draft General Operating Budget be received for information. LTA IQ1[47►[GL1all all1if91 1.4 2017 Draft General Capital Bu Mr. Fudge commented on the submitted 2017 Draft General Capital Budget. Capital budget projects are considered keeping the desired level of service to the public in mind. $39M in capital budget requests have been received for consideration in the 2017 budget. Mr. Fudge stated that of the capital budget approximately $10.2M is funded by debt issue. This does not incorporate some significant contigent projects that if they occur, increase the capital commitments further. With the contingent projects the net borrowing could become as high as $14.2M which is above the preferred threshold to manage the debt. However, if there is an opportunity that generates growth and assessment base, the project may want to be considered. Finance Committee Meeting Open Session September 15, 2016 Mr. Trail stated that the borrowing limit is approximately $12M. The challenge is balancing these contingent items and determining projects to commit to. Moved by Councillor Sullivan, seconded by Councillor Casey: RESOLVED that the Finance Committee recommend to Common Council that the City portion of the capital budget be limited to a maximum debt envelope of $12M. Mr. Fudge commented that if a growth initiative generates assessment base it may still be a worthwhile investment, even if it exceeds the preferred threshold and suggested that projects be considered on the merit of the business case. Councillor Reardon stated that this decision would have to form part of a larger discussion and cannot support the motion before a consideration is given to the projects involved. MOTION CARRIED with Mayor Darling and Councillor Reardon voting nay. Moved by Councillor Sullivan, seconded by Councillor Reardon: RESOLVED that the 2017 Draft General Capital Budget be received for information. MOTION CARRIED. 1.5 2017 Draft Water and Sewerage Capital and Operating Budgets Referring to the submitted report, Mr. Fudge provided an overview of the 2017 Draft Water and Sewerage Capital and Operating Budgets. Moved by Councillor Sullivan, seconded by Councillor Reardon: RESOLVED that the 2017 Draft Water and Sewerage Capital and Operating Budgets be received for information. MOTION CARRIED. Adjournment Moved by Councillor Sullivan, seconded by Councillor Casey: RESOLVED that the Finance Committee open session meeting held on Thursday, September 15, 2016 be adjourned. MOTION CARRIED. The Finance Committee meeting held on September 15, 2016 was adjourned at 7:25 p.m.