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2016-10-13 Finance Committee Minutes Open SessionFinance Committee Meeting Open Session October 13, 2016 MINUTES - OPEN SESSION FINANCE COMMITTEE MEETING OCTOBER 13, 2016 AT 5:00 PM 8t" FLOOR BOARDROOM, CITY HALL Present: Mayor D. Darling Councillor D. Merrithew Councillor D. Reardon Councillor S. Casey Councillor G. Sullivan Absent: Councillor G. Norton Also Present: City Manager J. Trail Commissioner of Finance and Treasurer K. Fudge Comptroller C. Graham Senior Manager, Financial Planning H. Nguyen Commissioner of Transportation & Environment Services M. Hugenholtz Commissioner Saint John Water B. McGovern Commissioner Growth and Community Development J. Hamilton Fire Chief K. Clifford Deputy Commissioner Growth & Community Development A. Poffenroth Assistant Comptroller Finance C. Lavigne Administrative Assistant K. Tibbits 1. Meeting Called To Order Councillor Merrithew called the Finance Committee open session meeting to order. Moved by Councillor Reardon, seconded by Councillor Sullivan: RESOLVED that the agenda for the open session meeting of the Finance Committee be approved. MOTION CARRIED. (Police Chief J. Bates, Deputy Police Chief G. McCloskey, Chair Police Commission A. Mullin and Director HR and Finance M. Corscadden entered the meeting) 1.1 Police Services Referring to the submitted report, Chief Bates and Mr. Corscadden commented on the 2017 operating budget for the Saint John Police Force. The police force is involved in contract negotiations and the potential wage settlement is not known. Salaries and benefits account for approximately 82%-83% of the overall budget. The force continues to look for ways to reduce overtime costs, through operational efficiencies. Finance Committee Meeting Open Session October 13, 2016 The goods and services budget has been reduced by approximately 23% over the past two years. There is risk and exposure to the force as a result in terms of sustainability and maintaining an adequate police service. Other risks to the budget include increased vehicle maintenance costs from retaining police vehicles longer; reductions to the training budget; and reduction in other operational equipment. Chief Bates and Mr. Corscadden commented on the submitted 2017 operating budget for the Public Safety Communicatons Centre. The centre does very well with respect to generating revenue to offset costs on the operating side. For every dollar spent, the centre generates approximately 0.40 cents in revenue to offset cost. The proposed budget for 2017 is approximately $109,000 less than the budget request for 2016. Responding to a comment, Chief Bates stated that there are sections in the taxi bylaw and the traffic bylaw that require a police officer to enforce such provisions. A bylaw amendment would be required to have these duties delegated to other areas. Gains could be made through synergies with community partners, specifically in the area of mental health calls. Moved by Councillor Sullivan, seconded by Mayor Darling: RESOLVED that the presentation entitled, "SJPF and PSCC 2017 Operating Budget", be received for information. MOTION CARRIED. (Mayor Darling withdrew from the meeting) (Chief J. Bates, Deputy Chief G. McCloskey, A. Mullin and M. Corscadden withdrew from the meeting) Moved by Councillor Reardon, seconded by Councillor Sullivan: RESOLVED that item 1.4 Saint John Water presentation be moved forward on the agenda. LTA IQ1[47►[GL1:k]k]11191 1.4 Saint John Water Mr. McGovern reviewed the submitted 2017 budget report for Saint John Water. Revenue streams vary year to year due to the number of flat rate customers, which have been declining, and also the amount of metered water use which can fluctuate significantly. There is a 2.96% increase in the 2017 budget of which 0.8% is attributable to an increase in the operating budget. The remainder is being channeled from the capital budget to operating into the safe clean drinking water project for a reserve. It is a good practice to establish a reserve in order to reduce borrowing costs and fiscal charges. Salaries have remained stable with a 1% increase and is forecasted to decrease by one position, through attrition, in the utility next year. Goods and services are essentially flat but a number of initiatives have been added into the budget without increasing goods and services. Responding to a comment regarding the trend of the utility having small surpluses, Mr. McGovern commented that the surpluses are not significant in terms of the overall budget. Overall the utility is taking on significant debt for the safe clean drinking water project and surpluses are rolled back into the utility. Mr. Fudge commented that there is significant borrowing required at substantial completion in 2018. The $72 yearly increase to ratepayers will provide for a reserve to offset the amount of borrowing. There will also be an annual service payment with respect to the P3 contract. This Finance Committee Meeting Open Session October 13, 2016 is a strategic decision, and a reserve will reduce the amount of borrowing and avoids "sticker shock" for the customer. Moved by Councillor Reardon, seconded by Councillor Sullivan: RESOLVED that the Finance Committee recommend that the submitted Saint John Water Utility Budget be presented to Common Council with a recommendation to receive and file. MOTION CARRIED. (Councillor Reardon withdrew from the meeting) 1.2 Finance & Administrative Services Mr. Fudge reviewed the 2017 budget for Finance and Administrative Services and commented on the service areas and upcoming initiatives. Finance and Administration has seen a number of continuous improvement projects including the City hall space optimization project, fleet utilization project, phone utilization project, and Market Square HVAC maintenance all of which are designed to identify potential savings opportunities. An asset management program is being undertaken which will reduce operating costs and improve service levels. It will allow the City to strategically prioritize its capital spending to critical areas. The goal is aligning long term financial planning with strategic plans. The trend in the budget is consistent with other service areas. Salaries and benefits have increased with inflationary pressures which has been offset through reductions in goods and services. Moved by Councillor Sullivan, seconded by Councillor Casey: RESOLVED that the submitted presentation entitled, "2017 Service Based Budget Finance and Administrative Services", be received for information. LTA IQ1[47►[GL1:k]k]11191 1.3 Growth & Community Development Services Ms. Hamilton reviewed the submitted budget presentation for the Growth & Community Development Service area. The budget includes city services delivered by the department and funding to the ABCs that relate to economic development. Funding is provided to support four economic development agencies, accounting for approximately $2M of the budget. Approximately % of the department's budget is offset by revenues. Revenue projections are based on historic trending; actuals are influenced by the level of economic activity in the community which is heavily influenced by major project construction. Referring to the expense budget for 2017, Growth and Community development services is projecting a budget of just over $10M which is a 4.4% increase from 2016. Most of the increase is caused by movement of funding for the urban development incentives program from the capital budget into the operating budget. Goods and services have been cut by 4% to offset increases in salaries. Moved by Councillor Merrithew, seconded by Councillor Sullivan: RESOLVED that the Finance Committee request direction from the Growth Committee on the allocation of the approximately $2M funding envelope for the economic development agencies. LTA IQ1[47►[GL1:k]k]11191 Moved by Councillor Sullivan, seconded by Councillor Casey: Finance Committee Meeting Open Session October 13, 2016 RESOLVED that the presentation entitled, "2017 Service Based Budget Growth & Community Development Services", be received for information. MOTION CARRIED. 1.5 2016 Year End Projections Ms. Nguyen commented on the year end projections for the general fund as at August 31, 2016. The projected year end surplus is $1.1M which is 0.72% variance from the overall budget. Ms. Graham commented on the year end projection for the water utility fund as at August 31, 2016. The surplus reported at the end of June has decreased from $317,000 to $233,000, predominantly the result of lower revenue. Moved by Councillor Casey, seconded by Councillor Sullivan: RESOLVED that the submitted report entitled, "2016 Year End Projections", be received for information. MOTION CARRIED. Adjournment Moved by Councillor Casey, seconded by Councillor Sullivan: RESOLVED that the Finance Committee open session meeting held on Thursday, October 13, 2016 be adjourned. LTA W1[47►[eL1:k]k]11191 The Finance Committee meeting held on October 13, 2016 was adjourned at 7:40 p.m.