Draft 2018 budget update unveiled at city hall

London city councillors got their first look at the draft 2018 update to the city’s multi-year budget on Monday.

City staff tabled the draft update during an afternoon session of the Strategic Priorities and Policy Committee at city hall.

In it, staff has brought forward 19 proposed budget amendments that they recommend be approved by city council.

Twelve of the amendments are to the city’s capital budget and have no impact on the tax levy.  Eight of the amendments are to the city’s operating budget. Of those eight, five will bring an increase to the operating budget, two a decrease, and one no impact.

If all 19 amendments are approved by council, as city staff recommends, the projected tax increase for 2018 will be 3.3 per cent – up from council’s 2.9 per cent target. City staff project an identical tax increase in 2019.

As a result, the average annual tax increase for the entire four-year budget would rise from 2.8 per cent to 3 per cent, about $82 – $6 more – for the average London homeowner.

The 0.2 per cent increase is being blamed on two operating budget amendments the city says it has no control over: the province’s proposed minimum wage increase and a confidential corporate budget matter that the city says pertains to “labour relations and employee negotiations.”

“As part of the four-year budget, we knew there were modest increases proposed to the minimum wage legislation,” said Anna Lisa Barbon, Managing Director, Corporate Services and City Treasurer, Chief Financial Officer. “We had included those increases as part of our four-year budget. The recent amendments that are proposed are far in excess of what was anticipated, so we started doing that work when we identified that that proposed change was coming.”

The draft update confirmed what city officials had previously estimated. The proposed minimum wage hike will have an impact on the city’s bottom line with additional costs to the tune of about $1.5 million in 2018 and $2 million in 2019. The province wants to raise the minimum wage to $14 in 2018 and $15 in 2019. It’s not clear how many city employees earn minimum wage.

The confidential matter, discussed in-camera, will cost the city just as much – $1.45 million in 2018 and $2.48 million in 2019.

“The minimum wage increase, there’s an excess of $1 million each year that we are now in excess of what was originally budgeted for as part of the budget,” Barbon said. “Every $5 million is approximately one per cent, so that is a very significant pressure on the tax rate.”

If the minimum wage increase and the confidential matter were excluded, the average annual tax increase for the multi-year budget would remain at 2.8 per cent — assuming a 2.7 per cent tax increase for 2018 and a 3.1 per cent tax increase for 2019.

London adopted a multi-year budget in 2016. Despite budgeting for a four-year period, city councillors must still approve the budget for each fiscal year, allowing for changes to be made.

Councillors have asked Barbon to come forward with potential cost savings. Barbon was asked whether some of those savings could come at the expense of strategic investments.

“As part of our mid-year monitoring report, we regularly provide a status on those strategic investments that were brought forward as part of the multi-year budget,” she said. “We would certainly provide a status of all of them, we would not single any of them out… our primary focus would be on those that employ operating dollars to support them. But we will bring forward any options we feel council could consider to also mitigate that, in addition.”

Barbon said service level reductions would be one option the city could consider.

“We would need to go back and take a look at potential options that might be palatable,” she said. “The deferral of the strategic investments is certainly another option, and we will go back and sharpen our pencils to see if there are any other opportunities that we could consider.”

Staff also presented seven capital amendments to the city’s Water and Wastewater and Treatment budgets. In a statement, the city said the impact on rates would be maintained at the three per cent identified in the multi-year budget period.

The public will have the ability to weigh in on the draft budget update. Two open houses are scheduled next month. One will take place on Nov. 7 at the Byron Library and another will take place on Nov. 9 at East London Library. Both run from 6 p.m. to 8 p.m.

A public participation meeting will be held during a Strategic Priorities and Policy Committee meeting at 4 p.m. on Nov. 22.

– With files from Devon Peacock and Liny Lamberink

The full draft budget report with all 19 amendments (pg. 2-9) can be seen below.