Centre Wellington councillors have approved, in principle, a $23-million capital budget for 2013.
The move followed last week’s budget review, including a report prepared by financial manager and deputy-treasurer Mark Bradey.
He noted the capital budget represents a significant portion of the total dollars spent by the township in any given year.
In 2012, the capital budget represented approximately $7.25 million of internal financing, including both tax-supported and user-pay sources, and excluding debt. By comparison, the 2013 draft capital budget proposes a similar amount of approximately $7.2 million, he said.
Bradey added that with debt expected to be drawn in 2013 for the $12.3-million expansion of the Elora wastewater treatment plant, the 2013 capital budget expands to approximately $19.5 million funded internally.
The draft capital budget also includes projects funded by external sources such as grants, development charges and developer and partner contributions totaling approximately $3.6 million.
This brings the total 2013 draft capital budget to just over $23 million.
New budget process
Bradey’s report stated that in the past, the annual capital and operating budgets were discussed together during the annual budget deliberations, typically beginning in late February. That timing was mainly dictated by the release of material information that had a significant impact on the operating budget (OMPF funding for example).
Bradey explained this meant tenders and proposal calls had to wait until spring to be issued. However, earlier tender calls usually result in more favorable pricing for roads, bridges and water/wastewater capital projects, he said.
Bradey added the 2013 draft capital budget may still be revisited in February as part of the draft operating budget discussions once the remainder of the township operating budget has been compiled.
“There may be opportunity to include further capital projects in the budget if additional funding becomes available prior to budget deliberations.”
He noted discussions concerning the 2013 capital budget actually began in April with work continuing throughout 2012.
In early November, senior management met to discuss the capital budget and based on available funding, roughly $700,000 was eliminated from the capital budget.
The was done through a combination of deferring certain projects (or a portion of a project) to a later year, or eliminating projects entirely from the 10-year capital forecast.
2013 draft capital budget
Highlights of the draft capital budget include:
– Hill Street drainage outlet, Elora;
– Fifth Line South, Eramosa-Garafraxa Townline to County Road 18;
– Second Line, Highway 6 to Sideroad 6;
– reconstruction of Irvine Street, John St. to Colborne St.;
– Elora Community Centre, begin work on replacing ice mechanical system;
– Victoria Park (Fergus) irrigation system for south and west fields;
– renovations to the council chamber (including media upgrades);
– development of a business retention and expansion program for Centre Wellington;
– Elora wastewater treatment plant upgrades;
– George Street in Belwood, Nelson St. to County Road 26; and
– development of the Bonaire Highlands subdivision north of Sideroad 18.
The 2013 draft capital budget includes approximately $1.5 million dollars in growth-related projects, which are eligible for funding from the township’s development charge (DC) reserve funds. The township is able to undertake these projects due to a significant amount of development charges collected in 2012, which Bradey anticipates will exceed the historical average by approximately $1.35 million.
Almost $600,000 of the budgeted DCs will be used to fund the plans and studies that together will form the basis for future growth and planning.
Ten-year capital forecast
Consistent with the 2012 budget, there are two key assumptions built into the 2013 draft 10-year capital forecast. They are:
– bridges and culverts with estimated total capital expenditures in excess of $500,000 are assumed to be financed as one-third township, one-third federal subsidy, and one-third provincial subsidy; and
– development-specific capital projects are assumed to be 100% front-end funded through a service financing agreement with the developer.
Sufficient reserve funds will not be available to fund all the projects listed in 2014 and 2015.
However, Bradey said, it was decided that investing further time into prioritizing the capital projects within available funding would not be beneficial due to the development of reports and plans in 2013 that will lay the foundation for prioritizing capital projects in future budgets.
Additional comments
In response to questions on Dec. 10, Mayor Joanne Ross-Zuj said the capital budget is out the door and that part of the process is finished.
“Council and staff are now working on the operations part of the budget.” Ross-Zuj said dates for that discussion are set up for January.
“We’ll have our budget pretty well wrapped up, hopefully, by February.”
She said that with the capital budget finished, it gives council a chance to put projects out to tender earlier in hopes of getting better pricing.
She added the capital budget process was good to go through – and that part of the budget was approved last week.
CAO Andy Goldie said the change to taxation won’t be known until the operating budget is complete.
However, Goldie said the dollar figure for capital expenditures is the same as in 2012.
“We will be dealing with the operating and any tax increase in February 2013.”
In response to questions why the capital and operating budget discussions were split for 2013, Goldie said “we wanted to get tenders out in the early part of the year in order to take advantage of good pricing.”
Ross-Zuj said the capital budget for 2013 is roughly $23 million. Of that, roughly $20 million is directed to the sewage treatment plant – and those numbers are exactly the same as 2012, Ross-Zuj said.
In later discussion, treasurer Wes Snarr said the capital budget had not changed from the presentation last week.
And, he added, while the concept of discussing capital and operating budgets may seem unusual, “it is fairly common for municipalities of this size.”
Snarr noted that many smaller municipalities tend to have budget meetings combining discussion of capital and operating budgets.
