2008 Budget Questions & Answers
QUESTIONS:
How does council arrive at its yearly budget?
What is the cost of services in the approved 2008 operating budget?
What is the cost of capital works approved in the 2008 capital budget?
What are the 2008 budget challenges?
What is the City of Kingston doing to meet the challenges of 2008 and the future?
How will the 2008 budget impact my tax and utilities bills?
How does the city's A+ credit rating affect our ability to borrow money or issue debentures?
ANSWERS:
A: Budget documents tell a city's financial story and set spending targets for municipal programs, services and initiatives. The budget is an important element in the accountability cycle and provides a standard against which subsequent performance can be judged.
Q: What is the operating budget?
A: The operating budget is an outline of a city's spending plan organized by department and division showing its day-to-day operations including programs and services, such as water and sewer, transit, garbage collection and disposal, recycling, parks, arenas, recreation programs, road maintenance, libraries, policing and public health services. Contributions to capital reserve funds are also made from the operating budget.
Q: What is the capital budget?
A: The capital budget is an outline of a city's capital expenditure plan for assets, such as water and sewer mains, roads, arenas and parks, which will provide or support services to residents over many years.
A: Capital projects are needed for major rehabilitation, replacement or expansion of existing assets and the acquisition or creation of new assets, such as roads, sewers, parks and arenas.
Q: How does council arrive at its yearly budget?
A: Residents provide budget input to their councillors throughout the year. Budgets are developed based on council's directions, guidelines and the forecasts approved in the prior year's budget. Asset management and program services are part of city management's responsibilities and serve as a major information source for budget planning. Council, sitting as Committee of the Whole, reviews all the budget proposals from city departments and external agencies.
Q: What is the cost of services in the approved 2008 operating budget?
A: The 2008 general municipal operating budget has been approved in the amount of $261,463,000.
The 2008 municipal utility operating budget has been approved in the amount of $78,402,058. Municipal utilities, operated by Utilities Kingston, include water, sewer and the operation of natural gas distribution in the geographic region known as the 'former' City of Kingston.
Q: What is the cost of capital works approved in the 2008 capital budget?
A: The 2008 capital budget is $66,687,550, which includes $39,007,100 for general municipal purposes, and $27,680,450 for municipal utilities.
In addition, the capital budgets for 2009 and 2010 specific to road and municipal utility capital programs were also approved. The 2009 capital budget for roads and municipal utilities is $85,202,786, which includes $15,528,000 for roads purposes, and $69,674,786 for municipal utilities. The 2010 capital budget for roads and municipal utilities is $49,068,294, which includes $17,750,000 for roads purposes, and $31,318,294 for municipal utilities.
Q: What are the 2008 budget challenges?
A: The 2008 budget challenges are:
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Maintaining all current services
The City of Kingston continues to provide a wide array of services. Council has completed a review of some of these services. However, the community response continues to favour maintaining and/or increasing current service levels. The challenge is to find a balance between service delivery cost and affordability. -
Increased pressure on the tax rate
Council has endorsed a multi-year financial forecast to predict impacts of various fees and taxation. Although this plan includes an annual inflation adjustment and dedicates 1% for capital infrastructure purposes, increased pressure on the tax rate continues.
Q: What is the City of Kingston doing to meet the challenges of 2008 and the future?
A: To meet the challenges of 2008 and the future, the city is:
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Reviewing the multi-year strategic approach to budgeting
The concept of a multi-year operating budget, with an emphasis on finding long-term sustainable and affordable solutions to achieve a balanced budget, was introduced in 2004. The multi-year budget will help deal with annual budget challenges and find long-term solutions to improve the fiscal position of the municipality. It allows the city to forecast inflation, growth and growth related cost pressures, regulatory service changes, salary and wage increases and their effects on future budgets. It also presents an opportunity to find more efficient and effective ways to deliver affordable and valued services to our citizens. -
Prioritizing capital expenditures
- For the period 2006 through 2010, council is looking for significant progress in the areas of infrastructure and recreation and culture, along with tangible progress in the areas of economic prosperity, environment and affordable housing.
- The current council has established a number of themes centering on the four pillars required to build a sustainable community (environmental, cultural, social and economic). In 2008 this base will form the basis for developing future capital and operating programs.
- For the period 2004 through 2006, council provided the city's management team with a strategic agenda, known as the Group of 7 projects, enabling them to establish their priorities and allocate resources to major initiatives, which will make a significant difference to the life of our city.
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Of the city's seven priority projects, council selected three "large initiatives" for its
term of office, which ended with the 2006 municipal election — the Ravensview Sewage
Plant upgrade, the Kingston Regional Sports and Entertainment Centre and the construction
of a four-ice pad arena — Multiplex — to address aging arenas.
As well, council added four other key initiatives — the widening of John Counter Blvd, the Grand Theatre, Market Square and the K&P Trail to frame an overall list of seven priorities. More information can be found in the Community Priorities — Group of Seven section of this Web site.
The Group of 7 capital projects received budget approvals in 2005 and 2006 and work on these projects is continuing into 2008 with completion of the final project in the Group of 7 by 2009.
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Lobbying the provincial and federal governments for grants and new sources of funding
The City of Kingston continues to focus on asset renewal. To assist with infrastructure rejuvenation, the city will continue to look for grants and new sources of funding from the upper levels of government. Cities cannot and will not be able to address this issue entirely on their own. Cooperation and support from federal and provincial governments is essential. -
Implementing changes in policy
In order to enable the city to finance certain service requirements and construct capital facilities, it will be necessary to move toward more focused user pay approaches. Examples of this include council's approval of user charges as a significant share of project funding for the Grand Theatre, the Kingston Regional Sports and Entertainment Centre, and the Multiplex.
Q: How will the 2008 budget impact my tax and utilities bills?
A: The amount of increases to property taxes and water and sewer rates are based on averages. Increases may vary depending on whether you live in the east, west or central areas of the city. Education tax rates, which are set by the province and your property tax assessment for 2008 taxation, also have an impact on your final tax bill.
The city's average residential property tax increase for 2008 is approximately 3.36%.
Natural gas distribution rates increased on January 1, 2008 by an average of 3.5%.
Water and sewer rates increased on January 1, 2008 by an average of 7.7% and 8.3% respectively. Utility rate increases are required due to infrastructure renewal and new regulations introduced by the Province of Ontario in the water utility. In addition the new rates reflect the first phase of the approved harmonization of water and sewer rates across the city over the three year period beginning in 2008.
Q: How does the city's A+ credit rating affect our ability to borrow money or issue debentures?
A: Standard & Poor's have completed the 2007 credit review and have revised the city's credit rating from A+ with a "stable" outlook to A+ with a "positive" outlook. This rating demonstrates strength in the city's financial management practices and positions the city to secure funds on the investment market at attractive interest rates.
