Council Update: Budget 2020

Agenda February 12

Yesterday was the big day for setting the 2020 budget as Council went through the budget options list (aka the parking lot). The options list was generated over the last several weeks as each department presented their budget. After each presentation, Council had the opportunity to ask questions of staff and move various unfunded items to the options list for additional consideration. The day when Council reviews the options list is the day that a lot of decisions are made about what HRM will do in the coming year. It’s the day when the full picture of what it all means in terms of taxes and debt is generally known. This year we found ourselves in the enviable position of being able to provide extra funding in several areas, eliminate the need for new debt, and keep the impact on the tax bill low. If only all of our budgets were like that!

When HRM started its budget deliberations, the initial direction was for a 1.5% increase in the tax bill for the average home (approximately $30). HRM always focuses on the change in the tax bill, which combines the impact of assessment increases and the tax rate. It’s basically designed so that Council isn’t able to boast about not raising tax rates while allowing rising assessments to fill the municipal coffers. It’s not well-known that this is how we measure things. The nuance is often missed. In actuality, HRM has cut the tax rate for the last several years because rising assessments have brought in enough additional revenue to meet HRM’s risings costs. Tax bill has gone up, but the tax rate has gone down.

Since our initial budget presentations, two bits of good news have come in. The first is that staff are projecting a surplus for 2019/2020 of $16.2 million. There is still some risk regarding the size of the surplus, but HRM appears likely to finish the year with extra cash. Having something leftover isn’t a bad thing. Far better to budget conservatively then to be overly optimistic and end up short! The other change is assessment increases related to HRM’s continued growth means there is more new revenue than previously anticipated. The unexpected assessment revenue totals $4.5 million and is largely from new apartment buildings (commercial assessments are still flat). Both the surplus and the better than forecast assessment results made a big difference for the options list since it gave Council the ability to include items without further impacting the residential tax bill. This is my fourth municipal budget and it’s been the first one where Council’s choices weren’t so stark.

One Time Items
One of the key principles of budgeting is to avoid creating a structural deficit. It would be dangerous to get into funding reoccurring programs and salaries, or cutting taxes with one-time revenues. It’s all fine and good the first year, but what happens in year 2 when the bill comes due in full? One-time revenues should be paired with one-time expenses to avoid ending up in a bind when the cash runs out. The 2019 surplus is very much one-time revenue and Council opted, therefore, to fund the following one-time items from the surplus funds:

Item	Amount	Notes
Keshen Goodman Library Reno	$2,000,000	Ended up funded from Strategic Capital Reserve
Pave Oak Ridge Drive	$36,400	Bedford’s last gravel road
Downtown Dartmouth Infrastructure Renewal	$2,000,000	Land acquisition for the Downtown Dartmouth project
Regatta Point Seawall Design	$80,000	Design work for upcoming repairs
Musquodoboit Valley Recreation	$250,000	Replace lost playground in Musquodoboit Valley (possible splashpad project)
Splashpads	$500,000	Splashpad funding. Dartmouth, Eastern Passage, and Timberlea are the three possible projects
African NS Affairs Economic Strategy	$50,000
Musgo Rider Capital Grant	$200,000	Capital grant to help Musgo Rider purchase a new vehicle
Bus Stop Theatre Grant	$125,000	Funded from reserve account
Washroom Graves Oakley Park	$315,000	Contingent on Provincial funding, funded from reserve account

I was particularly pleased to see the funding for splashpads (good chance that Dartmouth’s splashpad could be the recipient of that money) and the Downtown Dartmouth Infrastructure project. I wrote about the Dartmouth Splashpad yesterday, which you can read about here. The funding for the Downtown Dartmouth project is for land acquisition and is essential to keep this multiyear project moving. Acquiring property in 2020 sets the stage for the potential construction of the Dundas Street bridge into Dartmouth Cove in 2021. Once the Dundas Street Bridge is built, they’ll be a detour available for when Portland, Alderney, Prince Albert is dug up for phase 2 of the Sawmill River project. It’s at least a three year process.

Once the one-time capital items were taken into account, HRM’s surplus was reduced from $16.2 to $13.1 million. HRM had originally planned to borrow $12.9 million in 2020 for capital projects. Council opted to allocate up to $12.9 million of the surplus (almost all of what was left) to the already approved capital budget so that HRM can avoid taking on any new debt in 2020. Avoiding new debt will save HRM $2.3 million in 2021.

Reoccurring Items:
After dealing with the one-time items, Council had to turn to ongoing program costs. Here too, the news was good. The extra $4.5 million in assessment revenue is expected to reoccur each year since assessments are a generally stable source of funding, so that’s money that is available to support new program costs or reduce taxes without creating a structural deficit. Council ended up voting to provide funding for the following:

Item	Amount	Notes
Legislative Assistant Clerk’s Office	$67,200	Support  for new HRM committees
Lawyer	$122,600	Additional HRM lawyer (I voted against this one)
Legal support staff (2)	$113,900	Additional support for HRM legal
Street Navigator Program	$60,000	3 year partnership with Downtown Dartmouth and North End Halifax Business Improvement Districts
VOLTA Partnership	$125,000
Microsoft Licenses	$520,000	To get every HRM employee an HRM email
Citizen Survey	$75,000
Menstrual products in all HRM facilities	$0	Program will happen, but funding wasn’t needed as staff absorbed cost into existing facilities budget
Library isolation program	$50,000	Food program at the library to reduce social isolation
Rural Transit	$100,000	Funding for non-profit rural transit groups like MusGo and Bay Rider
BID Grants	$50,000	Increase in grants to HRM Business Improvement Districts
Tree Planting Pruning	$200,000
Parking Ban Enforcement	$34,000	Get aggressive on towing cars that obstruct snow removal
Parking Fines	($175,000)	Increase in parking fines from $25 to $35 with the arrival of the new parking technology
Trail Maintenance staff (4)	$79,000	Increased trail maintenance
Field Maintenance staff (4)	$79,000	Increased field maintenance
Inclusion Program	$125,600	Staff and program expansion for Parks and Rec
Aquatic Instruction Salary	$50,000	Increased salary for lifeguards
Art Grants	$125,000	Core funding for arts organizations
Support for multi-district facilities	$90,000	Sportsplex, Cole Harbour, Alderney, Canada Games etc
Food Action Plan	$100,000
Heritage Incentives	$150,000	Increase in available funding for heritage grants
Accessible Taxi	$100,000
HalifACT staff (3)	$137,000	New staff for HRM’s Climate Change plan
Heritage Planner	$80,000
Fire Department training	$290,000
Fire Department uniforms	$270,000
Fire Department Logistics	$230,000
Fire Department professional services	$60,000
Police Department	$157,500	Council doesn’t direct how the police budget is spent, but expectation is that this will be used for additional officers for lock-up and sexual assault investigations
Traffic Calming	$150,000	Additional funding for traffic calming, likely to be speed bumps in 10 school zones.

Since the additional reoccurring costs were less than $4.5 million (about $3.6 million total), the originally expected increase in the tax bill of 1.5% will instead be 1.4%. In terms of out-of-pocket cost, this means the tax bill for the average home will be about $27 instead of $30. We could have reduced the increase further, but only by opting not to fund items on the list. I think the balance is a good one as 1.4% is well fairly modest and well below inflation.

Library Funding
There are a lot of good things on the list. In particular, I wanted to highlight the $250,000 increase in the library collections budget. This was an item that I championed. Compared to other systems across the country, our library is exceptionally well-used, receiving significantly more visits per capita.

Our library system is definitely well-loved and effective! Despite that though, the size of the library’s collection is below average.

We have more visitors, but a smaller collection! That’s not a good pairing. Worse yet, the collection size isn’t keeping pace with our growing population and is getting relatively smaller year by year. Not surprisingly, there are some practical impacts, of which the easiest to measure are hold wait times. In HRM, on average, library users wait 65 days for a hold item, whereas comparable library systems are generally half of that. Of the seven systems surveyed by staff, only Winnipeg has a longer average wait.

City	Average Hold Wait Time (days)
Markham	30
Mississauga	35
London	35
Hamilton	36
Edmonton	42
Newfoundland	55
Halifax	65
Winnipeg	73

Part of the problem is the exorbitant prices that publishers are charging for e-books. E-books are growing in popularity each year, but they cost the library more to get and, unlike a paperback book, they actually expire after a limited number of downloads, forcing the library to rebuy the e-book. It’s a challenge all libraries are facing. Some sort of intervention by the federal government might be needed (checkout this Global story on the issue)

Unfortunately, for HRM to bring the library’s holdings up to the national average would cost over $6 million. Doing that all at once, given all of the other budget demands, isn’t realistic. $500,000 would stabilize the collection and allow the library to stop falling further behind each year. Figuring out what to ask for at Council can sometimes be challenging. Go too high and the item could get voted down. I suggested a phased approach that would keep the the tax bill at (as it turned out slightly below) the previously projected 1.5% tax bill increase and my colleagues supported my request to add $250,000 for the library collection budget. I hope to secure the other half next year to stabilize the collection’s size.

Fire Department:
The fire department’s extras are also worth mentioning since it looks like a lot of extra money. The thing is, it’s not really new money so much as Council correcting a very poor budgetary practice that has been going on for years. The fire department hasn’t been budgeting for training and uniform costs, costs that really aren’t optional for obvious reasons. Instead, HRM has juggled those expenses each year. Preparing a budget that intentionally doesn’t include money that you know you’re going to spend with the idea that surpluses or delays in other areas will free up cash to cover that expense is problematic. It’s wrong for transparency, planning, and introduces risk into the budget since there is no guarantee of surpluses elsewhere. It’s been this way for years. Council corrected a similar situation last year where Transportation and Public Works consistently didn’t plan for winter salt costs, and now we’ve done the same for the Fire Department. I expect to never see uniforms listed as an unfunded extra expenses again. Going forward that should always be built into the base budget.

Accessible Cab Grants:
Another item that needs a bit of explanation is the $100,000 for an accessible cab grant program. That’s a bit of a placeholder as, unfortunately, it’s very likely that HRM won’t be able to spend anything on accessible cabs. HRM would like to provide grants to cabdrivers to offset the additional cost of buying and operating an accessible cab. Since the Charter prohibits HRM from granting money to an individual or company, we can’t create a grant program without the Province first amending the Charter. HRM has been told that the needed legislative changes may come in the fall. If it does, it’ll still take several months for HRM to establish a grant program and then for people to apply and receive awards. We really need a solution to the Accessible cab piece, but it’s sadly slow going and it seems unlikely that the $100,000 allocated will be spent in 2020.

I’m very pleased with this budget. HRM was able to fund key items on the options list, eliminate the need for borrowing in 2020, and bring in the tax bill at a very modest 1.4%. It doesn’t get better than that. Now that Council has given direction on the options list, the budget will be formally drafted. It’s expected to come back to Council in March.