​Kincardine hammers out 2024 budget with 6.86% tax-rate increase

Kincardine council has hammered out its 2024 budget, with a 6.86-per-cent tax-rate increase.

At the budget meeting, Monday night (Feb. 12), six members of council were on hand, including the mayor and deputy mayor, to take one more look at the operating budget before approving the final numbers and directing the treasurer to bring forward a budget bylaw.

Prior to further discussion, treasurer Roxana Baumann presented a report on reserve funds and the Asset Management Plan which demonstrated where the money comes from for the Lifecycle reserve fund, water and sewer reserve funds, the contingency reserve, and development charges.

She said that capital projects are primarily funded through property taxes, either from previous taxpayers (existing reserves), current taxpayers (in-year contribution to reserves) or future taxpayers (paying off debt).

Money from the operating budget is allotted to the Lifecycle reserve fund (from property taxes, grants, user fees, and debt) and used to pay for capital projects, such as roads, bridges, arenas, playgrounds, the airport, sidewalks, snowplows, fire trucks, trails, libraries, the landfill, and cemeteries. This reserve fund currently sits at $8.625-million.

The water reserve fund takes money from water rates, grants and debt, and pays for such projects as watermains, water towers, wells, hydrants, water meters, pumps, and the water treatment plant buildings and equipment. This reserve fund sits at $9.481-million.

The sewer reserve fund takes money from sewer rates, grants and debt, and pays for such projects as sewer mains, pumping stations, lift stations, pumps, equipment and buildings. This reserve fund sits at $5.385-million.

Development charges and debt are placed in a reserve and used for growth-related assets and infrastructure. This fund sits at $1.69-million.

The contingency reserve is used to fund any deficits at the end of the year, said Baumann. If there is a surplus at year-end, that money goes into this reserve to be used to cover any unexpected costs, such as legal fees or unbudgeted expenses.

Baumann emphasized that the Lifecycle reserve fund is the only money available for capital projects, and unfortunately, the municipality is not contributing enough to cover the costs of future needs, such as bridges, roads, fire trucks, facilities, etc.

She indicated that from 2025-28, the total capital costs will be $58.83- million; however, reserve fund contributions will be at only $17.4-million, leaving a shortfall of $33-million.

Historically, the municipality has used the dividends from Bruce Telecom and Westario Power to fund operating expenses, which is not sustainable, said Baumann.

“At one point, the municipality was taking about $2-million in dividends and applying them to the operating budget to artificially keep the tax rate down,” she said. “It would take a 20-per-cent tax-rate increase to replace that.”

She also stressed that the contingency fund should not be used for ongoing expenditures; these should be covered by property taxes.

“We are funding medical expenses, which are a provincial responsibility, that should be funded through property taxes,” she said. “The intent of the Lifecycle reserve fund is to replace existing assets, but we often fund new projects and new assets, such as St. Albert Street sidewalks and the Kincardine to Inverhuron Provincial Park trail.

“We must increase our contribution to the Lifecycle reserve fund. It was trending upward, but for the past couple of years, has been trending downward.”

She said Kincardine is currently under-funding its infrastructure by $11.2-million annually.

“We are contributing three-per-cent on the tax rate each year,” she said, “but that will not achieve full funding to the Lifecycle reserve fund by 2032, as was scheduled under our Asset Management Plan. There will always be a gap.”

Baumann said the Asset Management Plan must be constantly updated, and the numbers updated every five years. The current plan doesn’t include several of the new assets in the municipality, and their actual replacement cost.

What this means, she said, is ultimately, there will be a decrease in service levels over time; future debt will be required as existing reserve funds are depleted; projects will be deferred; external borrowing will be required; assets will be removed from service; and new assets/projects will not be able to move forward.

What is needed, said Baumann, is a strategy to increase the contribution to the Lifecycle reserve fund; have operating costs funded by the tax-supported operating budget; direct any dividends toward the capital budget; and raise taxes to cover such things as the Saugeen Mobility (SMART) enhanced transportation services, funding for the Kincardine hospital expansion, and Community Improvement Plan initiatives.

Otherwise, the alternative is to reduce services to limit the pressure on property taxes, she said.

BUDGET DEBATE

Councillor Beth Blackwell put forward a motion to add two-per-cent to the operating budget to support the Asset Management Plan.

“We turned down 1.5 per cent earlier during budget talks,” said mayor Kenneth Craig.

“I know we need to be mindful of where everybody is, financially,” said councillor Jennifer Prenger. “However, we must think of the scary position we’ll be in if we don’t do this.”

Councillor Bill Stewart refused to support this proposal for this year, saying it puts too much pressure on taxpayers, and suggested considering it for 2025.

Councillor Mike Hinchberger said the solution may not be just throwing money at it.

“We can fund the Asset Management Plan by increasing revenue, decreasing expenses and removing some assets," he said. "We just removed $1-million in assets by taking out the Princes/William Street pedestrian bridge and the Davidson Centre track refurbishment.”

Deputy mayor Andrea Clarke agreed, saying that while the municipality must plan for the future, this puts too big of a squeeze on many individuals.

“Any increase in taxes is significant for many households,” she said. “Moving forward, we need to look at the number of services we offer and review our assets. I can’t support a two-per-cent increase, but I see the concern if we we don’t do something.”

Blackwell pushed for the increase in order to put the municipality on a path toward sustainability.

Hinchberger said there are a number of areas where the municipality is out of its lane, particularly dealing with health-care costs. “We’re trying to do everything and we’re not doing anything well.”

Clarke proposed a one-per-cent increase to go toward asset management, and while that motion was approved, the motion to increase the tax-rate by one per-cent for this purpose, was defeated.

However, council did agree to put $60,000 into the budget for the Community Improvement Plan, and $26,200 for a second seasonal bylaw officer for the summer.

Council defeated the proposal for expanded transportation services through Saugeen Mobility (SMART), and deferred discussion about support for the Kincardine Lions All-Wheel Park

It was agreed to table the discussion about the additional funding for the Kincardine hospital capital campaign until all of council is in attendance.

Among the key investments in the budget, are:
 

• Roads and bridges: $5-million, including the reconstruction of Bruce Avenue at a cost of $3.075-million
• Parks, playground and sports fields: nearly $2-million
• Davidson Centre: nearly $1-million toward maintaining and upgrading the lighting, roof, boiler, ramp, and more.
• Fleet and equipment: $1.7-million to help upgrade and improve the vehicles and tools used in the daily functions of the municipality
• Accessibility initiatives: $300,000 split between $100,000 for various capital projects and $200,000 for the Macpherson Park playground improvements

The budget contains $38.3-million for operating, and $13.2-million for capital, with a total municipal tax levy set at $23,521,496.

This means an overall municipal property tax-rate increase of 6.86 per cent which equates to $154.83 on an average residential assessment of $275,000; and a blended rate increase of 5.87 per cent when combined with the Bruce County levy and the education tax, which equates to $233.40 on the average residential assessment.

To learn more about your municipal budget, visit www.kincardine.ca/Finance and see the 2024 Budget Guide.

Council also approved a capital budget amendment to include $45,000 for a Goderich Street diesel generator, funded through the sewage reserve fund.