• • 2010 budget
•  • Budget breakdown
•  • Budget challenges
•  • City council’s guidelines
•  • Balanced approach
•  • Background

2010 budget

Knowing the struggles this community continues to face in the wake of the global economic downturn, Kitchener city council stayed true to its commitment to citizens in approving the city’s 2010 budget with a property-tax increase of 2.90 per cent -- which meets their objective of limiting a rate increase this year to 3 per cent or less.

For an average Kitchener household, the property-tax increase will mean an additional $27.98 per year, or $2.33 per month. 

The approved budget strikes a healthy balance between continuing to offer valued services and programs to residents, making strategic investments in community priorities such as parks and trails, and keeping any property tax increase to a reasonable rate.

Highlights of the 2010 budget include:

• Significantly accelerating the clean-up of Victoria Park lake with preliminary design work starting in 2011 -- or earlier if federal grant funding is awarded;
• Immediately increasing funding to parks, trails and sports fields by $691,000 in 2010.
• Ramping up spending on the city’s parks, trails, natural areas and sports fields by a further $5 million over the next 10 years, to a total investment of well over $37 million in Kitchener's green spaces over that time period.  
• Continuing the city’s commitment to stimulate, strengthen and diversify the local economy through its economic development investment fund – a stimulus fund that has already seen $1.78 invested into the community by other partners for every $1 the city has invested.
• Approving in principle the transfer of storm-water management costs from the property-tax base to a user-fee system, improving the city’s ability to protect local source water and the natural environment. Doing so will also help the city address its ongoing infrastructure deficit -- a problem municipalities across the country are now facing.
• Reducing municipal spending through budget reductions in a number of areas, such as:

• Elimination of employer paid parking -- $300,000
• Management salary adjustments -- $102,784
• Elimination of food service in city hall cafeteria -- $47,000

Councillors also decided to remove a number of proposed budget reductions from the list staff had presented for consideration. As a result, the following budgets for 2010 currently remain unchanged:

• Rockway Seniors Centre -- though council will still deliberate staff’s recommendation to close the centre in March.
• Idlewood pool
• The city’s annual athletic awards banquet and the Kitchener in Bloom program; though councillors did support reducing the Kitchener in Bloom program’s funding in 2010 from $14,000 to $7,000 and directed staff to identify sponsorships for the athletic awards. 

2010 budget breakdown

2010 budget challenges

Like many residents, businesses and public-sector organizations in this community -- and across Canada, the city is facing a number of serious financial challenges that have come as a direct result of the global economic downturn.
Just as others have been forced to make some very tough financial decisions, the city has been forced to tighten its belt and scrutinize its spending, in order to contend with the impact reduced revenues -- related to the recession -- have had on the organization’s bottom line.
The worldwide economic decline has reduced the amount of revenue the city is collecting through:

• Lower assessment growth.
• Lower supplementary taxes (property taxes on new construction).
• Lower investment income.
• Increased tax write-offs/refunds.
• Reduced building permit activity.
• Reduced development fee revenue.

Losses in these areas have translated into a projected deficit of $4.5 million for the city in 2009 alone.
City staff committed themselves to tackling these budget challenges head-on, implementing a series of temporary spending controls in specific areas. Staff also reviewed the city’s list of current capital projects to identify projects that have been completed or are projected to come in under budget.
As a direct result of these financial initiatives, the city cut its projected 2009 deficit to $385,000.
While this is a positive step toward improving the city’s financial position in 2009, similar pressures on the city’s budget are forecast for 2010 and beyond.

City council’s guidelines

Recognizing the negative impacts the global recession has had on the city’s revenues, as well as the financial pressures from a number of non-controllable budget lines such as increased snow removal costs, earlier this year city council set out guidelines to assist staff in developing the 2010 budget.

The budget should:

• Include a property-tax increase not to exceed 1.79 per cent;
• Include a further property-tax increase of 1.2 per cent to fund the city’s economic development investment fund;
• Exclude any increases to discretionary spending;
• Exclude any requests for additional staff not previously approved and budgeted for, or required by legislation;
• Exclude program expansions unless previously approved and budgeted for;
• Remove provision of 0.5 per cent to fund strategic initiatives;
• Increase user fees by 5.20 per cent;
• Strive to identify $2.5 million in reductions to the 2009 base budget while not compromising the city’s long-term financial stability.

A balanced approach to the 2010 budget

In developing the 2010 budget, the city’s main objective has been to: limit the impact proposed budget cuts would have on core public services; carefully manage the effects proposed budget reductions would have on the organization; and reach a reasonable property-tax increase for 2010.

Limiting the impact of any cuts on core public services: The budget reductions contained in the operating budget generally focus on scaling back some service levels in medium to low priority areas.
Managing the impact of any budget reductions on the long-term health of the organization through well-planned staffing reductions, primarily through early retirement, attrition and vacancy management.
Achieving a reasonable property tax increase for 2010, which includes a targeted increase of 1.79 per cent for the base budget and another 1.20 per cent increase for the economic development investment fund.

Background on the budget process

Breakdown of property taxes

Some people may not realize that only a portion of resident’s property tax bill goes towards the City of Kitchener. In reality, the greatest portion of a tax bill goes to the Region of Waterloo (49 per cent). The city collects 32 per cent; and the remaining 19 per cent goes to the Province of Ontario for education.

It’s important to note, however, that for the third consecutive year, an independent study shows Kitchener property taxes are lower than most of the 26 largest cities in Ontario.

What is the difference between the city’s operating budget and its capital budget?

The city's operating budget provides the funds necessary to operate all city-owned facilities and provide municipal services to local residents. The operating budget also pays for important municipal services such as snow removal, road repair and fire response. Funding for the operating budget comes primarily from the city’s property taxes and user fees.

The city’s spending on capital projects — from developing the new consolidated maintenance facility to repaving streets and building community centres to buying fire trucks — is prioritized over 10 years, within the capital budget.

An important distinction of capital expenditures is that they are used to either build or rehabilitate an asset that will last for more than one year.

Funding for the capital program comes various sources such as property taxes, enterprises, development charges, debt and grants.