Budget surprise: staff trims $6M from budget

City staff has found $6 million in savings since an early budget forecast presented in May, reducing the 2013 property tax increase to 2.8 per cent, down from early predictions of 4.4 per cent.

To put that into perspective, city councillors in 2012 had to take $1.5 million from reserve funds to get the tax increase below three per cent. And that was after a gruelling budget process that lasted through the fall and early winter. This year, staff has already reached the targeted increase just as the budget process is beginning.

At a special media budget briefing Nov. 6, Lorella Hayes, the city’s chief financial officer, detailed exactly where the savings came from. She said the biggest single saving - $2.8 million – resulted from a corporation-wide effort to “do more with less.”

That meant most departments had flat budgets, with no allowance for inflation, even as energy and other costs rise.

“Throughout these months, staff worked diligently to review historical and actual expenditures,” Hayes said. “They looked at inflationary adjustments that were required for forecasts for fuel, energy, natural gas. We looked at our contractual obligations and ensured those were all satisfied within the budget numbers.”

The city’s attrition policy reduced the number of full-time employees by five, and part-time hours were drastically reduced. Another source of savings was an exhaustive review of each departmental budget, which saved another $1.6 million.

“We certainly looked for efficiencies based on council’s direction,” Hayes said. “(Departments) combed through their budgets, line by line, continuing to look for reductions.”

The police budget came in $1.1 million lower than forecast, a new natural gas contract saved $800,000 and lower-than-expected inflation saved another $500,000.
“Credit is due to council for the direction they provided,” Hayes said.

Ward 11 Coun. Terry Kett, who chairs the city’s finance committee, said this is by far, the most complicated budget he’s been involved with over the last several years.

“It’s amazing that staff was able to do that,” Kett said, of the $6 million in savings. “They worked hard to do it, they listened to council, and they’ve done a super job.”

While it’s a good start, Kett said there’s still much to be done, especially considering the challenges the city faces in repairing its crumbling infrastructure.

“We’re getting there, but there’s still a long way to go before we’re finished.”
In total, the city will spend a total of $493 million next year. Of that amount, $222 million will come from property taxes. Someone with a house valued at $190,000 will pay $70 a year more than in 2012. If your house is valued at $419,000, you'll pay $148 more.

The largest single expense the city faces in 2013 is maintaining and building the city's roads network. For every $1,000 the city will spend in 2013, $238 will go to roads. The next highest expenditure is policing, which takes another $185, followed by health and social services at $120, and citizen and leisure services, at $113.

Greater Sudbury Mayor Marianne Matichuk also praised staff, and was glad the “line-by-line” budget review process she has championed paid off.

“But that doesn’t mean we can’t look for more,” she said.” Now that the budget is out, it’s a good start. I think the only way we can go is down.”

While it’s tempting to add more money to the roads and other infrastructure budget, Matichuk said there are other avenues worth exploring to fund that work.

The city has an estimated $700-million gap between what they should have spent maintaining their roads, and what they have actually spent.

“We also have the option of looking at debt financing for some of these big projects,” Matichuk said. “And you know what? Maybe that’s the way we need to go.”

The city will look at debt financing options for roads and other infrastructure projects at a special meeting expected in April. It’s possible that some big projects could be tackled in 2014 through debt financing, she said.

“Sometimes you need to bite the bullet and say we need to fix these things,” Matichuk said. “But I want to see what that’s going to look like before we commit to it, and what the impact would be in the future, because it may be one of these ‘pay me now, and really pay me later.’ We have to look at that, because I’m not an expert and we need more information first.”

The next city budget meeting is Nov. 13, when departments will present their budgets in more detail. The final budget should pass in January.