Saturday July 20, 2019
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The 2020 regional budget

niagara region

Is the cart before the horse? Regional Council agreed on June 20th to use the Municipal Price Index (MPI) to guide on-going automatic budget increases and directed their staff to prepare a bylaw to replace an old policy that had used the lower Consumer Price Index (CPI) escalator ahead of approving budget committee recommendations.

The Budget Committee approved base budget increases as follows; 2.7% for Regional Departments; 3.0% for agencies, boards and commissions (Police, NRH and NPCA); and 2.1% for waste management. This was based on an MPI that includes a 3.3% compensation increase and adds up to 2.85% overall tax increase.

There is no current budget planning by-law, but there is a policy; it’s called the Affordability Guidance Policy.  For budget guidance this policy uses the Bank of Canada Core Consumer Price Index. “The Policy establishes guidance by adding the annual inflation pressures for goods and services (the Niagara Region uses the Bank of Canada’s Core Consumer Price Index to estimate), with our forecast assessment growth, in a given year from new properties”.  It also says, “In our annual and multi-year budgeting, the guidance policy sets a financial target to ensure practical and cautious use of taxpayer’s dollars”. The guidance policy is based on the premise that outside of the best efforts to reduce budgets and minimize the potential of annual increases, a framework is provided that sets a ceiling for annual budgets tied directly to economic factors in the community.

That is the policy regional council has decided to replace with a new Budget Planning By-law.

Consumer price index was used in past years to establish the baseline for tax increases at the rate of inflation. It was a measure of inflation experienced by the taxpayer and used by council to consider against proposed property tax increases. It was intended to help council set budget guidance or targets for staff based on local affordability, hence the name Affordability Guidance Policy.

MPI is a measure of municipal costs and would be helpful information as context only, for council to consider. The MPI uses Canada-wide rates for 90% of its index weighting, less than 10% is based on Niagara.

The MPI included a compensation component that is based on Canada-wide average compensation increases for public administration.  Appendix 1 of report CSD 41-2019 shows compensation increases at 3.3%. It is a heavy factor in the MPI, 47.5% in department weighting and 72.1 % for agencies, boards and commissions.

But council has in the past been more interested in how a tax increase compares to the inflation rate experienced by Niagara residents. The current policy says “budgets tied directly to economic factors in our community”. Councilor Redekop asked the question about guidance addressing sustainability for Niagara taxpayers. A staff report only addresses the sustainability of the regional services.

The Budget Committee of the Whole meeting held June 20 passed a 2.85 % tax increase target or guidance for staff as they prepare recommendations for October. That recommendation will not be confirmed by council until July 18.  However, council directed staff on June 20 to prepare a bylaw establishing the MPI as guidance and removing CPI.

Council may decide on July 18 to approve the budget committee recommendation or set budget guidance using CPI at 2% with a full understanding of the MPI number being 2.7%.

Council can choose to direct staff to prepare recommendations based on any percentage increase they feel is best.

Keep in mind the budget process, presentation and reporting format changes every year, so new councillors and veteran councillors alike are at a disadvantage because much of what was learned from the previous year’s process is not helpful in the current year’s process. The recommendation to change from Core Consumer Price Index to Municipal Price index is an example of the constantly changing budget setting procedure.

Anyone can present their opinion on this matter at the July 18 council meeting. Delegation requests are best made before July 12 as council permission is required for any requests after 9 a.m. on that day.

Will council go with tax guidance at 2% using CPI or 2.85% using MPI? Regional Council will decide July 18.

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  • The 2020 regional budget

    By Bruce Timms Time To Read: 3 min