Isaac Newton’s third law of motion states that for every action in nature there’s an equal and opposite reaction.
This past week, Springwater Township council discovered Newton’s third law applies to budgets as well as nature.
Facing a tough slog to keep 2025’s tax hike from being onerous, township council directed senior management to deliver multiple budget options following a Nov. 6 budget meeting where staff presented council with a proposed budget that featured a 14.16 per cent increase to the municipal levy.
That levy, when combined with the proposed four per cent increase from the County of Simcoe (since reduced to 3.625 per cent), would’ve resulted in a blended tax bill increase of 8.31 per cent.
Facing an uproar from residents, council directed staff to bring back three budget options that reduced the municipal levy portion from 14.16 per cent to 12 per cent, 10 per cent and eight per cent.
Staff presented the reworked options to council Wednesday afternoon. In all three cases, staff reduced the increase, but they can't stave off the need.
Jeff Schmidt, the township’s chief administrative officer, took a few minutes near the beginning of the meeting to lay out some unvarnished realities.
First, he defended the proposed budget that was presented at the Nov. 6 meeting.
“By no means did senior management want to bring forward a budget that included a tax increase at the level you saw on Nov. 6,” Schmidt said in his preamble. “That being said, I respectfully submit, senior management is responsible for providing our best professional advice to council and it’s council that has the ultimate responsibility to make the final decision and provide direction.
“What was presented to members of council was a direct result of decisions and directions that have been previously made around this table,” he added.
With that out of the way, Schmidt started to present the numbers.
“The township’s net expenditures exceed our net revenues in the amount of $2.8 million,” he said.
The CAO listed six key influencers affecting the $2.8-million shortfall — labour, general operating expenses, the township’s one per cent infrastructure levy, its investment in capital funding from taxation, service-partner costs and assessment growth.
Labour, Schmidt said, will cost the township an additional $1 million in 2025.
The second major pressure is general operating expenses of $310,000, which basically help the township maintain 2024 service levels.
The third item is the township’s one per cent infrastructure levy which amounts to $190,000. The municipality has a portfolio of assets worth $1.07 billion that it’s required to maintain, and this money is earmarked for that purpose.
Next up is the township’s investment in capital funded from taxation — the amount of money that is funded from the township’s operating budget to support its capital budget.
“In our capital budget, we have a number of different funding sources — development charges, reserves, reserve funds, debt. If we don’t have any other money then it essentially comes out of taxation or operating budget,” Schmidt explained. “So of the $2.8-million shortfall, we have $1.3 million that’s in our operating budget to fund capital.”
Schmidt reminded council that it provided direction earlier this year to increase the township’s annual investments in road resurfacing projects to $3.5 million.
“As a result, the annual capital and operating budget for this area has increased by just over a million dollars, which is what you’re seeing here,” he said.
Next on the list of impacts is the township’s facilities assessment study. It recommends significant investments in the township’s corporate and community facilities. It’s a roughly $200,000 impact on the budget.
The final pressure at play in Springwater is the cost of service partners: Nottawasaga Valley Conservation Authority, Severn Sound Environmental Association, Springwater Public Library and Ontario Provincial Police.
Of the $657,610 needed to fulfill the requests from the township’s service partners, about 85 per cent of it — $575,000 — is for the increased cost of policing.
Schmidt closed on an optimistic note, advising council that the township should realize about $713,000 in revenue based on estimated assessment growth.
Greg Bedard, the township’s finance director, took council through the three new budget options after providing the guidelines staff used to arrive at the new options.
The first consideration was to maintain 2024 service levels.
“To that extent, currently we are not presenting any changes to the operating budget that impact service levels,” he said.
Next criteria was council’s resolution with respect to the roads rehabilitation capital plan spending target of $3.5 million.
“This represents council’s endorsement of the roads need study and the tax-increase scenario to maintain the required $3.5-million investment that the council resolution requires,” Bedard noted.
The last criteria was to defer 2025 capital projects that were funded through taxation.
“This speaks to CAO Schimdt’s previous comment with respect to looking to bring down the tax increase,” Bedard said. “This is primarily achievable through a reduction in the capital plan that is funded through taxation. When staff looked to defer or reduce 2025 capital projects to a future year, this included a prioritization of projects funded through taxation.”
Bedard cautioned that doing so would further build on the township’s current infrastructure deficit. He then presented the three options.
He started off on a positive note by advising council that the township will receive $115,000 from the Ontario Municipal Partnership Fund (OMPF) next year. The money will be used to offset operating expenses and represents a savings against the $2.8-million shortfall.
To achieve a 12.62 per cent increase in the municipal levy, the township would apply the $115,000 to the shortfall and remove the one per cent compounding of the infrastructure levy of $190,000.
This would result in a blended tax increase of 7.42 per cent.
To achieve a 10.51 per cent increase in the municipal levy, the township would apply the $115,000 to the shortfall, remove the one per cent compounding of the infrastructure levy of $190,000 and remove taxation funding from roads capital for a realized savings of $418,000.
This would result in a blended tax increase of 6.38 per cent.
In the final scenario, which would result in an 8.29 per cent increase in the municipal levy, the township would apply the $115,000 to the shortfall, remove the one per cent compounding of the infrastructure levy of $190,000, remove taxation funding from roads capital and fund from debt for a realized savings of $418,000 and remove taxation funding from facilities capital and reduce the scope of the facility condition assessment program in the amount of $210,000.
This would result in a blended tax increase of 5.29 per cent.
Springwater council will continue with budget deliberations on Monday, starting at 5 p.m.
