2023 Budget Walkthrough details challenges with inflation, and maintaining service levels

by Sylene Argent

The 2023 Budget for the Town of Essex has been formulated to address record levels of inflation, while maintaining service levels; ensuring customer service and innovations; and finding alternative revenue streams to assist in stabilizing tax increases, Council learned during the 2023 Budget Walkthrough held last Wednesday morning.

The preliminary educational session was meant to familiarize members of Council and the public with this year’s budget document. Budget deliberations will take place mid-February.

“This document outlines a financing approach intended to strengthen the Town’s financial condition, address infrastructure needs, and maintain and improve services residents access regularly,” Essex CAO, Doug Sweet, said.

“Over my career in municipal government, this has been the most challenging budget we have had to prepare. The current economic landscape has brought forward new challenges. Administration has made significant efforts to reduce expenses and balance additional costs,” Sweet added.

The Town is proposing a 2023 Budget, with revenues totalling $68.5M; of which $21M would come from taxation. In addition, internal transfers totaled $16M (monies coming out of reserve), $14M in user fees, $10M in grants, $4M in contributions from developers, over $1M in licensing, penalties, and fees, and nearly $1M in investments and other income.

The proposed 2023 Budget includes $55M in total operating revenue. Nearly 40 percent of taxation is what funds the

Operating Budget. Salaries account for nearly 25 percent of the Town’s Operating Budget.

The Town is also proposing a Capital Budget of $13.1M.

As presented, the unapproved average tax increase would be 4.12%, including the estimated County of Essex and education impacts.

That means, on a median house in Essex, this would be an average annual increase of $123 per average household valued at $189,000 (via MPAC records), if approved as presented.

In addition to preparing the 2023 Budget with those aforementioned challenges, Kate Giurissevich, Director of Corporate Services/Treasurer, noted the Finance Department underwent a Budget Rest. Correlating with the start of a new Term of Council, departments were required to start their budgets from scratch, and then compare them to previous years.

“This often does result in more accurate and relevant budget data, and it ensures Managers and Directors are really looking at where their dollars are allocated, and whether they are necessary, or if we can make adjustments within those departments,” Giurissevich explained.

In the 2023 Budget, staff is recommending the addition of four fulltime positions – a horticulture operator, a junior planner, and splitting the existing Executive Assistant for HR/Office of the CAO into two positions, which will also assist with communications. In addition, it includes a fulltime Water Operator, which was preapproved.

Three part-time positions were proposed – two By-Law Enforcement Officers and an Infrastructure Clerk.

The proposed four full-time and three part-time positions in the 2023 budget year, would have a total impact of just above $300,000.

Proposed in the 2023 Budget is a total of $13,068,895 for salaries, wages, benefits, and personnel expense changes. That is a $1,144,602 increase, when comparing 2022 to 2023.

Some of the changes in taxation, Giurissevich said, includes rate increases to the 2023 Roads Levy of $266,595 – the biggest underfunded portfolio for the Town of Essex, and two new levies: New Capital Levy of $73,190 – to correlate with new growth, and Budget Stabilization Levy of $36,595. Inflationary increases to garbage collection totaled $303,218 – after the Town found savings from previous years to reduce the original total, and $241,447 in operating expenses for inflationary impacts.

Annually, Giurissevich explained, the Town relies heavily on grant funding for the operating and capital budgets. The town received notice that the 2023 committed allocation from the Ontario Municipal Partnership Fund is $4,069,900. Essex will get $1,055,799 through the Canada Community Benefit Fund (CCBF) and $1,531,824 through the Ontario Community Infrastructure Fund (OCIF).

There is currently $25.35M in long-term debt. Based on the Budget Forecast, it is estimated the Town will take on additional $5M in debt in 2025. Based on the forecast, Essex’s Long-Term Debt could potentially be under $20M by 2027, Giurissevich said

In looking at asset management –which plans for the future replacement of infrastructure, over the next few years, Council has to find a way to put more funds into the reserve to ensure assets are being replaced when due. 2023 begins with around $7M in the Asset Management Reserve. By the end of the year, it is estimated there will be $4.6M left. It is forecasted that at the end of 2027, $1.3M will be left in the Asset Managing Reserve.

Some of the proposed items in the budget include:

Council category:

$50,000 in a Council Contingency Fund for unexpected projects

$25,000 to start the process to establish a South-North public transit system within Essex, if Council wants to pursue this and if grant funding is received.

Corporate Services:

$60,000 to complete stage two of the legislatively required Asset Management Plan, from OCIF grant funding

IT Department:

$40,000 to upgrade financial software, from IT contingency reserve

$27,000 for meeting room hardware to host virtual meetings in Harrow and large meeting room at Town Hall Essex Fire & Rescue

$500,000 to upgrade existing radio system, from Fire Reserve

$100,000 to complete a require comprehensive Community Risk Assessment

$38,597 to update software systems $120,000 to replace the 24-year-old support vehicle at Station 3 $32,837 to replace six to eight sets of personal protective equipment gear Parks (all from the Asset Management