Without budget cuts, the town’s 2021 property taxes could jump by as much as 7.24 per cent, according to the latest staff projections.
Plans for a budget increase in line with inflation have been derailed by pandemic costs in the range of $9 million, according to Nancy Sully, the town’s treasurer and acting commissioner of corporate services.
Town of Oakville takes $13.4 million COVID-19 Financial Hit - May 26, 2020
On Tuesday morning, she told a meeting of the town’s budget committee that reduced transit ridership and lower revenues from recreation and culture programs will have a significant impact on next year’s budget.
However, Sully reassured councillors that staff will spend the summer exploring ways to lessen the impact on taxpayers.
“We have a lot of work to do over the next couple of months,” she said. “This is a starting point based on what we know right now, it’s not where the budget will come in for the committee’s consideration.”
Keeping increases to 2021 property taxes in line with inflation will require about $10.7 million in budget cuts or new revenues.
Capital levy waived for 2021
As a first step to addressing the shortfall, the budget committee voted to waive the policy of adding an annual one per cent capital levy to the 2021 budget.
Dropping the capital levy will save about $2.1 million, councillors were told.
As part of the town’s response to the pandemic, about $71 million in capital projects was deferred this year. Funding for those projects was returned to reserve funds.
Sully’s report noted that many of those projects will be re-budgeted in 2021, providing the chance to forego the annual capital levy.
However, several councillors noted the importance of maintaining the town’s commitment to infrastructure renewal.
“A vacation from the capital levy has to be just a temporary vacation,” said Ward 6 town and regional councillor Tom Adams, chair of the 2021 budget committee.
User fees to rise
The budget committee also gave the nod to increasing town rates and user fees at the rate of inflation – forecast to come in around 1.7 per cent this year.
That move will help the town keep pace with inflationary costs related to providing services and programs, said Sully.
Councillors will also have to rein in their expectations around pet projects or special initiatives during such an exceptional year, warned Ward 2 town and regional councillor Cathy Duddeck.
“We have to do what we can to maintain our high level of services while still being totally fiscally responsible, given the predicament that we’re in.”
2020 budget impact
In addition to next year’s budget woes, the pandemic is expected to cost the town $10.3 million in 2020.
At this point, town staff are projecting a revenue loss of $24.1 million, balanced off by $13.8 million in savings.
A financial update was provided to town council at its July 6 meeting.
The shortfall will be covered by a $4.5 million surplus from the 2019 budget and money in town reserve funds.