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2011-2014 Budget and Taxpayer Savings

2011-2014 Budget and Taxpayer Savings

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Published by CityNewsToronto
This briefing note, from city of Toronto CFO Roberto Rossini, provides a summary and clarifies budget and taxpayer savings over the past four years.
This briefing note, from city of Toronto CFO Roberto Rossini, provides a summary and clarifies budget and taxpayer savings over the past four years.

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Published by: CityNewsToronto on Mar 27, 2014
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05/14/2014

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Josie La Vita
Director 
 
Roberto Rossini
 DCM & Chief Financial Officer
Financial Planning
City Hall, 7th Floor, East Tower 
 
100 Queen Street West
 
Toronto, ON M5H 2N2
 
Tel: 416 397-4229
 
Fax: 416 397-4465
 
 jlavita@toronto.ca
2014 OPERATING BUDGET BRIEFING NOTE 2011
 – 
 2014 Budget and Taxpayer Savings
Issue / Background:
This briefing note provides a summary and clarifies budget and taxpayer savings over the past four years from 2011 to 2014. As requested by the City Manager, a breakdown of the total property tax levy savings from 2011-2014 is provided; these were incorporated in the City's operating budget and were required to balance the operating budget in order to meet Council's directions. This briefing note will also assist Councillors in responding to inquiries from constituents.
Key Points:
 
Every year the City is facing an operating pressure arising from various factors such as inflation and cost of living (COLA) increases.
 
The City's operating budget faced opening budget pressures of $706 million in 2011, $714 million in 2012, $465 million in 2013 and $210 million in 2014.
 
Budget guidelines and directions have been shaped to address the City's ongoing annual operating budget shortfall. The guidelines and directions for the operating budget process over the past four years included:
 
Budget reduction targets of -5% in 2011, -10% in 2012 versus the opening pressure; and
 
In 2013 and 2014, the operating budget target was 0% increase versus the prior year, which means City divisions had to reduce their budget to absorb all the opening  pressures.
 
In order to balance the budget and maintain tax increases below or in line with inflation, the City implemented and approved a number of initiatives in the 2011 to 2014 operating  budgets totaling $972.4 million as follows:
 
Reduced Council/ Mayor's budget ($6.4 million);
 
Contract out garbage collection ($11.2 million per year for 4 years);
 
Service efficiency savings and base budget reductions for 2011 - 2013 ($753.0 million);
 
Local 416 Collective Agreement savings in employee benefits ($89.0 million);
 
 - 2 -
 
Local 79 productivity/efficiency savings ($49.2 million); and
 
Increase in user fee revenues ($30.0 million).
 
Operating budget savings referred in Appendix 1 is part of the difference between the Council approved net operating budget and the opening budget pressures as illustrated below.
3,0003,5004,0004,5005,000
2011 2012 2013 2014
     $     M     i     l     l     i    o    n
Council Approved Net Operating Budget
 
 
The Staff Recommended 2014 Operating Budget included savings of $147.0 million resulting from efficiencies of $110.0 million and reduced capital financing costs of $37.0 million. The 2014 Budget also included a $6.0 million increase in user fees which increase the total savings, prior to other taxpayer savings, to $972.4 million.
 
Appendix 1 shows the cumulative 2011 to 2014 Operating Budget savings totals $972.4 million.
 
Appendix 2 shows the web-links to each of the major savings.
 
In addition, the elimination of the Personal Vehicle Tax (PVT) in 2011 has saved the taxpayer $50 million annually based on 2010 collections totaling $200 million over the past four years. It should be noted that when the PVT was eliminated in 2011, the City did not have a property tax increase that year.
Prepared by:
John Oswald, Senior Financial Analyst, Financial Planning Division, (416) 392-4257,  joswald@toronto.ca 
Further information:
Andy Cui, Manager, Financial Planning Division, (416) 397-4207, acui@toronto.ca Josie Lavita, Director, Financial Planning Division (416) 397-4229,  jlavita@toronto.ca 
Date:
March 27, 2014
 
 - 3 -
Permanent SavingsAnnual Budget Savings#  YearsTotalCouncil Budget Reductions
Reduced the Mayors Budget 0.843.2 Reduction of City Council0.843.2 
Total Council Budget Reductions6.4 Contract Out Garbage Collection Savings - 4 years11.2444.8 
(Total over 7 years save $78.4 million excluding inflation)
Service Efficiency Savings and Base Budget Reductions - Permanent Savings
2011 - cost reductions57.0157.0 2012 - efficiencies ($267) & service reductions ($60)327.01327.0 2013 - efficiency ($178) and reduced capital financing ($44) 222.01222.0 2014 - efficiencies ($110) and reduced capital financing ($37)147.01147.0 
Total Service Efficiency Savings and Base Budget Reductions753.0 Collective Agreement (savings on benefits)
$54M in savings from reductions in city liabilities for post-age 65 retiree benefits (L416)13.5454.0 $35M in productivity efficiencies and productivity gains (Local 416)8.8435.0 Sub-Total89.0 $49.2M in savings, efficiencies and benefits liability reductions (Local 79)49.2 
Total Collective Agreement Savings138.2 User Fees
201212.0112.0 201312.0112.0 20146.016.0 Total User Fee Revenue Increases30.0 
Total Savings 972.4 
($ Million)2011 - 2014 Budget and Taxpayer SavingsAppendix 1
 
 Note: The lower salary increase component ($89 million) is included in the Service Efficiency Savings. The Collective Agreement savings are referencing employee benefits and productivity gains only.

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