September 2018

Presented by: Filipa Reynolds & Brad Witzel

Multi-year BudgetingCity of Waterloo Experience

REGIONAL CONTEXT

The Region of Waterloo

10th largest Region (CMA) in Canada

4th largest in Ontario (Province)more information: www.regionofwaterloo.ca/en/doingbusiness/census.asp

583,500 residents (2016 year end)• 15% homes in built up area (2003)• 55% homes in built up area (2011)

742,000 residents by 2031

65,000 post-secondary students

1,825 new startups (since 2011)

$818M LRT opening 2018

134,600 residents – 1 in 5 resident a post secondary student

3 post-secondary institutions (UW, Laurier, Conestoga College)

76% population post-secondary education (>Toronto, Vancouver)

$3.5B construction activity (>2010 – averaging $506M per year)

WATERLOO AT A GLANCE …

CITY CONTEXT

The City of Waterloo

BUILDING FOR THE FUTURE: 1.3 M sf academic space since 2010 (2017 updated)

UW E5 171,900 SF ($55M)

UW E6 – Chemical Eng.

116,300 SF ($42M)

New UW E7 (UC)242,000 SF ($88m)

2,000 more engineers

Science Teaching Complex118,403 SF ($95M)

WLU Business School (GIE, UC)

215,000 SF ($103M)

Mike & Ophelia LazaridisQuantum Nano Centre

285,000 SF ($160M)

Conestoga College ExpansionCentre for Advanced Learning

150,000 SF ($43.5M)3,000 new students

LOCAL ECONOMY

TOP 10 DEVELOPMENT PROJECTS (recent/under construction/multi-phased)

ION LRT

Construction

$818M capital1.

Schlegel-UW RIA

Institutional

$130M build out

2.BarrelYards

Mixed Use

$500M build out 3.Waterloo Corporate Campus

Commercial

$160M build out 4.UW QNC

Institutional

$160M project 285,000 sf

5.The Boardwalk Commercial

$150M build out 1.1M sf

6.WLU GIE Building Institutional

$103M project

7.

256 Phillip St. Residential

$90M build out

8.144 Park/155 Caroline

Residential

$60M build out

10.9.UW E7 Institutional

$88M project

$2.3 Billion Construction Value

• Aeryon Labs:– Founded 2007

– 180+ employees (370% growth since 2013)

• Huwaei:– Opened 2016

– UW partnership (R&D)

• Kik:– $50M fund from Tencent and $50M Polychain

– Valuated at $1B

• Magnet Forensics– Founded 2009.

– Today, 125 employees (15,000% revenue growth last 5 years)

• Open Text: – Canada’s largest software company (1,300 employees in City

• Sandvine (2016): – Received $15M R&D funding from Province

– 267 employees plus 75 new from funding

– $483M acquisition (PNI)

• Shopify: from 30 to 750 (260 today)

• TD Labs: 120 (new innovation office)

• Thalmic Labs: – wearable technology

– $160M venture funding

FAST GROWING COMPANIES (City of Waterloo)

LOCAL ECONOMY

More activity: http://whywaterloo.ca/

WATERLOO, A DIVERSE ECONOMY (City and Region)

“So just in terms of scale, Waterloo stands out, even on a global

basis stands out very, very well.” Bill Gates

Waterloo Top Employers: UW: >4,000 Sunlife: >2,700 Manulife: >2,600

Open Text: 1,600 >1,000 Blackberry

1. Manufacturing Sector

2. Finance & Insurance

3. Knowledge &

Education

4. Technology

5. Housing

Regional context:www.regionofwaterloo.ca/en/doingBusiness/business.asp

2018 Net Tax Levy $72.2M

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Operating Budget - Highlights

2018 Enterprise Revenues $71.7M

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Operating Budget - Highlights

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Operating Budget – Highlights Continued

- ~600 FT & PT Employees

- 125 Casual, Co-ops &

Summer Students

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• $522 million over 2016-2025

• $57 million for 193 routine capital projects (2016-2018)

• $70 million for 77 non-routine projects

• approved in principle

• projects returned to council through a

follow-up report for funding approval

• Department 10 Year Capital Budget by Theme

and Growth vs. Rehab charts provided

Capital Budget - Highlights

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What is multi-year budgeting?

Section 291

Municipal Act

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Budgeting – Then & Now

Prior to 2008: Annual Budgeting

Operating – 1 year approval

Capital – 1 year approval + 9 year forecast

2008 to present: Multi-year Budgeting

1st year of Council term:

Operating – 1 year approval

Capital – 1 year approval + 9 year forecast

Remainder of Council term:

Operating – 3 year approval

Capital – 3 year approval + 7 year forecast

Re-confirm 1

Re-confirm 2

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Why do multi-year budgeting?

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How did we get buy-in in 2008?

1. MPI policy developed – tax increase capped at MPI

2. Developed a multi year budget policy

• Parameters to re-open the budget

3. Link between

4. Sold the benefits (long term planning, stability, efficiencies, flexibility)

Strategic Plan

Business Plans

Budget

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Poll 1: Does your city do multi year

budgeting?

1. YES

2. NO

3. NOT SURE

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Poll 2: If yes, how long have you been

doing it?

1. > 5 YEARS

2. < 5 YEARS

3. NOT SURE

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Poll 3: If you don’t do multi year

budgeting, are you considering doing it?

1. YES

2. NO

3. NOT SURE

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Adjustment Process

The three year budget approval will allow for an annual adjustment

process so that Council has some flexibility to adjust plans and budgets

as economic and political circumstances change. Adjustments may

include, but are not limited to;

a) Material changes to the projected Core Consumer Price Index (CPIX)

b) Material changes to Labour Agreements

c) Material changes to Economic assumptions

d) Changes to Assessment Growth Projections*

Material changes are defined an individual items that will have an impact

of 1% property tax budget.

Multi-year Budget Policy - Excerpt

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Multi-year Budget Policy - ExcerptAssessment Growth

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1. 2010/2013/2014 Amendments

• MPI was reduced and therefore tax increase reduced

• Salary budget was reduced accordingly

2. 2018 Budget

• Significant assessment growth (3.74%, additional $1.8 million)

• Opened up the budget - several adjustments made

Adjustments to multi year budgets

YearTax Levy % Increase -

Original

Tax Levy % Increase -

Approved

% Change from

Original

2008 3.61% 3.61% 0.00%

2009 3.33% 3.33% 0.00%

2010 3.33% 1.57% -1.76%

2011 1.89% 1.89% 0.00%

2012 2.16% 2.16% 0.00%

2013 2.26% 1.55% -0.71%

2014 2.46% 1.25% -1.21%

2015 1.53% 1.53% 0.00%

2016 2.20% 2.20% 0.00%

2017 2.30% 2.30% 0.00%

2018 2.40% 2.10% -0.30%

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Poll 4: If you do multi year budgeting, do

you have a budget policy to guide

amendments?

1. YES

2. NO

3. NOT SURE

Budget Process FlowchartCouncil’s Strategic Plan & Business Plans & Community

Input

Council

• Budget Strategy

• Strategic Plan

• Budget Review &

Approval

CMT/OLT Budget

Committee

• Budget Strategy

• Budget Directives,

Policies, Targets

• Prioritize Budget

Requests

• Public Engagement

OLT/Managers/Staff

• Develop Business Plan

• Identify, Prioritize &

Document Budget needs

• Prioritize Budget Requests

within teams/divisions

Financial Planning Team:

Consult/Coordinate/Facilitate/Document/Communicate

Recommend Budget

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Process: TimelineTimeline Steps Who

Administrative Review

January - May 2015 Budget Strategy Sessions

OLT Budget Sub-Committee

CMT

Finance

May 2015

Budget Launch

- Presentation

- Targets

- Direction

Supervisors

Managers

OLT

CMT

Finance

June 2015 Budget Software Training for Departments

Identified Staff

Finance

June 2015 MPI vs CPIX Report Council

July 2015 Fees & Charges Approval - Tax Base Council

May - August 2015

Budget Preparation

- Business Plans

- Operating Budget

- Capital Budget

Managers

OLT

CMT

Finance

June - August 2015

Reserve & Reserve Fund Policy Review &

Update

OLT Budget Sub-Committee

Finance

Audit Committee

August 2015

Budget Strategy Approval

Budget Policy Approval Council

September 21 - FSP CPIX Approval Council

August - September 2015

Administrative Review / Budget Deliberations

Administrative Approval

OLT

OLT Budget Sub-Committee

CMT

Finance

October - November 2015 Public Budget Document Preparation Finance

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Process: Timeline Continued

Political ReviewSeptember 2015 Reserve & Reserve Fund Policy Approval Council

December 2015 Fees & Charges - Enterprise / Rate Approval Council

December 2015

Early Capital Budget Approval (for time

sensitive projects with a start date prior to

February Budget Day) Council

December 2015 Public Budget Release Council

January 2016 Business Plan Presentations Council

February 2016 Operating and Capital Budget Approval Council

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Multi year Summary

DEPARTMENT: CITY WIDE

2016 2017 2018

Proposed Budget $ Proposed Budget $ Proposed Budget $

EXPENSES:

CAO 2,361,566 2,495,011 2,538,580

Community Services 47,716,457 49,282,486 50,542,609

Corporate Services 24,173,102 24,886,878 25,741,532

Corporate Transactions 26,256,005 26,583,470 27,319,598

IPPW 75,396,929 79,600,957 82,076,441

TOTAL EXPENSES 175,904,059 182,848,802 188,218,760

REVENUES:

CAO (217,495) (217,495) (217,495)

Community Services (18,081,371) (18,041,624) (18,172,155)

Corporate Services (4,808,609) (4,934,903) (4,990,063)

Corporate Transactions (20,523,076) (20,538,789) (20,551,881)

IPPW (66,617,157) (70,439,178) (72,790,814)

TOTAL REVENUES (110,247,708) (114,171,989) (116,722,408)

NET TAX LEVY 65,656,351 68,676,813 71,496,352

2016 - 2018 Operating Budget Overview by Division

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Multi year Budget Request

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Multi year Budget Request

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Budget Resolutions

ii) CAPITAL REFERENCE 221 – Mary Allen Park (High Interest in Staff Recommended and CPIX budgets)

“That Council approves in principle, the Mary Allen Park capital project of $1,224,000 within the Environment and Parks Services division 2016-2018 capital budget, with funding to be approved through a follow up report to Council.”

AND

b) Operating Budget

i) ITEM G8 COMM.2016.059 – New Parks and Trails City

Wide 2017 (Staff Recommended budget)

“That Council approves $68,960 of ongoing funding in 2017 for outdoor maintenance of new parks within the Environment and Parks Services division operating budget.”

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Capital Budget - Process

City of Waterloo Capital Projects Classifications

• Projects approved in principle – require follow-up Council report to approve project and release funds

1. Financial Materiality-Projects receiving funding greater than $5M over the 3 year period of 2016-2018

2. Non-routine in nature-e.g. construction of a City facility, development of a CIP

3. High Public/Council Interest 4. Request by Council

• Capital projects that do not fall under one of these criteria are considered Routine projects and would not need to return to Council after the budget is approved. Funding can be released any time after budget day with Director authorization

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Capital Budget – Process Continued

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Public Engagement Strategy

• 1 year budget – Council orientation, balanced/stay the course budget

• 3 year budget – Utilizes strategic plan stakeholder engagement,

increased level of engagement around service level changes (I.e. Leaf

Collection program)

• Meet Lucy, your guide to the City of Waterloo Budget

City of Waterloo 2016-2018 Budget

Public Engagement

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Budget Public Engagement

City of Waterloo undertakes numerous public engagement activities

during our budget deliberations

➢ Publish all operating budget requests and

capital project sheets on our website

➢ Online engagement through our

engageWaterloo platform

➢ Pop-up Public Information Centre

➢ Ward Budget Meetings

➢ 6 Council Meetings

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Poll 5: How often do you consult the

public about the budget?

1. WITH EVERY BUDGET

2. EVERY SO OFTEN, DEPENDING ON ISSUES

3. NOT SURE

Participatory Budgeting

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Participatory budgeting (PB) is a democratic

process through which community members

directly decide how to spend part of a public

budget. It is anticipated that PB will help

directly involve residents in the budgeting

process and foster increased community

engagement.

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Poll 6: Do you do formal Participatory

Budgeting?

1. YES

2. NO

3. NOT SURE

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Poll 7: If yes, how long have you been

doing it?

1. > 5 YEARS

2. < 5 YEARS

3. NOT SURE

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Multi-year Budgeting – Key Takeaways X3

1) Develop a strong multi-year budget policy

2) Strategic Plan → Business Plan →Budget

3) Due Diligence

Key Takeaway

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• Please visit www.waterloo.ca/Budget to view all our budget material

• or feel free to contact either of:

Collaborate: We’re Better Together

Filipa ReynoldsFinancial Planning &

Procurement Director

Filipa.Reynolds@waterloo.ca

519 747 8711

Brad WitzelBudget Analyst

Brad.Witzel@waterloo.ca

519 747 6075