Subject:

Recommendation:

Receive as information Report FN-03-19, regarding the budget requirements of Ontario Regulation 284/09 passed under the Municipal Act, 2001, be received as information;

Council adopt the compliance report for expenses excluded from the 2019 budget as a requirement of Ontario Regulation 284/09 passed under the Municipal Act, 2001.

Purpose:

The Province of Ontario introduced Ontario Regulation 284/09 Budget Matter – Expenses, that allows a municipality to exclude from its annual budget estimated expenses related to the following:

a)     amortization;

b)     post-employment benefits; and

c)     solid waste landfill closure and post-closure.

The regulation requires that the municipality report on the impact of these excluded costs and, before adopting a budget for the year that excludes any of the expenses listed above, Council must adopt the report by resolution.

Background:

In 2009, accounting standards and financial reporting requirements changed significantly, with the most notable change being that of the requirement to report on Tangible Capital Assets (TCA).  However, these new accounting standards do not require budgets to be prepared on the same basis.

The Town, like many municipalities, continues to prepare budgets on a modified accrual basis, which excludes non-cash items such as amortization, post-employment benefits and solid waste landfill closures and post-closure.

Ontario Regulation 284/09 requires municipalities that have excluded expense in their budgets to prepare a report, about those excluded expenses and adopt the report by resolution, before adopting a budget for the year. 

Financial, Legal, Staff Considerations:

Financial:  

This report details the impact of the expenses listed above should they have been included with the 2019 budget.  As the Town does not have landfill within their level of authority, this report focuses on amortization expenses and post-employment expenses.               

The Town of Lincoln’s 2019 budget and associated tax levy excludes the following:

1. Amortization expenses, estimated at $5,878,686 since amortization is a non-cash expense.  Traditionally, municipalities use funds held in reserve and reserve funds to finance asset replacement.  Proposed budgeted transfers to reserves and reserve funds for asset renewal total $3,018,549.

2. Future post-employment expenses, which are estimated to increase by $4,300.  Post-employment expenses are dental and health care benefits that the Town provides between the time an employee retires and the time that employee reaches age 65.  Actuarial reviews are conducted to estimate the liability for financial reporting purposes.  The Town budgets annually for the current year’s costs of post-employment benefits, estimated at approximately $18,300 per year, but it does not budget for the entire estimated future liability, currently projected at $524,800.

Further, staff recommend that the Town of Lincoln continue to prepare budgets on the traditional modified accrual basis.  To ensure compliance with Ontario Regulation 284/09, this report has become part of the budget process and is presented on an annual basis prior to the final approval of the budget.

Legal: N/A       

Staffing: N/A

Public Engagement Matters:

N/A

Conclusion:

Council adoption of this report will ensure the Town’s adherence to Ontario Regulation 284/09 Budget Matter – Expenses

Respectfully submitted,

Angela Cifani

Director of Finance and Administration

905-563-8205 Ext. 228