Newmarket council officially adopted its 2021 municipal budget on Monday, which means that property taxes will increase by 1.98 per cent next year.
Mayor John Taylor expressed his relief that the month's long process is over, at least until next year.
"This has been a very difficult budget. It's like none we've ever seen before. We are definitely less certain about what next year will hold in terms of financial implications than we have ever been before in a budgeting process. So there is a bit of crystal ball budgeting going on here," said Taylor.
"That's why we have introduced a COVID-19 contingency reserve fund ... It will help us manage the impact of COVID-19."
The money being put aside in the COVID-19 contingency fund makes up 0.8 per cent of the 1.98 per cent tax increase.
Another 1 per cent of the tax increase is from money being put into an asset replacement fund so the municipality will have money on hand to pay for future infrastructure replacements, which is a component of Newmarket's recently completed fiscal strategy.
"That means only 0.18 per cent (of the tax increase) is from an increase to the base budget for running the town," said Taylor. "That is the lowest base budget increase we have ever seen in my time here."
When the budget was first presented, the proposed tax increase was 2.99 per cent, but after receiving direction from council, staff managed to reduce it by more than 1 per cent without impacting the delivery of municipal services.
How was this done?
According to treasurer Mike Mayes, there were three main areas where savings were found.
The first was a slight reduction in the funds being put aside in the COVID-19 contingency fund. Instead of being a full 1 per cent of the tax increase, it was reduced to 0.80 per cent.
"The original request was for $625,000 (equivalent to a 1 per cent increase); the final recommendation is now at $500,000," said Mayes.
Mayes noted that the contingency money didn't exist before the 2021 budget, so reducing it slightly doesn't mean the town is choosing to underfund anything.
"If we think of it as filling a glass. The glass didn't exist before. Now it does, and we are still going to fill it to 80 per cent full," the treasurer said.
On the flip side, the town could have decided not to put money in a COVID-19 contingency fund at all to save taxpayers money, but Taylor argued that there are people in businesses who need the support more than homeowners need a slight break on their taxes.
"This will allow us to continue doing some of the work we have done previously, such as breaks on penalties and fees, and target initiatives like the patio program. It will also allow us to do more through this targeted approach," said the mayor.
"We could have gotten rid of the contingency and saved homeowners maybe $50. But that small amount on a home is not going to be meaningful, but with that money, we can do things with meaning such as supporting the small business community."
The second major source of savings was that inflation this year has not been as high as was thought it would be in March when work on the 2021 budget began. The pandemic caused any inflation estimates built into the original budget to be significantly off.
"Things were really wonky in 2020; we had deflation at one point. We didn't know what to build in, so we assumed that inflation would be between zero and 1 per cent and built the budget around that," said Mayes.
"At this point, with the projections from the provincial government, we are looking at 0.5 per cent at the end of the year.
"So we were able to reduce the base budget down from 1 per cent — which we assumed would be the top end of inflation — down to 0.5 per cent, which saved us $315,000 right there."
The remainder of the savings was found by implementing recommendations from the REV it UP program the Town of Newmarket took part in in late 2019.
The program helps municipalities find opportunities for greater efficiencies, cost savings and new revenues. The final report was delivered to council last December, but none of the potential savings from its recommendations were included in the original draft of the budget.
"We started this process back in March, and we didn't even have confidence that we would have good numbers at this point ... So it was stated in the budget target reports that we would not be including anything from REV it UP," said Mayes.
"But to get the increase below two per cent, we thought we would make an exception in this case, and council set a target for $200,000 as a target for 2021 to bring the budget down. It's an achievable number."
The REV it UP report to council contained 18 proposals that would save Newmarket $1.9 million to $2.6 million. Mayes said the town has decided to move forward on 13 of them, although several had to be put on hold due to the pandemic.
One of the proposals that is being implemented includes a three-year project for a new administrative monetary penalty system, which will save time and money on bylaw enforcement staffing, as well as create a source of revenue.
