Ice Storm Q&A’s

ICE STORM RECOVERY UPDATE – PARKS AND FORESTRY – Report to Council of April 23, 2014 - please click on attachment -

Ice Storm Recovery Update report to Council

 

1.   Does the City have an emergency fund or reserves for disasters like the ice storm?

Most municipalities have contingency funds but they were not designed to deal with the extreme weather events we are experiencing today. The City’s reserve funds pay for costs of services that change from year to year depending on normal weather patterns and changes in the economy.

Contingency reserves often pay for services like winter maintenance, utility costs and insurance.

This reserve helps property tax rates remain stable.

2.   How do our reserve funds work and what are the current totals?

The City has Reserves and Reserve Funds

A.  The City’s Reserves – general reserves are funds that the City has set aside for contingency type purposes or for funding items that do not occur every year such as elections. These reserves currently sit at $52.1 million.

Contingency reserves help smooth out spending that may vary from year to year such as for services like winter maintenance which change due to weather patterns, utility costs and legal settlements.  These reserves help property tax rates remain stable.

B.  Reserve funds– reserve funds hold funds that have been set aside for dedicated purposes based on legislation, or city policies and by-laws. They can only be used for the purpose that they were set aside for.

The City has Operating Reserve Funds which are dedicated funding for items such as Insurance claims and workers compensation. These funds total approximately $69 million.

The City also has Capital reserve funds that are dedicated funding for capital purposes. This includes

  • Development Charge reserve funds, which under legislation can only be used for growth expenditures; 
  • Gas Tax Reserve Funds which under legislation can only be used for Transit and Roadway expenditures;
  • Park Land Dedication Reserve funds which under legislation can only be used for park land acquisition and recreation facilities and equipment. These reserve funds total $285.8 million.

The City also has a Capital Reserve Fund to provide for replacement or acquisition of City infrastructure (i.e. roads, bridges, community centres, libraries and transit). The Capital reserve fund now sits at $65.9 million.

The amounts needed and ways we can use Capital reserves are governed by City policies and asset management plans. These capital projects ensure we have the facilities we need and that we can continue to maintain them.

Municipalities are challenged to deliver current services and maintain critical infrastructure while keeping property taxes affordable.

The additional burdens associated with disasters, such as the recent ice storm and flooding event, create both immediate and long-term financial problems as municipality’s try to deliver services and maintain critical infrastructure.

Municipalities own and maintain 65% of the nation’s capital infrastructure. Infrastructure is critical to the quality of life of our citizens and our national economy. The provincial government receives 34% of each tax dollar the federal government receives 55%; municipalities receive only 11%.

Municipalities are already struggling to pay for new infrastructure and the upkeep of existing assets. The funding gap continues to grow. Mississauga took on debt for the first time in 2013.

The City considers its trees an important part of our community. There are 2.1 million trees located in the City of Mississauga, half are privately owned.  The City has not collected data on the impact to private trees damaged by the ice storm. At this time, the number of City-owned street and park trees impacted by the storm is estimated at 20,000. While most City capital assets are insured, City trees are not insured because they are uninsurable.

 3.   Why is the property tax insufficient to address these disasters?

The costs of extreme weather events due to climate change are beyond the means of any municipality. Although most municipalities have reserve funds, they were not designed to deal with the costs of extreme weather events.  In fact, reserve funds are often already accounted for to cover the costs of infrastructure.

Municipalities provide things like roads and bridges, transit, snow-clearing, libraries, community centres, waste management, and emergency services– including fire and police.  The primary revenue source for municipalities is through property taxes.

4.   Why is it the responsibility of the province or federal government to address the costs of these disasters?

Municipalities, with property taxes, additional levies and fundraising are already taking on costs normally borne by provincial and federal governments. We need to work together to find a solution.  Mayor Hazel McCallion, along with 19 GTA mayors and 3 regional chairs, is asking the provincial and federal governments to fund one third of all the recent ice storm costs and to establish new programs to address future disasters and severe weather events; they met in Mississauga on January 17, 2014 to co-ordinate their request and approach. See news release.

5.   Why doesn’t Mississauga focus on creating a new disaster emergency fund instead of funding new strategic projects such as the UTM innovation centre?

Most municipalities have contingency funds but they were not designed to deal with the extreme weather events we are seeing today. The City’s reserve funds pay for costs of services that change from year to year depending on normal weather patterns and changes in the economy.  

One of the priorities in the City’s budget process is to support smart investments based on the priorities in the City’s 40 year strategic plan. Council’s decision to support the UTM investment was made before the ice storm. The City would not be considered a fiscally responsible community partner if it reversed significant financial decisions after a budget had been approved.