Meaford council took its first look at a proposed capital budget for 2008 at a special meeting held Wednesday afternoon.

Financial Consultant David Creech presented the proposed budget at the meeting. During his presentation Creech outlined the new capital project reporting requirements he has implemented since joining the municipality. Creech told council that all capital projects over $10,000 would be presented within the annual capital budget from this point forward.

At a second meeting held Monday evening, council refined some of the numbers and shifted a project from being financed by 2008 taxes to long-term debt.

Each municipal department has a capital budget. The overall capital budget is brought together from the various municipal departments. It identifies each project, how much it will cost and clearly shows where funding for the project is coming from.

Funding sources include: federal/provincial grants, deferred revenue from previous years, reserves, current year taxes, money flowed from the water/sewage department, development charges, donations and long term debt financing. Creech stressed that no capital project will be allowed to start without solid funding sources.

In addition to the overall budget presented by Creech, each project in the capital budget has a separate report that breaks down its costs and funding sources. Creech said throughout the year council will be updated about capital projects with the individual reports. The individual reports include: the project's original budget, a revised budget, tender cost estimates and final actual costs.

The reports also include all the funding sources to be used to pay for each project.

Council reviewed each capital item at Wednesday's meeting with each department head. Questions and comments were made about the various proposals, but no decisions were made. Wednesday's meeting was the first opportunity for council to view the proposed capital budget.

The three most important numbers in the report presented by Creech are the total capital budget cost, the amount of financing needed from 2008 taxation and the total amount not financed that may require long term debt depending on council's direction.

Municipal staff is proposing a total capital budget for 2008 of $2,603,335.50. Of that amount, just $76,000 is required from 2008 taxes. The municipality is looking at adding $470,650 in long-term debt if the capital budget is approved as initially presented.

The largest item in the 2008 capital budget is the proposed new fire hall for the Meaford Fire Department.  Its cost is pegged at $705,000.

The largest capital department is the roads budget with items totaling $1,082,368. It is in that line item that council faces its biggest decision. Almost the entire capital roads construction budget is being funded with a provincial infrastructure grant of $1,053,768.

The other $28,600 is coming from the water/sewage department for underground water line work proposed for Boucher/Victoria streets. Just over $400,000 of the total is earmarked for finished construction projects from a year ago. Staff has suggested the municipality spend the further $647,668 of grant money on a variety of upgrade and resurfacing projects.

Creech explained that council had to decide what to do with the remainder of the infrastructure grant money. He said the amount could be spent on new infrastructure works in 2008 or could be earmarked to pay for projects completed last year that require financing.

"If you use that $600,000 to pay off last year's work, our long-term debt payments will be significantly lower than expected. There is logic to doing it that way. It's your call," Creech told council.

At a second budget meeting held Monday evening, the $600,000 available for either infrastructure projects in this year's budget or to pay for projects from last year to reduce long-term debt had grown by $210,000.

Creech informed council that staff found a $210,000 allocation for the Sykes Street project from last year that should have been included in the numbers. The new information at Monday night's meeting leaves council with approximately $800,000 to spend on new infrastructure projects as proposed by staff, reduce debt from 2007 or do a combination of both.

Council still has not made a final decision about the road's capital budget and will look at the numbers at a budget meeting to be scheduled for next week.

Creech explained to council that using the infrastructure grant to finance projects from 2007 would affect the 2008 tax rate by reducing the amount the municipality has budgeted to pay in principle and interest costs on the long term debt expected to be issued for those projects. Creech said it was up to council to decide how to balance between reducing that left over debt and going forward with new infrastructure spending.

Councillor Gerald Shortt argued in favour of using the money to pay for projects in order to limit the debt to be incurred.

"In the last three years you did about 10 years worth of work and it didn't get paid for. It's time to start cutting back," said Shortt.

Councillor Cynthia Lemon argued that council needed to move forward with some of the infrastructure spending because paying off the debt from the previous year was going to have little impact on the 2008 tax increase.

"Unless it's a big chunk, we need to move forward with some of these road projects," said Lemon.