Welcome to Orangeville, Bill McKennan. We have a real challenge for you.

Orangeville's new treasurer and director of finance, who assumed his post in September, will be making his municipal budget debut Monday night and dealing with what Mayor Rob Adams describes as "probably the toughest budget we have had to prepare."

Mr. McKennan will be making a state-of-the-finances address to council — which also sits as budget committee — and he will, in his own words, present "the good, the bad and the ugly" of Orangeville's current financial state.

In an interview Tuesday, Mr. McKennan said the 2010 budget preparation will not only have to contend with where to make expenditures, but will also have to look at negative revenue shifts in recession-ridden 2009.

Nevertheless, he said he has received a clear message from the budget committee. "The message was to minimize the tax rate, and staff has been directed to bring forth a budget with that in mind."

This is one year when keeping property tax increases to a minimum and still maintaining levels of services will be far easier said than done.

For example, housing starts have slowed considerably and that means less revenue from development charges and new assessments.

In the past, the town was able to count on ready cash, thanks to "overnight interest rates" on the money it generates from various revenue sources. Two years ago, that rate was in the neighbourhood of five per cent, as opposed to the 1 1/2 per cent to 2 per cent it is now. The difference, said Mr. McKennan, can be around $300,000 less revenue this year than in 2007.

A negative dent in ready revenues has also occurred as mounting job losses have caused more property owners to default on their taxes.

Mayor Adams said in an interview that a new catch phrase, the "new reality," is springing up across the province.

"Council, staff and administration are going to have to face this new reality," he said. "We can't rely on revenue streams we relied on in the past. At the same time, we have to remember that the taxpayer can ill afford increases."

A simple crunching of the numbers reveals that lower revenues, that can't be offset by higher taxes, equals fewer services. While council has been able to juggle the finances and maintain services in recent years, that might not be possible in 2010.

Mayor Adams suggested that some municipal services, such as the clearing of all sidewalks in the winter, might have to go. The 2010 budget preparation, he figures, will be "the hardest decision-making process this council will face. We have to be responsible to the taxpayer."

The ongoing 2010 budget preparation in Mono sees that council aiming to dip into its reserves, more than usual, to prevent a town-only tax increase. A similar objective is likely in Orangeville.

According to Mr. McKennan, the town has discretionary reserves of approximately $3 million. This is money that can be readily used for any purpose council sees fit.

There is also about $9.7 million in obligatory reserves. Provincial regulations stipulate where these funds can be spent, however, and they can't be accessed on a whim. The town has to submit plans to the province, which show the reserve fund usages meet the criteria of which they are intended.

Currently, the obligatory reserves in Orangeville are $4.8 million for development charges (slated for growth-related infrastructure projects such as road widening), $4.2 million for wastewater management and $660,000 for parks and recreation.

Deputy Mayor Warren Maycock advocated resorting to reserves to keep the local town-only tax increase to zero in 2009. Mr. Maycock, who also serves on county council, pointed out that the county used about 17 per cent of the county's gas tax revenue from the federal government to help keep the county levy increase at less than one per cent.

If ever there was a time to rely on reserves, Mr. Maycock says, 2010 is it. "Hopefully, the majority of council will see fit to do that."

In 2009, the town passed a budget that included a 2.5-per cent town-only tax increase. Because of actual decreases at county and no increase in the education levy, Orangeville homeowners saw their overall tax bills go up just .25 per cent.

The town-only increase was to raise funds to allow Orangeville to have money to match federal and provincial infrastructure stimulus funds and go ahead with major capital projects.

Councillor Mary Rose, who supported this measure in 2009, said that this year "is going to be a very difficult time for the town. Even to maintain the services we already have is going to be a stretch."

She doubts, however, that there will be a total consensus on the budget committee, since each member has the the inclination and innate obligation to get as much as she or he can for whatever municipal cause they oversee on the committees on which they serve.

"Everyone has their projects they will want to fight for," said Ms. Rose. "If we can come away with an increase close to the cost of living, or less, we will be doing well."

In summation, she cited a variation of a common Chinese saying. "We are living in an interesting time."

And some of the councillors' interest might relate to the fact 2010 is an election year.