2025 DRAFT FINANCIAL PLAN (Staff Report)

RECOMMENDATION:

THAT the Committee recommend to Council that staff prepare the 2025-2029 Financial Plan bylaw for consideration based on the feedback received during the public financial plan consultation, and the April 8, 2025 Committee of the Whole financial plan recommendations.

ALTERNATIVE OPTIONS:

Option #2: THAT the Committee recommend to Council that staff prepare 2025-2029 Financial Plan bylaw for consideration based on the 2025-2029 Draft Financial Plan as presented.

PURPOSE:

This report presents the 2025 DRAFT Financial Plan (Plan) for Council’s consideration. The Plan presentation schedule is as follows,

• April 8, 2025 – Operations, Strategic Projects (non-core), and Capital Program
• Additional meetings to be determined if needed

BACKGROUND:

The Community Charter requires that local governments in British Columbia approve a Five-Year Financial Plan (in bylaw format) and Tax Rates Bylaw on or before May 15 of each year. To produce this bylaw, the Town updates its five-year Financial Plan which includes general and sewer operations, strategic projects, general and sewer capital programs, and reserves budgeting.

The annual budget process, public engagement, and review are used to balance the level of operational services, implement Council's strategic initiatives, and maintain Sustainable Infrastructure Replacement Plan (SIRP) financial strategies and long-term planning. In doing this the Town strives to:

• Ensure adequate funding for services
• Continue long-term financial strategies to increase future infrastructure replacement funding levels and reserves
• Manage expenses, contain costs, be efficient
• Assess staff capacity and delivery of work plans
• Provide for contingencies, manage risks and operate prudently
• Maintain reserves for the future
• Use debt strategically

This report provides information to assist Council with budget deliberations, identify increases, and to consider direction to complete the 2025 budget.

Financial Plan Drivers:

The Plan provides status quo funding for the continuation of services expected by the community from the 2024 Financial Plan, in addition to the following primary changes:

• Fire Department implementation of new IAFF Collective Agreement, first full year of three new career Firefighter positions, and addition of a second Assistant Chief position Feb 1st
• Increase Information Technology Coordinator/Manager position from 0.6 FTE to 1.0 full-time position
• Status quo service levels for RCMP members and municipal staffing, plus transition of E-Comm dispatch services to the Town
• Sustainable Infrastructure Replacement Plan (SIRP) financial strategies of 1.0% property tax increase, non-market change assessment revenue contribution, increase in Casino Reserve funding, and sewer fee increase of 5.0%
• Building Permit related revenue five-year average trend decrease due to declining activity
• Increase in investment portfolio returns five-year trend due to favourable returns and forecasts for Municipal Finance Authority pooled fund investments

See Table 1 and 2 below for summary of 2025 average home tax increase, property tax revenue drivers, and amounts. Increases in Police and Fire Services, and escalation in funding for future asset replacement account for approximately $1.3 of the $1.4 million draft revenue increase required.

DISCUSSION:

Wages and Benefits Increases

The most significant operational cost drivers for the annual budget are labour related costs. Wages and benefits represent approximately 65-70% of the Town’s general operations (including Policing). The only collective agreement with the Town is for the Fire Department IAFF which expires December 31, 2025. Unknown wage rate increases does create budgeting risks. IAFF contract increase estimates, and other employee groups, have been forecast that reflect knowledge/judgement of current market conditions, and Town past practices.

New service level increases for 2025 wages and benefits include:

• Fire Department Assist Chief – Feb 1st hire, tax funded
• Increase Information Technology Coordinator position from 0.6 to 1.0 FTE, tax funded
• Community Planner, phased in tax funding over three years, with use of Growing Communities Fund grant, no 2025 tax impact

2025 tax impact from prior year positions implemented:

• First full year budget for three career Firefighters hired mid-2024
• First full year budget for 0.5 FTE Communications Coordinator

Contracted Services

RCMP Police Services Cost

The Police budget represents core policing costs of labor, contracted costs for E-Comm dispatch (new for 2025), integrated units and supplies. Approximately 18% of the Town’s general operating budget is for RCMP Policing. The 2025 budget for RCMP contracted services and support staff is approximately $3.2 million or a 5.6% budget increase over 2024. In addition, the Town is now responsible for EComm 911 dispatch costs starting April 1st with a budget of $276,600. 2026 budget will increase by $129,080 to $405,680 representing the first full year of services paid.

Westshore Parks and Recreation and Greater Victoria Public Library

As presented to Committee of the whole January 14, 2025, the 2025 Westshore Parks and Recreation requisition to the Town is $790,789, an increase of $22,144 or 2.88% over 2024, and a Greater Victoria Public Library requisition of $688,064, or an increase of $27,878 or 4.30% over 2024.

Strategic Projects (non-core) and Capital Program development and prioritization

Strategic Projects:

The Leadership Team develops a strategic projects plan based on a variety of factors,

• Council priorities and direction
• Facility and technology needs
• Statutory requirements
• Community engagement
• Continuous improvement
• Infrastructure and departmental master planning
• Bylaw, policy and strategy development
• Community studies and safety

The five-year Strategic Plan projects are compiled based on prior years’ plans, and annual review of projects to be carried forward, added and removed. Progress of planned projects is reviewed each year and staff capacity reevaluated to determine the following years’ workload that is achievable. The final projects plan is approved by the Town’s Leadership Team and Chief Administrative Officer.

Engineering and Parks Capital Projects:

The staff recommended engineering and parks capital projects are predicated on the priorities identified in the Town’s master plans. Infrastructure master planning is critical in budget planning as it ensures that (1) projects align with the initiatives identified in the Town’s Strategic Plan, (2) critical upgrades from both a capacity and safety standpoint are prioritized, and (3) public expectations are balanced with staffing resources to deliver the projects.

Staff utilize the following master plans to prioritize projects within 5-year planning cycles and long-term planning:

• Sanitary Master Plan (2019)
• Drainage Master Plan (2017)
• Transportation Plans: Active Transportation Network Plan (2023), Transportation Technical Update (2016), Transportation Master Plan (2008)
• Parks Master Plan (2017)
• View Royal Park Master Plan (2020)
• Development Cost Charges Plan (2017)

Non-Core Projects (non-recurring strategic projects and new employee positions identified)

The Town has an ambitious program of strategic projects for a small municipality and limited staff capacity. For 2025 the draft Plan will see over 20 projects identified for over $1.2 million. The five-year draft Plan includes 39 projects totaling over $3.5 million funded from a variety of different sources.

Project Summaries have been provided to Council for information, and staff will be available for any questions.

Infrastructure Capital Program

The 2025 capital plan consists of $7.36 million of work with funding of $6.14 million from reserves including Casino and Community Works Fund, $0.82 million from grants, and $0.40 million from Development Cost Charges. In total, the ambitious five-year capital plan includes $29.1 million of works with $19.4 million for transportation related projects. 2025 major initiatives include:

Sustainable Infrastructure Replacement Plan (SIRP) Financial Strategies

A Sustainable Infrastructure Replacement Plan was introduced to Council in early 2024. The Plan’s focus is on the Town’s core responsibility of maintaining it’s existing assets through resilient levels of annual funding and reserves balances. Annual long-term funding strategies incorporated into the Plan are as follows,

• Increase property taxes by 1.0% for 12 years for general renewal reserves
• Increase Casino funding to replacement reserves by $100,000 a year until annual funding of $500,000 is reached.
• Convert debt servicing budgets to replacement reserves when debt is retired
• Utilize non-market change assessment revenue to increase replacement reserves funding until the annual targeted funding is reached
• Increase sewer utility revenue by 5.0% a year for 5 years

A key success factor to asset replacement funding increases is Council’s commitment to the Plan while other financial pressures exist. Deferring increases pushes the costs of capital services to future generations and higher levels of debt and interest costs in the future.

The Plan and financial strategies do not include new or upgraded infrastructure of the Town. Significant new or upgraded infrastructure should be funded with grants or debt, until a taxation strategy is implemented. If or when new asset programs become a priority for the Town (eg. active transportation) it’s recommended a new property tax financial strategy be implemented over time to fund so as not to deplete replacement reserves. A specific new/upgrade asset levy could be used to fund new assets directly or to service related debt.

2025 and 2026 Projects for consideration by Council are included in Appendix C.

2025 Draft Financial Plan increase

As is the case each year, the budget is developed with an approach of balancing services being delivered, saving for the future, and overall impacts on taxation.

The benchmark average home tax increase is based on 2024 tax multiples and the BC Assessment Revised Roll and Non-Market Change (NMC) assessment (April 1st final roll). The draft budget average home tax increase is 7.87% or $174 for operations, and 3.38% or $75 for savings for future asset replacement, for a total of 11.25% or $249.

Table 1: 2025 Average Home Tax Increase

NMC – BC Assessment 2025 Non-Market Change revenue

There are a number of escalating economic and political risks that may impact the Town in the future, along with significant construction and contracted costs that are escalating at rates much higher than property taxes and CPI.

Table 2: 2025 DRAFT Property Tax Revenue Increase

Below is a summary of the primary 2025 draft budget property tax revenue drivers,

Non-market change (NMC or new construction) in property assessment from the BC Assessment April 1st Revised Roll (final) contributes $285,400 to the SIRP Plan and saving for future infrastructure replacements. New NMC revenue for 2025 is significant but is expected to decrease in future years as new construction slows in the Town.

Table 3: New Construction Assessment Revenue

During the budget preparation process staff work to refine both revenues and expenses to deliver the services expected while keeping property tax increases as low as possible. Should Council direct the draft tax increase be reduced, staff can bring back reduction scenario options and recommendations for Council’s consideration.

Amendments to Draft Financial Plan

Since publishing the Draft Plan March 19th, some amendments have been identified that will be included in the adopted budget with Council approval. Items identified to date are as follows:

• Crossing Guard Program funding. The School District crossing guard program is moving from an annual grant in aid submission to part of a Memorandum of Understanding. 2025 funding was omitted from the budget in error. $45,000 will be added to the transportation operations budget for 2025 – 2029 funded from Casino Reserves.
• Capital Project C-054, Helmcken curb/sidewalk from Eagle Creek Village to Aspire will be removed from the budget as per Council motion at the March 18, 2025 Council meeting.

Any other budget amendments approved by Council will be incorporated into the budget and summarized in the adopted Plan.

2025 Financial Plan format and presentation

Although review of the budget each year is for council to approve the entire budget and existing services, the staff report is focused on the property tax revenue increase and departmental increases for 2025 including,

• New staff positions and additions
• RCMP costs and EComm,
• Fire Department
• Increases to reserve contributions for future asset replacement

In addition, project summaries for strategic projects (non-core) and capital have been provided to Council for information. Staff will be available if there are questions on specific projects during deliberations.

The DRAFT 2025-2029 Financial Plan was published March 19, 2025 and a public engagement program started and is open to April 2, 2025. Public engagement feedback and comments are attached for Council’s information and consideration.

NEXT STEPS:

• Budget presentation and deliberations
• Financial Plan and tax rates bylaw approvals (final reading by May 14, 2025)

PUBLIC PARTICIPATION GOAL:

The desired level of public participation for the recommended option is: [X] Inform [ ] Consult [ ] Involve [ ] Collaborate [ ] Empower [ ] N/A

TIME CRITICAL:

Financial Plan and Tax Rate Bylaws require final reading by May 14, 2025

CONCURRENCE:

Attachments: Attachment A: 2025 and 2026 Capital and Strategic (Non-Core) Projects Appendix A: DRAFT 2025-2029 Financial Plan Appendix B: Public Engagement survey and comments