2024-2028 FINANCIAL PLAN APPROVAL

FINANCE AND ADMINISTRATION COMMITTEE REPORT

TO: Committee of the Whole DATE: April 4, 2024 FROM: D. Christenson Director of Finance and Technology MEETING DATE: April 9, 2024

2024-2028 FINANCIAL PLAN APPROVAL

RECOMMENDATION:

THAT the 2024-2028 Financial Plan be approved in principle, as amended, and further that the 2024-2028 Financial Plan bylaw be prepared for consideration at the next Council meeting.

PURPOSE:

To provide Council with a revised five-year financial plan for approval in principle and identify any changes required by Council before preparing the 2024-2028 Financial Plan bylaw.

TIME CRITICAL:

The Community Charter (S. 165) requires municipalities to adopt a financial plan by bylaw prior to adoption of the annual property tax bylaw before May 15 of each year.

EXECUTIVE SUMMARY:

Over the last several months, Council has considered projects and initiatives that have implications for the five-year financial plan, culminating in a series of budget-focused workshops in February 2024. View Royal constituents have had the opportunity to review and comment on the proposed 2024-2028 Financial Plan through various means, including participating in public meetings, commenting in the Citizen Budget engagement tool online, and reviewing the financial plan through the Financial Plan Insights app and accompanying documents via View Royal’s website.

At its March 19, 2024, meeting, Council directed that the garbage collection service budget be increased by $5,000 for a bear safe bin pilot program, funded by sales of specialized bins on a cost recovery basis. Residents would be charged the difference in cost between the bear safe bin and the regular bin that is included in the annual garbage collection user fees.

After the draft financial plan was published, the CRD finalized its budget, and the cost apportionment for View Royal’s share of sanitary sewer costs increased from $1,469,000 to $1,556,900. While the ultimate impact to sewer user fees will only be known after staff receive and analyze water consumption data, it is likely that sewer user fees will increase 6%-7% over the prior year.

Additionally, staff identified a required change to increase the total cost estimate for RCMP contracted services by $93,000 for 2024, based on an updated cost per member. The increase is funded by a reduction in the contribution to the police operating reserve.

These changes will have no direct impact to taxation in 2024.

Council may wish to direct any further changes to the 2024-2028 Financial Plan prior to approving the plan in principle. Once the plan has Council’s approval, staff will prepare the financial plan bylaw for Council’s consideration prior to the May 15, 2024, deadline.

Information about the financial plan, taxes, and user fees will be included with the tax notice mail out planned for mid-May 2024.

BACKGROUND:

The proposed 2024-2028 Financial Plan was reviewed by Council at a series of budget meetings on February 13-15 and 20, 2024. At these sessions, Council considered the 2024 core operating budget, proposed non-core and capital items, ongoing costs of capital projects, and reserve transfers. Council provided direction to staff regarding specific changes to the financial plan as indicated by black text on Schedule A – Changes to tax-funded items and Schedule B – Changes to items funded by sources other than taxes (attached).

The decisions made during the budget deliberations were incorporated into the Citizen Budget public engagement tool, Financial Plan Insights app, and the 2024-2028 Financial Plan document published on March 11, 2024, on View Royal’s website. The Citizen Budget engagement opportunity was open for input until April 1, 2024. View Royal residents were informed about the online opportunity and budget information through multiple social media messages, View Royal’s website, and RSS feeds.

The following items require the 2024-2028 Financial Plan as presented at the February 2024 budget workshops to be revised. These changes, indicated in red text on Schedules A and B will be incorporated into the financial plan bylaw before it is returned to Council for consideration.

1. Council allocated $5,000 for a pilot project for bear safe residential garbage and food scrap bins (March 19, 2024, Council resolution C-45-24). The program will be funded from fees charged for the bins, based on the difference in cost between bear safe bins and the regular bins that are included in the regular garbage collection user fees. Project Summary N-120 Bear safe bin pilot (attached) describes the details of this project.

2. Sewer user fees are based on recovering the cost to maintain and operate both View Royal’s and a share of the Capital Regional District’s (CRD’s) sanitary sewer systems. After the draft financial plan was published, the CRD finalized its budget, and the cost apportionment for View Royal’s share of sanitary sewer costs increased from $1,469,000 to $1,556,900. The increase is primarily a result in shifts in average annual flow percentages between the core area participants. The resulting impact to sewer user fees will greatly depend on the distribution of water consumption between residential and other user classes. The draft financial plan estimated a 2%-3% increase in sewer rates; this range is now more likely to be 6%-7%. A 6% increase to a residential property with 85 m3 of winter water consumption would be about $22 (from $368 to $390). Staff will analyze consumption data and recommend amended sewer rates for 2024 in September.

3. In reviewing budget detail, Finance staff identified that policing cost estimates for the RCMP contract had not been updated to the latest information. This correction was made in the 2024-2028 Financial Plan dated March 11, 2024, and included with the online public engagement information. The revised estimate required an increase for 2024 by $93,000 and additional amounts for subsequent years as shown on Schedule A – Changes to tax-funded items. The increase for 2024 is offset by a reduction in the contribution to the police operating reserve to avoid any impact to taxation. The police operating reserve contribution for 2024 after the change is $96,250. Any actual surplus in taxation funding for policing will be transferred to the police operating reserve, per policy (Policy# 1600-020 Reserves and Surplus).

Note that while the project proposed by Project Summary C-179 Noise barrier fencing Hwy 1 offramp at Six Mile Road has been discussed by Council since the February 2024 budget workshops, staff understand that the 2024 budget amount of $100,000 is a placeholder only. Council will determine the next steps for this project once information from acoustic testing becomes available. The $600,000 reduction to the original budget of $700,000 is listed on Schedule B Changes to items funded by sources other than taxes under the heading “Casino” as item “C3”, leaving $100,000 available for any future actions Council approves.

DISCUSSION:

When the February budget workshops concluded, the 2024-2028 Financial Plan estimated a 6.4% overall tax increase required to generate approximately $711,400 additional tax revenue for 2024 before adding in new tax revenue from non-market change assessments (estimated at about $199,400). The amendments as described above have no impact to the proposed increase in total taxation revenue required for 2024. However, the most recent assessment data from BC Assessment indicates that when tax estimates include the actual changes in assessed values for 2023 and 2024 and related non-market changes, the actual impact to prior year assessed values (all property classes) is closer to 6.6%, to achieve the financial plan taxation revenue target.

Taxation impact estimates assume that the ratios or multiples that reflect the relationship of non-residential tax classes to the residential class remain unchanged from the prior year. Council will have the opportunity to consider these multiples prior to adoption of the tax rates bylaw. Estimates of future years’ taxation will be adjusted when the financial plan is reviewed again next year.

Prior to approving the financial plan in principle, Council may direct further changes to the plan.

SUSTAINABILITY/CLIMATE CHANGE IMPACTS:

The changes to the 2024-2028 Financial Plan recommended in this report have no significant direct impact to View Royal’s sustainability or climate change.

FINANCIAL IMPLICATIONS:

There are no additional financial implications other than those described in other sections of this report.

ALTERNATIVES:

Delaying approval in principle of the five-year financial plan may create the need for additional Council meetings to meet statutory deadlines.

CONCLUSION:

The Community Charter requires that local governments adopt a five-year financial plan, prior to adoption of the tax rates bylaw, which is required on or before May 15 each year. The financial plan may be amended by bylaw at any time.

The following proposed schedule for remaining steps in the financial planning process satisfies the legislated deadlines:

Information about the financial plan, taxes and user fees will be included with the tax notice mail out planned for mid-May 2024.

ATTACHMENTS:

• Schedule A Changes to tax-funded items
• Schedule B Changes to items funded by sources other than taxes
• Project Summary N-120 Bear safe bin pilot