Financial Planning Targets
Report identifying financial planning targets for the 2022-2026 process, noting an estimated 8% overall tax increase for 2022.
TOWN OF VIEW ROYAL
COMMITTEE OF THE WHOLE REPORT
TO: Committee of the Whole DATE: September 7, 2021 FROM: D. Christenson, Director of Finance MEETING DATE: September 14, 2021
Financial Planning Targets
RECOMMENDATION:
THAT the Committee identify financial planning targets and priorities for the upcoming 2022-2026 Financial Planning process.
CHIEF ADMINISTRATIVE OFFICER’S COMMENTS:
I concur with the recommendation.
PURPOSE OF REPORT:
To identify financial planning targets to guide the preparation of the 2022-2026 Financial Plan.
BACKGROUND DISCUSSION:
At its April 13, 2021, meeting the Committee directed staff to prepare a report regarding five year financial plan targets for its September meeting.
At the conclusion of the 2021-2025 Financial Planning process, the estimated implication for the 2022 budget was an approximate 8% overall tax increase, and an average of 3% per year thereafter, assuming at least $100,000 of the total required tax revenue is offset by increased property assessments because of new construction. The estimated 2022 assessed value of new construction will be available prior to the development of the draft financial plan in January 2022.
The estimated increase in 2022 total tax revenue is needed to replace the draws from casino and surplus funding approved for 2021 and to restore reserve contributions to pre-2021 levels.
| Tax funding allocation | 2020 Budget | 2021 Budget | 2022 Budget | % Chg 2021-2022 |
|---|---|---|---|---|
| Operating budgets | ||||
| General Government Services | 943,555 | 1,073,768 | 1,161,537 | |
| Protective Services | 3,157,543 | 3,584,326 | 3,655,731 | |
| Transportation Services | 2,640,063 | 2,757,139 | 2,808,853 | |
| Development Services | 370,401 | 361,343 | 380,648 | |
| Parks Services | 725,220 | 748,862 | 768,496 | |
| Recreation & Culture Services | 552,158 | 554,593 | 605,400 | |
| Debt | 365,534 | 365,534 | 365,534 | |
| 8,754,474 | 9,445,565 | 9,746,199 | 3.2% | |
| Reserve contributions | ||||
| Capital Works and Land | 60,000 | 0 | 60,000 | |
| Capital Renewal | 248,000 | 72,000 | 200,000 | |
| Future Operating Expense | 100,000 | 0 | 100,000 | |
| Parks Improvements | 105,000 | 105,000 | 125,000 | |
| All other reserves | 112,500 | 114,500 | 114,500 | |
| 625,500 | 291,500 | 599,500 | 105.7% | |
| Total taxation requirement | 9,379,974 | 9,737,065 | 10,345,699 | 6.3% |
| Taxation requirement reduced by | ||||
| Draw from Casino revenue for COVID-related costs | 0 | (200,000) | $0 | |
| Draw from surplus for COVID relief | (167,500) | (111,667) | (55,833) | |
| Our Place Society grant | (152,400) | 0 | 0 | |
| Total taxation requirement* | $9,060,074 | $9,425,398 | $10,289,866 | 9.2% |
* Funded by existing and new property assessments
If at least $100,000 of the total taxation requirement in 2022 is funded by assessments that result from new construction, the estimated tax increase given the forecasted budgets as outlined above would be 8.1%.
The Committee has several options to set financial targets for the next budget cycle, and each option has implications for current or future service levels and financial sustainability. These include, but are not limited to, the following:
| Option | Pro | Con |
|---|---|---|
| Reduce services or service levels | Cost savings | Degradation or elimination of desired service or service level |
| Reduce reserve contributions | Deferral of future costs | Increased future volatility in taxation |
| Increase draw from surplus | Decreased short-term volatility in taxation | Not sustainable |
| Increase reliance on Casino revenue for operating | Decreased short-term volatility in taxation | Not sustainable |
Council may consider any of the listed options in any combination and any other option not listed here. While preparing the draft 2022-2026 Financial Plan, staff will be guided by Council’s direction and indication of priorities. For example, if Council indicates that increasing reliance on Casino revenue is preferred to reducing services or service levels, staff will prepare the draft budget under the assumption that current levels of services will be supported.
RECOMMENDATION:
THAT the Committee identify financial planning targets and priorities for the upcoming 2022-2026 Financial Planning process.
SUBMITTED BY: D. Christenson, Director of Finance
REVIEWED BY: K. Anema, Chief Administrative Officer
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