Finance & Administration Report: BUDGET VARIANCE AND PROJECTS UPDATE REPORT TO MARCH 31, 2022
Staff report analyzing the financial results of operations and progress of both core and non-core projects as of the end of the first quarter of 2022.
TOWN OF VIEW ROYAL
Finance & Administration Report
TO: Committee of the Whole DATE: April 7, 2022 FROM: S. Vella, Manager of Accounting MEETING DATE: April 12, 2022
BUDGET VARIANCE AND PROJECTS UPDATE REPORT TO MARCH 31, 2022
RECOMMENDATION:
THAT the report dated April 7, 2022 from the Manager of Accounting titled “Budget Variance and Projects Update Report to March 31, 2022” be received for information.
CHIEF ADMINISTRATIVE OFFICER’S COMMENTS:
I concur with the recommendation.
PURPOSE OF REPORT:
To provide Council with information regarding the financial results of operations and progress of projects to March 31, 2022.
BACKGROUND:
As the 2022-2026 Financial Plan is underway and not finalized, the report reflects budget values for revenue, expense and projects as presented in the Financial Plan Insights app and Citizen Budget public engagement tool launched to the public mid-March 2022. The Budget Variance Dashboard has been updated to show the same budget information. Budget values are subject to change until finalized by the adopted five-year financial plan bylaw. The attached schedules are provided to inform Council of the financial results of delivering services and capital and non-core projects to the end of March this year with prior year actual values provided for comparison.
DISCUSSION:
Interested constituents can access the Budget Variance Dashboard through a “Quicklink” on the landing page at www.viewroyal.ca. The Budget Variance Dashboard includes information about the status of both non-core and capital projects along with related operating budget and spending to date. The Dashboard displays year-to-date values (YTD) for the current year and up to four years’ comparative values and is updated weekly. A highlighted note informs the viewer that the 2022 budget values are as proposed and that the 2022-2026 Financial Plan process is underway.
Please note that the year-to-date values provided are subject to change until finalized for the published financial statements. Also, the values in the dashboard may not match those on the attached consolidated reports, as the dashboard reflects only operating revenue and expense and specific project financial information, rather than the full consolidated budget.
Consolidated Budget Variance and Projects Update Report
Revenues and expenses to date are within expected variances, with the exceptions and comments noted below.
Consolidated Revenue
Schedule A – Consolidated Budget Variance shows revenue on a consolidated basis, which means that both operating and capital revenue are added together in the same format as shown in the five-year financial plan bylaw. Sixty-four percent or $17 million of the total 2022 consolidated revenue budget comes from operating activities. At March 31, 2022 $417,000 (2.4%) in total operating revenue has been received or is receivable.
First quarter revenue is typically low, as the most significant sources of revenue (taxation and user fees) are billed all at once later in the year, rather than accrued quarterly. A determination as to whether View Royal is on track to meet its total revenue target will become clearer in the coming months.
Consolidated Expense
Like revenue, expense is shown on Schedule A on a consolidated basis – operating, capital expenses and transfers are added together. Sixty-one percent or $16.2 million of the total 2022 consolidated expense is budgeted for operations. At March 31, 2022, 14.7% of total operating expense ($2.3 million) has been spent or is payable.
Generally, operating expense is spread evenly throughout the year such that at March 31 about 75% budget should remain for each of the functional services. Schedule A shows that most operational services have the expected level of budget remaining, which allows for timing differences, year-end accruals, and other project or contingency expenses. The exceptions in recreation and culture services and interest and principal payments on debt reflect advanced payments for these services.
Non-core projects
The 2022 recommended budget includes $715,240 designated for specific non-core projects. Non-core projects are defined as those that represent a change to service levels or are new non-recurring or infrequent items. The attached Schedule B – Non-core Projects details the non-core budget and the actual expenditures that total $20,747 to March 31, 2022 and includes projected completion dates. Staff typically delay spending on new projects until the 2022-2026 Financial Plan is approved, which explains the low year-to-date values at this point. Note that discrete actual costs for non-core projects relating to increases in personnel are not available but are included as a part of the total non-core budget.
Further details about non-core projects can be viewed in the Budget Variance Dashboard and Financial Plan Insights app at viewroyal.ca.
Capital projects
The 2022 recommended budget includes $3,888,140 allocated for specific capital projects. The attached Schedule C – Capital Projects details the capital budget and the actual expenditures that total $118,571 to March 31, 2022 and includes projected completion dates. Staff typically delay spending on new projects until the 2022-2026 Financial Plan is approved, which explains the low year-to-date values at this point.
Further details about capital projects can be viewed in the Budget Variance Dashboard and Financial Plan Insights app at viewroyal.ca.
Summary
Due to timing differences between internal reporting timelines and invoices from vendors, there may exist variances between reported costs and final costs of some projects. As invoices are processed, a more complete calculation of actual variances will be made.
Cost overruns can be offset by deferring other projects with the same funding source, to the extent that there are no other significant impacts to levels of service. Staff will continue to monitor financial results to ensure delivery of services and projects within the allocated budgets. Where applicable, staff will seek budget amendment approval in due course once the final funding requirements are known.
Should corrective measures be necessary, staff will inform Council of the effect, if any, on service levels or project completion timelines.
RECOMMENDATION:
THAT the report dated April 7, 2022 from the Manager of Accounting titled “Budget Variance and Projects Update Report to March 31, 2022” be received for information.
SUBMITTED BY: S. Vella, Manager of Accounting
REVIEWED BY: D. Christenson, Director of Finance
Attachments:
- Schedule A: 2022 Consolidated Budget Variance
- Schedule B: 2022 Non-core Projects
- Schedule C: 2022 Capital Projects
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