COMMITTEE OF THE WHOLE REPORT: 2022-2026 FINANCIAL PLAN APPROVAL
Staff report from the Director of Finance recommending the approval in principle of the 2022-2026 Financial Plan following budget workshops and public engagement.
TOWN OF VIEW ROYAL COMMITTEE OF THE WHOLE REPORT
TO: Committee of the Whole DATE: April 4, 2022 FROM: D. Christenson, Director of Finance MEETING DATE: April 12, 2022
2022-2026 FINANCIAL PLAN APPROVAL
RECOMMENDATION:
THAT the 2022-2026 Financial Plan be approved in principle, as amended, and further that the 2022-2026 Financial Plan bylaw be prepared for consideration at the next Council meeting.
CHIEF ADMINISTRATIVE OFFICER’S COMMENTS:
I concur with the recommendation.
PURPOSE OF REPORT:
To provide Council with a revised five-year financial plan for approval in principle.
BACKGROUND:
The proposed 2022-2026 Financial Plan was reviewed by Council at a series of budget meetings on February 15-17 and 22, 2022. At these sessions, Council considered the 2022 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 outlined in Schedules A and B (attached), as shown in black text.
The changes made during the budget deliberations were incorporated into the Citizen Budget public engagement tool, Financial Plan Insights app and the 2022-2026 Financial Plan document, published on March 11, 2022, on View Royal’s website. The Citizen Budget engagement opportunity was open for input until March 31, 2022. View Royal residents were informed about the online opportunity and budget information through multiple social media messages, View Royal’s website, and RSS feeds.
Further to the February 2022 budget workshops, Council approved the following items which will be incorporated into the financial plan bylaw before it is returned to Council for consideration. These items are also listed on the attached schedules, signified with red text.
| Item | Description | Year | Change | Funding |
|---|---|---|---|---|
| Grants in aid applications received by March 1 | Increase to $111,586 from $75,000 (C-22-22, C-23-22, and C-25-22) | 2022 | $36,586 | Casino revenue |
| CleanBC heat pump rebate program | Carry forward unspent amount for renewed contract | 2022 | $10,000 | Prior year surplus |
| Garbage collection contract renewal | Revised estimates for garbage collection contracted services and landfill tipping fees for solid and food waste | 2022 2023 2024 2025 2026 |
($18,418) $37,608 $48,666 $60,091 $72,858 |
Garbage user fees |
Additionally, on March 3, 2022, the RCMP advised of cost increases to contracted policing services due to approved personnel pay raises. The per member cost increased from the original estimate of $190,918 to $203,416, a 6.5% increase, effective April 1, 2022. This represents a total 9% increase from the 2021 per member cost of $186,559. View Royal’s share of the revised cost increase is $89,100 - $105,000 annually, including the effect of the planned increase to RCMP members, as follows:
| Contract costs | 2022 | 2023 | 2024 | 2025 | 2026 |
|---|---|---|---|---|---|
| Core contract (12.35 members) | 1,715,000 | 1,758,000 | 1,802,000 | 1,847,000 | 1,893,000 |
| Additional members (see N-054) | 22,100 | 137,000 | 168,000 | 172,000 | 177,000 |
| Total proposed (13.55 members by 2026) | 1,737,100 | 1,895,000 | 1,970,000 | 2,019,000 | 2,070,000 |
| Increase for core contract | 88,000 | 90,000 | 92,000 | 95,000 | 97,000 |
| Increase for additional members (N-054) | 1,100 | 6,000 | 8,000 | 9,000 | 8,000 |
| Total revised contract costs | 1,826,200 | 1,991,000 | 2,070,000 | 2,123,000 | 2,175,000 |
Policing costs are funded primarily from taxes, with transfers from the Police Operating reserve to a maximum of the cost equivalent of 1.5 RCMP members. The transfer from the operating reserve is intended to reduce unnecessary tax in circumstances when the Province is unable to provide the authorized strength on behalf of View Royal. Based on the revised costs above, funding would be adjusted to increase the reserve transfer and required taxation revenue as follows:
| Funding component | 2022 | 2023 | 2024 | 2025 | 2026 |
|---|---|---|---|---|---|
| Reserve funding as proposed | 199,400 | 204,400 | 209,500 | 214,700 | 220,100 |
| Increase based on revised costs | 9,800 | 10,000 | 10,300 | 10,600 | 10,800 |
| Total revised reserve funding | 209,200 | 214,400 | 219,800 | 225,300 | 230,900 |
| Taxation funding as proposed | 1,537,700 | 1,690,600 | 1,760,500 | 1,804,300 | 1,849,900 |
| Increase based on revised costs | 79,300 | 86,000 | 89,700 | 93,400 | 94,200 |
| Total revised taxation funding | 1,617,000 | 1,776,600 | 1,850,200 | 1,897,700 | 1,944,100 |
| Total revised funding (reserves + taxation) | 1,826,200 | 1,991,000 | 2,070,000 | 2,123,000 | 2,175,000 |
The revised taxation funding represents an approximate 0.84% tax increase in 2022. Staff recommend Council approve this increase; however, Council may wish to consider other alternatives, such as increasing the contribution from Police Operating or other reserve, reducing other tax-funded costs, or underfunding the stated increases. The table below briefly summarizes the impact of these alternatives.
| Alternative | Implication |
|---|---|
| Increase reserve transfer from Police Operating or other reserve | Unsustainable to the extent that RCMP membership is fulfilled as expected; increases risk of insufficient reserves to offset future costs; represents a deferral of tax increase to future years compounding Protective Services funding challenges including annualization of additional manpower, introduction of new dispatch costs, and settlement of IAFF collective bargaining |
| Decrease other tax-funded operational budgets | Some operational services may be reduced or deferred; risk incurring deficit to the extent that contractual obligations prevent reductions or deferrals |
| Underfunding – keep budget at level originally proposed rather than increasing to revised costs | Increases likelihood that full amount of reserve transfer will be required; risk incurring deficit to the extent that other revenue and expense values occur as anticipated |
When the February budget workshops concluded, the 2022-2026 Financial Plan estimated a 4.7% overall tax increase required to generate $447,198 additional tax revenue for 2022 in addition to new tax revenue from non-market change assessments. A 4.7% tax increase would result in an estimated $153 increase for the average residential property assessed at $930,800.
A tax increase of 5.5% would be required to support the revised policing costs, resulting in an estimated $168 increase over 2021 property taxes for the average residential property.
These 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.
DISCUSSION:
The Community Charter requires that local governments adopt a five-year financial plan prior to May 15 of each year. The financial plan may be amended by bylaw at any time. The tax rates bylaw must also be adopted prior to May 15 but must be preceded by the adoption of the five-year financial plan bylaw.
The following proposed schedule for remaining steps in the financial planning process satisfies the legislated deadlines:
- First, second and third reading of five-year financial plan bylaw: April 19, 2022
- Adoption of five-year financial plan bylaw: May 3, 2022
- First, second and third reading of tax rates bylaw: May 3, 2022
- Adoption of tax rates bylaw (special meeting): May 10, 2022
Information about the financial plan, taxes and user fees will be included with the tax notice mail out planned for mid-May 2022.
RECOMMENDATION:
THAT the 2022-2026 Financial Plan be approved in principle, as amended, and further that the 2022-2026 Financial Plan bylaw be prepared for consideration at the next Council meeting.
SUBMITTED BY: Dawn Christenson, Director of Finance
REVIEWED BY: K. Anema, Chief Administrative Officer
Schedule A Changes to tax-funded items Schedule B Changes to items funded by sources other than taxes Revised Project Summary N-054 Additional RCMP members
Document Images
(3)
