BUDGET VARIANCE AND PROJECTS UPDATE REPORT TO MAY 31, 2022

BUDGET VARIANCE AND PROJECTS UPDATE REPORT TO MAY 31, 2022

RECOMMENDATION:

THAT the report dated June 9, 2022 from the Manager of Accounting titled “Budget Variance and Projects Update Report to May 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 May 31, 2022.

BACKGROUND:

On May 3, 2022, Council adopted Financial Plan Bylaw 1096. This report reflects budget values for revenue, expense and projects as presented in the Town’s 2022-2026 Financial Plan. The Budget Variance and Financial Plan Insights Dashboards have been updated to show the same budget information. 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 April 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.

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 $17.2 million of the total 2022 budgeted revenue and transfers comes from operating activities. At May 31, 2022 nearly $11.8 million (68.6%) in total operating revenue has been received or is receivable. This percentage is typical to the end of May as the annual property tax levy completed in May is recorded all at once, rather than being spread evenly throughout the year. First quarter casino revenue was $470,000, and if this level of gaming activity were to continue for the rest of 2022, View Royal’s share would exceed the total budget of $1.5 million. Other revenue categories reflect expected values for this time of year.

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 $16.3 million of the 2022 total consolidated expense is budgeted for operations. As of May 31, 2022, 28.3% of total operating expense ($4.6 million) has been spent or is payable.

Generally, operating expense is spread evenly throughout the year such that at the end of May about 58% budget should remain for each of the service categories. Schedule A shows that most operational services have more than the expected level of budget remaining, which allows for timing differences, year-end accruals, and other project or contingency expenses. For example, the Town is billed quarterly for its RCMP contract, so costs for the April and May have not yet been recorded. Recreation and culture services and interest and principal payments on debt reflect advanced payments for these services, so these categories reflect less budget values remaining than would otherwise be expected.

Non-core projects

The 2022 recommended budget includes $716,340 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 $113,047 to May 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 $167,964 to May 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 June 9, 2022, from the Manager of Accounting titled “Budget Variance and Projects Update Report to May 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