TOWN OF VIEW ROYAL FINANCIAL PLAN ORIENTATION PRESENTATION

FINANCIAL PLAN ORIENTATION

Purpose

To orient Council to the Proposed 2023-2027 Financial Plan package

• Financial planning legislation
• Financial sustainability
• Budget development process
• Budget package organization

Legislation

Community Charter, S 165:

• Municipality must have a financial plan adopted annually by bylaw before the annual tax bylaw is adopted (May 15); can be amended any time
• Must cover 5 years
• Must be balanced – expenses cannot exceed revenue
• Must identify transfers for reserves and surplus
• If actual expenses exceed revenues, the deficit must be included in the next year’s financial plan as an expenditure

Financial sustainability

“Meeting the needs of the present without compromising the ability of future generations to meet their own needs.”

“a government's ability to manage its finances so it can meet its spending commitments, both now and in the future, and whether it ensures future generations of taxpayers do not face an unmanageable bill for government services provided to the current generation.”

Requires:

• Looking beyond the current year and past current electoral term
• Matching underlying nature of expenditure with source of funding

Source: https://www.gfoa.org/materials/role-of-the-finance-officer-in-supporting-fiscal-sustainability

Balanced budget

Legislation requires expenses (and transfers out) to not exceed revenue (and transfers in)

Structural balance means

Recurring revenues are equal to recurring expenditures

Revenue

Expenses

Principles

• If expense is recurring, fund from recurring revenue

  

• If expense is a one-time thing or infrequent, fund from non-recurring revenue

Non-recurring revenue

Non-recurring revenue sources are mapped to specific reserve and surplus accounts:

• Contributions from developers -> Statutory reserves or Multi-purpose reserves
• Sale of assets -> Capital reserves
• Casino revenue -> Reserve accounts
• CWF -> Reserve accounts
• Windfalls -> Multi-purpose reserves or Operating reserves
• Grants -> Deferred revenue
• Surplus -> Accumulated surplus

Surplus

What happens when we use surplus to reduce taxes?

Year 1 Budget

• Cost of services: $1,000
• Taxes: $1,000
• Surplus: $0

Year 1 Actual

• Cost of services: $900
• Taxes: $1,000
• Surplus: $100

Surplus

Year 2 Budget

• Cost of services: $1,020
• Taxes: $920
• Surplus (deficit): $-100

Year 2 Actual

• Cost of services: $1,020
• Taxes: $920
• Surplus (deficit): $-100

Surplus

Year 3 Budget

• Cost of services: $1,040
• Taxes: $1,040
• Surplus: $0

Year 3 Actual

• Cost of services: $1,040
• Taxes: $1,040
• Surplus: $0

Surplus

Taxpayer point of view

• Year 1: $1,000
• Year 2: $920 (8% decrease)
• Year 3: $1,040 (13% increase)

Taxes vs Actual Costs

[Chart comparing Taxes and Costs over three years, illustrating how using surplus for tax reduction causes a sharp increase in taxes in Year 3 to meet actual service costs]

Schedule and process

Staff project future costs based on best info at the time, considering:

• Market increases (inflation)
• Contractual requirements
• Growth
• Established levels of service
• Strategic plans
• Master plans
• Financial policies
• Historical experience
• Etc.

[Funnel diagram illustrating Council initiatives, Strategic and master plans, and Financial policies being synthesized into the Proposed Financial Plan]

Schedule and process

• February: Workshops
• March: Grants in aid, Online Citizen Budget
• April: Results from online engagement, Approval in principle, Tax rates
• May: Bylaws adoption, Tax notice with informational insert

Budget Workshops

• Less presentation, more conversation

  

• Noted

  

• Shared with all

  

• Clear direction

  

Budget package organization

Distributed February 7, 2023

• Introduction
• Council initiatives
• Schedule 1 Consolidated Financial Plan
• Schedule 2 Non-core Projects
• Schedule 3 Capital Projects
• Schedule 4 Projected Reserve Balances
• Schedule 5 Service Plans Budgets
• Project Summaries
• Glossary

Consolidated Financial Plan

The financial plan is visually represented as a puzzle with the following components:

• Core

  

• Non-core

  

• Ops cost of capital

  

• Capital
• Reserves

Schedule 1.1 = Schedule 1.2 + Schedule 1.3

The puzzle pieces form two main consolidated sections:

• Consolidated Operating Plan: Formed by the Core, Non-core, and Ops cost of capital pieces.
• Consolidated Capital Plan: Formed by the Capital and Reserves pieces.

Schedule 2 Non-core Projects

Schedule 2.1

Listing of proposed projects by functional division in priority order:

• In progress
• Critical
• Required
• Strategic
• Discretionary

Schedule 2.2

Same projects presented:

• By year
• By cross-ref number (N-xxx)
• Showing source(s) of funding

Schedule 3 Capital Projects

Schedule 3.1

Listing of proposed projects by functional division in priority order:

• In progress
• Critical
• Required
• Strategic
• Discretionary

Schedule 3.2

Same projects presented:

• By year
• By cross-ref number (N-xxx)
• Showing source(s) of funding

Schedule 3.3

Operational costs of capital projects

Schedule 4 Projected Reserve Balances

Listing of reserves:

• Capital reserve funds
• Operating reserve funds
• Statutory reserve funds
• Reserve accounts
• Multi-purpose reserve funds

Showing for each year:

• Contributions
• Uses
• Projected opening/closing balances

Schedule 5 Service Plans Budgets

Financial plan by functional division:

• Revenue
• Expense
• Total

For 2023, detailed columns show:

• Core (and % change)
• Non-core
• Operational costs of capital
• Total budget (and % change)

2024-2027 shows total budget and % change

Project Summary

The project summary template is annotated with the following data points:

• Cross reference number
• What? (Project Name)
• Who? (Submitted by)
• Coles notes (Executive Summary)
• Why? (Business problem and opportunity)
• What specifically? (Proposed project objectives)
• Down sides? (Business risks)
• Funding source? (Proposed sources of funding)
• When and how much $? (Costs and benefits table)
• Benefits? (Tangible and Intangible benefits)
• Recommendation (Staff Recommendation)

Staff Recommendation: THAT the Committee recommend the 2023-2027 Financial Plan include an information security management system to be funded by Casino revenue and MIA risk reduction grant.

Upcoming budget sessions:

• Regular Council, 7 pm, February 14, 2023
• Special Committee of the Whole, 6 pm February 15, 2023
• Special Committee of the Whole, 6 pm February 16, 2023
• Special Committee of the Whole, 6 pm February 21, 2023 IF REQUIRED