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Finance 101

City of Kamloops. Thompson-Nicola Regional District. tnrd.ca. kamloops.ca. Finance 101. The BUDGET. LEGISLATIVE REQUIREMENTS. Municipalities:. Community Charter. Part 6 – Financial Management. Division 1 – Financial Planning and Accountability. Section 165 – Financial Plan.

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Finance 101

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  1. City of Kamloops Thompson-Nicola Regional District tnrd.ca kamloops.ca Finance 101 The BUDGET

  2. LEGISLATIVE REQUIREMENTS Municipalities: Community Charter Part 6 – Financial Management Division 1 – Financial Planning and Accountability Section 165 – Financial Plan Regional Districts: Local Government Act Part 24 – Regional Districts Division 5 – Financial Operations Section 815 – Financial Plan City of Kamloops Thompson-Nicola Regional District kamloops.ca tnrd.ca

  3. Requirements: • A financial plan must be adopted annually, by bylaw • The financial plan may be amended by bylaw at any time. • The planning period for a financial plan is 5 years, that period being the year in which the plan is specified to come into force and the following 4 years.

  4. Content: • The financial plan must set out the following for each year of the planning period, (RD - shown separately for each service): (a) the proposed expenditures for the service; (b) the proposed funding sources for the service; (c) the proposed transfers between funds in respect of the service.

  5. Content (cont’d): • The financial plan must not plan for a "deficit". For each year of the plan, the total of proposed expenditures and transfers to other funds must not exceed proposed funding sources plus transfers from other funds (RD – in respect of each service). • In the event that actual expenditures and transfers to reserves exceed actual revenues and transfers from other funds in any one year, the resulting deficiency must be included as an expenditure in the financial plan for the next year.

  6. Content details: • Proposed ExpendituresThe following must be set out separately in the financial plan: • the amount required to pay interest and the amount required to pay principal on debt; • the amount required for capital purposes; • the amount required to cover a prior year deficiency; and • amounts required for other purposes (all expenditures that do not fall into one of the prescribed categories).

  7. Content details (cont’d): • Proposed Revenue SourcesThe financial plan must include separate amounts for each of the following : • the amount required to pay interest and principal on debt; • revenue from property value taxes; • revenue from parcel taxes; • revenue from fees and charges; • proceeds from borrowing (all borrowing sources should be included, other than revenue anticipation borrowing under the Community Charter s. 177 or the Local Government Act s. 821); and • revenue from other sources (all proposed revenue that does not fall into one of the other prescribed categories).

  8. Content details (cont’d): • Proposed Transfers Between FundsThe proposed transfers between funds must set out separate amounts for: • the amount to be transferred to and from each reserve fund; and • The aggregate amount to be transferred to and from accumulated surplus.

  9. Content details (cont’d): • Municipalities only • Municipalities are further required to include more explicit revenue and tax policy disclosure. • The financial plan must set out the municipality’s objectives and policies in relation to each of the following, for each year of the planning period: • For each of the funding sources, the proportion of total revenue that is proposed to come from that source; • The distribution of property tax values among the property classes subject to tax; and • The use of permissive tax exemptions.

  10. Lawful Expenditure Authority The financial plan provides the expenditure authority for the local government. Expenditures may not be incurred unless they are provided for in the financial plan for the current year. Emergencies The only exception to the above rule is when expenditures are required to deal with an "emergency" situation. In this case, expenditures should be made as demanded by the situation. The financial plan must then be amended as soon as possible afterwards to reflect the expenditures and funding sources for the expenditures.

  11. Public Consultation Prior to the adoption of the proposed financial plan or amendment of the financial plan, the local government must undertake a process of public consultation. The legislation does not specify the format of the public consultation process – it is left to the local government’s discretion as to what is most effective for them.

  12. City of Kamloops Budget Process • Input obtained from Boards, Committees, Commissions & Neighbourhood Associations

  13. City of Kamloops Budget Process • An amended Five-Year Financial Plan is introduced in Dec of each year • The plan incorporates all known operating revenues and expenditure increases, updates the capital for the next fiscal year • The plan assumes the same service level as the current year, with annualization of costs of anything that was added or removed in the year. • It includes an estimate for new taxes from growth based on preliminary new construction numbers from BC Assessment Authority.

  14. City of Kamloops Budget Process • The amended plan is adopted in Dec approving the required expenditure authority changes required to carry on the City operations. • Council and public consultation continue into the next fiscal year, at which time year-end results are known and final assessment numbers are available from BC Assessment. • Any additional requests for new or increased services or capital expenditures that were not included in the Dec Budget will be discussed during this consultation process. • Updates, incorporating all of changes required to the Financial Plan will be adopted by Bylaw, prior to adopting the Annual Property Tax Bylaw for the current year. (no later than May 15).

  15. Thompson-Nicola Regional District Budget Process • Much the same as the City • Provisional budget prepared and adopted before December 31 each year • Incorporates all known plans for the next fiscal year • Is based on the same property assessment values as the immediately preceding year, so highlights pure dollar impacts of year-to-year changes • Year-end surpluses must be estimated – won’t be known with certainty until the new year • Once approved, this budget is put out to the public for more formalized input and consultation

  16. Thompson-Nicola Regional District Budget Process • A final budget is prepared and adopted before legislative requirements in March each year • Updates provisional budget with new property assessment changes (available January or February), actual surpluses carried forward and any other new information that has become known • Incorporates decisions made with the input from public consultation

  17. SOME TAKE-AWAYS: • The process has an annual time table, but really is going on constantly throughout the year • It’s important to have well defined service levels, expectations of such, and this significantly impacts spending • Need to think long-term in order to smooth taxation and build appropriate reserves for future needs

  18. Thompson-Nicola Regional District City of Kamloops tnrd.ca kamloops.ca

  19. City of Kamloops Thompson-Nicola Regional District tnrd.ca kamloops.ca Questions?

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