GFOABC Dollars & Sense - September 2019 - Issue 108

Dollars & Sense P e r s p e c ti v e

Issue #108 • september 2019

GFOA Reimagines Ethics Boot Camp: Back to Basics Collectors’ Corner

p r es i d e nt ’ s m es s ag e in this issue President’s Message 2 Executive Director’s Message 4 Boot Camp: Back to Basics 5 Member Profile 7 What’s Happening 9 GFOA Reimagines Ethics 10 MFA’s Corner 12 From Gatekeeper to Trusted Business Partner 13 Disruptive Technologies and the Public Sector Role 15 Economic Outlook Q3 16 Collectors’ Corner 17 Quarterly Question 18

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Hello Everyone, As I begin writing this message to you, I am struck by the fact that August is drawing to a close and I think, how did we get here already? Where did summer go? It’s true that unless we are deliberate with our actions and priorities that life just seems to whisk by. As finance professionals, many of us find that time flies by in our local government roles, tax season, budget delivery, financial statements, etc. etc. So how can we feel satisfied that we are living our best lives both professionally and personally?

Ensuring that the work we are doing is aligned to our strategic plan and that our time spent matches our “north star” values.

This summer the GFOABC Board hit the ground running: Committee Chairs were assigned, meetings were convened, and the Executive Committe met ahead of our July Board Meeting. This year we implemented “Board Buddies” so that our new members feel supported and have someone to help them navigate their first year. The output from each Committee and Board meeting will include key messaging around our top priorities so that these items will stay top-of-mind and not get

lost in the minutes and actions. We have also committed to including our strategic planning graphic in all packages going forward. We are being purposeful about walking the talk—being able to speak to our strategic plan individually as Board members, and staying at the strategic level of board business, which allows our fabulous staff to do their jobs.

The Executive, Communications, Education and External Relations Committees have set their 2019-2020 Workplans and these were fully endorsed at the Board meeting. Here’s a hint of our Committees’ key focus areas: • Online Forum and Board Recruitment policy and guideline development • fall workshop planning with CPABC • 2020 conference topic planning; update training material for Boot Camp • consideration to some working groups (i.e. AROs and Property Tax Deferment) • development of a local government finance professionals onboarding package • relationship building with our external stakeholders (i.e.

Provincial Ministry partners).

We are doing our best to ensure that what we do for you aligns with your input and our adopted strategic plan.

Over the next couple of months I encourage you to have a conversation with a peer to connect and share some tips on how you manage to stay focused on your “north star” values and/or strategic plan. We are better together!

Genelle Davidson President

Board of Directors President Genelle Davidson Vice President Trevor Thompson Secretary-Treasurer Lorraine Coughlin Past President Rick Danyluk Directors at Large Nyla Attiana Jim Bauer Jeannie Bradburne Shelley Hahn Lenora Lee Raj Sharma Talitha Soldera Sheila Thiessen Kala Harris, Executive Director Erica Christie, Manager, Operations and Member Services Gerilee McBride, Graphic Design

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e x e c uti v e d i r e c t o r ’ s m es s ag e Since 2007, nearly four hundred local government finance professionals have attended Boot Camp. The Finance Officers Development Program, more commonly known as Boot Camp, was created to provide a comprehensive overview of local government finance requirements, responsibilities and resources for new and not-sonew municipal and regional district finance professionals. For each of the past five years, one Boot Camp attendee has been awarded the Deb Humphrey Scholarship.

The Deb Humphrey Scholarship was created in 2015 in memory of Deb Humphrey. Deb worked for many years in the Local Government Department at what is now called the Ministry of Municipal Affairs and Housing. Deb was instrumental in the development of Boot Camp and continued to support the program from the time of its creation until she lost her battle with cancer in 2014. Deb was passionate about lifelong learning and supporting local government financial officers and their communities, this scholarship honours that passion.

The scholarship is awarded to one Boot Camp attendee each year based on the needs of the attendee and the community in which they serve. This year the scholarship was awarded to Courtney Kirk from the Central Coast Regional District (CCRD). Courtney 4 | GFOABC.CA

the deb humphrey scholarship: a legacy promoting local government financial excellence

(L) Stephen Gentles (C ) Courtney Kirk, (R ) Nora Coleman – Boot Camp Dinner, University Club, UVIC)

is currently the Chief Administrative Officer of the CCRD and has recently taken on the additional responsibilities of Chief Financial Officer.

The Deb Humphrey Scholarship is made possible by Deb’s husband, Stephen Gentles, who remains committed to continuing Deb’s legacy of promoting local government financial excellence. We are extremely appreciative of Stephen’s commitment to Deb’s passion and for making this scholarship possible. We were honoured to have Stephen and Deb’s close friend, Nora Coleman, join us

again as our special guests for the award ceremony.

On behalf of GFOABC Board and staff, we congratulate Courtney Kirk on receiving this award. • Kala Harris Executive Director Past recipients include: Ruby Decock, Village of Port Clements; Lisa Clark, Village of Sayward; Christine Spears, City of Greenwood; and Amit Sharma, Village of Tahsis.

b o ot ca m p : b a c k t o b as i c s 2 0 1 9 Being relatively new to local government, I was excited to attend GFOABC Boot Camp. I knew I would learn something, but I was not prepared for how much I would learn! The carefully crafted agenda that started at 7:00am and ended at 9:00pm (with plenty of break time) was filled with great presenters, presentations, discussions, teamwork, and networking.

The presentations were on a variety of subjects: the role of the finance officer, budgeting and financial planning, taxes, loans, and investments and financial reporting. The presenters also ranged from finance officers in municipalities, regionals districts, and provincial government branches, to

some amateur entertainment at The University Club of Victoria.

Awards were presented after dinner. The Deb Humphrey Scholarship was given to the well-deserved recipient, Courtney Kirk, Chief Administrative Officer from the Central Coast Regional District. Two travel scholarships were given out: one was given to Kari Walker from the City of Dawson Creek, and the other to me! I was pleasantly surprised upon

“I was not prepared for how much I would learn!” representatives from CivicInfo BC, Municipal Finance Authority of BC, and public accounting firms.

At the end of each day, there was time to catch up with the other attendees. This made for a great opportunity to get to know each other. However, the last night of the conference was the most memorable with cocktails at the Fireside Lounge followed by dinner and

receiving it and extremely grateful to GFOABC for recognizing the challenges of travelling to educational events for those who live and work in smaller communities.

Boot Camp not only provided me with information but also resources and better understanding of the Community Charter. I would recommend Boot Camp to anyone new to local government. It will

not only provide you with a better understanding of your role but with a network of people in similar positions. Thank you to GFOABC, the presenters, and to all the attendees at GFOABC Boot Camp 2019. • Emily-Anne Therrien, Finance Manager, District of Mackenzie

2019 Deb Humphrey Scholarship Winner

Courtney Kirk, Chief Administrative Officer, Central Coast Regional District Travel Scholarship Winners

Kari Barber, Financial Manager, City of Dawson Creek Emily-Anne Therrien, Finance Manager, District of MacKenzie

•

Emily-Anne joined the District of Mackenzie in 2019.

She previously worked at Northern Development Initiative Trust and is currently pursuing her CPA. Emily-Anne was a member of Team Yellow, the recipients of the 2019 Golden Boot award.

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Boot Camp: Basic Training 2019 Presented in Partnership with:

Thank you to our Boot Camp Faculty, Presenters and Special Guests

Golden Boot winners Team Yellow, L to R: Celma Schribar, Brad Hindle, Emily-Anne Therrien, Arlene Mendoza, Jeremy Hunt, Sharon Landrath

Faculty Nyla Attiana, District of Tofino Kevin Bertles, City of Armstrong Jeannie Bradburne, Regional District of Nanaimo Shannon Cottrell, Municipal Finance Authority of BC Myriah Foort, Strathcona Regional District Garry Jackson, GFOABC Faculty Guest Lauren Kerr, Municipal Finance Authority of BC Mario Piroddi, BDO Chris Paine, City of Colwood Talitha Soldera, Cowichan Valley Regional District Doug Stein, GFOABC Faculty Farouk Zaba, City of Port Coquitlam Presenters & Special Guests Marijke Edmondson, Ministry of Municipal Affairs and Housing Carley Friesen, Ministry of Municipal Affairs and Housing Scott Leitch, Ministry of Municipal Affairs and Housing Laird McLachlin, Ministry of Municipal Affairs and Housing Alexa Newton, Ministry of Municipal Affairs and Housing Jennifer Lockhart, City of Victoria Karen Kerr, PH&N Investment Services Todd Pugh, CivicInfo BC Anne Graboski, Ministry of Finance Bill Schley, Ministry of Finance Michael Spatharakis, BC Assessment

Register Now for Boot Camp!

Basic Training 2020 Sunday, August 9–13, 2020 | 5:00 PM

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Thank you to the Ministry of Finance and Ministry of Municipal Affairs and Housing staff who attended Boot Camp throughout the week. We appreciate your continued participation and support!

MEMBER PROFILE trevor thompson interviews corinne bomben I had the pleasure of interviewing Corinne Bomben. I say “pleasure” as Corinne is one of those people that when you are done a conversation with your cheeks hurt from smiling, even over the phone.

In trying to get to know more about Corinne, the conversation always came back to Prince Rupert. When asked what she values most, her answer is “here”. So let’s explore a bit about the place and through that get to know more about Corinne.

Prince Rupert is a port city of 13,000 tight-knit welcoming people, and a community that has endured a 20 year recession. See their video about converting brownfields, and a community that has immense potential.

The city has many competitive advantages as it is the fastest growing port in North America with $50 billion worth of goods shipped annually, and the potential for adding 5,000 jobs over the next decade. Prince Rupert is affordable for families, connected (road, air, sea, rail), with quick access (within 7-minute drive to everything) to activities and natural beauty. Corinne noted, “It’s like living in a park”.

Admittedly, it sounded a bit like walking into an economic developer department, how strongly and positively Corinne talks about Prince Rupert. She is committed, all-in, knowledgeable and excited. Excited for the potential of her city, and excited for what the opportunities could mean to her family, her friends, and her community. Excited because she gets to be a part of it, gets to participate, and gets to make a difference as Chief Financial Officer for the City of Prince Rupert.

Corinne noted the positives of GFOABC and when asked for words of advice for others, she used phrases such as, “enjoy yourself”, “control what you can”, “invest in yourself (education, network)”, “see possibilities”, and “sell the positives of your community”. She acknowledged that the finance role in smaller communities goes well beyond finance and into operations and city administration. She also described some scenarios and the strengths required to make decisions— things that I would say are all skills and characteristics of a strong leader.

Corinne has worked for the City of Prince Rupert for nine years and prior to that she worked in public practice for nine years. What I observed of Corinne is that experience is not measured in years, but in action; getting involved, putting fear aside and making a difference.

She noted that life and work is kind of like figure skating, playing hockey or participating in the Tough Mudder, you will fall down — if you don’t get up and push on you’ll never get to see what you are capable of achieving. •

Trevor Thompson is the Chief Financial Officer for the City of Maple Ridge and is proud to have served the citizens of this city for the past 20 years. Trevor most enjoys the fact that in the public sector, and more specifically through the GFOABC, we share successes and learnings. It’s a pretty special place, one that is supportive and collaborative, focused on longterm strategy while still be able to address short-term emergencies, and comprised of professionals from different disciplines pulling together to meet the ever-increasing demands citizens and members alike.

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W H AT ’ S H A P P E N I N G AT G F O A B C September 17 | 9:30am Investors’ Forum Webinar REGISTER NOW

September 17 | 1:30pm Municipal Tax Sale REGISTER NOW

September 25 | 10:00am 12-Month Taxation and Assessment REGISTER NOW

October 23 | 9:00am Quarterly Collectors’ Forum Webinar REGISTER NOW

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fa l l p d w o r ks h o p s / l g a Aw

Local Government Accounting & Auditing Workshop REGISTER NOW November 21 | 8:30am – 4:30pm Managing Fraud Risk in the Public Sector | PSAB Update | Employee Future Benefits | Financial Statement Transformation | Array of Accounting & Auditing Issues November 22 | 8:30am – 4:30pm Security & Privacy in the time of Public Cloud | Internal Controls for Local Government | Public/Private Partnerships | Money-Laundering & Risk Mitigation | Asset Retirement Obligations | Local Government Finance Practitioners & Auditors Panel Coast Coal Harbour Hotel | 1180 W Hastings St, Vancouver, BC Reserve before October 19 to receive negotiated rates.

1-800.663.1144 | ONLINE HOTEL RESERVATION

June 3-5, 2020 GFOABC Annual Conference REGISTER NOW

Fall PD Workshops November 19 | 8:30am – 4:30pm Ethics and Leadership REGISTER NOW November 19 | 8:30am– 4:30pm Budgeting Best Practices for BC Local Government REGISTER NOW November 20 | 8:30am – 4:30pm Financial Reporting REGISTER NOW November 20 | 8:30am – 4:30pm Taxation and Assessment: End to End Process REGISTER NOW Coast Coal Harbour Hotel | 1180 W Hastings St, Vancouver, BC Reserve before October 19 to receive negotiated rates.

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SEPTEMBER 2019 • DOLLARS & SENSE PERSPECTIVE | 9

g f o a r e i m ag i n es e th i c s Code of Ethics We, the government finance officers of the United States and Canada, have a deep and abiding desire to show that we are worthy of the special trust that the communities we serve have placed in us. As a member of my government’s finance office, I commit to living the following values to show that I am worthy of that trust.

Integrity and honesty are the foundation on which trustworthiness is built. It means people can believe what I say, I act in accordance with my deepest values, I put principle ahead of my own ego, and I do the right thing even when it is hard.

Public finance offices have an important job. Doing that job well honors the trust the public has placed in me.

Local governments depend on trusting relationships. Therefore, I will treat people fairly and develop processes and procedures that are fair.

Embracing diversity and fostering inclusiveness helps finance offices cultivate organizations and promote policies that reflect the communities they serve. When people feel included, they see that I am concerned for their wellbeing. That shows I am worthy of their trust.

When I consistently apply my standards – especially to myself – I honor my commitment to the community I serve and make it easier to do the right thing even when faced with challenging circumstances.

August 2019

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The Government Finance Officers Association has been around since 1906.

However, our approach to ethics hadn’t changed much since that time, and more importantly, our code of ethics has historically not played a meaningful role in GFOA’s professional development program.

Ethics are more important than ever before. According to the Proof Inc “Can Trust Index 2019�1, the Canadian public has been losing trust in government.

In recent years, new research has revealed a compelling new approach to ethics that recognizes the conflicting incentives and pressures that public finance officers face, and is focused on real-world solutions to ethical challenges.

The old GFOA code was a traditional approach to ethics — it provided a list of do’s and don’ts — and while this gives some value, it does not provide good answers to the complex environment finance officers often find themselves in.

GFOA’s new approach is centered on the most important asset that government finance offices have: trust.

It describes how finance officers can build and maintain trust with other public officials, their colleagues in the finance office, and the public.

Doing my job well honors the trust the public has placed in me.

s Code of Ethic

mmit to ce office, I co e trust rnment’s finan th ve of y go y rth m wo of r As a membe show that I am wing values to e. m living the follo has placed in the community

can believe what I say, I act le peop d of my honesty means t values, I put principle ahea Integrity and es ep . de rd y with m en it is ha in accordance thing even wh I do the right own ego, and

Building trust requires honesty and integrity and treating people fairly in order to produce results for the community. These values are the foundations of ethical behavior and are at the core of who GFOA members are as people.

The new approach is about creating an inspiring approach to ethics where the motivation to do the right thing comes from within you. This is essential for us to do the right thing when faced with pressure to do otherwise. Reactions to the new code have been great. For example, according to Governing magazine: By reimagining ethics this way, GFOA has done two remarkable things. First, it’s offered practical advice to its members on how to navigate an increasingly tenuous and hostile civic space. Second, and perhaps more important, it’s

Fairness leads to trust. Therefore, I will treat people fairly and develop processes and procedures that are fair.

When people feel included, they will see that I am concerned for their wellbeing, and that shows I am worthy of their trust.

When I consistently serve, I honor my community and build trust.

articulated the real value proposition of public finance. Good public financial management is essential to trust in government.

GFOA members have responded positively as well: • “My reaction was prideâ€? • “Great values to build an organizational culture onâ€? • “Down to earth and makes sense to the normal personâ€?

You can check out the new code at gfoa.org/ethics. We are developing resources to support the code, such as an implementation guide and training programs.

The new code, plus the supporting resources, moves ethics beyond just a set of constraints. When finance officers build trust, they allow themselves to reach their full potential as public servants.

Chris Morrill is the Executive Director/CEO of the Government Finance Officers Association of the US and Canada, a 20,400 member organization dedicated to advancing excellence in government finance.

Shayne Kavanagh is the Senior Manager of Research for GFOA and author of the forthcoming GFOA book Financial Foundations for Thriving Communities.

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M fa ’ s c o r n e r CAMELS: A Systematic Approach to Review Financial Institutions Local government finance professionals typically invest a large portion of their municipality’s excess cash with financial institutions through deposits, GICs, and bonds. It can be tempting to focus only on yield and select those investments with the highest return. While easy to implement, that approach runs counter to modern portfolio theory as it does not consider the credit risk associated with each financial institution, nor does it adequately address concentration risk in the entire portfolio.

To clarify, credit risk is the probability that a borrower will not pay back an investor. Concentration risk is relying too heavily on one investment or “name” (financial institution) which increases the inherent probability that an investment (or deposit) will not be repaid. It is important to remember that as professional asset managers, the goal is to earn the best risk-adjusted return, not just the best return.

This article briefly outlines a process that can be used to evaluating financial institutions’ (FIs’) credit risk. CAMELS is an acronym for a creditreview process which explores six components of a bank’s operations.

CAMELS is short for: Capital adequacy, Asset quality, Management capabilities, Earnings sufficiency, Liquidity position, and Sensitivity to market risk. Each area is scored, and a weighted average score is found. One nuance to this process is that each component may be weighted as determined appropriate by the analyst; some may view capital adequacy as more important than earnings sufficiency, for example. The mechanics of reviewing each section is too lengthy to outline here, however the next section will provide some general tips on reviewing a bank’s earnings.

There are three key areas to contemplate when reviewing a bank’s earnings. First, are the bank’s earnings adequate? Adequacy of earnings can be assessed by reviewing each bank’s earnings and comparing that to other FI’s earnings. Adequacy must consider what each bank’s mandate is, where it operates (locally? Internationally?), and what products it offers. It is not an apples-to-apples comparison between RBC and XYZ Small Town Credit Union. Next, are the bank’s earnings trending upwards? Consistently growing earnings is of course positive, but are the earnings of a “high-quality”? In this context, “high-quality” can refer to the future stability of those earnings which can be impacted by declining market share or the reasonableness and quality of future estimates for loan impairment and losses. Those estimates can have a significant impact on net earnings and is a measure of management capability 12 | GFOABC.CA

and asset quality. Lastly, sustainability of earnings is another key component of bank earnings analysis. Generally, bank earnings may be divided into three components: (1) net interest income (the difference between interest earned on loans minus interest paid on deposits), (2) net service/fee income, and (3) net trading income. Net Interest and service/fee income are considered more stable than trading income, thus a steady or growing proportion of those earnings is desirable.

As you can tell, quite a bit of research and analysis can go into the selection of which name to invest with. This article aimed to give you a high-level indication of the relevant factors that may be explored. In the near future, I will deliver a multi-part webinar on how to conduct a full CAMELS analysis and invite you to join me soon. •

Kyle Derrick is the Credit & Economic Analyst at MFABC. He is a recent MBAgraduate from Royal Roads University. Further, he has an undergraduate degree in Business Administration (finance) and holds a Certificate in Economics.

From Gatekeeper to Trusted Business Partner: Elevating the Role of Finance Finance departments in local governments play a fundamental role. They are the organization’s protectors, responsible for safeguarding the organization’s finances. They help the organization manage financial risk, develop and stick to a budget, and meet financial reporting requirements. Finance professionals take this role seriously, and it shapes the way they do business: from how they engage with others, to what they focus on, and even to the assumptions and conclusions they make.

This way of being has earned many Finance departments the reputation of “Gatekeeper”. In conversations with other departments, we often hear about Finance’s focus on developing and enforcing rules; about their attention to detail; about their demands for specific information. We even hear of a sense of apprehension “when Finance shows up at my door”.

This way of being serves an important purpose: it enables Finance to fulfill its role of protector, and every organization needs a protector. And, we are also hearing that this way of being isn’t enough to meet the increasingly complex challenges local governments face.

A new way of being is needed to help the organization prepare for climate change, provide affordable

housing, or respond to an opioid crisis.

We are hearing that Finance needs to continue to be a protector and it needs to take on a more strategic and customer-centric role in the organization. “More forward-thinking”, “more agile”, and “more responsive” are often suggested as ways that Finance could improve to better serve its customers and help lead the organization and the community into the future.

And we’re hearing directly from people in Finance that they are not being engaged in planning processes early enough, in key decisions, and in corporate initiatives like asset management. There is a sense from everyone that Finance is being called upon to elevate its role from Gatekeeper to a Trusted Business Partner.

The question is: how? The answer lies in the following: • being deliberate about improving service; • comprehensively assessing performance with input from customers; • developing an improvement plan; and • actively implementing it through changes to systems and culture.

We developed Next Level Finance: A Self-Assessment Tool for Finance departments who are ready to deliberately go from Gatekeeper

to Trusted Business Partner. The process to develop the Tool was led by the City of Kelowna in collaboration with the Cities of Coquitlam, Kamloops, Maple Ridge, Victoria, and the District of North Vancouver.

Next Level Finance is like a 360degree assessment. It won’t tell you what your organization’s target reserve levels should be but it will help you reflect on crucial questions like “How financially literate are others in the organization?”, “How well do we understand the needs of others?”, and “Are we seen as go-to problem solvers?”. The tool can be used in different ways. The City of Kelowna’s Finance Division used it to assess their current performance and to develop a strategic plan, including priority areas of improvement to

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help the Division achieve its goal to be “customer-centric and demonstrate excellence in core service delivery”.

The District of North Vancouver also used the tool to develop a strategic plan, and through the assessment uncovered the core capabilities that the team needs to develop to implement the strategic plan. The Finance team is now actively building these capabilities through a team-based leadership development process.

Other communities are using the tool to assess what capabilities they need

to build to get “unstuck” and to successfully implement existing strategic plans. We’re excited to see the ways that other communities choose to use the tool. • Next Level Finance is available on the GFOABC website via MemberLink.

If you are interested in exploring how to elevate your performance with a cohort of local governments, contact Kala Harris at execdir@ gfoabc.ca. GFOABC is particularly interested in hearing from representatives from small communities.

Brittney Dawney, P.Eng., Integral Professional Coach™ is a municipal engineer, certified coach, and consultant with Urban Systems Ltd. who helps local governments improve their performance as service providers. She helps clients measure and assess performance and develop improvement strategies and plans. She also designs and delivers leadership programs to individuals and teams who are seeking to elevate their performance..

June 3–5, 2020

GFOABC Annual Conference REGISTER NOW

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Disruptive Technologies and the Public Sector’s Role Everything about your morning commute is about to change. Imagine, as you pull into traffic, automated systems and smart signals reflow cars to the most efficient routes, cutting your total drive time in half. You pass a construction crew performing preventative maintenance on a water main, notified in advance by equipment sensors. After parking your car in a spot, you reserved via your smartphone the night before, you stride into your office, where automated climate controls have optimized the space according to weather conditions.

These scenarios might sound optimistic, but municipalities have already begun making them a reality.

Smart city technologies, networks of sensors feeding data and taking commands from municipal managers, will enable municipalities to unlock massive benefits such as reduced emissions, better resource allocation, and a higher quality of life for residents. This extraordinary potential has left elected officials scrambling to implement these technologies as one way to continue to deliver for their constituents.

But it’s not all optimism. For all the potential benefits, these technological innovations are not without risks. The more municipalities rely on

technology, the more vulnerable they can become. Increased cyber breach potential is just one risk to consider.

You’re also dealing with new hardware that might be more prone to manufacture defect, meaning costly delays or reinstallations. The changing regulatory and legal environment could also have unintended consequences. Even the larger public interest in these projects might translate to bigger reputational or political risks. That’s why better risk management early on is critical. Just like risk management plan reviews early in a construction process can save millions in retrofits, proper risk management from the very beginning of a smart city project can help chart the best path forward.

Adoption of these smart technologies hasn’t yet reached critical mass.

Budget shortfalls and public safety concerns are just a few of the issues that governments tend to prioritize over the kind of significant investments needed to become a smart city. However, municipal leaders are coming to understand that smart city technology can offer solutions to these very concerns. The public sector will need to invest more than $90 trillion globally in infrastructure projects to ensure the sustainability of our municipalities over the next few decades.

Your municipality’s future is smart.

As municipalities become smarter and more connected, the new risks and opportunities that arise will need to be properly evaluated at the planning stage and beyond. Best practice risk management tools and risk transfer strategies will need to be applied to help municipalities ensure the long-term success of their smart city technologies. •

Paul AndersonTrocmé, P.Eng, Risk Consultant, is a professional engineer with a specialization in civil and transportation engineering. At Aon, Paul works as a Consultant on the Risk Control team with a focus on risk management engagements.

Jose Peralta is the Director for Aon’s Public Sector Practice in the US. He specializes in complex placements connecting clients with insurance, reinsurance, and capital market solutions that empower governments to more sustainably serve their constituents.

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e c o n o m i c o ut lo o k q 3 Provincial Economic Growth Slowing Provincial Economic Growth Slowing Consistent with the slowing at the national level, we expect B.C.’s economy to gear down further.

We now expect the provincial economy to grow at 2.4% and 2.5% real GDP for 2019 and 2020, respectively. Our new estimates are one-tenth lower than the private sector’s average original forecasts of 2.5% and 2.6%.

The anticipated retrenchment follows a significant slowing that unfolded in 2018, due to a pull-back in household spending coupled with a steep downturn in the housing market. The housing market is expected to recover as the year progresses, having dragged significantly on growth since 2018 amid a slowdown induced by rising interest rates and a range of federal and provincial policy measures. Home sales in Vancouver surged 23.9% month/ month in May — the strongest monthly gain since 2007, and housing starts reached an all-time high during the same month. However, we saw a significant pull-back as housing resales in June 2019 were the lowest since 2000.

As consumers take a step-back in spending, non-residential construction has become a bright spot in the BC economy. Private sector construction of commercial buildings and a number of large projects, in the resource and infrastructure space, are more significant developments.

Within the context of the Canadian economy, B.C. will still manage to register a decent growth rate as the construction of LNG Canada’s Kitimat export facility and Kinder Morgan’s Trans Mountain expansion project gets underway. Even with the uncertain timeline for the Trans Mountain project, we still expect it will provide a meaningful economic boost in 2020. While these factors will shape regional economic activity, the hit to the province’s resource sectors – particularly forestry – has become a negative factor, resulting in a more subdued near-term economic outlook for many regions in the province.

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B.C.’s trade outlook has worsened and is expected to continue to subside (and possibly turn negative). The risk for exports is clearly on the downside, considering the deteriorating external backdrop, sagging commodity markets and trade policy concerns. Wood products – one of the province’s key ex-ports – have experienced the biggest export decline (down 12%) with metallic mineral and pulp and paper products following (all down around 7.5%). However, some segments of service exports, such as technology, professional services, and film and television production will continue to show strength in 2019-2020.

Even as the economy cools, the job market in B.C. is healthy. The unemployment rate is hovering near record lows – averaging 4.5% so far this year, down from 4.8% the same period in 2018. However, there is some regional disparity emerging. Employment in Vancouver Island is down this year. Further, as mentioned above, the weakness in the forestry industry is evident in the Cariboo region, where employment is down 3.1%. The North Coast/ Nechako region and the Northeast have also registered job losses this year. Wage growth in B.C. has recently slowed and is negative in real terms. The increase in the average hourly wage is currently running around 1%, which is below inflation, compared to the 4-5% gains seen over the first half off 2018. • Read the full CIBC Economic Outlook Q3 2019 Sources: Bloomberg, Statistics Canada, Bank of Canada Alberta Treasury Board of Finance, CMHC, CREA CIBC World Markets Inc. James Hobson, CFA, PM, Investment Advisor at 403-260-0574 Charet Chahal, CIM, Investment Advisor at 403-260-0440

c o l le c t o r s ’ c o r n e r It’s a FEE. It’s a CHARGE. No, it’s a TAX! Several court cases have helped to clarify the meaning of words we Collectors use all the time. The Catalyst v North Cowichan (2012) case confirmed that a municipal council has complete discretion to consider whatever information it deems relevant to set tax rates, and to allocate the tax burden among the property classes as it sees fit.

The Eurig v Ontario (1998) case clarified that a fee cannot be greater than the cost of the service that the fee is being charged for. In the 620 Connaught Ltd. v Canada (2008) case, the judge went to great lengths to clarify a lot of terminology.

So, what is a tax? A tax is authorized by legislation (the Community Charter), compulsory, levied by a public body (e.g. a municipality), the monies generated are intended for a public purpose where there is no connection between the amount raised and the actual cost of the service provided to the payor. So, a tax pays for the services provided or are available by a municipality whether a specific service is used, such as a public park or a particular

road. However, if there is a connection between the amount charged and the cost of a service provided to the payor, then it’s a fee.

A fee is generally related to a regulatory service. For example, even though a business licence fee is authorized by legislation, compulsory and levied by a public body, it is a regulatory charge connected to a regulatory scheme (permission granted by the municipality to carry on a business). A charge (or user fee) is generally related to providing a government service or facility such as a garbage charge, water rate, room rental fee, etc. Even though a user charge or fee may be included as a line item on the property tax notice, it is not a tax (and therefore not be eligible for Land Tax Deferment). A regulatory charge is imposed in relation to a right or privilege awarded or granted by the municipality (e.g. a building permit fee which grants permission to do something or per-tonne charge on landfill to discourage the production of waste). A tax is not connected to a regulatory scheme. Also, in the Telus v Nanaimo (2010) case,

the court ruled that a municipality does not have the authority to charge an “indirect tax” (e.g. a 911 levy). A fine is a charge as punishment for an offence.

Yes, it’s all semantics — but it does matter if it’s a fee or a charge or a tax! As a reminder, municipalities tax property, not people because the services provided by a municipality service the properties, not people. So even though pouring a glass of water to drink or flushing the toilet seems rather personal, water service is provided to the property — which is why we can collect unpaid water bills by adding the outstanding water bill amount to the property tax account as taxes in arrears. •

DOUG STEIN has worked in municipal finance for over 30 years. In 2011 he retired from his position as Manager of Revenue Services for the District of Saanich. Doug has been very involved with the Collectors’ Forum, is a GFOABC Life Member and a CPA, CMA.

SEPTEMBER 2019 • DOLLARS & SENSE PERSPECTIVE | 17

CIVICINFOBC CIVICINFOBC

q u a rte r ly q u estio n

property tax … what’s included?

On the GFOABC Discussion Forum, Mark Coulter from the City of Campbell River asked for help comparing property taxes across BC, breaking down how other local governments charge for services like water, sewer and garbage. To get the answer, CivicInfo BC and the GFOABC conducted a very short survey, and 50% of the province’s local governments replied.

Results: How BC Local Governments Charge for Services (Percentage of Survey Respondents, n=94)

Additional Analysis Using CivicStats.ca We took the data generated from the responses and compared it to the datasets available on CivicStats.ca. We found that when communities offer green waste collection, those with higher populations were most likely to bill for the service separately, and communities with smaller populations (less than 10,000) were more likely to include the cost in the general levy.

You can perform your own analysis CivicStats.ca is a platform, offered free to local government employees across BC as part of their CivicInfo BC membership, that allows users to compare over 6 million unique datapoints

If you would like to learn more about this free service, contact CivicInfoBC at info@civicinfo.bc.ca

18 | GFOABC.CA

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quarterly question

september’s Quarterly Question: nsf fees … what’s the standard?

ACOMPLETE SURVEY

The GFOABC Forum contains many questions from Finance Officers on how NSF cheques are handled. Check out the next quarterly question using the link below, it will only take 1-2 minutes to complete. The responses to this question will be profiled in the next GFOABC Newsletter.

If you have a topic for a future quarterly question, please contact the office at office@gfoabc.ca or 250-382-6871.

SEPTEMBER 2019 • DOLLARS & SENSE PERSPECTIVE | 19

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