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a) 2021 Budget Policy
Department: Finance Area: Municipal Office Subject: Budget Policy Policy number: Effective Date: August 17, 2020 Revision Date:
Municipality of North Perth Operating and Project/Capital Budget Policy
POLICY STATEMENT:
It is the policy of the Municipality of North Perth to: - achieve its current and future goals in a fiscally responsible and sustainable manner, - make informed choices about the provisions of services and capital assets, and - promote stakeholder participation in the budget process
PURPOSE:
The purpose of this policy is to - improve the efficiency of the budget-setting process, making more strategic use of Council’s time in reviewing budgets and administration’s time in preparing them; - ensure that the budget plans presented by staff are consistent with the goals set out by Council in its Strategic Plan; - maintain the long-term financial stability of the Municipality with affordable taxation and user rates; and - establish a foundation for monitoring actual expenditures against budgeted expenditures.
SCOPE:
The Operating and Project/Capital Budget Policy applies to all departments and local boards (including Library, Cemetery, BIA (Business Improvement Area and Police Services as endorsed by their board) of the Municipality of North Perth.
BUDGET PRINCIPLES AND STRATEGIES:
The principles and strategies that the Municipality utilizes in making decision related to short and long-term budget planning include:
1. Strategic Plan
The corporate Strategic Plan serves as the guiding document under which all Municipal initiatives are aligned. The budget is to align with the Strategic Plan which will allow us to fully reach our goals.
2. Communication with the Community
The Budget Visioning Meeting gives Council the opportunity to discuss their vision with staff and emphasis and clarify the goals from the Strategic Plan that they would like to see implemented for the given year.
A pre-budget survey will be circulated in advance of the budget visioning meeting allowing members of the public to provide us with responses pertaining to the yearly budget. The budget will provide opportunity for community input and will make available reports consistent with Council-approved principles for public involvement.
3. Affordability
The Municipality must be able to manage the cost without incurring financial difficulty or risking other undesirable consequences.
4. Fiscal Capacity
Fiscal capacity will be built to respond to emerging community needs through adherence to the asset management plan and related debt and reserve fund management policies while working towards a complete long-term financial plan. A strong financial position is an important component of the Municipality’s Corporate Strategic Plan.
5. Sustainability
The budget will incorporate a long-term focus with the aim of achieving a prosperous and sustainable community.
6. Accountability and Transparency
The budget will demonstrate accountability to the community through an open and transparent decision-making process in addition to the audited financial statements and other reporting.
7. Statutes
Budget development shall comply with all relevant provisions of Ontario statutes, including, but not limited to, the following: - Municipal Act, including sections relating to Business Improvement Area - Police Services Act - Public Libraries Act - Health Protection and Promotion Act - Conservation Authority Act
8. Initiative and Innovations
The budget will demonstrate a series of prudent initiative and innovations which provide opportunities for collaboration with other partners such as developers, other levels of government and agencies, etc by: - Providing the funding to deliver the services and programs residents want in an efficient manner that minimizes risk to the community and the corporation; - Setting priorities based on innovative and effectively managed policies to achieve
Municipal goals;
Managing our financial relationship with other governments in a proactive manner, demonstrating municipal leadership and advocating to obtain the tools needed to deliver services. - Incorporate innovative approaches to service delivery and will include funding to allow for the development and implementation of operating efficiencies and cost-saving measures. Cost-sharing and partnership strategies will be pursued, including the provision for matching funding where leveraging opportunities exist.
9. Risk Management
Priority-setting and decision-making will be informed by risk management principles with the aim to minimize the negative effects of risk while also minimizing the cost to accomplish this balance.
10. Stewardship
- The budget will support existing infrastructure using asset management best practice as per the Strategic Asset Management Policy. Operating budget includes depreciation expenses for each group of assets per department. - The budget will consider new infrastructure required to achieve the Asset Management
Plan - The budget will minimize reliance on debt by focusing on funding reserves to address the infrastructure gap.
11. Addressing Unfunded Liabilities
The budget will address identified liabilities through reserve contributions
12. Project (Capital) Budget
Project/Capital budgeting, is the planning process used to determine whether an organization’s long-term investments, such as new or replacement infrastructure, new or replacement equipment and consulting work projects, are worth the funding of cash through the organization’s capitalization structure (debt, equity or retained earnings). It is the process of allocating resources for project/capital investment expenditures.
Accrual accounting has been implemented for the financial management of capital assets within the Municipality. A project forecast will be presented, with further information provided for projects that are in the planning stages, based on timely information derived from the North Perth Asset Management Plan. The updated forecasts are to be submitted to the Budget Committee as part of the Project Budget presentation. Project Forecasts should include estimated expenditures and timing, as well as possible grant funding opportunities. Not all projects will be capitalized as per Tangible Capital Asset Policy.
Capital expenditures are to be defined as capital improvements to replace or extend the life and/or increase capacity, such as: - Land Acquisitions - New Facilities - New Equipment - Major overhaul/maintenance or upgrade of any asset
The Budget Committee will review proposed Departmental Project Budgets individually. Projects being proposed for initiation in the current year require a detailed explanation and rationale for each project. Carried forward projects are included indicating the current year component or budget changes.
The projects will be evaluated and prioritized by staff based on Asset Management data criteria: 1. Safety of the Public/Risk 2. Prior Commitment of Council 3. Existing Structural Condition
4. Lack of Physical Capacity 5. Environmental/Economic Impact – cost/payback 6. Monitored Complaints Received by Staff and Council
It is understood that the foregoing criteria are not refined and therefore are open to interpretation and degree. Priority will be identified by Department Heads on the project detail sheets for the Budget Committee’s review and comment. The Project information will be circulated to the Budget Committee as a prioritized listing for review. The Budget Committee, with the Department Heads and other key staff in attendance to answer questions, will meet to consider and evaluate the departmental information provided. At the end of each meeting, the Budget Committee will provide direction to staff on any adjustments, amendments or financial limitations of the presented Project Budgets.
No later than 30 days after the completion of a Project, the Department Head will advise the Deputy Treasurer/Asset Management Specialist that the Project is complete.
13. Multi-Year Capital Budgets
A multi-year capital budget will be developed. Only one year will be passed by Council but this will initiate pre-planning for Council’s consideration. Quarterly updates will be provided, including previous year’s totals.
14. Budget Roles and Responsibilities
Accountability Role
Municipal Council
Role Responsibilities
· Establish priorities through the Corporate Strategic Plan · Budget Committee, appoint Chair and Vice Chair · Approve the proposed level of public communication and engagement (Public Survey and Budget Open House, social media promotion) · Provide direction during the Budget Visioning Meeting · Conduct the budget review in an open and collaborative manner · Review budget submission during assigned budget council meetings (Schedule A) and give direction of any modifications to be made to the original submission · Adopt the budget by-law · Approve the rates required for taxation and user fees by by-law
Chief Administrative Officer · Direct, in co-operation with the Director of Finance/Treasurer and Deputy-Treasurer/Asset Management Specialist and the Senior Management Team, the preparation and presentation of the operating and capital budgets on an annual basis · Direct, in co-operation with the Director of Finance/Treasurer and Deputy-Treasurer/Asset Management Specialist and the Senior Management Team, the preparation of the budget based on the direction
Senior Management Team (SMT)
Director of Finance, Deputy-Treasurer/Asset Management Specialist, Finance Staff, Executive Co-Ordinator and Policy Assistant given by council during the Budget Visioning Meeting · Exercise financial control over all corporate operations in conjunction with the Director of Finance/Treasurer and Deputy-Treasurer/Asset Management Specialist to ensure compliance with the revenue and expenditure budgets approved by Council
· Lead the development of realistic and responsible departmental budget in accordance with the established guidelines and timeline (Schedule A) · Submit budget requests based on supportable facts that can be well understood by the general public and other members of the organization · Ensure that the resources and assets under their authority are effectively managed on an ongoing basis · Staff reports for budget visioning meeting (using current and historical data which include a review and analysis of last year’s budget to actual) · Present proposed department goals and objective for council consideration (detailing significant changes in service or level of service, changes to service fees and charges and any changes to be approved by the Rates and Fees By-law · Provide quarterly report analysis in June, September and December,
· Director of Finance/Treasurer and the Deputy-Treasurer/Asset Management Specialist will lead and co-ordinate the overall preparation and administration of the Municipal budget and capital program plan · Ensures adherence to budget policies and financial policies as approved by Council · Provide management and strategic direction to the financing of the Municipality · Compile initial operating and project/capital budget submission and record of updates from original submission · After 5th meeting, Council will be provided an amended overall summary and analysis of the consolidated operating and capital budgets presented for consideration. It will include an overview and analysis of possible property tax effect, debt charges, reserve funds and operating impacts. The finalization is subject to confirmation of grant funding availability and assessment base · Develop a budget community engagement plan for Council review and approval (elements of engagement may include municipal website, webbased public engagement platform, social media and in-person via one or more Public Information Sessions) · Circulate the public survey and prepare presentation for budget open house · Provide quarterly statements (June, Sept, Dec) and updates provided by SMT
Schedule A Proposed Meeting Dates and Times
1. Tuesday, October 6, 2020 @ 7:00 p.m. – Council Chambers 2. Wednesday, November 25, 2020 @ 7:00 p.m. – Council Chambers 3. Wednesday, December 9, 2020 @ 7:00 p.m. – Council Chambers 4. Wednesday, January 13, 2021 @ 7:00 p.m. – Council Chambers 5. Wednesday, January 27, 2021 @ 7:00 p.m. – Council Chambers 6. Wednesday, February 10, 2021 @ 7:00 p.m. – Council Chambers
Proposed Agendas
1st Meeting
1. A visioning meeting of the 2021 Budget Committee to provide members of Council will an opportunity to give senior staff suggestions and direction for the budgeting process.
2nd Meeting
3rd Meeting
4th Meeting
1. Provide 2021 Budget Committee with a comprehensive 2021 Corporate Operating
Budget with individual supporting documentation by Department. 2. Direction from Committee on changes and amendments to be made to 2021 Operating
Budgets as presented.
5th Meeting
1. Consideration of amendments to initial presentations and the resulting impacts. Surplus,
Segregated Surplus and Reserve Funds impact analysis and current debt structure will also be available for review. 2. Finalization of the Operating and Project Budgets in principal for recommendation and presentation to Council.
6th Public Information Session
1. To provide the proposed 2021 Budget information to the public in consultation with
Council and staff.
