Annual Budget

WHAT

  • Holistic Financial Planning

    Annual financial planning is more than looking at revenues and deciding whether you can afford to add or subtract new programs. The annual budget process is really an ongoing cycle of establishing corporate and financial objectives, measuring performance indicators, drafting departmental business plans, preparing 5-year forecasts, providing several opportunities for community input and the Council/Board’s review and final adoption the financial plan. The fiscal year for local governments in BC is the calendar year.

    Section 165 of the Community Charter requires an annual financial plan with a minimum 5-year financial budget forecast, which provides the opportunity for local governments to incorporate strategic planning, performance management and corporate reporting into financial management. Regional Districts also need a financial plan – the parallel provision is the Local Government Act, section 815.

    Both the annual report and financial plan require consideration by Council in an advertised public meeting open to submissions and questions from the public.

    Financial reporting requirements are contained in Section 98 wherein municipalities must prepare an annual report prior to June 30th of each year, including:

    the audited annual financial statements for the previous year;

    • a report respecting municipal services and operations for the previous year;
    • a progress report respecting the previous year in relation to the objectives and measures established for that year
    • a statement of municipal objectives, and the measures that will be used to determine progress respecting those objectives, for the current and next year
    0
HOW

  • The Sound Financial Plan

    Changes to the Public Service Accounting Board (PSAB) standards, which took effect January 1, 2009, provide for consistent financial reporting across all Canadian municipalities. Full depreciation accounting will require local governments to account for capital assets, such as roads, bridges, sewage treatment facilities and buildings. Traditionally, local government financial statements have focused on annual surplus or deficit, whereas the new reporting standards provide for key indicators, such as net debt, operation costs and the sources and uses of its cash resource.

    The PSAB requirements will provide a fuller and more accurate picture of the fiscal health of local governments.  While fully accounting for all assets and depreciating them at the acquisition cost will not meet replacement costs, this information is a baseline for capital asset management. Knowing what assets you have, expected service life and the replacement cost should enable local governments to balance short-term financial planning  with long-term fiscal goals.  

    Adequate capital funding envelopes, not only for replacement, but maintenance and repair, are necessary to ensure the full life cycle of an asset is achieved. Much like any household budget, a local government should review its full range of expenditures - new and immediate needs through to long-term capital asset expenditures in comparison to its revenues.  This will lead to a balanced and sound financial plan.

    0