Municipal Budgeting Basics The Department of Municipal Affairs

Municipal Budgeting Basics The Department of Municipal Affairs
Presented by: The Department of Municipal Affairs PRE-SET for each participant: Municipal Budget Submission Form Evaluation Form ON HOLD BACK for each participant: Presentation True/False Quiz Allocation Exercise Sampletown Budget Questions

Introduction to Budgeting
The budgeting process is the first phase of a municipality’s financial management cycle It will produce a valuable planning tool to use as a guide to the management and operation of the municipality The budget is a written plan, expressed in dollars It is only as accurate as the information collected and the thoroughness of the process WHAT IS A BUDGET? POINT OUT highlighted words …More than a detailed projection of expenses and revenues for a one year period It is a plan for the future direction of the municipality – a road map for carrying out objectives, services, and programs Therefore, it is a piece of work that should reflect the priorities and objectives of Council and municipality. And it should demonstrate how available resources will be used to meet those objectives – allocates fiscal resources to meet needs and provide services.

The Importance of Budgeting
Sets standards for controlling costs Allows regular comparisons between estimated and actual costs Allows timely adjustments to programs and services Must be done to establish tax rates Ensures realistic planning and estimates Communicates council’s plans to others Provides an opportunity for evaluation of programs and services ASK: Why is it important to budget? REVIEW responses. Possible Answers: Resource allocation Performance evaluation Formulate plans DISTRIBUTE copies of presentation.

Budget Categories Categories:
1.Current/Operating – expenditures for goods and services which will be used within one year. 2.Capital – expenditures on equipment and infrastructure expected to last for a number of years. Operating – day to day operating activities of the municipality – short term benefit (salaries, wages, office supplies) Capital – provision of resources for the long term running of a municipality (long term purchases and big investments) Examples: roads, buildings, equipment Interdependence between the two. New capital expenditures can reduce ongoing expenditures, …and failure to properly invest in capital assets can increase ongoing expenditures. …Example: failure of a town to repave roads can result in increased expenditures for patching and related costs. EXPLAIN: this workshop will focus on Current/Operating Budget only

Developing a Realistic Budget
Preparation of a realistic budget emphasizes: Council giving clear direction to the staff regarding financial priorities, goals and objectives The need for accurate, up-to-date information Completing expenditures estimates BEFORE revenues EMPHASIZE KEY WORDS: priorities….information….expenditures before revenues PRIORITIES Start with this: examination of the goals and purpose for your budget process – sense of direction. What do we want to achieve? and …How does this fit into the big picture? If Council provides clear direction early in process, the resulting draft budget should target those priorities. While each municipality will have its own goals and objectives, we are all trying to achieve the twin goals of meeting community needs and maximizing resources. Scaling expenditures to “FIT” the available revenues is NOT a very good practice.

Who Does the Budget? The clerk or manager is responsible for the actual preparation of the budget, but it is the Council which must adopt the budget. Council may appoint a Finance Committee to guide and coordinate the budget process A typical Finance Committee would include: The mayor One or two councillors The clerk or manager EMPHASIZE IMPORTANT POINT: Clerk/Manager to prepare and Council to adopt. Clerk or manager prepares budget, in consultation with Council and/or Finance Committee. Finance Committee may depend on Size of municipality Complexity of financial activities Availability of expertise ASK: How many people here have Finance Committees?

Deadlines and Time Frames
Municipal Fiscal Year - January 1 to December 31 The Budget Cycle - October 1 through one full year Budget Time Frames: September 1 - start gathering information By December 1 - prepare and adopt budget… By December 31 - submit budget to Minister… Fiscal year is January 1 to December 31. Budgets prepared with this time frame in mind. Given that budget must be adopted by Dec. 1, & balanced budgets must be submitted to Minister of MA by December 31 of each year, budget preparations would begin in advance of this due date. With approval, budget may undergo changes/revisions during the year to reflect the changing financial picture.

Deadlines and Time Frames
EXCEPTION Time frames may be different in the case of an election year or revised budget. EXPLAIN: that I’m not getting into legislation. Just be aware that there are exceptions. REFER TO: SECTION 77 – Annual Budgets SECTION 80 – Revised Budget

Six Steps to Successful Budgeting
Establish a Budget Calendar Actions to be completed Who is responsible Dates when these actions are to be completed SIX STEP PROCESS: recommended to prepare the draft budget, get it ready for approval by Council, and then on to MA for review. Useful method for controlling the budget process is the Budget Calendar! PLAN THE PROCESS! Establishing a schedule of key actions, decision points, dates, etc. allows adequate time for information gathering and decision making. How long the process actually takes and who is involved will vary depending on your municipality. May be easier to start with the last step (submit the budget to Minister of MA) and work backwards to the starting date.

Six Steps to Successful Budgeting ....Sample Budget Calendar
What (Actions) Who? (Person/Group) When? (Date) Collect all necessary information for budget preparation Clerk/Manager Sept. 1 Send out notices to request input from committee, group that is supported by Council funds or accountable to Council Submit input to Council; include requests for next year’s programs and activities and an evaluation of last year’s programs All departments, committees, groups requesting budgeted funds for the next fiscal year Oct. 1 ASK: does anybody wish to describe their municipality’s budget calendar?

Six Steps to Successful Budgeting ....Sample Budget Calendar
What (Actions) Who? (Person/Group) When? (Date) Review all material and prepare draft budget for presentation to Council Clerk/Manager; Finance Committee Nov. 1 Make adjustments and prepare final budget Present final budget to Council for approval Dec. 1 Submit budget to the Minister of Municipal Affairs for review Council Dec. 31 ASK: does anybody wish to describe their municipality’s budget calendar?

Collect all necessary information Assessment Roll Loan payment schedules Past budgets Goals & objectives of Council Tax collection statistics Audited financial statements, internal financial reports and bookkeeping records STEP 2: Collect All Necessary Information Need as much information as possible…. …to ensure that the budget accurately reflects municipal priorities and acts as a guide for spending and decision making. ANY INFORMATION THAT WILL HELP YOU DETERMINE REALISTIC BUDGET ESTIMATES SHOULD BE USED. See additional notes….

Collect all necessary information Financial policies and procedures The current year’s “year-to-date” operating costs as well as forecasted amounts for the balance of the year Annual evaluations of Council programs, services, and activities Program statistics Financial policies and procedures Info necessary to predict certain revenue and expense categories Per diems for travel, meals, accommodation Amounts for fees, permits, licenses Approved exemptions The current year’s “year-to-date” operating costs as well as forecasted amounts for the balance of the year Are you on target with current budget estimates? If off target, you will need to decide whether to do a revised budget now or to budget for the deficit/surplus in the new year See notes on next page….

3. Request information from others Review financial statements of funded groups Request budget estimates from groups seeking funding Review reports and program evaluations on previous year’s activities Meet with groups seeking funds STEP 3: Request Information From Others Any group / department / committee who may be requesting funds should provide input. The more input and collaboration, the more accurate the process. People are more committed to the process. And you will be better able to focus on the right community priorities. Also want to ensure that the programs, services, and activities supported by Council are relevant and beneficial to the municipality.

4. Review information and prepare draft What to Review: Goals and objectives of council Differences between past budgets and actual expenditures (Financial Statements) Effectiveness, cost implications and benefits of all council activities – on-going or proposed Financial policies and procedures Are they still relevant? You have direction regarding priorities and objectives, You’ve established a budget calendar You’ve collected information (historical information and new information) You have requested and received input from groups that may receive funding Now it’s time to put all the pieces together and prepare the draft budget, based on plans and assumptions. Step 4 involves reviewing Information gathered in Step 2 Input received from Step 3 Any recommendations for major changes in financial procedures and policies should be addressed by Council prior to the development of draft budget. WHY? To help guide the development of the budget. Budget should be in line with those policies. Policies should provide a sense of direction to those developing the budget.

Review information and prepare draft, cont’d Preparing the draft Complete the Debt Charges Summary Reminder: ensure that the totals for Council Annual Payment & Provincial Annual Payment are recorded in the proper place under Expenditures (7.1 – Debt Charges From all Sources) Reminder: ensure that the total for Provincial Annual Payment is recorded in the proper place under Revenues (4.1.2 – Provincial Portion of Debt Charges) STEP 4, cont’d You’ve reviewed Information. Now, prepare the draft. Record all loans from all sources Reminder – transfer your totals for both the Council Annual Payment and Provincial Annual Payment to the appropriate sections of the Expenditures and Revenues sections.

Review information and prepare draft, cont’d Preparing the draft, cont’d Estimate and record expenditures Estimate and record expected revenues Prepare draft for presentation to Council REMINDER: good practice to record expenditures first, which is why expenditures come before revenues in the Budget Form.

5. Review the draft and make adjustments If there is a Finance Committee - draft is reviewed and adjustments made to balance the budget If there is no committee, council thoroughly reviews draft and approves any adjustments Several meetings may be needed to finalize the budget STEP 5: Review the Draft and Make Adjustments Gathered Information. Reviewed Information. Prepared the Draft. NOW: Review draft and make adjustments To make sure numbers balance and make sense….to ensure that it is consistent with the goals, objectives that were identified earlier in the process EXPLAIN: “Adjustments” can mean changes in the tax rates and/or modifications to services and programs. This step may take some time. But so what? FURTHER SPEAKING NOTES ON OH-19

Remember… The draft budget review process is an excellent opportunity to: Help Councillors to better understand the budget process and the overall financial picture of the municipality Take the time to ask questions about the relevance and viability of municipal programs, services and activities Remember the bigger picture – this is not just about balancing numbers. A budget is a process for planning for the future of your municipality. The numbers in that budget should be consistent with agreed upon objectives, goals, and priorities. Issues with underlying assumptions? Questions about proposed spending or anticipated revenues? NOW is the time to discuss and make any changes.

Revenues = Expenditures
Remember… Approved budgets MUST be balanced. Revenues = Expenditures Section 78 of Municipalities Act, 1999: The anticipated revenues and proposed expenditures of a council shall balance.

6. Adoption & submission of budget Adoption by December 1 at a regular council meeting Budget notes/highlights to be made available Adopted budget is transcribed onto official form and sent to Municipal Affairs for ministerial review Municipal Affairs staff will review and Council will be advised if revisions are required STEP 6: Adoption and Submission of Budget Finalized budget must be formally presented and adopted at a regular Council Meeting no later than December 1. Notes highlighting the budget items, especially any changes proposed and reasons why, should accompany the budget. WHY? This will help Council and the public better understand why and how the budget is what it is. (impt. to have solid basis of justification for estimates) Adopted budget must be made available to the public for information purposes. Transcribe budget onto official form, and send to MA no later than December 31. ASK: What are the six steps to successful budgeting? (PRIZE)

Did You Know That…? All tax rates for the coming year should be set and approved by resolution of council …Section 101(1) Even though no changes are made. . . Tax rates should be re-adopted each year for the record This practice is essential when taking court action against taxpayers in arrears You have an official record of the tax rates in effect for previous years March 31 is an important date Why? Tax rates cannot be changed after March 31…Section 101(4) ANSWER to “March 31 is an important date…Why?’ March 31 of each year is the deadline for making tax rate adjustments IF you want the changes to be effective for that year. If you have problems with your budget… You have until March 31 to make the budget adjustments, get council approval and submit to MA. Otherwise, the tax changes you want to make won’t take effect until the following year.

Did You Know That…? A council shall publish annually a copy of its tax structure in a newspaper circulated in a municipality and by public notice in a municipality…Section 109(1) REVIEW SLIDE 23 If municipality DOES NOT have a newspaper, post in another public place Post office Town hall Town office

The Municipal Budget Submission Form
There are five main sections: Front Page Debt Charges Summary Expenditures Revenues – Includes tax rates information Summary of the Municipal Budget Submission Form REVIEW OH-24 TELL them you will walk them through the form later. - Front Page Debt Charges Summary (Page 1) Expenditures (Page 2) Revenues (Page 6) Summary (Page 11) Pass out the Budget Quiz… DO the Budget Quiz exercise REVIEW the answers…don’t get into details of answers

The Front Page Here is where you identify: Your municipality
The budget period The date of approval The individuals, by their signature (mayor, clerk/manager) who verify the adoption of the budget THE FRONT PAGE ASK group to look at their Municipal Budget Submission Form SHOW OH-25 and REVIEW points.

Debt Charges Summary If council owes money for loans received, the Debt Charges Summary must be completed The lending sources are typically the Banks, the Newfoundland and Labrador Municipal Financing Corporation (NMFC), and the Canada Mortgage and Housing Corporation (CMHC) DEBT CHARGES SUMMARY EXPLAIN that if you have loans to repay, you must complete this section

Debt Charges Summary Using the loan information obtained from the lender(s), complete the table in the summary Your previous audited statement should contain a summary of all loans for the previous year ALL loans must be reported You should complete the Debt Charges Summary BEFORE you prepare your draft budget. WHY? DEBT CHARGES SUMMARY REVIEW OH-27. ANSWER the question: WHY should you complete the DEBT CHARGES SUMMARY before you prepare the draft budget? - You will have to transcribe both the Council Portion and Provincial Portion to the appropriate boxes in the Expenditures and Revenues sections.

Debt Charges Summary Loan Number Name of Creditor
Purpose (Water/Sewer; Roads; etc.) Original Principal Maturity Date Council Annual Payment Provincial Annual Payment DEBT CHARGES SUMMARY SHOW OH-28 and REVIEW points, referring to the budget form, as needed. REMIND participants to transcribe Council Annual Payment and Provincial Annual Payment to the appropriate sections in the Budget Submission Form.

Debt Charges Summary TOTAL Council Annual Payment
TOTAL Provincial Annual Payment 7.1 – Debt Charges from all Sources (Under Expenditures, Fiscal services, p. 4) TOTAL Provincial Annual Payment 4.1.2 – Provincial Portion of Debt Charges (Under Revenues, Government Transfers, Provincial Government Grants and Subsidies, p. 9) DEBT CHARGES SUMMARY SHOW OH-29 and REVIEW points referring to the budget form, as needed. REMIND participants: TOTAL Council Annual Payment: 7.1.1…..Expenditures Section, Fiscal Services, Debt Charges from all Sources (p.4) TOTAL Provincial Annual Payment: 7.1.2 ALSO: Total Provincial Annual Payment Revenues Section – GOVERNMENT TRANSFERS – Provincial Govt. Grants and Subsidies – (P.9) 4.1.2 – Provincial Portion of Debt Charges

Expenditures/Revenues and Summary
Estimated expenditures are entered here Revenues: Estimated revenues are entered here The budget form requires that the various tax rates set by a municipality be recorded in the appropriate boxes in this section Summary of the Municipal Budget Submission Form: This is an “at-a-glance” summary of the reported expenditures and revenues EXPENDITURES / REVENUES and SUMMARY SHOW OH-30 and REVIEW points, referring to the budget form, as needed. Expenditures: where is money going? (pages 2 – 5) Revenues: where is money coming from? (pages 6 – 10) don’t forget to include tax rates (example: on page 6, you will need to enter mil rate under property tax info) Summary of Municipal Budget Submission Form (page 11) Shows totals for all revenue and expenditure categories

The Municipal Budget Submission Form - Expenditures
1.0 General Government 2.0 Protective Services 3.0 Transportation Services 4.0 Environmental Health 5.0 Planning and Development 6.0 Recreation and Cultural Services 7.0 Fiscal Services 1.0 General Government – costs associated with the overall administration of the municipality Activities of Council General Admin. Municipal Elections and By-Elections Property Assessment Common Services – those that can’t be easily allocated to other categories (PR, training, maintenance, etc) 2.0 Protective Services – providing for the protection and safety of residents Fire protection, Emergency preparedness and response, Animal/pest control, Enforcement, Other services. See notes on next page…

1.0 GENERAL GOVERNMENT 1.1 Council Remuneration for Councillors Travel 1.1 COUNCIL All costs associated with operation, maintenance, and support of the activities of council (as a group, and as Councillors) Council chamber, official functions hosted by Council 1.1.1 Remuneration for Councillors If Councillors are paid a specified amount for their work on Council, this amount is recorded here. 1.1.2 Travel Accommodations Meals Per diems Transportation Mileage

1.0 GENERAL GOVERNMENT 1.2 General Administration Salaries Employee Benefits Payroll Burden Travel Supplies Purchased Services (other than Insurance) Professional Services Insurance 1.2 GENERAL ADMINISTRATION This is where you’d budget for: Expenses of the administrative staff, Municipal office, and Cross-functional services and programs that benefit the municipality as a whole. Contains 8 categories – see notes on separate sheet.

1.0 GENERAL GOVERNMENT 1.3 Municipal Elections & By-Elections 1.4 Property Assessment Services 1.5 Common Services Engineering Services General Maintenance Professional Development and Training Public Relations 1.3 MUNICIPAL ELECTIONS AND BY-ELECTIONS Training Reproduction of the required forms and ballots Per diems or honoraria for those running the elections and security Awareness campaigns 1.4 PROPERTY ASSESSMENT SERVICES Fees charged by the Municipal Assessment Agency to provide property assessment services Exception: St. John’s 1.5 COMMON SERVICES - See attached notes…

2.0 PROTECTIVE SERVICES 2.1 Fire Protection 2.2 Emergency Preparedness and Response 2.3 Animal and Pest Control 2.4 Municipal Enforcement 2.5 Other Protective Services and Inspections 2.0 PROTECTIVE SERVICES Expenditures that provide for the protection and safety of the residents As you can see, Fire, Emergency, Animal & Pest Control, Enforcement, Building Inspection Services 2.1 Fire Protection Expenses related to the direct provision of this service OR the purchase of these services from another municipality Operation & maintenance of fire fighting vehicles Honoraria given to volunteer firefighters 2.2, 2.3, 2.4, 2.5……see notes

3.0 TRANSPORTATION SERVICES 3.1 Vehicle and Fleet Maintenance 3.2 Road Transport Streets, Roads, Sidewalks, etc. Snow Removal Street Lighting Traffic Services 3.3 Public Transport 3.4 Other Transportation Services 3.0 TRANSPORTATION SERVICES Operation & maintenance of vehicles owned by municipality Provision & upkeep of roads, streets, bridges Safe movement of traffic Public transportation 3.1 Vehicle and Fleet Operations and Maintenance Costs for operation, maintenance and repair of cars, trucks, or heavy equipment (NOT dedicated to a specific function) owned or leased by municipality Fire, enforcement, and recreation vehicles should be budgeted for under the appropriate category, if easy to allocate 3.2, 3.3, 3.4….see notes

4.0 ENVIRONMENTAL HEALTH 4.1 Water Supply 4.2 Sewage Collection and Disposal 4.3 Garbage and Waste Collection and Disposal 4.4 Other Environmental Health Services 4.0 ENVIRONMENTAL HEALTH General Description: Expenditures dealing with: Water supply Sewage Garbage Waste collection & disposal See next page for notes

5.0 PLANNING AND DEVELOPMENT 5.1 Planning and Zoning 5.2 Community Improvement and Development 5.3 Regional Development 5.4 Tourism and Marketing 5.5 Other Planning and Development 5.0 PLANNING AND DEVELOPMENT General Description: Activities surrounding the development and maintenance of Municipal Plan Community Improvement Projects Regional Development Projects Also includes marketing, tourism, other economic development activities See notes for description of 5.1 – 5.5

6.0 RECREATION AND CULTURAL SERVICES 6.1 Recreation Administration 6.2 Recreation Facilities Recreation and Community Centres Parks, Playgrounds, etc. Stadium Swimming Pool 6.0 RECREATION AND CULTURAL SERVICES Includes: Recreational and cultural facilities, programs, activities, community events 6.1 RECREATION ADMINISTRATION Recreation Dept.’s administrative costs Recreation Director’s salary Recreation office expenses Cost of rec. support staff See notes on next page for 6.2

6.0 RECREATION AND CULTURAL SERVICES, cont’d 6.3 Cultural Facilities 6.4 Recreation and Cultural Programs, Activities, etc. 6.5 Other Recreation and Cultural Services 6.3 Cultural Facilities If a municipality operates or supports operation of a MUSEUM, LIBRARY, or other facility 6.4 Recreation & Cultural Programs, Activities, and Community Events Expenses for any events that are planned for the various recreational / cultural facilities 6.5 Other Recreational and Cultural Services - Use only when an anticipated expense cannot be directly allocated

7.0 FISCAL SERVICES 7.1 Debt Charges From All Sources Council Annual Payment Provincial Annual Payment 7.0 FISCAL SERVICES General Description: This category captures expenses related to: Loan repayments Provisions for uncollected taxes Operating deficit Losses Capital expenditures out of revenue Bank service charges See notes on next page…

7.0 FISCAL SERVICES 7.2 Transfers to Authorized Reserves and other Funds Provision for Uncollectible Taxes, Fees, & Charges Operating Deficit of Prior Year Accumulated Deficit Reduction Plan Discounts, Losses, Allowances Capital Expenditures Out of Revenue Gas Tax All other (please provide list) 7.2 TRANSFERS TO OWN RESERVES AND OTHER FUNDS Two reasons for this category: To record items that require the municipality to recognize and plan for some form of financial loss or contingency To record the expenditures that normally would be paid for out of non-operational funds, such as a capital fund See next page for notes…

7.0 FISCAL SERVICES 7.2 Transfers to Authorized Reserves and other Funds Authorized Transfers to Reserves & Other Funds Gas Tax All Other (please provide list) 7.3 Bank Charges & Other Fiscal Services 7.2.6 Authorized Transfers to Reserves and Other Funds Refers to the amount of money that the council is transferring to a reserve fund or funds. Establishment of reserve fund must be authorized by Minister of MA Gas Tax All Other – Example: in 3 years, town was going to purchase a new loader at a cost of $30,000 With permission, the town would put $10,000 away for 3 years. 7.3 BANK CHARGES AND OTHER FISCAL SERVICES Service fees charged by the bank or financial institution where the municipality does it’s business (does not include debt charges on long term loans) The expected interest to be charged on short term borrowings that a municipality may need to maintain its operational cash flow during the fiscal year. These loans must be paid off BEFORE the end of the fiscal year (December 31)

Dealing with HST REMINDER:
HST paid out or rebated is not recorded in the budget The EFFECT of HST is reflected in the budget for expenditures that are taxable There is no place in the budget submission form to record anticipated HST to be paid out Also no place to record any expected rebates Why? Because HST is NOT included in the budget – NOT IN EXPENDITURE SIDE OR REVENUE SIDE However, when budgeting for expenditures that are taxable, you need to consider HST and the effect of the rebate

Dealing with HST Budget Item: Office supplies for council office
Value: $200 Clerk will budget for $ Here is the calculation: Cost of Supplies ……$200 Plus HST ….+$26 (5% GST is $10 ; 8% PST is $16) Total………....$226 Less GST rebate …. - $10 (100% of GST, which is $10) ($200 + $26) - $10 = $216 Budget for supplies: $216 SHOW OH-45 and REVIEW SLIDE NOTE – municipalities are eligible for a 100% rebate of the GST portion of HST they pay for goods and services (and on municipal share of joint funding projects) If you budget for expenditures without considering any taxes, you will UNDERESTIMATE costs ($200 vs $216) If you budget for expenditures including the full 13% HST, and not factoring in the rebate, you will OVERESTIMATE costs ($226 vs $216)

In some cases, the dollar amounts involved can be significant !!
Dealing with HST Budgeting without including the applicable taxes will result in an under estimation of costs Including the full 13% HST and not factoring in the rebate will result in an over estimation of costs In some cases, the dollar amounts involved can be significant !! To summarize: You will not find an expenditure or revenue category in the budget form for HST While you don’t budget for it specifically, you need to consider it when budgeting for taxable expenditures. DISTRIBUTE Allocation Exercise….participants will complete the worksheet in groups

The Municipal Budget Submission Form - Revenues
1.0 Taxes and Related Revenues 2.0 Sales of Goods and Services 3.0 Other Revenue From Own Sources 4.0 Government Transfers 5.0 Other Transfers Where is the money coming from? Revenue generated by authorized taxes Anticipated amounts of money to be received by municipality selling it’s goods or services Other revenue expected to be generated from within the municipality Provincial and federal government transfers Other transfers – operating surplus, transfers from authorized reserves

1.0 TAXES AND RELATED REVENUES 1.1 Property Tax Information Residential Property Info. Mill Rate Method Minimum Tax Method Residential Grants in Lieu Residential Exempt Properties 1.0 TAXES AND RELATED REVENUES All expected revenue to be generated by authorized taxes assessed by the Council are to be included here Authorized taxes: those permitted under the Municipalities Act, or are, at request of Council, approved for assessment by Minister of MA Do NOT include other fees, charges, or sales Monies expected from any special arrangements made between the Council and another govt, agency, or private company to pay an agreed upon sum instead of routine property or business tax is recorded here, as well.

1.0 TAXES AND RELATED REVENUES 1.1 Property Tax Information Commercial / Non-Residential Mill Rate Method Minimum Tax Method Non-Residential Grants in Lieu Tax Agreements Non-Residential Exempt Property Property Tax – Commercial / Non-Residential Mill Rate & Minimum Tax Method – rates and amounts used in residential property tax can be different for commercial properties

1.0 TAXES AND RELATED REVENUES 1.2 Water and Sewage Tax Information Residential Water and Sewage Number of households NOT connected Water and Sewage Tax Water Tax Only (if separate tax) Sewage Tax Only (if separate tax) Other Residential Water and Sewage Tax Section for Residential and one for Commercial Tax rates may differ between residential and commercial

1.0 TAXES AND RELATED REVENUES 1.2 Water and Sewage Tax Information Commercial / Non-Residential Water and Sewage Number of Commercial / Non-Residential Units NOT connected Water and Sewage Tax Water Tax Only (if separate tax) Sewage Tax Only (if separate tax) Other Commercial / Non-Residential Water and Sewage Tax Industrial & Institutional Water and Sewage (e.g. fish plants, hospitals) Place to record number of units not connected Water and Sewage tax (as a combined tax) Water Tax only Sewage Tax only Others

1.0 TAXES AND RELATED REVENUES 1.3 Other Taxes Poll Tax Business Tax Utility Tax Municipal Utility (Sales) Tax Direct Seller Tax Other Authorized Taxes SAY: We’ve covered Property Taxes, Water and Sewage Taxes Now, we’ll look at some other taxes.

2.0 SALES OF GOODS AND SERVICES 2.1 Garbage Collection Fees 2.2 Recreation and Cultural Services 2.3 Transportation Services 2.4 Fire Protection Service Fees 2.5 Animal and Pest Control Fees 2.6 Tipping Fees 2.7 Water Supply 2.8 Other Sales of Goods and Services When a Council provides a service or a benefit directly to its residents and/or others, it is considered to be ‘selling’ that service or benefit. Record anticipated revenue to be received from sale of goods and services provided by municipality to its residents, other municipalities, other governments or agencies Fire protection Snow removal Provision of fire protection services Recreation and cultural services

3.0 OTHER REVENUE FROM OWN SOURCES 3.1 Assessments, Levies, Fees and Charges 3.2 Rental Income 3.3 Interest From Investments 3.4 Interest Collected on Overdue Accounts 3.5 Other Revenue From Own Sources All other revenues expected to be generated from within the municipality are itemized here See additional notes on next page…

4.0 GOVERNMENT TRANSFERS 4.1 Provincial Government Grants and Subsidies Municipal Operating Grant Provincial Portion of Debt Charges Other Provincial Grants and Subsidies 4.1 Provincial Government Grants and Subsidies Any funds received from the Provincial Government for any reason are recorded here Anticipated grants (MOG), subsidies, and government’s portion of loan payments Notes continued on next page…

4.0 GOVERNMENT TRANSFERS 4.2 Federal Government Grants and Subsidies Gas Tax Other Federal Grants and Subsidies 5.0 OTHER TRANSFERS 5.1 Operating Surplus of Prior Year 5.2 Transfers from Authorized Reserves 4.2 Federal Government Grants and Subsidies Includes monies received from the Federal Government or its agencies (EXCEPTION: “Grants in Lieu of Taxes”, which are recorded in that section of the budget) GAS Tax funding Other Federal Grants and Subsidies See notes on next page…

The Municipal Budget Submission Form – Debt Servicing Ratio (DSR)
Municipal Annual Debt Payment Local Revenue + MOG = DSR (%) Follow the instructions on Page 10 of the Budget Submission Form to calculate your municipality’s DSR Compares debt (principal and interest on long term debt) to revenue Indicates the amount of revenue that is being used to service the municipality’s debt. A high DSR indicates that there is less revenue available for m providing services

Summary of the Municipal Budget Submission Form
From the Municipal Budget Submission Form, transcribe the following onto the Summary Form : Totals of the seven expenditure functions Total expenditures Totals of the five main revenue sources Total revenues REVIEW OH-58.

Monitoring the Budget Ensure that your budget is monitored on a monthly basis: To insure that your goals and objectives will be met To allow council to take corrective action on a timely basis if operational circumstance cause you to stray from your financial plan Use a Budget Variance Report Compares actual expenditures to-date with budgeted figures Once you complete the preparation of the budget and it is approved by Council and submitted to MA, do you forget about it? NO!! It is good financial management to keep track of where the money has come from and where it has gone. Budget monitoring ensures that resources are used for their intended purposes and are properly accounted for.

Last updated on October 21, 2010, by Melanie Sheppard
ASK participants to complete evaluation form. Last updated on October 21, 2010, by Melanie Sheppard

Municipal Budgeting Basics The Department of Municipal Affairs

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