Presentation on theme: "Municipal Budgeting Basics The Department of Municipal Affairs"— Presentation transcript:
1Municipal Budgeting Basics The Department of Municipal Affairs Presented by:The Department of Municipal AffairsPRE-SET for each participant:Municipal Budget Submission FormEvaluation FormON HOLD BACK for each participant:PresentationTrue/False QuizAllocation ExerciseSampletown Budget Questions
2Introduction to Budgeting The budgeting process is the first phase of a municipality’s financial management cycleIt will produce a valuable planning tool to use as a guide to the management and operation of the municipalityThe budget is a written plan, expressed in dollarsIt is only as accurate as the information collected and the thoroughness of the processWHAT IS A BUDGET?POINT OUT highlighted words…More than a detailed projection of expenses and revenues for a one year periodIt is a plan for the future direction of the municipality – a road map for carrying out objectives, services, and programsTherefore, 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.
3The Importance of Budgeting Sets standards for controlling costsAllows regular comparisons between estimated and actual costsAllows timely adjustments to programs and servicesMust be done to establish tax ratesEnsures realistic planning and estimatesCommunicates council’s plans to othersProvides an opportunity for evaluation of programs and servicesASK: Why is it important to budget?REVIEW responses.Possible Answers:Resource allocationPerformance evaluationFormulate plansDISTRIBUTE copies of presentation.
4Budget 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, equipmentInterdependence 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
5Developing a Realistic Budget Preparation of a realistic budget emphasizes:Council giving clear direction to the staff regarding financial priorities, goals and objectivesThe need for accurate, up-to-date informationCompleting expenditures estimates BEFORE revenuesEMPHASIZE KEY WORDS: priorities….information….expenditures before revenuesPRIORITIESStart 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.
6Who 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 processA typical Finance Committee would include:The mayorOne or two councillorsThe clerk or managerEMPHASIZE 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 onSize of municipalityComplexity of financial activitiesAvailability of expertiseASK: How many people here have Finance Committees?
7Deadlines and Time Frames Municipal Fiscal Year - January 1 to December 31The Budget Cycle - October 1 through one full yearBudget Time Frames:September 1 - start gathering informationBy 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.
8Deadlines and Time Frames EXCEPTIONTime 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 BudgetsSECTION 80 – Revised Budget
9Six Steps to Successful Budgeting Establish a Budget CalendarActions to be completedWho is responsibleDates when these actions are to be completedSIX 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.
10Six Steps to Successful Budgeting ....Sample Budget Calendar What(Actions)Who?(Person/Group)When?(Date)Collect all necessary information for budget preparationClerk/ManagerSept. 1Send out notices to request input from committee, group that is supported by Council funds or accountable to CouncilSubmit input to Council; include requests for next year’s programs and activities and an evaluation of last year’s programsAll departments, committees, groups requesting budgeted funds for the next fiscal yearOct. 1ASK: does anybody wish to describe their municipality’s budget calendar?
11Six Steps to Successful Budgeting ....Sample Budget Calendar What(Actions)Who?(Person/Group)When?(Date)Review all material and prepare draft budget for presentation to CouncilClerk/Manager; Finance CommitteeNov. 1Make adjustments and prepare final budgetPresent final budget to Council for approvalDec. 1Submit budget to the Minister of Municipal Affairs for reviewCouncilDec. 31ASK: does anybody wish to describe their municipality’s budget calendar?
12Six Steps to Successful Budgeting Collect all necessary informationAssessment RollLoan payment schedulesPast budgetsGoals & objectives of CouncilTax collection statisticsAudited financial statements, internal financial reports and bookkeeping recordsSTEP 2: Collect All Necessary InformationNeed 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….
13Six Steps to Successful Budgeting Collect all necessary informationFinancial policies and proceduresThe current year’s “year-to-date” operating costs as well as forecasted amounts for the balance of the yearAnnual evaluations of Council programs, services, and activitiesProgram statisticsFinancial policies and proceduresInfo necessary to predict certain revenue and expense categoriesPer diems for travel, meals, accommodationAmounts for fees, permits, licensesApproved exemptionsThe current year’s “year-to-date” operating costs as well as forecasted amounts for the balance of the yearAre 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 yearSee notes on next page….
14Six Steps to Successful Budgeting 3. Request information from othersReview financial statements of funded groupsRequest budget estimates from groups seeking fundingReview reports and program evaluations on previous year’s activitiesMeet with groups seeking fundsSTEP 3: Request Information From OthersAny 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.
15Six Steps to Successful Budgeting 4. Review information and prepare draftWhat to Review:Goals and objectives of councilDifferences between past budgets and actual expenditures (Financial Statements)Effectiveness, cost implications and benefits of all council activities – on-going or proposedFinancial policies and procedures Are they still relevant?You have direction regarding priorities and objectives,You’ve established a budget calendarYou’ve collected information (historical information and new information)You have requested and received input from groups that may receive fundingNow it’s time to put all the pieces together and prepare the draft budget, based on plans and assumptions.Step 4 involves reviewingInformation gathered in Step 2Input received from Step 3Any 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.
16Six Steps to Successful Budgeting Review information and prepare draft, cont’dPreparing the draftComplete the Debt Charges SummaryReminder: 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’dYou’ve reviewed Information.Now, prepare the draft.Record all loans from all sourcesReminder – transfer your totals for both the Council Annual Payment and Provincial Annual Payment to the appropriate sections of the Expenditures and Revenues sections.
17Six Steps to Successful Budgeting Review information and prepare draft, cont’dPreparing the draft, cont’dEstimate and record expendituresEstimate and record expected revenuesPrepare draft for presentation to CouncilREMINDER: good practice to record expenditures first, which is why expenditures come before revenues in the Budget Form.
18Six Steps to Successful Budgeting 5. Review the draft and make adjustmentsIf there is a Finance Committee - draft is reviewed and adjustments made to balance the budgetIf there is no committee, council thoroughly reviews draft and approves any adjustmentsSeveral meetings may be needed to finalize the budgetSTEP 5: Review the Draft and Make AdjustmentsGathered Information.Reviewed Information.Prepared the Draft.NOW: Review draft and make adjustmentsTo make sure numbers balance and make sense….to ensure that it is consistent with the goals, objectives that were identified earlier in the processEXPLAIN: “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
19Remember…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 municipalityTake the time to ask questions about the relevance and viability of municipal programs, services and activitiesRemember 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.
20Revenues = Expenditures Remember…Approved budgets MUST be balanced.Revenues = ExpendituresSection 78 of Municipalities Act, 1999: The anticipated revenues and proposed expenditures of a council shall balance.
21Six Steps to Successful Budgeting 6. Adoption & submission of budgetAdoption by December 1 at a regular council meetingBudget notes/highlights to be made availableAdopted budget is transcribed onto official form and sent to Municipal Affairs for ministerial reviewMunicipal Affairs staff will review and Council will be advised if revisions are requiredSTEP 6: Adoption and Submission of BudgetFinalized 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)
22Did 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 recordThis practice is essential when taking court action against taxpayers in arrearsYou have an official record of the tax rates in effect for previous yearsMarch 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.
23Did 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 23If municipality DOES NOT have a newspaper, post in another public placePost officeTown hallTown office
24The Municipal Budget Submission Form There are five main sections:Front PageDebt Charges SummaryExpendituresRevenues – Includes tax rates informationSummary of the Municipal Budget Submission FormREVIEW OH-24TELL them you will walk them through the form later.- Front PageDebt Charges Summary (Page 1)Expenditures (Page 2)Revenues (Page 6)Summary (Page 11)Pass out the Budget Quiz…DO the Budget Quiz exerciseREVIEW the answers…don’t get into details of answers
25The Front Page Here is where you identify: Your municipality The budget periodThe date of approvalThe individuals, by their signature (mayor, clerk/manager) who verify the adoption of the budgetTHE FRONT PAGEASK group to look at their Municipal Budget Submission FormSHOW OH-25 and REVIEW points.
26Debt Charges SummaryIf council owes money for loans received, the Debt Charges Summary must be completedThe lending sources are typically the Banks, the Newfoundland and Labrador Municipal Financing Corporation (NMFC), and the Canada Mortgage and Housing Corporation (CMHC)DEBT CHARGES SUMMARYEXPLAIN that if you have loans to repay, you must complete this section
27Debt Charges SummaryUsing the loan information obtained from the lender(s), complete the table in the summaryYour previous audited statement should contain a summary of all loans for the previous yearALL loans must be reportedYou should complete the Debt Charges Summary BEFORE you prepare your draft budget. WHY?DEBT CHARGES SUMMARYREVIEW 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.
28Debt Charges Summary Loan Number Name of Creditor Purpose (Water/Sewer; Roads; etc.)Original PrincipalMaturity DateCouncil Annual PaymentProvincial Annual PaymentDEBT CHARGES SUMMARYSHOW 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.
29Debt Charges Summary TOTAL Council Annual Payment TOTAL Provincial Annual Payment7.1 – Debt Charges from all Sources (Under Expenditures, Fiscal services, p. 4)TOTAL Provincial Annual Payment4.1.2 – Provincial Portion of Debt Charges (Under Revenues, Government Transfers, Provincial Government Grants and Subsidies, p. 9)DEBT CHARGES SUMMARYSHOW 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: 7.1.2ALSO:Total Provincial Annual PaymentRevenues Section – GOVERNMENT TRANSFERS – Provincial Govt. Grants and Subsidies – (P.9)4.1.2 – Provincial Portion of Debt Charges
30Expenditures/Revenues and Summary Estimated expenditures are entered hereRevenues:Estimated revenues are entered hereThe budget form requires that the various tax rates set by a municipality be recorded in the appropriate boxes in this sectionSummary of the Municipal Budget Submission Form:This is an “at-a-glance” summary of the reported expenditures and revenuesEXPENDITURES / REVENUES and SUMMARYSHOW 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
31The Municipal Budget Submission Form - Expenditures 1.0 General Government2.0 Protective Services3.0 Transportation Services4.0 Environmental Health5.0 Planning and Development6.0 Recreation and Cultural Services7.0 Fiscal Services1.0 General Government – costs associated with the overall administration of the municipalityActivities of CouncilGeneral Admin.Municipal Elections and By-ElectionsProperty AssessmentCommon 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 residentsFire protection,Emergency preparedness and response,Animal/pest control,Enforcement,Other services.See notes on next page…
32The Municipal Budget Submission Form - Expenditures 1.0 GENERAL GOVERNMENT1.1 CouncilRemuneration for CouncillorsTravel1.1 COUNCILAll costs associated with operation, maintenance, and support of the activities of council (as a group, and as Councillors)Council chamber, official functions hosted by Council1.1.1 Remuneration for CouncillorsIf Councillors are paid a specified amount for their work on Council, this amount is recorded here.1.1.2 TravelAccommodationsMealsPer diemsTransportationMileage
33The Municipal Budget Submission Form - Expenditures 1.0 GENERAL GOVERNMENT1.2 General AdministrationSalariesEmployee BenefitsPayroll BurdenTravelSuppliesPurchased Services (other than Insurance)Professional ServicesInsurance1.2 GENERAL ADMINISTRATIONThis is where you’d budget for:Expenses of the administrative staff,Municipal office, andCross-functional services and programs that benefit the municipality as a whole.Contains 8 categories – see notes on separate sheet.
34The Municipal Budget Submission Form - Expenditures 1.0 GENERAL GOVERNMENT1.3 Municipal Elections & By-Elections1.4 Property Assessment Services1.5 Common ServicesEngineering ServicesGeneral MaintenanceProfessional Development and TrainingPublic Relations1.3 MUNICIPAL ELECTIONS AND BY-ELECTIONSTrainingReproduction of the required forms and ballotsPer diems or honoraria for those running the elections and securityAwareness campaigns1.4 PROPERTY ASSESSMENT SERVICESFees charged by the Municipal Assessment Agency to provide property assessment servicesException: St. John’s1.5 COMMON SERVICES- See attached notes…
35The Municipal Budget Submission Form - Expenditures 2.0 PROTECTIVE SERVICES2.1 Fire Protection2.2 Emergency Preparedness and Response2.3 Animal and Pest Control2.4 Municipal Enforcement2.5 Other Protective Services and Inspections2.0 PROTECTIVE SERVICESExpenditures that provide for the protection and safety of the residentsAs you can see, Fire, Emergency, Animal & Pest Control, Enforcement, Building Inspection Services2.1 Fire ProtectionExpenses related to the direct provision of this service OR the purchase of these services from another municipalityOperation & maintenance of fire fighting vehiclesHonoraria given to volunteer firefighters2.2, 2.3, 2.4, 2.5……see notes
36The Municipal Budget Submission Form - Expenditures 3.0 TRANSPORTATION SERVICES3.1 Vehicle and Fleet Maintenance3.2 Road TransportStreets, Roads, Sidewalks, etc.Snow RemovalStreet LightingTraffic Services3.3 Public Transport3.4 Other Transportation Services3.0 TRANSPORTATION SERVICESOperation & maintenance of vehicles owned by municipalityProvision & upkeep of roads, streets, bridgesSafe movement of trafficPublic transportation3.1 Vehicle and Fleet Operations and MaintenanceCosts for operation, maintenance and repair of cars, trucks, or heavy equipment (NOT dedicated to a specific function) owned or leased by municipalityFire, enforcement, and recreation vehicles should be budgeted for under the appropriate category, if easy to allocate3.2, 3.3, 3.4….see notes
37The Municipal Budget Submission Form - Expenditures 4.0 ENVIRONMENTAL HEALTH4.1 Water Supply4.2 Sewage Collection and Disposal4.3 Garbage and Waste Collection and Disposal4.4 Other Environmental Health Services4.0 ENVIRONMENTAL HEALTHGeneral Description:Expenditures dealing with:Water supplySewageGarbageWaste collection & disposalSee next page for notes
38The Municipal Budget Submission Form - Expenditures 5.0 PLANNING AND DEVELOPMENT5.1 Planning and Zoning5.2 Community Improvement and Development5.3 Regional Development5.4 Tourism and Marketing5.5 Other Planning and Development5.0 PLANNING AND DEVELOPMENTGeneral Description:Activities surrounding the development and maintenance ofMunicipal PlanCommunity Improvement ProjectsRegional Development ProjectsAlso includes marketing, tourism, other economic development activitiesSee notes for description of 5.1 – 5.5
39The Municipal Budget Submission Form - Expenditures 6.0 RECREATION AND CULTURAL SERVICES6.1 Recreation Administration6.2 Recreation FacilitiesRecreation and Community CentresParks, Playgrounds, etc.StadiumSwimming Pool6.0 RECREATION AND CULTURAL SERVICESIncludes:Recreational and cultural facilities, programs, activities, community events6.1 RECREATION ADMINISTRATIONRecreation Dept.’s administrative costsRecreation Director’s salaryRecreation office expensesCost of rec. support staffSee notes on next page for 6.2
40The Municipal Budget Submission Form - Expenditures 6.0 RECREATION AND CULTURAL SERVICES, cont’d6.3 Cultural Facilities6.4 Recreation and Cultural Programs, Activities, etc.6.5 Other Recreation and Cultural Services6.3 Cultural FacilitiesIf a municipality operates or supports operation of a MUSEUM, LIBRARY, or other facility6.4 Recreation & Cultural Programs, Activities, and Community EventsExpenses for any events that are planned for the various recreational / cultural facilities6.5 Other Recreational and Cultural Services- Use only when an anticipated expense cannot be directly allocated
41The Municipal Budget Submission Form - Expenditures 7.0 FISCAL SERVICES7.1 Debt Charges From All SourcesCouncil Annual PaymentProvincial Annual Payment7.0 FISCAL SERVICESGeneral Description:This category captures expenses related to:Loan repaymentsProvisions for uncollected taxesOperating deficitLossesCapital expenditures out of revenueBank service chargesSee notes on next page…
42The Municipal Budget Submission Form - Expenditures 7.0 FISCAL SERVICES7.2 Transfers to Authorized Reserves and other FundsProvision for Uncollectible Taxes, Fees, & ChargesOperating Deficit of Prior YearAccumulated Deficit Reduction PlanDiscounts, Losses, AllowancesCapital Expenditures Out of RevenueGas TaxAll other (please provide list)7.2 TRANSFERS TO OWN RESERVES AND OTHER FUNDSTwo reasons for this category:To record items that require the municipality to recognize and plan for some form of financial loss or contingencyTo record the expenditures that normally would be paid for out of non-operational funds, such as a capital fundSee next page for notes…
43The Municipal Budget Submission Form - Expenditures 7.0 FISCAL SERVICES7.2 Transfers to Authorized Reserves and other FundsAuthorized Transfers to Reserves & Other FundsGas TaxAll Other (please provide list)7.3 Bank Charges & Other Fiscal Services7.2.6 Authorized Transfers to Reserves and Other FundsRefers 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 MAGas TaxAll 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 SERVICESService 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)
44Dealing with HST REMINDER: HST paid out or rebated is not recorded in the budgetThe EFFECT of HST is reflected in the budget for expenditures that are taxableThere is no place in the budget submission form to record anticipated HST to be paid outAlso no place to record any expected rebatesWhy? Because HST is NOT included in the budget – NOT IN EXPENDITURE SIDE OR REVENUE SIDEHowever, when budgeting for expenditures that are taxable, you need to consider HST and the effect of the rebate
45Dealing with HST Budget Item: Office supplies for council office Value: $200Clerk will budget for $ Here is the calculation:Cost of Supplies ……$200Plus HST ….+$26 (5% GST is $10 ; 8% PST is $16)Total………....$226Less GST rebate …. - $10 (100% of GST, which is $10)($200 + $26) - $10 = $216Budget for supplies: $216SHOW OH-45 and REVIEW SLIDENOTE – 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)
46In some cases, the dollar amounts involved can be significant !! Dealing with HSTBudgeting without including the applicable taxes will result in an under estimation of costsIncluding the full 13% HST and not factoring in the rebate will result in an over estimation of costsIn 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 HSTWhile 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
47The Municipal Budget Submission Form - Revenues 1.0 Taxes and Related Revenues2.0 Sales of Goods and Services3.0 Other Revenue From Own Sources4.0 Government Transfers5.0 Other TransfersWhere is the money coming from?Revenue generated by authorized taxesAnticipated amounts of money to be received by municipality selling it’s goods or servicesOther revenue expected to be generated from within the municipalityProvincial and federal government transfersOther transfers – operating surplus, transfers from authorized reserves
48The Municipal Budget Submission Form - Revenues 1.0 TAXES AND RELATED REVENUES1.1 Property Tax InformationResidential Property Info.Mill Rate MethodMinimum Tax MethodResidential Grants in LieuResidential Exempt Properties1.0 TAXES AND RELATED REVENUESAll expected revenue to be generated by authorized taxes assessed by the Council are to be included hereAuthorized taxes: those permitted under the Municipalities Act, or are, at request of Council, approved for assessment by Minister of MADo NOT include other fees, charges, or salesMonies 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.
49The Municipal Budget Submission Form - Revenues 1.0 TAXES AND RELATED REVENUES1.1 Property Tax InformationCommercial / Non-ResidentialMill Rate MethodMinimum Tax MethodNon-Residential Grants in LieuTax AgreementsNon-Residential Exempt PropertyProperty Tax – Commercial / Non-ResidentialMill Rate & Minimum Tax Method – rates and amounts used in residential property tax can be different for commercial properties
50The Municipal Budget Submission Form - Revenues 1.0 TAXES AND RELATED REVENUES1.2 Water and Sewage Tax InformationResidential Water and SewageNumber of households NOT connectedWater and Sewage TaxWater Tax Only (if separate tax)Sewage Tax Only (if separate tax)Other Residential Water and Sewage TaxSection for Residential and one for CommercialTax rates may differ between residential and commercial
51The Municipal Budget Submission Form - Revenues 1.0 TAXES AND RELATED REVENUES1.2 Water and Sewage Tax InformationCommercial / Non-Residential Water and SewageNumber of Commercial / Non-Residential Units NOT connectedWater and Sewage TaxWater Tax Only (if separate tax)Sewage Tax Only (if separate tax)Other Commercial / Non-Residential Water and Sewage TaxIndustrial & Institutional Water and Sewage (e.g. fish plants, hospitals)Place to record number of units not connectedWater and Sewage tax (as a combined tax)Water Tax onlySewage Tax onlyOthers
52The Municipal Budget Submission Form - Revenues 1.0 TAXES AND RELATED REVENUES1.3 Other TaxesPoll TaxBusiness TaxUtility TaxMunicipal Utility (Sales) TaxDirect Seller TaxOther Authorized TaxesSAY: We’ve covered Property Taxes, Water and Sewage TaxesNow, we’ll look at some other taxes.
53The Municipal Budget Submission Form - Revenues 2.0 SALES OF GOODS AND SERVICES2.1 Garbage Collection Fees2.2 Recreation and Cultural Services2.3 Transportation Services2.4 Fire Protection Service Fees2.5 Animal and Pest Control Fees2.6 Tipping Fees2.7 Water Supply2.8 Other Sales of Goods and ServicesWhen 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 agenciesFire protectionSnow removalProvision of fire protection servicesRecreation and cultural services
54The Municipal Budget Submission Form - Revenues 3.0 OTHER REVENUE FROM OWN SOURCES3.1 Assessments, Levies, Fees and Charges3.2 Rental Income3.3 Interest From Investments3.4 Interest Collected on Overdue Accounts3.5 Other Revenue From Own SourcesAll other revenues expected to be generated from within the municipality are itemized hereSee additional notes on next page…
55The Municipal Budget Submission Form - Revenues 4.0 GOVERNMENT TRANSFERS4.1 Provincial Government Grants and SubsidiesMunicipal Operating GrantProvincial Portion of Debt ChargesOther Provincial Grants and Subsidies4.1 Provincial Government Grants and SubsidiesAny funds received from the Provincial Government for any reason are recorded hereAnticipated grants (MOG), subsidies, and government’s portion of loan paymentsNotes continued on next page…
56The Municipal Budget Submission Form - Revenues 4.0 GOVERNMENT TRANSFERS4.2 Federal Government Grants and SubsidiesGas TaxOther Federal Grants and Subsidies5.0 OTHER TRANSFERS5.1 Operating Surplus of Prior Year5.2 Transfers from Authorized Reserves4.2 Federal Government Grants and SubsidiesIncludes 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 fundingOther Federal Grants and SubsidiesSee notes on next page…
57The Municipal Budget Submission Form – Debt Servicing Ratio (DSR) Municipal Annual Debt PaymentLocal Revenue + MOG= DSR (%)Follow the instructions on Page 10 of the Budget Submission Form to calculate your municipality’s DSRCompares debt (principal and interest on long term debt) to revenueIndicates 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
58Summary of the Municipal Budget Submission Form From the Municipal Budget Submission Form, transcribe the following onto the Summary Form :Totals of the seven expenditure functionsTotal expendituresTotals of the five main revenue sourcesTotal revenuesREVIEW OH-58.
59Monitoring the BudgetEnsure that your budget is monitored on a monthly basis:To insure that your goals and objectives will be metTo allow council to take corrective action on a timely basis if operational circumstance cause you to stray from your financial planUse a Budget Variance ReportCompares actual expenditures to-date with budgeted figuresOnce 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.
60Last updated on October 21, 2010, by Melanie Sheppard ASK participants to complete evaluation form.Last updated on October 21, 2010, by Melanie Sheppard