Agenda Index City of Vancouver

Kenneth Bayne, Director of Financial Planning &Treasury

April 19, 2000

TO: Mayor Owen and Councillors

Copy: Judy Rogers, City Manager

FROM: Ken Bayne, Director of Financial Planning & Treasury

SUBJECT: 2000 Operating Budget: Recommendation for Gaming Revenue

The purpose of this memo is to clarify the treatment of the revenue the City is anticipated to receive from participation in the Host City Agreements with the provincial government.

The Interim Estimates of the 2000 Operating Budget recommend that Council recognize the casino revenue in the operating budget in 2000, but that these funds be used to “offset” one-time or limited time expenditures. Examples of several such expenditures are referenced in the report.

There are two reasons for this recommendation. First, Council is faced with some difficult decisions to make in bringing the budget into balance. The report notes that a 5.2% tax increase would be necessary if Council were to approve the budget as presented. The availability of revenue from gaming provides Council the opportunity to utilize these funds to assist in meeting its taxation targets in 2000, without the need to reduce service levels.

At the same time, staff recognize that a discussion about the ongoing use of these funds has not occurred and that Council’s instruction to report back on their use (March 9, 2000) has not been completed. For that reason, the recommendation of the Director of Finance and City Manager was constructed to ensure that no ongoing dependence on these funds was created beyond the 2000 Operating Budget. In fact, the recommendation is that Council take this funding into general revenue in 2000 but that its use in future years will be considered at a later time. As general revenue, these funds should be seen to support the entire budget. Moreover, our initial planning for the 2001 and 2002 Operating Budgets does not include this revenue, pending Council’s decision on the ongoing use of these funds. The reference to one-time expenditures was only intended to indicate that there are a number items in the budget that are not recurring, including the funding for assessment appeals, the initiatives on the downtown eastside and the transportation and planning reviews.

Council has also expressed concern that no proposals have come forward to use this funding for specific community service purposes. The proposed treatment of casino revenue in the budget does not limit Council’s ability to deal with any proposals that come forward during the year, nor the ability to tie these proposals to the casino revenue. Council has instructed staff to report back on the use of these funds and, should proposals require funding this year, Contingency Reserve would be the appropriate funding source.

Continued support for approved proposals beyond the 2000 Operating Budget can be confirmed as part of the 2001 Operating Budget discussion.

Council also expressed concerned about the reference in the report to the use of these funds to support a variety of community services programs including the Carnegie Centre, Saller Centre and the community services grants program. The intention was not to suggest that the services provided through these programs should in any way be tied to or dependent upon casino revenue. Council should continue to make decisions on funding levels for these programs on their own merits and on the ability of the budget to support them.

The Director of Finance and City Manager are concerned about the City becoming dependent on this source of revenue. At least until we can be more certain about its future, it is their recommendation that this funding be used to deal with one time or limited-time programs. This will limit the exposure of the Operating Budget to reductions in or loss of this revenue in the longer term and will provide the opportunity to consider the use of these funds in the longer term.

Ken Bayne
Director of Financial Planning

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