Agenda Index City of Vancouver



Standing Committee on City Services and Budgets


General Manager of Corporate Services/Director of Finance in consultation with the Corporate Management Team


2000 Operating Budget - Review



Council's standing instructions require that the Director of Finance report on the status of the Operating Budget as of June 30 and September 30 each year, along with recommendations for any appropriate adjustments.

Under provisions of the Park Board global budget, Council has authorized the Director of Finance to maintain a notional Revenue Stabilization Account to balance the annual surpluses or deficits that result from seasonal or weather related factors affecting the revenue program.


The purpose of this report is to inform Council of the status of the revenue and expenditure appropriations in the 2000 Operating Budget and to recommend several adjustments that reflect revised expectations. The report also provides a summary of the impact of the recent work stoppage on the Operating Budget.


Under normal circumstances, staff would have reported the September Review of the Operating Budget in the latter part of October. However, the impact of the work stoppage on projections of the year-end position in most departmental budgets resulted in a delay in that report. Following the work stoppage, the corporate Budget Office, in conjunction with departmental staff, updated the September Review, which was completed on a “business as usual” basis. There are several recommended adjustments to the budget as a result of this review.

The review also focussed on identifying the impact of the recent work stoppage. However, the complex interrelationships in the Operating Budget and among the Operating Budget, the Utilities and the Capital Budget, make a full determination of strike impacts an imperfect task. Moreover, it will be possible for some departments, such as Engineering, Park Board and Building Management to complete all, or a portion, of their annual programs despite the seven week shutdown. As a result, it has been necessary to make assumptions about how savings from these programs will accrue in the Operating Budget.

In this report, the impacts of the normal review have been separated from those of the work stoppage, where possible.


1. Revenue Appropriations

The review of revenue appropriations seeks to identify areas of significant variance that have arisen since the budget was approved in April. The Director of Finance is recommending several adjustments to revenue appropriations.

Taxation Revenue

The 2000 Budget provided $4.0 million for tax write-offs and other adjustments to the tax levy. This included a provision for the Pacific Centre assessment appeal that was then before the Assessment Appeal Board. The basic provision of $2.0 million is intended to cover the City portion of property taxes that must be written off as a result of the assessment appeal process, including the portion that may be unrecoverable from other taxing authorities.

The decision on the Pacific Centre assessment appeal was delivered to the City at the end of September. The adjustments to assessed values made by the Board will result in a refund of taxes and rents-in-lieu totalling approximately $4.3 million. Resolution of assessment appeals involving other properties in the City have resulted in a net gain in revenue to the City of $2.3 million and it is proposed that these additional revenues be utilized to fund the shortfall in the provision for the Pacific Centre refund.

Penalties on Late Taxes $400,000

The balance of taxes outstanding after both the advance and main property tax due dates was higher than anticipated when the budget was developed, generating an additional $400,000 in penalties.

Receipts in Lieu of Taxes $779,000

There are three adjustments totalling $779,000 recommended as a result of higher than expected receipts-in-lieu of taxes from BC Gas, Property Endowment Fund properties and E-Comm.

License & Development Fees ($556,000)

Two adjustments are recommended in this area.
· Slightly lower than anticipated revenues are expected in development and building related revenues based on the business as normal scenario. An adjustment in the

· License fees from business licenses and alarm permits are anticipated to be slightly lower than contemplated when the budget was established in April. The estimated shortfall is approximately $298,000.

On Street Parking Revenues $500,000

A review of parking meter revenue indicates that collections were ahead of expectations prior to the work stoppage, suggesting that revenues would exceed the budget by approximately $500,000.

Short-term Interest ($650,000)

In setting the estimate for short-term interest earnings, it had been anticipated that a debenture issue would have been completed in early fall, increasing the City’s cash balances. However, a delay in the timing of this debenture borrowing along with lower than anticipated short term interest rates during the year will result in lower than projected short-term investment income.

Net Increase in Revenue Appropriations $473,000

2. Expenditure Appropriations

Under normal circumstances departments are expected to operate within the expenditure appropriations approved by Council in April of each year. Where funding problems are identified during the year, departments are required to realign priorities or reallocate resources within existing budgets to the extent possible. This is an ongoing process in which Budget Office staff work with departments to identify and minimize the impact that these problems can have on the Operating Budget. The focus of budget review is generally restricted to those areas where departments have been impacted by factors which cannot otherwise be accommodated.

For the most part, departmental expenditure budgets remain within the allocations provided in the 2000 Operating Budget. Only one adjustment is being recommended by the Director of Finance at this time. However, there are three areas of the expenditure budget that are not specific to individual departmental budgets but which are of concern in projecting a year-end position:

Fringe Benefit Costs

Wage Settlements

Fuel Prices

As noted there is only one expenditure budget adjustment recommended by the Director of Finance at this time:

Fire Department $284,000

In establishing the budget for the Fire Department, the provision for uniform purchases was set based on experience and excluded a full provision made for unused uniform entitlements remaining from the prior year. Use of these entitlements in 2000 has resulted in additional expenditures of $284,000, which are beyond the ability of the Fire Department to absorb. An adjustment to fund this “one-time” expenditure is recommended.

Net Increase in Expenditure Accounts $284,000

The net impact of adjustments to the revenue and expenditure appropriations has identified an net increase of $189,000, which the Director of Finance recommends be allocated to Contingency Reserve.

Park Board Global Budget

Review of the Park Board Global Budget indicates that, before accounting for the impacts of the work stoppage, there is a potential shortfall of approximately $587,000 in the Board’s net budget of $40.9 million.

Although most areas of the Park Board operations remain within funding levels, two areas are of concern:
· Revenue from weather-dependent programs including outdoor pools, concessions and golf courses have experienced shortfalls due to the wet weather through the spring and early summer months. Although these might have been reversed during the extended good weather in October and November, the work stoppage did not allow this to happen. Estimates of the deficit in these areas indicate a shortfall in the range of $260,000.
· As noted, the Park Board has been particularly impacted by increased natural gas and fuel prices. The forecasted shortfall for 2000 attributable to increased fuel prices is

The year end position of the Board budget will also be impacted by the work stoppage and as a result, no adjustment to the Global Budget is recommended at this time.

The Park Board global budget arrangement provides the Director of Finance with the authority to provide for shortfalls in the Park Board revenue programs through an appropriation from Revenue Surplus. This is intended to balance the surplus / deficit cycle that can result from weather related impacts on the Board's programs.


Review of the Operating Budget indicates that the budget is very tight and it will be a challenge to end the year in a balanced position. This report notes the concerns about the impact of the work stoppage along with operational issues and, while most departments are operating within their budget targets, there are some areas that may cause difficulties by year-end. A major snowfall would also have a significant impact on the City's ability to remain in a balanced position. In addition, there may be accounting adjustments required as part of the normal year-end audit that need to be accommodated within the budget. Contingency Reserve, coupled with net savings from the labour dispute, are likely to be required to cover additional costs for wage increases, energy and fringe benefit costs as well as any emergent items that arise during the 2000 year-end. As a result of this concern, departments are being asked to take particular care to control the use of discretionary funds for the balance of the year. Should it become necessary, the Director of Finance will report back as part of the normal year end with recommendations necessary to maintain the budget in a balanced position.


On September 27, 2000 CUPE 15 began a withdrawal of services that effectively shut down City operations by September 30. Two locals of the IBEW also began job action on September 28. As a result of the CUPE 15 strike, CUPE 1004 was “picketed out” for the duration of the work stoppage. Only the Vancouver Public Library (VPL) and Police and Fire departments remained almost fully operational. A limited number of CUPE 1004 members at the Park Board also continued to work along with workers deemed essential under the Essential Services Order and approximately 400 exempt and management staff.

With approximately 4,000 employees off work for 7 weeks, there were savings realized in the Operating Budget, the Utility Budgets and in the Capital program, primarily in the form

of unspent salary funding. However, the work stoppage also resulted in costs being incurred by the City to comply with the Essential Services Order, to ensure that some public services were maintained and to protect City assets. In addition, several of the City’s revenue sources were adversely affected by the dispute resulting in revenue losses.

This report concentrates on the impact that the strike had on the Operating Budget, that portion of the City’s operations that are supported by taxation and general revenues. Expenditure and revenue impacts in the Water and Solid Waste Utilities do not impact on the Operating Budget, since any savings accrue directly to rate stabilization reserves. As the Sewer Utility is partially funded from taxation, savings are shared with the Operating Budget. “Savings” in the capital program are really a deferral of work rather than a savings. This is because the capital program is a multi-year program and work not completed during the work stoppage will be scheduled later in the capital budget cycle. Based on the normal pattern of capital expenditures, the value of this deferred work is about $10 million. Unless Council is prepared to reduce the capital program outlined in the 2000 - 2002 Capital Plan, there are no cost savings to be realized.

It is also worth noting that, while certain City services were not operated during the work stoppage, departments have five weeks after the strike during which some programs can recover lost work. For example, in Parks and Engineering there are maintenance programs for buildings and other public works that can be completed or mostly completed despite the work stoppage. Moreover, in areas like Parks, program registrants have been offered refunds for programs that could not be delivered and it is uncertain what the impact of these initiatives will be by year-end. This will reduce the savings that might otherwise be anticipated from the strike.

The following table summarizes the costs and savings related to the strike as they are reflected in the Operating Budget. Additional information concerning the various categories of savings and costs are attached in Appendix A.

1. Cost Savings:

2. Revenue Losses:

3. Strike Costs

The table indicates that the net savings to the Operating Budget are currently estimated at $1.3 million. However, there are still costs being incurred. As these costs take time to be reported through the financial system, a full accounting will not be available until year-end.

As a result, the final impact of the work stoppage will be included with the normal year-end.


A review of the 2000 Operating Budget indicates that while most departments are operating within their budget targets, there are some areas that may cause difficulties by year-end. The adjustments recommended will return the budget to a balanced position.

The Director of Finance notes that the 2000 budget remains very tight at this point in the year and the Corporate Management Team has agreed to take particular care to control expenditures to year-end.

* * * * *


Appendix 1
2000 Work Stoppage Costs and Savings





Salary, materials & equipment costs


Savings reported net of specific recovery

Park Board salary & materials



Civic Theatres salaries & materials



Solid Waste Utility
· Disposal
· Residential Collection
· Residential Recycling
· Yard Trimmings
· Other including wages
· Transfer to Reserve
Net Savings

$ 0

Savings accrue to the Solid Waste Capital Reserve

Waterworks Utility
· Transfer to Reserve

Net Savings

$ 0

Savings accrue to the Water Rate Stabilization Reserve

Sewer Utility
· Transfer Reserve

Net Savings

$ 0

Savings accrue to the Sewer Rate Stabilization Reserve

Strike Savings



Park Board Revenues


Recreation program fees & admissions

Civic Theatre Revenues


Concession revenues

License & Inspection Fees


Trade permit & license fees

Parking Meter fees, By-law Fines



Lost Revenues



Direct Strike Costs


exempt overtime and miscellaneous costs

Return to work



Strike Costs



Net Impact of the Strike



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