ADMINISTRATIVE REPORT

Date: September 28, 2001
Author/Local: A. Klein 7789

RTS NO. 2382

CC File No. 1605

CS&B: November 8, 2001

TO:	Standing Committee on City Services and Budgets
FROM:	General Manager of Corporate Services/Director of Finance in Consultation with the Corporate Management Team
SUBJECT:	2001 Operating Budget - September Review

INFORMATION

The General Manager of Corporate Services/Director of Finance submits this report for INFORMATION.

COUNCIL POLICY

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

PURPOSE

In accordance with Council's standing instructions, this report reviews the status of the revenue and expenditure appropriations in the 2001 Operating Budget at September 30, 2001, and identifies for Council any significant variances.

DISCUSSION

September Budget Review includes detailed reviews of both the revenue and expenditure appropriations in the Operating Budget. The review seeks to identify areas of significant variance that could impact on the budget position at year-end. Appendix A includes a summary of the City's year-end financial position.
1. Year-End Projection

Based on the results of the September Review, departments and the Budget Office have developed a year-end projection for the 2001 Operating Budget. This projection indicates that the budget will be close to a balanced position as follows:

Year-End Projection

Revenue Surplus/(Shortfall) $3.34 Million
Expenditure Surplus/(Shortfall) ($3.45) Million
Net Financial Position ($0.11) Million

2. Variances to Revenue Appropriations

The review of revenue appropriations and the projection to year-end indicates that several revenue sources will exceed budget, as detailed below:

Surplus (Shortfall)

Service and Inspection Fees $1.25 million

Service and Inspection Fees are ahead of expectations and are currently estimated to be in a surplus position of $1.25 million by year-end. This increased activity is directly related to the construction boom in late 2000 which increased the demand for permits and inspections in 2001.

On-Street Parking Revenues $1.16 million

A review of parking meter revenue indicates that collections are ahead of expectations suggesting that revenues would exceed the budget by $1.16 million by year-end.

Receipts-in-Lieu-of-Taxes $0.50 million

Receipts-in-Lieu-of-Taxes are also expected to achieve a surplus by year-end. A portion of these revenues are based the financial performance of utility companies that is not reported to the City until after the budget is approved. Strong financial performance of some corporations has had a positive impact on the City's revenues.

Other Revenues $0.43 million

Estimates of licence fee and short-term interest revenues indicate a slight surplus of $0.23 million and $0.20 million respectively.

3. Variances to Expenditure Appropriations

As indicated in Appendix A, most departments are projected to be close to the allocations approved by Council in April. In cases where departments are projecting a shortfall, these are generally the result of issues beyond their control. The major variances affecting the City's year-end forecast are detailed below.

Surplus (Shortfalls)

Police Department ($1.25 million)

The Vancouver Police Department's shortfall is being driven by Legal Expenses ($0.70 million) and Criminal Investigations ($0.15 million) which is difficult for the Police Department to predict.

The other area currently projected to be in a deficit is Prime BC ($0.40 million). Funding for Prime BC lease payments was not provided for in the 2001 Budget since VPD was to find funds internally through the elimination of 14 civilian positions in their Information Section. Other than 3 positions, VPD has not been able to eliminate the remaining 11 positions because:
· Implementation issues have required extra resources;
· VPD has provided non-emergency call taking service on behalf of E-Comm while they are in a strike situation; and
· The diversion of Information Section staff to two areas: a) Public Service Counter, which resulted in the civilianisation of 12 police officers; and b) Criminal Clearance.

The Vancouver Police Department has committed to limiting the growth of their year-end deficit by finding savings within the discretionary areas of their operations.

General Government ($3.4 million)

General Government includes expenditures of a corporate nature. The short-fall in General Government is driven by Contingency Reserve ($1.9 million) and Fringe Benefits ($1.5 million).

Civic Theatres ($0.32 million)

Event bookings at the City's civic theatres have declined by 10% in 2001. As a result, Civic Theatres' Program is estimating a year-end shortfall of $0.32 million due to a reduction in revenues.

Corporate Services $1.01 million
Community Services $1.20 million

Community Services and Corporate Services have a significant amount of savings due to delays in hiring.

Other Departmental Variances ($0.64 million)

The remaining departments (Fire, Library, and Legal Services) are projecting a minor shortfall. These departments will strive to find savings within their budget to come within budget by year-end.

CONCLUSION

Current estimates for the year-end show a minor shortfall of $0.11 million. However, Corporate Management Team has committed to balancing the budget by looking for savings within departmental budgets. Given that the City is projected to have a balanced budget, adjustments to the budget are not required this year. The major outstanding risk facing the budget at this time could be a snow fight operation between now and December 31, 2001.

* * * * *

APPENDIX A - 2001 SEPTEMBER BUDGET REVIEW SUMMARY
$ millions	Annual Budget	Year-End Projection	Year-End Variance	%Variance
REVENUES
Property Taxation	(380.20)	(380.20)		0%
Receipts-In-Lieu of Taxes	(32.08)	(32.58)	0.50	(2%)
License Fees	(11.55)	(11.78)	0.23	(2%)
Service & Inspection Fees	(17.93)	(19.18)	1.25	(7%)
Municipal By-Law Fines	(9.31)	(9.31)	-	0%
Parking Meter Revenue	(14.58)	(15.74)	1.16	(8%)
Short-Term Interest	(11.40)	(11.60)	0.20	(2%)
Provincial Revenues	(6.06)	(6.06)
Other Revenues	(6.78)	(6.78)
Transfers	(10.49)	(10.49)		0%
Utility Fees	(104.37)	(104.37)		0%
TOTAL REVENUES	(604.75)	(608.09)	3.34	(1%)
EXPENDITURES
Mayor & Council	1.37	1.33	0.04	3%
Office of the City Manager	0.54	0.54	-	0%
Equal Employment Opportunity	0.31	0.31	-	0%
Law Department	3.25	3.42	(0.17)	(5%)
Civic Theatres (Net Budget)	0.31	0.62	(0.31)	(101%)
Britannia Community Services	2.45	2.45	-	0%
City Clerks	3.07	3.02	0.05	2%
Community Services	36.39	35.19	1.20	3%
Civic Grants	10.82	10.82	-	0%
Corporate Services	24.81	23.80	1.01	4%
Engineering	179.84	179.84	-	0%
Human Resources	4.53	4.53	-	0%
Fire Department	67.06	67.33	(0.27)	(0%)
Library	28.61	28.81	(0.20)	(1%)
Park Board	45.76	45.71	0.05	0%
Police	120.95	122.20	(1.25)	(1%)
General Government	31.94	35.54	(3.60)	(11%)
Debt Charges	42.72	42.72	-	0%
TOTAL EXPENDITURES	604.75	608.20	(3.45)	(0.5%)
NET FINANCIAL POSITION			(0.11)

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