ADMINISTRATIVE REPORT

Date: April 26, 2002
Author/Local: Ken Bayne / 7223

RTS No.: 02541

CC File No. 1605
Council Date: April 30, 2002

TO:	Vancouver City Council
FROM:	General Manager of Corporate Services / Director of Finance
SUBJECT:	2002 Operating Budget - Final Estimates

RECOMMENDATION

THAT Council adopt the final 2002 Operating Budget revenue and expenditure estimates with a property tax increase of 4.0% as outlined in this report by approving the budget resolution attached as Appendix 2.

CITY MANAGER'S COMMENTS

When Council considered the interim estimates of the 2002 Operating Budget, staff was instructed to make adjustments with a view to achieving a balanced budget with a tax increase in the range of 4.0%. With the adjustments noted in this report, that target has been achieved. Therefore, the City Manager RECOMMENDS approval of the foregoing.

COUNCIL POLICY

The Vancouver Charter requires the Director of Finance to present the estimates of revenues and expenditures to Council not later than April 30 each year and for Council to adopt a resolution approving the budget and a rating bylaw establishing general purpose tax rates as soon thereafter as possible. There are generally three reports in the budget building process:

· the Preliminary Estimates Report provides Council with the first indication of the budget requests from Departments and Boards and seeks Council guidance on the policies that will govern the administrative review of the estimates. This report was considered by Council on December 11, 2001.
· the Interim Estimates Report summarizes the results of the detailed administrative review of the budget and seeks Council approval to finalize the estimate, bringing the budget into balance. Council considered the interim estimates on April 9 and April 11, 2002.
· the Final Report on the Operating Budget presents the finalized revenue and expenditure estimates including any final adjustments approved by Council at the interim report stage. The final report is accompanied by a resolution in which Council adopts the estimates for the year.

PURPOSE

The purpose of this report is to seek approval of the final revenue and expenditure estimates for the 2002 Operating Budget.

BACKGROUND

On April 11, 2002, Council approved the following recommendation related to the development of the 2002 Operating Budget:

A. THAT Council approve the Park Board Global Budget of $46,952,800, including $466,000 for added basic costs, this amount excluding any reductions approved by Council to balance the 2002 Operating Budget.

B. THAT Council consider the budget adjustments put forward by the Corporate Management Team to reduce the general purposes tax increase to as low as 3.9%, omitting reductions to parks and libraries, reducing the City share of the anticipated tax increase to approximately 3.0%.
C. THAT Council approve the creation of the following positions at a net cost of $110,000 in 2002 ($220,000 ongoing):

· Corporate Services 1.0fte Systems Analyst III
· Corporate Services 2.0fte Business Analyst
· Corporate Services 1.0fte Programmer
· Human Resources 1.0fte Human Resources Consultant
· Human Resources 1.0fte Clerk Typist III
subject to classification by the General Manager of Human Resources. These positions are supported by the Corporate Management Team and funding has been included in the current budget position.

D. THAT Council defer consideration of the two reports related to the Anti-Graffiti Strategy to City Services and Budgets Committee on April 25, 2002, recognizing that the costs of any program approval will have to be accommodated within the existing budget position.
E. THAT Council approve an increase in the sworn staffing of the Police Department from 1096 to 1126 (30 positions) at an additional cost of approximately $2.3 million annually by 2007 (no cost in 2002, $2.1 million in 2003).
F. THAT Council approve an increase of 15 civilian positions in the Police Department at an ongoing annual cost of $410,000 (after reallocation of existing funding) with funding of $265,000 to be provided in the 2002 Operating Budget from Contingency Reserve.

Subsequently, Council approved the proposed Anti-Graffiti Strategy and the additional funding request of $612,000 for 2002 and $264,000 for 2003.

DISCUSSION

1. Current Budget Position

Since April 11, staff have worked to bring the budget into balance within the property tax guidelines approved by Council. Appendix 1 reflects the final estimates including the following changes from the interim budget estimates:

· funding for 15 civilian positions, totalling $265,000 has been added to the Police department budget with funding taken from Contingency Reserve. This adjustment shifts the cost of these additional positions to 2003.
· funding for the anti-graffiti strategy, totalling $612,000 has been added to the budget with an increase in the property tax levy of 0.16%
· the 2002 impact of expenditure program adjustments approved by Council on April 11, 2002 have been reflected in departmental budgets.
· final adjustments have been made to the sewer utility budget reflecting the requisition from the GVS&DD and the addition of a number of minor revenues approved by Council.
· the general purposes tax levy has been increased by 4.0%, adding $15.0 million to the budget.

These adjustments bring the 2002 Operating Budget in to a balanced position as follows:

		($000)	($000)
Revenues
	Taxation Revenue	$432,074
	General Revenue	116,497
	Utility Fees	106,557
	Transfers	12,098	$667,226
Expenditures
	Departmental Expenditures	$466,876
	Utility Expenditures	136,320
	Capital Program	58,877
	Transfers	5,153	$667,226
Net Budget Position			$0
Indicated Property Tax Increase			4.0%

2. The Budget Resolution

With approval of Recommendation, the 2002 Operating Budget will be brought into balance and the budget cycle completed. Council approval of this final position requires adoption of the budget resolution attached as Appendix 2.

3. Final Steps

Two additional actions will be required of Council over the next two weeks to put in place the necessary rating bylaws to provide for billing of the general purposes property tax levy:

· On May 2, 2002, City Services & Budgets Committee will consider a report from the Director of Finance outlining the impact of shifting a further one percent of the property tax levy from non-residential to residential properties. This shift follows from actions of Council over the last eight years to shift the property tax burden from the non-residential property classes. The Director of Finance will present this change in taxation burden for Council's CONSIDERATION.

· On May 14, 2002, the Director of Finance will bring forward a report summarizing the property tax levy and presenting a series of resolutions that give effect to the land averaging program approved by Council earlier this year, as well as Rating Bylaws for the City's general purpose tax levy and the requisition from the Greater Vancouver Regional District. This report will reflect the final impact of decisions made regarding taxation policy measures.

* * * * *

Appendix 1

City of Vancouver  

2002 Operating Budget:  Final Estimates

		2001 budget	2002 final		$   change	%  change
		($000s)	($000s)
Summary of Revenues
Taxation Revenues:
	Base Levy	372,217	386,940		15,103	4.1%
	New Construction	0	3,378
Net Taxation Revenues		372,217	390,318		18,484	4.9%
	Tax Adjustments	(1,750)	(1,750)		0	0.0%
	Receipts in Lieu of Taxes	32,084	33,352		1,268	4.0%
	Local Improvement Taxes	4,537	4,304		(233)	-5.1%
	Penalties and Interest	5,200	5,850		650	12.5%
Total Revenue from Taxation		412,288	432,074		20,169	4.9%
Other Revenues:
	Provincial Transfers	6,060	6,137		77	1.3%
	Investment Income	11,400	9,600		(1,800)	-15.8%
	License Fees	11,549	12,290		741	6.4%
	Property Rentals	1,279	1,295		16	1.2%
	Municipal By-Law Fines	9,308	9,652		344	3.7%
	On Street Parking Revenue	14,575	16,990		2,415	16.6%
	Service and Inspection Fees	18,039	19,409		1,370	7.6%
	Civic Theatres Revenue	5,353	5,585		231	4.3%
	Park Board Revenues	29,295	29,240		(54)	-0.2%
	Miscellaneous Revenues	5,496	6,299		803	14.6%
Total Other Revenues		112,354	116,497		4,143	3.7%
Utility Fees
	Waterworks	55,165	56,102		937	1.7%
	Solid Waste	22,324	22,603		279	1.2%
	Sewers	26,450	27,852		1,402	5.3%
Total Utility Fees		103,939	106,557		2,618	2.5%
Total Revenues before Transfers		628,582	655,128		26,930	4.2%
Transfer from Other Funds/Reserves:
	Sinking Fund Prior Year Surplus	3,326	3,638		312	9.4%
	Property Endowment Fund	7,000	7,000		0	0.0%
	Art Gallery Reserve	160	160		0	0.0%
Total Transfer from Other Funds		10,486	12,098		1,612	15.4%
Total Revenues before Tax Increase		639,068	667,226		28,542	4.4%
Summary of Expenditures
General Government:
	Mayor & Councillors	1,369	1,405		36	2.6%
	City Manager / EEO	867	938		70	8.1%
	City Clerk	2,469	2,507		39	1.6%
	Legal Services	3,303	3,345		41	1.2%
	Financial Services	10,251	10,260		9	0.1%
	Information Technology	9,245	9,782		537	5.8%
	Real Estate and Property Management	5,861	6,332		472	8.1%
	Human Resourses	4,582	5,769		1,187	25.9%
	Other General Government	3,191	3,378		187	5.9%
	Community Services Administration	4,802	5,097		295	6.1%
	City Wide & Community Planning	5,255	5,203		(52)	-1.0%
Total General Government		51,195	54,015		2,820	5.5%
Protection to Persons & Property:
	Police Services	121,150	128,070		6,920	5.7%
	Fire & Rescue Services	65,616	67,278		1,661	2.5%
	E-COMM Services	11,025	12,136		1,111	10.1%
	Development Services	6,242	6,005		(238)	-3.8%
	Licencing & Enforcement	11,833	12,525		692	5.9%
	Animal Control	986	908		(78)	-7.9%
	Vancouver Emergency Program	973	978		5	0.5%
Total Protection to Persons & Property		217,825	227,898		10,073	4.6%
Public Works
	Administration & General	7,272	7,784		512	7.0%
	On Street Parking Program	6,569	6,929		360	5.5%
	Traffic Planning and Control	6,544	7,094		550	8.4%
	Street Lighting & Communications	4,359	4,409		50	1.1%
	Street Cleaning	5,856	6,364		508	8.7%
	Streets, Bridges & Walkways	13,599	14,460		861	6.3%
Total Public Works		44,200	47,041		2,841	6.4%
Utilities - Waterworks
	Operating Costs	7,254	7,020		(234)	-3.2%
	Water Purchase	22,943	23,860		917	4.0%
	City Debt Charges	22,003	22,981		978	4.4%
	Transfer to/(from) Reserve	2,965	2,241		(724)	-24.4%
		55,165	56,102		937	1.7%
Utilities - Solid Waste
	Operating Costs	21,553	22,103		549	2.5%
	Transfer to/(from) Reserve	771	500		(271)	-35.1%
		22,324	22,603		279	1.2%
Utilities - Sewer
	City Operating Costs	4,834	4,768		(66)	-1.4%
	City Debt Charges	20,362	19,743		(619)	-3.0%
	Regional Sewerage Levy	31,545	32,934		1,388	4.4%
	Transfer to/(from) Reserve	1,174	171		(1,003)	-85.5%
		57,915	57,615		(300)	-0.5%
Recreation & Community Services:
	Parks & Recreation	74,434	76,193		1,759	2.4%
	Britannia Service Centre	2,440	2,542		102	4.2%
	Social Planning	1,451	1,769		318	21.9%
	Housing Programs	1,331	1,275		(56)	-4.2%
	Office of Cultural Affairs	335	599		264	78.9%
	Carnegie Centre	2,372	2,347		(24)	-1.0%
	Dowtown South Gathering Place	1,759	1,737		(23)	-1.3%
	Vancouver Public Library	28,706	29,863		1,157	4.0%
	Civic Theatres	5,663	5,747		85	1.5%
	Archives	653	661		8	1.2%
	Cemetery	771	705		(66)	-8.5%
Total Recreation & Community Services		119,915	123,439		3,524	2.9%
Civic Grant Program		10,822	10,748		(74)	-0.7%
Contingency Reserve		(457)	3,735		4,575
Total Before Debt Charges & Transfers		578,904	603,196		24,675	4.2%
Capital Program
	General Debt Charges	38,185	40,673		2,488	6.5%
	Capital From Revenue	12,600	13,900		1,300	10.3%
	Local Improvements	4,537	4,304		(233)	-5.1%
Total Capital Program		55,322	58,877		3,555	6.4%
Transfers to Reserves/Funds
	Other Transfers	4,842	5,153		311	6.4%
Total Transfers to Reserves/Funds		4,842	5,153		311	6.4%
Total Expenditures		639,068	667,226		28,542	4.4%
Tax Increase Utilized to Balance Budget		3.0%	4.0%

Appendix 2
RESOLUTION

MOVED BY Councillor:

SECONDED BY Councillor:

THAT WHEREAS, the Vancouver Charter, Section 219 requires that the Director of Finance submit to Council each year the detailed estimates of revenues and expenditures of the City for the year;

AND WHEREAS the Vancouver Charter, Section 372 requires that Council adopt the estimates of revenues and expenditures for the City as soon thereafter as possible;

AND WHEREAS Council has reviewed the development of the estimates in reports submitted by the Director of Finance on December 11, 2001, and April 9, 2002 and approved measures to bring the estimates into balance, including approval of a 4.0% general purposes property tax increase;

AND WHEREAS the total estimated expenditures of the City to pay all debts and obligations of the City falling due in the year 2002, exclusive of the amounts required for school, Greater Vancouver Regional District, Greater Vancouver Transportation Authority, British Columbia Assessment Authority and Municipal Finance Authority purposes and not otherwise provide for, as amended by Council, amount to $667,226,400;

AND WHEREAS the total estimated expenditures as aforesaid is the sum of the appropriation requests of all departments and boards properly supported by detailed analysis of those expenditures and listings of the salaried staff;

AND WHEREAS the total estimated revenue of the City for 2002 from sources other than real property taxes, as amended by Council, amounts to $276,908,400;

AND WHEREAS the amount of the General Purposes Tax Levy so required is $390,318,000;

THEREFORE be is resolved that the said estimates, both as to totals and individual items pertaining thereto, of the Director of Finance as so amended by Council be and the same are hereby adopted by Council.

(c) 1998 City of Vancouver