Vancouver City Council

CITY OF VANCOUVER

ADMINISTRATIVE REPORT

	Date:	December 14, 2004
	Author:	Annette Klein
	Phone No.:	873-7789
	RTS No.:	04736
	CC File No.:	1605
	Meeting Date:	January 18, 2005

TO:	City Council
FROM:	General Manager of Corporate Services/Director of Finance in Consultation with the Corporate Management Team
SUBJECT:	2005 Operating Budget: Preliminary Estimates

A. THAT Council receive for information the preliminary estimates for the 2005 operating budget as outlined in this report and summarized in Appendix 1.

B. THAT the Director of Finance, in consultation with the Corporate Management Team, report the interim estimates to Council by March 2005 along with options to achieve a property tax increase below 3.3% and no lower than inflationary levels.

C. THAT Council receive a list of Departmental initiatives for information as outlined in Appendix 2 and defer any decisions on these initiatives until the Interim Budget Report.

COMMENTS OF THE CITY MANAGER

The Preliminary Report on the 2005 Operating Budget is the first opportunity that Council has had to review the budget position and to begin the process of bringing the estimates into balance. As noted in this report, the 2005 estimates show a funding shortfall of $14.2 million, equivalent to a property tax increase of 3.3%. This increase is based on providing adequate funding to maintain base program levels, to accommodate new/expanded programs approved by Council in 2004 and to pass through increases other agencies impose on our budget that Council has no direct control.

The report outlines a number of new revenue and savings related to Traffic Fine Revenues, Gaming Revenues, and GST. $7.8 million of additional Traffic Fine Revenue anticipated for 2005 has been applied to the preliminary estimates to help defray the costs of policing. On the other hand, $5.0 million of Gaming Revenue from Plaza of Nations and Hastings Park and $2.0 million of GST savings have been left out of the Preliminary estimates until Council has an opportunity to review options for the use of these revenues/savings. Options and recommendations will be provided to Council during the Interim Budget phase.

Staff are not requesting Council to make specific funding decisions at this stage of the budget process. However, in order to move the process forward, staff look to Council to provide direction, in Recommendation B, to the Corporate Management Team to report back on options for adjusting the revenue and expenditure estimates that will reduce the tax increase to below 3.3% and no lower than the level of inflation. Achieving a tax increase at inflation may involve changes in service levels and/or revenues.

The greatest implication for 2005 will be the funding of new initiatives. The 3.3% tax increase will not provide sufficient funding to deal with new initiatives that will be brought forward over the coming year. Council will have the opportunity to discuss the initiatives during a special City Services and Budgets Committee Meeting on February 3, 2005. Also, the Vancouver Police Department has identified a number of initiatives most of which relate to their Strategic and Long Range Staffing Plan. These requests, as instructed by Council, are being reviewed by an independent consultant whose findings will be presented to Council prior to the Interim Budget Report. Recommendations from the City Manager and CMT on all of these initiatives will be brought forward in the Interim Budget Report.

If there are major new initiatives that Council wishes to be included in the 2005 Operating Budget, it would be appropriate to identify them between now and the Interim Budget to ensure that adequate funding is available.

Moving forward from this report, staff will work to achieve Council's priorities and to meet Council's taxation targets. Further, Council has approved a public information and input process that will proceed in late January. This process will seek public input on the challenges we face in balancing the budget including input into the utilization of Gaming Revenue and GST Savings, and the appropriate level of funding for Policing Services. The results of the public participation process will be reported in the Interim Budget Report to Council, at which time Council will be asked to make the decisions necessary to bring the budget into balance.

PURPOSE

The purpose of this report is to:

bring forward the preliminary revenue and expenditure estimates of the 2005 Operating Budget;
Identify new revenues and savings that impact the 2005 Operating Budget; and

provide a list of initiatives, developed by the Service Groups and prioritized by the Corporate Management Team, that impact the 2005 and subsequent budgets.

BACKGROUND

The Preliminary estimates for the 2005 Operating Budget indicate a potential tax rate increase in excess of local inflation. Major factors contributing to this increase are:

Salary increases due to collective bargaining
Costs associated with new and expanded services approved in 2004
Cost of outside agencies
Costs associated with the Capital Program

Staff began preparing the 2005 Operating Budget estimates during the fall of 2004 based on approved levels of service. Finance staff have just completed the administrative review of the revenue and expenditure estimates. This review includes discussions with service groups to ensure that departmental budgets meet target expenditure levels that provide sufficient funding to maintain programs, services and staffing at approved levels, and that requests for additional funding beyond these targets could be justified on the basis of Council approvals, health and safety concerns or short-term workload issues. The preliminary budget position includes decisions arising from these Budget Reviews with the exception of the Police Board and Park Board due to a number of outstanding items that will be resolved early in the new-year.

DISCUSSION

The Budget Challenge

Balancing the 2005 Operating Budget with a tax increase in the range of local inflation, as has been Council's past practice, without impacting City programs and services presents a challenge. However, the challenge in 2005 has been mitigated by the receipt of revenues in excess of local inflation.

The City relies on a small number of non-taxation revenue sources and, where possible, revenues are increased annually to reflect service costs. However, many of these revenues do not relate to the activities they support, and as such, cannot grow at the same rate as their associated expenditure budgets. Many of these revenues are subject to significant external influences such as decisions driven by outside organizations, the economy or the weather. In 2005, the City will receive provincial contributions from Traffic Fine and Gaming Revenues. Traffic Fine revenues have been utilized to reduce the impact of policing costs while the Gaming Revenue from new facilities in excess of 2004 levels have been excluded from the budget until Council provides direction as to the use of these revenues.

The impact of this mismatch between expenditure and non-taxation revenue growth and the fact that property tax revenues provide almost two-thirds of the funding in the operating budget means that, when expenditures rise, the pressure is on property tax increases to maintain service levels.

Changes in the City's budget do not track with changes in the Consumer Price Index, which is based on a basket of consumer goods and services. City costs, rather than being driven by consumer goods, are mainly driven by employment costs, external agency costs, and annualized costs of new programs approved during the 2004 budget year. However, as CPI is understood by the public, it is often used as a benchmark for increases in property taxes.

The challenge in balancing the Operating Budget is that, as costs increase, it is very difficult to hold property tax increases to local inflation without affecting the delivery of programs and services. As a result, the current budget position reflects a tax increase above local inflation. Moving below this level will require adjustments in the estimates, either on the revenue or expenditure side of the budget or a combination thereof.

A further challenge in 2005 is a number of key initiatives being proposed by Departments including a major staffing request from the Vancouver Police Department. Once again, to hold taxes to inflation and allow for many of the new initiatives will require adjustments to these estimates.

The Current Budget Position
The following table summarizes the current position of the estimates following the target reviews described above. This position is presented prior to consideration of a property tax increase.

Revenues			$000
	Taxation Revenue	$477,425
	General Revenue	143,594
	Utility Fees	121,851
	Transfers	8,428	$751,298
Expenditures
	Departmental Expenditures	$538,743
	Utility Expenditures	154,304
	Capital Program	64,986
	Transfers	7,495	$765,528
Net Budget Position			($14,230)
Indicated Property Tax Increase			3.3%

Additional detail of these estimates is provided in Appendix 1, along with comparative information from the 2004 Operating Budget.

The following summarizes the major revenue and expenditure areas in the budget.

1. The Revenue Estimates

The revenue side of the Operating Budget comprises of four components: Taxation Revenue, General Revenues, Transfers from Reserves/Funds, and Utility Revenues (as they relate to the utility expenditures detailed above). The preliminary estimates include revenues of $751.3 million in 2005, up 3.2% from 2004. This revenue position is prior to consideration of a property tax increase.

Taxation Revenue
Taxation revenues are those derived from property taxation sources including the general purpose tax levy, receipts-in-lieu of taxes (revenues from properties not subject to property taxation) as well as penalty and interest charges for outstanding and arrears taxes. The preliminary estimates establish these revenues at $477.4 million, up 0.3% from 2004.

i) The general purposes tax levy has been set at $437.1 million prior to consideration of a tax increase. This includes $4.5 million in tax revenue from new construction as well as a reduction of $0.8 million related to tax exemption of Berth Corridors that had been slated for 2004 but delayed to 2005.
ii) The provision for tax adjustments remains at $2.0 million, reflecting the number of assessment appeals now before the Assessment Review Panel and the City's exposure to subsequent adjustments to the property tax levy.
iii) Receipts-in-lieu of taxes totals $32.5 million (a decrease of $2.3 million), reflecting anticipated loss of revenue from rents in lieu of taxes.

General Revenues
A variety of general revenue sources support the expenditure budget. There are a number of new revenues anticipated in this area, however, the opening budget position only includes an increase in Provincial Traffic Fine Revenue (see Section 4). Overall, General Revenues are anticipated to increase to $143.6 million or $14.8 million over the 2004 budget level of $128.8 million, a 11.5% increase. These revenues are summarized below:

i) Provincial Revenue Sharing is comprised of two components :

(Note - a full discussion of these two revenue sources are fully discussed in Section 4 of the report)

Provincial Traffic Fine Revenue

· The Provincial traffic fine revenue program has increased substantially in 2005 based on the Provincial initiative to transfer 100% of traffic fine revenue to municipalities. This traffic fine revenue is provided to municipalities in order to defray the cost of local police enforcement.

The Preliminary Budget includes $10.2 million for Provincial Traffic Fine Revenue, an increase of $7.8 million equivalent to a 1.8% tax decrease. The increase is based on 2004 actual experience since 2005 estimates have not yet been received from the Province.

Gaming Revenue

· Revenue sharing from Vancouver casino operations will change substantially due to Council approving the introduction of slot machines at the Plaza of Nations and Hastings Park.

· For 2005, the Preliminary Budget includes the budgeted revenues from Casinos that had existed prior to the introduction of slots. However, gaming revenue from these casinos are anticipated to decrease by $2.4 million, from $3.9 million to $1.5 million, due to the closure of the Renaissance Casino and the diversion of clientele to new Casinos both in Vancouver and in the Lower Mainland. $2.4 million of new revenues from Hastings Park and Plaza of Nations have been utilized to offset this loss so that the gaming revenue budget remains intact in the Preliminary estimates.

· With the exception of the $2.4 million, revenue from these new casinos has not been included in this opening position due to the need to have Council review options on the use of this revenue (see discussion in Section 4).

ii) Investment Income is dependent on the cash balances the City has to invest and on market interest rates. An overall increase in the cash pool is anticipated, however, given low short term rates, the estimates remain at 2004 levels or $10.0 million.

iii) On-Street Parking Revenue has been increased by $1.4 million to reflect program changes and rate increases approved by Council in 2004.

iv) Service and Inspection Fees have been increased by $3.4 million reflecting increasing activity in this sector of the economy and the increased fees approved by Council.

v) Park Board and Civic Theatres revenues have been set based on inflationary guidelines and anticipated event bookings respectively and have increased by $1.5 million.

vi) Miscellaneous Revenue has been decreased by $0.29 million mainly as a reflection of the anticipated changes in Musqueam Service Agreement and the changing CRTC regulations pertaining to Utility Company Access Fees.

Transfers from Reserves
The transfer from other funds and reserves includes:

i) The annual surplus on the City's sinking fund has been eliminated in 2005. The Sinking Fund's earnings in 2004 has been impacted by the decline in market rates. The impact is a reduction in transfers by $0.55 million. The declining rates will continue to impact in 2005, therefore, included in City's budget for debt is a transfer $0.60 million to the Sinking Fund from both the General Fund and Utilities to ensure that the Sinking Fund meets its actuarial obligations.

ii) The annual dividend from the Property Endowment Fund is held at $7.0 million.

iii) The transfer from the Art Gallery Reserve remains unchanged at $160,000. It partially offsets the Art Gallery operating grant.

iv) $1.3 million has been transferred into the 2005 Operating Budget to fund the 2005 Civic Election.

2. The Expenditure Estimates
The expenditure side of the budget is comprised of four components: Departmental Expenditures, Utility Expenditures; the Capital Program and Transfers to other Funds/Reserves. The preliminary estimates include expenditures of approximately $765.5 million in 2005, up 5.2% from the 2004 final budget. If approved at this level, expenditures of $643.6 million would be supported by property taxes, general revenues, and transfers and $121.9 million would be supported by utility user fees.

Departmental Expenditures
Departmental expenditures are those related to the programs and services provided by the City. The increases in program costs totals $25.2 million and are driven by the following factors.

i) Salary and Benefit Costs

Collective agreements for most employee groups expired at the end of 2002. The wage provision is a significant driver, as employment costs make up over 60% of the City operating expenditures. The wage increase for most employee groups in the City increased by 2.5%, while, the police officer group increased by 3.49%. The result is an overall increase of $14.6 million equivalent to a 3.3% tax increase.

ii) Inflation in Non-Salary Costs
Besides the costs associated with salaries and benefits, a variety of material, equipment and other input costs associated with the programs offered by the City also face inflationary pressures. The budget provided a general allowance of 2.0% in departmental budgets to account for these increases. This general inflation adjustment adds approximately $2.8 million to the budget, equivalent to a 0.7% tax increase. Note: GST savings within Departmental budgets has been reallocated to General Government's Transfer Section (see section 4 for a discussion of GST savings) pending Council's approval for the use of the savings during the Interim Budget deliberations.

Some specific non-salary items worth noting that have changed at a different rate than inflation are:

Energy costs for natural gas and hydro has decreased by $0.25 million or 2.4% due to improved market conditions in this sector.

Equipment costs have increased by $2.3 million, equivalent to a 0.5% tax increase. $1.15 million of the increase is due to Council approved funding increase for the Police Department's fleet based on a comprehensive joint Engineering and Vancouver Police Department review (included also as a new program in subsection iii). The remaining increase is related to increases in fuel, insurance, and equipment rental rates which combines capital and maintenance costs.

Insurance budgets have decreased by $0.10 million or 4.2% due to the stabilization of the insurance market.

ii) One Time Budget Adjustments

As part of the budget setting exercise, Council made some one-time budget adjustments to balance the 2004 Operating Budget. These budgets have been reinstated adding $2.2 million to the 2005 Operating Budget. These included new and non-recurring funds ($0.75 million), Strategic Initiative Fund ($0.75 million), Corporate Training ($0.20 million) and Turnover ($0.50 million).

Contingency Reserve has been reinstated to $4.0 million from the final budget approved by Council of $4.37 million, reducing the net impact of these other one-time adjustments to $1.83 million or 0.4% tax increase.

iii) New Programs and Services

There are a number of new or increased expenditures related to programs and services totalling $5.7 million equivalent to a 1.3% tax increase. These included Park Board "Added Basic, programs approved throughout 2004 by Council, and known Council initiatives.

Park Board "Added Basic"

The upgrading of Park Board facilities and services funded in the Capital Budget adds new operating costs to the budget each year. Funding of $879,100 has been added to the Park Board's preliminary budget in 2005 to pay for the cost of maintaining new street trees, operating expanded recreation facilities, maintaining a number of enhancements in City parks, and compensating for loss of revenues related to facility closures due to capital work plans in 2005. A further $15,000 related to Council approved initiatives in 2004 has been added to the Park Board Added Basic for the pesticide program.

2004 Approvals:

Community Initiatives
In 2004, Council approved an Action Plan for Creating a Just and Sustainable Food System ($0.16 million), extended hours at Carnegie Centre and Gathering Place ($0.15 million), and opened the Britannia, Central, Kitsilano, Oakridge and Renfrew branches Library Branches on Sundays ($0.16 million). These approvals added $0.47 million to the Operating Budget or 0.1% tax increase.

Increased Grants
In April 2004, Council approved a number of increases to the City's grant budget. Specifically, increases were provided to Community Grants ($0.16 million), Child Care Grants ($0.17 million), Celebration Grants ($0.10 million) and the annual grant for the Vancouver Planning Commission ($0.06 million) for a total increase of $0.49 million or 0.1% tax increase.

Disability Management
In September 2004, Council approved the expansion of the City's disability management program including the creation of a Disability Management division within Human Resource Services at an annual cost of $0.63 million or 0.1% tax increase. The establishment of this division will ensure the City is able to meet its obligation to accommodate ill or injured employees and provide transitional (light) duties for employees so they can return more quickly to the workplace following illness or injury thereby reducing WCB and sick leave hours paid to employees and improving services for ill or injured employees.

Planning Projects
Council approved a number of planning projects that have added $0.72 million to the 2005 Operating Budget equivalent to a 0.2% tax increase. The major initiatives were the False Creek Flats Planning ($0.48 million), the Coordinated Neighbourhood Response Program, Vancouver-UBC Transit Plan (0.08 million) and Consulting for Downtown South Development Cost Levy ($0.02 million).

Sustainability
$0.30 million has been added to the 2005 Operating Budget for two Sustainability programs: a Corporate Climate Change Action Plan ($0.17 million) and a Green Buildings Strategy ($0.13 million). The Corporate Climate Change Action Plan provides a mechanism for the City to achieve emission reductions for Civic buildings and facilities, the City's fleet; Street & park lighting and traffic control signals; Corporate waste reduction and landfill operations; and Corporate demand side management. The Green Building Strategy is a component of this Corporate Climate Change Action Plan.

Public Safety
A number of Public Safety approvals, mainly related to equipment, added $1.50 million to the Operating Budget. The Vancouver Police fleet equipment costs at $1.15 million (as described above) made up the majority of this increase. Other approvals include:
o Additional radios for the Vancouver Police Department ($0.18 million)
o Creation of two Fire Inspectors and two Fire safety education positions ($0.09 million) whose costs are partially offset by revenues
o Replacement of the Fire Department's "Jaw's of Life" ($0.08 million)

Other Council Approvals
There were a number of administrative approvals by Council throughout the 2004 budget year that have added a further $0.42 million to the 2005 Operating Budget. These include:
o Implementation of Animal Control Services Strategic Plan ($0.06 million)
o Creation of two positions within Corporate Communications ($0.12 million)
o Creation of an Assistant Director of Planning Position within Community Services ($0.01 million)
o Creation of Social/Cultural Planner position ($0.09 million)
o Implementation of a Pesticide Use Program for Private Property (0.02 million)
o Implementation of the Engineering Special Events Policies & Procedures ($0.03 million)
o Renewal of Contract for Corporate Records Storage & Retrieval Service ($0.09 million)

Known Council Initiatives - based on 2004 Direction
Council has supported two major initiatives and they have been included in the opening budget position. These include support costs for the 2010 Olympics ($0.15 million impact) and joint engineering and planning support for the Richmond/Airport - Vancouver Rapid Transit (RAV) ($0.16 million impact).

iv) Charges from Outside Agencies

The City's Operating Budget must also fund costs imposed by outside organizations over which Council has little or no direct control. The major organization impacting the City's Operating Budget in 2005 is the Emergency Communications Centre for Southwest British Columbia (E-Comm). The requisition from E-Comm for radio and dispatch services is estimated to increase by $1.0 million over 2004 - $0.3 million is related to Police user equipment additions (radios) and replacements (laptops) which are the responsibility of the City. It has been Council's practice to pass expenditure increases from outside organizations through to taxpayers as a tax increase rather than forcing reductions in the City's programs to remain within acceptable taxation targets. The net impact of $0.7 million levy costs represents a tax increase of 0.2%.

Utility Expenditures

The City has established three utilities that are operated on a user pay basis. The water and solid waste utilities are fully funded from user fees so that increased expenditures are matched by increased user fee revenues with no impact on property taxes. The sewer utility is funded approximately 48% from user fees and 52% from property taxes. The budgets and rates for these utilities was approved by Council in early December 2004.

Water utility costs are driven by increases in the cost of water purchased from the Regional District and debt charges. The Regional cost of water is to increase by 12.0% in anticipation of future capital expenditures related to water filtration projects at Seymour and Capilano Reservoirs and has resulted in an overall increase $3.5 million or 12.2%, factoring in consumption. The City's utility debt is to increase by $2.2 million or 9.8%. This debt cost includes $0.17 million of sinking fund payments to compensate for declining rates to ensure that the Sinking Fund meets its actuarial obligations. Even with these increases, Water Utility rates were increased by Council by only 6.5% by providing a $0.47 million contribution from the Waterworks stabilization reserve.

The Solid Waste utility shows a $2.0 million increase mainly due the reclassification of revenues previously netted against expenditures. Overall, the utility did not have significant changes as recycling revenues largely offset inflationary increases to collection, recycling, and disposal expenditures.

Sewer utility costs were driven by a minor decrease in the Regional District costs for sewage treatment ($0.30 million) and increases in debt charges ($0.46 million) including $0.13 million of sinking fund payment. The rate increase approved by Council for the sewer levy is 0.6%.
As noted, water and solid waste operations have no impact on taxes while the increases to the sewer costs is partially impacting the general tax levy (the net impact to the tax supported portion of the sewer utility is $0.14 million).

Capital Program
The City's capital program is planned over a three year period with financing provided by a combination of debt and pay-as-you-go funding. The costs of this financing plan are carried in the Operating Budget through payments of principal and interest on debt and funded by the property tax levy.

In 2005, these costs will increase for three reasons:

i) The 2005 Operating Budget assumes debt charges based on current and planned debenture program. This includes interest on a general purpose $40 million issuance in 2005. The total cost of this debenture is offset by maturities in 2005 increasing debt costs by $1.3 million in 2005. Included in the debt costs is an additional $0.30 million sinking fund reserve payment.

ii) The 2003-2005 Capital Plan anticipates capital from revenue of $18.0 million in 2005, an increase of $1.7 million over 2004.

iii) To balance the 2003 Operating Budget, Council approved a deferral of $2.0 million of Capital from Revenue. In 2004, $1.0 million of this deferral was included in the Operating Budget. To complete the Capital Plan, the final $1.0 million of deferred funding has been included in the 2005 Operating Budget.

The total impact of the capital program, after minor adjustments to Local Improvements and the Debt Repayment Reserve, is $3.6 million equivalent to a tax increase of 0.8%.

Transfers to Reserves/Funds
There are a number of transfers included on the expenditure side of the operating budget:

i) $6.50 million for the Information Technology Long Term Financing Plan. This funding provides for the replacement and continued development of the City's core information technology infrastructure and equipment.
ii) $0.45 million for the 2005 election,
iii) $0.75 million for the Liability Insurance Reserve; and
iv) $2.05 million related to the GST savings removed from Departmental Budgets and centralized in General Government's transfer section until the use of this savings is approved by Council. Please refer to Section 4 for full discussion of GST savings.

3. Summary of Budget Drivers

Budget Driver	Budget Change ($ millions)	Indicated % Tax Increase
Revenues & Transfers From (Excluding Utility Revenues)
Taxation - New Construction	$4.5	(1.0%)
Outside Impact - Taxation exemption - Berth Corridors	(0.8)	0.2%
Change in Rents in Lieu	(2.3)	0.5%
Provincial Contribution - Traffic Fine Revenue*	7.8	(1.8%)
Service & Inspection Fees	3.4	(0.8%)
On-Street Parking Program	1.4	(0.3%)
Park Board and Civic Theatre Revenue	1.5	(0.3%)
Civic Election Transfer	1.3	(0.3%)
Sinking Fund Transfer	(0.6)	0.1%
Miscellaneous	0.6	(0.1%)
Total Change	$16.8	(3.8%)
*Defrays Policing Costs
Expenditures & Transfers To (Excluding User Fee Supported Utility Expenditures)
Salaries and Benefits	$14.6	3.3%
Non-Salary (includes GST Savings of $2.0 million)	2.8	0.7%
Equipment Costs (excluding VPD Fleet)**	1.2	0.3%
Civic Election	1.3	0.3%
New Programs - Park Board Added Basic - New Programs Approved in 2004 - Council Initiatives	0.9 4.5 0.3	0.2% 1.0% 0.1%
One Time Budget Adjustments (SIF/NNR/Training/Contingency/Turnover)	1.8	0.4%
Outside Impact - E-Comm Levy Increase	0.7	0.2%
Capital Program	3.6	0.8%
Miscellaneous	(0.7)	(0.2%)
Total Change	$31.0	7.1%

**VPD Fleet included in New Programs

Net Budget Position

$14.2

3.3%

4. New Revenues/Savings for 2005
`
Gaming Revenue

Council approved the establishment of 600 slots at both the Plaza of Nations and Hastings Park. The Plaza of Nations opening has been delayed a number of times in 2004 but is now anticipated to open mid to late January of 2005. The introduction of slots at Hastings Park requires the completion of a development application and an Operating Agreement. The introduction of slots for the Hasting Park is anticipated in late 2005.

Even with the introduction of 1,200 slot machines in 2005, there are activities within Vancouver and the Region that have impacted existing casinos and their revenue generating abilities:
_ The Renaissance Casino in Vancouver closed in 2004. The Great Canadian Casino at the Holiday Inn has picked up some of this customer base but not all.
_ Richmond's opening of River Rock Casino may continue to divert customers away from the City.
_ Further, it is uncertain as to how the Plaza of Nations Casino will impact the established Casinos in Vancouver.

Given these changes, it is anticipated that gaming revenue from established Casinos will decrease from $3.9 million to $1.5 million. On the other hand, Plaza of Nations and Hastings Park are anticipated to generate $7.4 million in gaming revenue as operations are phased-in in 2005.

If the budget were to only reflect the base funding change from those established facilities, there would be a net decrease in revenues in the Operating Budget. However, the introduction of slots should, ideally, not impact base funding. Therefore, the 2005 Preliminary Operating Budget includes $2.4 million of new slot revenues to maintain base funding at $3.9 million.

The 2005 revenue expectations from Vancouver based casinos can be summarized as follows:

Increase/(Decrease)

Established Casinos ($2.4 million)
Plaza of Nations/Hastings Park $7.4 million
Net New Gaming Revenue Impact $5.0 million

The 2005 gaming revenues is only a best guess at this point given: a) the uncertainty of the timing of the opening of both new facilities and b) the changing regional market place. For 2006 and beyond, the revenue projections should be more predictable.

With regards to the remaining gaming revenue of $5 million for 2005, these funds have not been included in the preliminary budget position. The public consultation process approved by Council on December 14, 2004, will attempt to gauge the public's opinion for the use of these funds. This input as well as options will be presented to Council as part of the Interim Budget Report.

Traffic Fine Revenues:

On September 24, 2004, the Provincial Government announced a comprehensive strategy to enhance community policing, crime prevention and public safety, including the remittance to municipalities 100 per cent of all net traffic fine revenues generated within municipal boundaries. This provincial contribution has increased the City's share of Traffic Fine Revenue from $2.4 million to approximately $10.2 million, an increase of $7.8 million. The increase is based on 2004 actual experience since estimates have not yet been received from the Province.

The Traffic Fine Revenue falls under the Local Government Grant Act which categorizes the contribution as an unconditional grant. Unconditional grants are accounted for in General Revenues. The regulations (Section 8.1) within the Local Government Grant Act states that: "The amount that a municipality may receive to help defray the cost of local police enforcement...." Therefore, the full provincial contribution has been provided for in the Preliminary Budget position to help defray the Vancouver Police Department budget.

The preliminary budget for the Vancouver Police Department is $146.3 million, therefore, the Traffic Fine Revenue of $10.2 million reduces the impact of policing costs to the general tax levy to $136.1 million.

The public consultation process will not attempt to gauge the public's opinion for the use of these funds since legislation has explicitly defined its use. Rather, the public consultation will focus on the desire for increased policing services and the public's willingness to increase taxes to pay for increased policing. This input as well as options will be presented to Council as part of the Interim Budget Report (see Section 6 for a full discussion of the Police Department initiatives).

GST

In the federal budget introduced on March 23, 2004, the federal government agreed to provide to municipalities an additional 3% rebate of GST paid by municipalities. The benefit from the additional rebate began as of February 1, 2004. On April, 20 2004, Council allocate the GST rebate in the Operating Budget as a one-time contribution to the capital program in 2004. For 2005, the decision on how to allocate the GST savings is to be determined by Council during the Interim Budget deliberations.

The anticipated savings for 2005 is $2.0 million. This savings is reflected in departmental budgets and has been transferred to General Government expenditures. The total savings potentially generated was $2.6 million, however, the GST savings from the three utilities ($0.2 million) has been excluded from the total savings within the Operating Budget since it has been treated as an increase to their rate stabilization reserves. Further, offsetting this savings was a $0.4 million increase in the amount GST required to be remitted to the Federal Government from GST collected on behalf of the Federal Government on services provided by the City. Previously, when the City collected 7% GST, the City was allowed to remit only 5.8% to the Federal Government. The new legislation requires that the City remit 6.5% of the GST collected to the Federal Government.

The Federal Government has indicated that the GST savings are to be allocated towards City infrastructure. Within this criteria are options on how to allocate these savings. The public consultation process will attempt to gauge the public's opinion for the use of these funds. This input as well as options will be presented to Council as part of the Interim Budget Report.

5. Park Board Global Budget

The preliminary estimates make full provision for the Park Board Global Budget of $52,877,800 including added basic funding of $894,100. The global budget has been calculated by the City and Board staff according to the principles agreed upon in the arrangement with Council. In short, these principles require the Park Board to increase its fees and charges based on the increase in City costs in order to receive adjustments on the expenditure side (employment costs, inflation and added basic) of its budget on the same basis as other departments. The base budget has been adjusted to reflect changes in salary and benefit costs arising from collective agreements and non-salary costs have been increased by the same 2% provided to all departments.

Added basic is the ongoing operating cost that arises from the Park Board capital program. Under the global budget arrangement, Council has agreed to add these costs to the Park Board budget. The 2005 request includes $894,100 of additional funding for maintenance and support of buildings and parks infrastructure, as well as the operating costs of the expanded programs and new parks. Included in this added basic funding is $15,000 related to Council approved pesticide program.

The administrative review of the Park Board Added Basic has been completed which will result in a slight reduction in the overall Park Board Global Budget. However, given that not all of the issues were resolved during the review, the budget included in the Preliminary Report excludes those Budget Review decisions. These decisions will be reflected in the Interim Budget Report.

6. Vancouver Police Department Base Budget and New Initiatives

The Vancouver Police Department has submitted to Council on November 26, 2004, its "2005 Provisional Operating Budget and Supplementary Capital Submission". Below is a summary of the submission from November and the submission from the department to date:

Nov. 26^th Updated
Submission Submission

2005 Base Funding $146,359,800 $146,348,000 (per Appendix 1)
Appeals to the Base 6,285,400 6,218,800
Strategic Plan/Long Range Staffing 12,359,800 13,357,600
New and Non Recurring (NNR) Request 365,900 365,900
Total Operating Funding Submission 165,370,900 166,190,300

Supplementary Capital 734,600 734,600

The Police Board has approved the Provisional Budget "on the condition that further discussions will occur between the Vancouver Police Department and City finance staff, and that a more detailed budget ...be brought back to the Vancouver Police Board for approval in February 2005"

This provisional budget has allowed VPD to meet the Police Act's requirement to submit a provisional budget for the following year to Council by November 30.

Specifically, section 27 of the Police Act states:

(1) On or before November 30 in each year, a municipal board must prepare and submit to Council for its approval a provisional budget for the following year to provide policing and law enforcement in the municipality.
(2) Any changes to the provisional budget under subsection (1) must be submitted to Council on or before March 1 of the year to which the provisional budget relates.

Council is not required to make any decisions at this stage since the Board recognised that the Board's submission will be incorporated in the overall City budget process.

Appeals to the Base - An Administrative Review of VPD's 2005 Base Budget Requirements was held on December 17, 2004, and was attended by Police Board Finance Committee Members, VPD Executive, VPD Finance Staff, City Finance Staff, and Deputy City Manager. The meeting was constructive and has resulted in a number of key decisions. However, a number of outstanding items still remain to be resolved early in 2005 therefore, adjustments to the VPD's base budget has not been made but will be reflected in the Interim budget position.

It should be noted that some of the items that included in the $6.3 million appeal is already included in the Department's staffing initiative.

New and Non Re-occurring (NNR) & Supplementary Capital Reviews-A Staff Review Group, made up of Corporate Finance and Departmental Finance representatives, reviews and makes recommendations for allocations of both NNRs and Supplementary Capital based on corporate priority. The NNR allocation will be finalized in March by staff and the Supplementary Capital allocation is approved by Council in May as part of the annual Capital Budget process.

Staffing Request - Part of the submission by VPD to Council includes $13.4 million for new initiatives that mainly relate to the Department's long range staffing plan. As Council has directed, an independent consultant has been hired to review VPD's long range staffing request. The recommendations from the consultant will be provided in time for the final budget deliberations. Further, the public consultation process will attempt to gauge the public's desire for additional policing services and the implication that may have on taxation.

The VPD has five major initiatives with the first two, relating to staffing, being the most significant.

i) Strategic Plan/Long Range Staffing Initiatives: $12.5 million

The VPD and its Board has prepared a strategic plan that has resulted in a comprehensive staffing report that identifies the sworn and civilian staffing needs of the Department over the next five years. The request includes facilities and equipment requirements associated with an increase in staffing. As noted above, the request is currently being reviewed by an independent consultant who will be able to assist both staff and Council as to the reasonableness of the request and options that may be available to the City.

Sworn Staffing Request - in their Long Range Staffing Report, the department is requesting an increase of 469 sworn officers from an authorized strength of 1,124 to 1,593 by 2009. The implication for 2005 is the addition of 99 officers at a total cost of $7.1 million including uniform and equipment costs.

Civilian Staffing Request - in their Long Range Staffing Report, the department is requesting an increase of 170 civilian staff from an authorized staffing level of 230 to 400 by 2009. The implication for 2005 is the addition of 93 positions at a total cost of $5.2 million including equipment costs.

Strategic Planning Implementation - The Police Department is requesting funding to implement key initiatives included in their Strategic Plan. These include a Chronic Offender Program ($22,000), Recovered Stolen Auto Program ($23,500), Reduced Property Crime Program ($22,200) and a Public Affairs and Marketing Program ($132,200). These costs relate to equipment and programming costs since the staffing implications are included in the sworn and civilian staffing requests above.

ii) Community Policing $0.9 million

The Police Department is requesting an additional $900,000 for Community Policing which currently is funded at $150,000. The request involves increasing core funding for each community policing centre (CPC) as well as expanding the number of CPCs from 8 to 10 by establishing a Native Liaison CPC and a new CPC for the North side of District 4. The core funding for each CPC would increase to $100,000 (from approximately $19,000) to provide rent, staff and operating costs. Each CPC would continue to raise the rest of their budget through other fundraising initiatives. A further $50,000 is requested for other community policing projects such as Blockwatch, Business Liaison and the Citizen's Crime Watch.

Note: this request was not identified by the Department to Council in their 2005 Provisional Budget submitted to Council and is in the process Board review.

iii) Proactive Lifestyles Strategy: $0.04 million

The Police Department is requesting funding to introduce a wellness program targeted specifically to police members. The total cost of this program is $40,000 in 2005 and $60,000 on-going.

7. New Initiatives for 2005

The budget position described earlier in the report does not include provision for any new initiative. As part of the budget planning process, departments were asked to identify new initiatives that may require funding in 2005. Appendix 2 includes the list of initiatives which total $5.3 million and Vancouver Police Department initiatives which total $13.4 million. Council will have the opportunity to discuss major initiatives during a special City Services and Budget meeting scheduled for February 3, 2005. Further, the report from the independent consultant reviewing the Police Departments long range staffing plan will be presented to Council prior to the Interim Budget deliberations in March 2005.

The initiatives have been placed into three categories:
· Type A and B initiatives to be considered by Council when balancing the budget at the interim stage and have not yet built into the estimates.
· Items in Type C relate to the Vancouver Police Department initiatives as described in the Section 6 and are subject to an independent review.

Initiative Type A:
Recommended for Inclusion in the Interim Estimates

There are three initiatives listed in Appendix 2 recommended to be funded as part of the 2005 Operating Budget. The total funding request for 2005 is $174,100 which is not included in the current estimates and would add a further 0.04% tax. The requests are for:
· The creation of a Digital Archivist within City Clerks to help preserve the City's digital records
· Permanently funding for a Information Technology Security Analyst for the City
· Increasing physical security at Vanier Maritime Museum

Initiative Type B:
Recommended for Inclusion in the Interim Estimates with a Report Back to Council

There are a number of initiatives that the Corporate Management Team and/or Council has placed priority and have been identified for 2005. However, given the scope, specific reports for Council approval will have to be completed. The total funding request for 2005 is $5.1 million which is not included in the current estimates and would add a further 1.2% tax increase should they be solely funded through taxation. During the Interim Budget phase funding options will be presented to Council.

The initiatives identified are:

2005 Funding

FTE Requirement

· Establish a City External Relations Program* 2.00 $ 169,500

· Ethical Purchasing* 1.00 $ 70,300

· Improve development application process* 16.00 $ 653,800

· Develop City Economic Land Use Policy Project* 2.00 $ 224,800

· Strengthening Civic Cultural Programs & Initiatives* n/a $1,000,000

· Increase Non-arterial street maintenance* 4.00 $ 457,000

· Expansion of Sustainability Mandate* 3.00 $1,000,000

· Provide Funding for World Drug Forum n/a $ 250,000
 
· Employee Relations and Advisory Services Resources 3.00 $ 165,100

· Replace Fire Department Records Management System n/a $ 367,000

· Library Children Outreach* 5.00 $ 215,700

· Library Opening Hours 11.40 $ 464,000

· Britannia Volunteer Coordinator 1.00 $ 28,000

48.40 $5,065,200

*To be presented at CS&B February 3, 2005

Initiatives Type C:
Vancouver Police Department Initiatives - Subject to Independent Review

As noted previously, the Vancouver Police Department has identified $13.36 million of initiatives that mainly relate to their Strategic and Long Range Staffing Plan. The total funding request would add a further 3.1% tax increase.

Summary of Initiatives

Initiative Type	FTE Impact	Impact $ millions	Potential Property Tax Increase
Type A	3.0	0.2	0.1%
Type B	48.4	5.1	1.2%
Type C - VPD	192.0	13.4	3.1%
Total	243.4	18.7	4.4%

Notes:
1) Should there be new initiatives not identified in this report, they will be identified on February 3, 2005.
2) Vancouver Economic Development Budget and Business Plan will be submitted prior to the Interim Budget Report.

8. Indicated Property Tax Increase
As noted, to maintain current service levels, the budget shortfall reflected above is $14.2 million and would require a 3.3% tax increase. The main drivers are listed below.

Base Funding To Maintain Current Service Levels

Tax Increase	Driver
2.6%	City costs - Revenue, Employment and Inflation
1.3%	New Programs Approved in 2004 plus Added Basic
0.8%	Capital Program Costs
0.4%	Charges from Outside Agencies - E-Comm & Provincial Tax Exemption
(1.8%)	Change in Provincial Contributions - Traffic Fine offset by Gaming Revenue
3.3%	Preliminary Budget Position

Adding the impact of new initiatives, the cumulative tax increase is 7.7% assuming all initiatives are approved as requested and funded through taxation.

New Initiatives - New or Enhanced Services

Tax Increase	Driver
1.3%	Departmental Initiatives
3.1%	Police Department Initiatives
4.4%	Total Impact of New Initiatives - Cumulative Tax Increase 7.7%

A potential offset could be the new revenues and savings assuming that all new revenues and savings will remain in the Operating Budget and applied to identified services.

New Revenues/Savings

Tax Increase	Driver
(0.5%)	GST Savings
(1.1%)	Gaming Revenue
(1.6%)	Preliminary Budget Position - Cumulative Tax Increase 6.1%

9. Inflation Benchmark

It has been Council policy that general purpose tax increases associated with development of the Operating Budget be held within the range of local inflation. The following summarizes recent measures of the consumer price index (CPI) in Vancouver:

· Annual Average November 2003 to November 2004 1.9%
· 2004 Average To Date January 2004 to November 2004 2.0%
· 2004 Six Month Average June 2004 to November 2004 2.3%
· 2004/2003 Month to Month November 2004/November 2003 2.3%

It is worth noting from the data above, that CPI statistics have been increasing in recent months above 2.0%. Therefore, it is recommended that 2.3% be used as the inflationary benchmark.

Council has adopted a practice of passing tax increases related to requisitions from outside agencies (E-Comm and the Province) through to taxpayers rather than forcing offsetting reductions in City programs and services to meet Council's taxation objectives. As outlined in this report, the impact of these outside agencies on the 2005 Operating Budget is equivalent to a tax increase of approximately 0.4%.

Should Council wish to continue with the practice of setting tax rate increases based on past practice, the total property tax increase would translate to approximately 2.7%. To provide for this level of tax increase, Corporate Management Team would need to identify adjustments to the revenue or expenditure estimates of approximately $2.6 million prior to consideration of any of the new initiatives going forward as part of the 2005 Operating Budget as well as final adjustments related to the Vancouver Police Department appeals.

Council Direction

The recommendations provided in this report request that Council receive for information the 2005 preliminary estimates and a list of initiatives.

More importantly, based on Council's instruction, the Corporate Management Team would prepare options for any budget adjustments in time for the Interim Budget Report to bring down the anticipated tax increase from 3.3% to the rate of inflation.

Next Steps

The next steps to the budget process are the following:

· Review outstanding Police Department and Park Board issues related to their administrative reviews - January 2005
· Joint Council/Union Workshop - January 2005
· Presentations of Major Initiatives at CS&B Meeting - February 3, 2005
· Public Consultation Process - Mid January to Mid February 2005
· CMT develops options to balance the Operating Budget - January to February 2005
· Interim Budget Report - March 15, 2005
· Final Budget Report and Resolution - March 31, 2005
· Council Reports on Land Averaging and Tax Shifts - February - March 2005
· Tax Rating Report and Approval of Rating Bylaws - April 2005

CONCLUSION
The preliminary estimates of the 2005 Operating Budget indicate that a property tax increase of 3.3% to maintain current service levels. This tax increase is necessary to provide for:

Salary and inflationary increases
Costs associated with new and expanded services approved in 2004
Park Board Added Basic
Cost of outside agencies
Costs associated with the Capital Program
Cost of known priority initiatives

In addition, there are number of initiatives being brought forward for consideration. The public consultation process will determine what trade-offs the public is willing to make with regards to tax increases, new services, and service adjustments.

- - - - -

City of Vancouver Appendix 1
2004 Operating Budget Projections
		2004	2005	$ change	% Change
		budget	projection
		($000s)	($000s)
SECTION 1: Summary of Revenues
Taxation Revenues
	Base Levy	428,623	432,610	3,987	0.9%
	New Construction	4,872	4,500	(372)	(7.6%)
Net Taxation Revenues		433,495	437,110	3,615	0.8%
	Tax Adjustments	(2,086)	(2,000)	86	(4.1%)
	Local Improvement Taxes	4,118	3,964	(154)	(3.7%)
	Receipts in Lieu of Taxes	34,821	32,501	(2,320)	(6.7%)
	Penalties and Interest	5,850	5,850	0	0.0%
Total Revenue from Taxation		476,198	477,425	1,228	0.3%
Other Revenues
	Provincial Revenue Sharing Programs	6,337	14,137	7,800	123.1%
	Investment Income	10,000	10,000	0	0.0%
	License Fees	14,148	14,845	697	4.9%
	Property Rental Income	1,349	1,407	58	4.3%
	Service and Inspection Fees	22,671	26,032	3,361	14.8%
	Municipal By-Law Fines	9,654	9,994	340	3.5%
	On Street Parking Revenue	20,800	22,225	1,425	6.9%
	Civic Theatres Revenue	5,990	6,282	292	4.9%
	Park Board Revenues	32,433	33,593	1,160	3.6%
	Miscellaneous Revenues	5,370	5,078	(292)	(5.4%)
Total Other Revenues		128,752	143,594	14,841	11.5%
Utility Fees
	Waterworks	61,535	64,650	3,115	5.1%
	Solid Waste	22,165	24,873	2,708	12.2%
	Sewers	31,607	32,328	721	2.3%
Total Utility Fees		115,308	121,851	6,543	5.7%
Total Revenues before Transfers		720,258	742,870	22,612	3.1%
Transfer from Other Funds/Reserves
	Sinking Fund Prior Year Surplus	550	0	(550)	(100.0%)
	Property Endowment Fund	7,000	7,000	0	0.0%
	Art Gallery Reserve	160	160	0	0.0%
	Revenue Surplus	0	0	0	0.0%
	Other	0	1,268	1,268	0.0%
Total Transfer from Other Funds		7,710	8,428	718	9.3%
Total Revenues before Tax Increase		727,968	751,298	23,330	3.2%
		2004	2005	$ change	% Change
		budget	projection
		($000s)	($000s)
SECTION 2: Summary of Expenditures
General Government
	Mayor and Councillors	1,757	1,800	43	2.4%
	City Manager / EEO	1,368	2,280	912	66.6%
	City Clerk	2,671	3,984	1,313	49.1%
	Legal Services	3,742	3,994	252	6.7%
	Corporate Services	29,032	29,840	808	2.8%
	Human Resources	5,896	6,749	853	14.5%
	Other General Government	5,791	8,804	3,012	52.0%
	Community Services Administration	6,450	7,519	1,069	16.6%
	City-Wide and Community Planning	5,770	6,117	348	6.0%
Total General Government		62,478	71,086	8,609	13.8%
Protection to Persons and Property
	Police Services	139,540	146,348	6,808	4.9%
	Fire and Rescue Services	71,208	73,236	2,028	2.8%
	E-COMM Services	14,921	15,928	1,007	6.7%
	Permits and Licences	19,526	19,759	233	1.2%
	Animal Control	1,049	1,525	476	45.4%
	Vancouver Emergency Program	695	677	(18)	(2.5%)
Total Protection to Persons and Property		246,938	257,472	10,533	4.3%
Public Works
	Administration and General	8,790	8,897	107	1.2%
	On Street Parking Program	8,580	8,759	179	2.1%
	Traffic Planning and Control	7,329	7,971	642	8.8%
	Street Lighting and Communications	4,747	4,865	119	2.5%
	Street Cleaning	7,107	7,847	741	10.4%
	Streets, Bridges and Walkways	17,184	16,375	(809)	(4.7%)
Total Public Works		53,736	54,714	978	1.8%
Utilities - Waterworks
	Operating Costs	7,976	8,072	96	1.2%
	Water Purchase	28,985	32,532	3,547	12.2%
	City Debt Charges	22,272	24,449	2,178	9.8%
	Transfer to/(from) Reserve	2,303	(404)	(2,707)	(117.5%)
Total Utilities - Waterworks		61,535	64,650	3,115	5.1%
Utilities - Solid Waste
	Operating Costs	20,781	22,833	2,053	9.9%
	Transfer to/(from) Reserve	1,384	2,040	655	47.3%
Total Utilities - Solid Waste		22,165	24,873	2,708	12.2%
Utilities - Sewer
	City Operating Costs	6,241	6,953	713	11.4%
	City Debt Charges	20,912	21,367	456	2.2%
	Regional Sewerage Levy	36,756	36,460	(296)	(0.8%)
	Transfer to/(from) Reserve	12	0	(12)	(100.0%)
Total Utilities - Sewer		63,919	64,781	861	1.3%
		2004	2005	$ change	% Change
		budget	projection
		($000s)	($000s)
Recreation and Community Services
	Parks and Recreation	84,207	86,471	2,264	2.7%
	Britannia Service Centre	2,547	2,626	80	3.1%
	Social Planning	1,341	1,596	255	19.0%
	Housing Programs	1,464	1,531	67	4.6%
	Office of Cultural Affairs	808	992	184	22.8%
	Carnegie Centre	2,502	2,942	440	17.6%
	Dowtown South Gathering Place	1,842	1,941	98	5.3%
	Vancouver Public Library	31,889	32,724	835	2.6%
	Civic Theatres	6,326	6,675	349	5.5%
	Archives	1,270	1,305	35	2.8%
	Cemetery	865	829	(36)	(4.1%)
Total Recreation and Community Services		135,060	139,632	4,572	3.4%
Civic Grant Program		11,004	11,839	835	7.6%
Contingency Reserve		4,370	4,000	(370)	(8.5%)
Total before Capital Program and Transfers		661,206	693,047	31,841	4.8%
Capital Program
	General Debt Charges	39,448	40,772	1,324	3.4%
	Capital From Revenue	16,300	19,000	2,700	16.6%
	Local Improvements	4,118	3,964	(154)	(3.7%)
	Debt Repayment Reserve	1,500	1,250	(250)
Total Capital Program		61,366	64,986	3,620	5.9%
Transfers to Reserves/Funds
	Other Transfers	5,396	7,495	2,099	38.9%
Total Transfers to Reserves/Funds		5,396	7,495	2,099	38.9%
Total Expenditures		727,968	765,528	37,560	5.2%
Tax Increase Used to Balance Budget			3.3%

Appendix 2 - Department Initiatives

				Funding Required
Department	Description		FTE	2005 $Amount	2006 $Amount	2007 $Amount		Description
Type A - Include in Interim Budget Position - Priority Requirement
City Clerks		Digital Archivist	1.00	41,100	61,600		61,600	Additional resource is required to help service and preserve the increased transfers of digital records from Department which will improve citizen access to the City Archives
Corp Services		Permanently fund Information Technology Security Services	1.00	83,000	85,000		87,000	This request is to provide ongoing resources for the provision of IT Security Services for the organization which currently is funded on a temporary basis. This request covers the cost of staffing.
Corp Services		Physical security at Vanier Maritime Museum	1.00	50,000	51,000		52,000	Increasing security staff will ensure security presence during open hours. Duties would include weekly alarm audits and monthly lighting , fire extinguisher, fire exit and first aid room audits, along with regular patrols and incident response.
Total Type A Initiatives			3.0	174,100	197,600		200,600

					Funding Required
Department	Description			FTE	2005 $Amount	2006 $Amount	2007 $Amount		Description
Type B - Include in Interim Budget Position and Report Separately to Council
City Clerks		Create 2 new permanent positions to manage and coordinate the City's External relations	2.00		$169,500	$212,700		$212,700	Create an External Relations Program to direct, oversee, coordinate and facilitate the City's external relationships affiliated with protocol, visit coordination and support, major event protocol and international partnerships.
Corp Services		Ethical Purchasing	1.00		70,300	68,000		68,000	Create a full time permanent position in Corporate Services at $68,000 plus one time $25,000 for consulting and other required services to implement the ethical purchasing policy approved in principle by Council on December 16, 2004 and develop a comprehensive Sustainable and Ethical Purchasing Policy, as directed by Council on June 22, 2004.
Community Services Group		Improve development application process throughout the organization	16.00		$653,800	$978,400		$1,246,500	Service delivery in development application processing is below public and corporate expectations due to increases in: discretionary zoning; time-limited approvals; conditions of approval to be satisfied prior to permit issuance; requests for amendments to permits previously issued and/or plan revisions to applications in process; staff turn-over; community involvement and project controversy; and, time spent responding to complaints from applicants and neighbors about regulations, process timing, decisions and interests not respected. This initiative will result in new positions added within Development Services, Engineering, Corporate Services, and Legal Services.

				Funding Required
Department	Description		FTE	2005 $Amount	2006 $Amount	2007 $Amount		Description
Community Services Group		Develop City Economic Land Use Policy	2.00	224,800	208,300		58,800	Based on Council direction, a review of the link between the Core economy and issues of land, location, and zoning. Some of the issues facing the City are: Loss of Jobs and Tax Base - the City is losing the land supply for jobs in the Metropolitan Core to residential development, including in areas previously set aside for jobs. Sensitive timing - As the Core becomes more fully developed, there are fewer possibilities - City land use decisions being made now can foreclose future opportunities. Economic development: Adequate and appropriate land supply is an important factor for economic development and is a factor within City control. Possible other staffing may be required in other departments, such as Engineering.
Community Services Group		Strengthening Civic Cultural Programs & Initiatives		1,000,000	2,000,000		3,000,000	City funding to its not-for-profit creative sector has not kept pace with population growth or development needs in the community. This initiative will allow the City to plan for and be prepared to make significant investment in culture programs and initiatives. Vancouver also has the Olympic opportunity to create a global reputation for creative excellence and an unprecedented market for the City's cultural products (including cultural tourism) long after the games. Very significant matching resources will be available from the federal and provincial governments and VANOC.

				Funding Required
Department	Description		FTE	2005 $Amount	2006 $Amount	2007 $Amount		Description
Engineering		Increase Non-arterial street maintenance	4.00	457,000	685,000		685,000	City streets are in need of additional maintenance in order to extend life cycle term and delay the need for major capital re-construction. Traffic volumes, construction, re-development and an increased move toward sustainable "green streets" are all putting pressure on maintenance requirements. With the limited Maintenance work carried out over the last few years on our non-arterial streets, a large portion of streets will move into a category for complete re-construction. By increasing maintenance budgets we can limit the need for re-construction, extend the life of our streets, and lower life cycle costs.
Sustainability		Expansion of Sustainability Mandate	3.00	1,000,000	1,000,000		1,000,000	In 2004 Council approved a Corporate Climate Change Action plan that specifically sought to reduce green house gas emissions in City operations. In 2005, the Sustainability Group, through the direction of Council, is seeking to expand its efforts of green house gas emission reductions to the Community. This Community Climate Change Action Plan has much broader implications to all residents and businesses in the City.
Mayor's Office		World Drug Forum		250,000	250,000			17th International Conference on the Reduction of Drug Related Harm is to be held in Vancouver in 2006. City support for this forum through a financial contribution complements City policy in the Downtown Eastside.
				Funding Required
Department	Description		FTE	2005 $Amount	2006 $Amount	2007 $Amount		Description
Human Resources		Additional Resources for Employee Relations and Advisory Services	3.00	165,100	212,700		212,700	Three positions are requested Employee Relations and Advisory Services. Two Human Resource Consultant positions are requested to support corporate policy initiatives that currently only one position is dedicated to. One administrative support position is also requested to not only provide general assistance but to help manage the City's temporary agency pool whose utilization has grown by 100% over 3 years.
Fire Department		Replace Records Management System & Computer Aided Dispatch System		367,000	735,000		735,000	As reported previously to Council, the Fire Department's Record Management System (RMS), implemented in 1990, is due to be replaced. The original system was used with Vancouver Police Department (VPD) and purchased primarily for their use. VPD has partnered with RCMP to implement a police specific system at E-Comm called PRIME while still supporting the original RMS for Fire's use in the short term. A new Fire RMS system is being developed through E-Comm which will result in some cost sharing with other jurisdictions.

				Funding Required
Department	Description		FTE	2005 $Amount	2006 $Amount	2007 $Amount		Description
Library		Children Outreach	5.00	215,700	293,000		302,000	This funding would go to expansion of critical early years outreach programs aimed at caregivers, such as Mother Goose and Man-in-the-Moon. These programs impact directly on social environment of families & young children. Note: this being the Library Board's 1st priority initiative, a report to Council will be provided prior the Interim Budget.
Library		Improve Library opening hours	11.40	464,000	476,000		490,000	To provide additional staffing to allow Kitsilano and Renfrew branches to open on Mondays; to allow Joe Fortes branch to open 4 hours on Sundays; to open Central branch an additional 3 hours on Sundays.
Britannia		Volunteer Coordinator	1.00	28,000	54,000		54,000	Volunteers are the life blood of Britannia. W/O the 600 the centre uses annually it would not be possible to offer the wide range of quality programs and services to the community. They are vital to the coordination, operation and development of these programs.
Total Type B Initiatives			48.4	5,065,200	7,173,100		8,064,700
Total Initiatives Excluding The VPD			51.4	5,239,300	7,370,700		8,265,300

				Funding Required
Department	Description		FTE	2005 $Amount	2006 $Amount	2007 $Amount		Description
Type C - Vancouver Police Department Initiatives
VPD		Long-Range Sworn Staffing Requirements	99.00	7,064,900	15,151,000		23,394,000	Based on VPD 2004 Staffing Report which looks at implementing the Police Department's Strategic Plan, an increase in sworn staff is being requested. The annual increase requested is 99 (2005), 99 (2006), 96 (2007), 95 (2008) and 80 (2009), increasing the overall police authorized strength from 1124 to 1593 in five years (42%). This request, as instructed by Council in March 2004, is being evaluated by Independent Consultants
VPD		Long-Range Civilian Staffing Requirements	93.00	5,151,300	6,813,300		7,921,300	Based on VPD 2004 Staffing Report which looks at implementing the Police Department's Strategic Plan, an increase in civilian staff is being requested. The annual increase requested is 93 (2005), 30 (2006), 20 (2007), 20 (2008) and 7 (2009), increasing the overall police authorized strength from 230 to 400 in five years (74%). This request, as instructed by Council in March 2004, is being evaluated by Independent Consultants

			Funding Required
Department	Description	FTE	2005 $Amount	2006 $Amount	2007 $Amount	Description

VPD	Strategic Plan Implementation		201,400	203,200	203,200	The Police Department is requesting funding to implement key initiatives included in their Strategic Plan. These include a Chronic Offender Program ($22,000), Recovered Stolen Auto Program ($23,500), Reduced Property Crime Program ($22,200) and a Public Affairs and Marketing Program ($132,200)
VPD	Community Policing		$900,000	$900,000	$900,000	The Police Department is requesting an additional $900,000 for Community Policing which currently is funded at $150,000. The request involves increasing core funding for each community policing centre (CPC) as well as expanding the number of CPCs from 8 to 10 by establishing a Native Liaison CPC and a new CPC for the North side of District 4. The core funding for each CPC would increase to $100,000 (from approximately $19,000) to provide rent, staff and operating costs. Each CPC would continue to raise the rest of their budget through other fundraising initiatives. A further $50,000 is requested for other community policing projects such as Blockwatch, Business Liaison and the Citizen's Crime Watch
VPD	Proactive Lifestyle Strategies		40,000	60,000	60,000	The Police Department is requesting funding to introduce a wellness program targeted specifically to police members
Total Police Department Initiatives		192	13,357,600	23,127,500	32,478,500

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