CITY OF VANCOUVER
ADMINISTRATIVE REPORT
Date: |
March 21, 2005 | |
Author: |
Annette Klein | |
Phone No.: |
873-7789 | |
RTS No.: |
5016 | |
CC File No.: |
1605 | |
Meeting Date: |
March 31, 2005 |
TO: |
City Services and Budgets Committee |
FROM: |
General Manager of Corporate Services/Director of Finance |
SUBJECT: |
2005 Operating Budget - Final Estimates |
RECOMMENDATION
THAT Council adopt the final 2005 Operating Budget revenue and expenditure estimates with a property tax increase of 2.99% as outlined in this report by approving the budget resolution attached as Appendix 2.
CITY MANAGER'S COMMENTS
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.
_ 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.
_ 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 2005 Operating Budget as well as to update Council on the financial implications of the increase in Police staffing levels as approved by Council on March 17, 2005.
BACKGROUND
On March 17, 2005, Council considered the Interim Report on the 2005 Operating Budget and approved a number of recommendations related to the 2005 Operating Budget. Council also instructed the Director of Finance to bring the 2005 Operating Budget into balance with general purposes tax increase just under 3% while providing for:
_ the Park Board Global Budget1 of $52,795,700, including approximately $788,000 for added basic and one-time adjustments in the Park Board estimates but excluding new and non-recurring budget;
_ The creation of a position within Corporate Services and the renewal of the contract for the Vancouver Economic Development at no additional cost to the 2005 Operating Budget;
_ The creation of positions within the Vancouver Police Department, Corporate Services, City Clerks, to be funded through taxation increase;
_ Establishment of a General Program Account (funded from the additional Gaming Revenue) for community, social, and cultural programs.
_ Prior to further adjustments by Council (see below), a contribution of GST Savings to Capital from Revenue ($1.4 million) and to enhance residential street maintenance ($0.5 million);
_ Prior to further adjustments by Council (see below), an one-time increase of $0.8 million in the Contingency Reserve provision to ensure sufficient funding for new initiatives and Council priorities; and
This budget position also reflects the following motions of Council:
_ Council modified the approval of the External Relations Program by noting that one position is to be funded through operational savings and, if needed, through Contingency Reserve later in the year (if funding is available).
K c) ii. One Regular Full Time External Relations Coordinator, without additional funding. Position is subject to classification by the General Manager of Human Resources, at a prorated cost of $41,900 (estimated $55,900 annually). Funding to be provided from other discretionary sources within existing departmental budgets or, if available, from the Contingency Reserve later in the year.
_ Council modified the Vancouver Police Department staffing to 50 sworn officers and 27 civilian staff for each of 2005 and 2006 to be funded from a property tax increase. 2006 funding is subject to Council approval of a strategic operating plan and a report back by the Steering Committee in late 2005 on projected overtime savings, shared services opportunities, and other potential efficiencies as follows:
T.a. THAT Council establish, in 2005 a total of 50 sworn officers, and 27 civilian positions, including associated one-time and vehicle rental costs, to be funded by increasing property taxes and that staff report back on March 31, 2005 on the financial impact and the recommendation accordingly; and,
THAT Council establish 50 additional sworn police positions and 27 additional full-time civilian positions in 2006, including associated one-time and vehicle rental costs, subject to approval of a strategic operating plan and the report from the Steering Committee as specified in T (b); and,
All civilian positions will be subject to General Manager of Human Resources classification review, and are to be specified in the March 31, 2005 report back.
All vehicles are to be purchased by the Plant and Equipment Reserve (Plant Account) in accordance to the VPD Master Schedule.
_ Council approved an increase to Community Services Grants ($500,000), Childcare Grants ($150,000 on a one-time basis) and to Contingency Reserve ($400,000 on a one-time basis) to fund a number of Council priorities as follows:
Y.a. THAT Council increase the contingency reserve by a further $400,000 for the purpose of providing funding to the Women's Task Force, the World Peace Forum and a Feasibility Study of a community centre for the Lesbian, Gay, Bisexual and Transgendered (LGBT) community, and that reports need to be submitted for Council's approval prior to the release of these funds; and
FURTHER THAT for the World Peace Forum, other funding identified in their budget must be in place prior to the release of these funds.
Y.b. THAT Council increase Community Service Grants by $500,000 and that release of the funds is subject to the city's grant approval process.
Source of funds for the entire $900,000 to be as follows:
· The savings resulting from the reduction of sworn police officers from 65 to 50, and civilians from 35 to 27, as set out in T;
· A further SIF reduction of $100,000;
· The balance of gaming revenue that has not been allotted to specific initiatives, approximately $78,700;
· The balance to be funded by a tax increase, such that the total 2005 tax increase for the city shall be under 3%.
AND FURTHER THAT staff report back on how Council should prioritize the allocation of the $500,000 by the end of April 2005, together with the reconsideration report.
Z.a. THAT funding for the Pedestrian Safety Task Force be deferred for consideration in the 2006 budget to allow time to develop comprehensive terms of reference and a workplan for hiring an expert consultant, conducting consultations with the community and providing extensive research for the Task Force in 2006 once it is funded and established; and
FURTHER THAT the $150,000 budgeted from the GST savings for the Pedestrian Safety Task Force be reallocated to fund the Capital from Revenue Contribution that was included in the Preliminary Budget with a resulting property tax reduction of approximately 0.034%;
Z.b. THAT an additional $150,000 be allocated to the childcare grants, on a one-time basis.
Council has made a number of approvals on March 17, 2005, from Contingency Reserve and the General Program Account. These approvals are not reflected in individual department budgets in Appendix 1, but they will be reflected in the City's modified budget (Version 0) so that the City's beginning budget position reflects the Council approved gross level of Contingency Reserve and General Program Account funding of $5.2 million and $3.1 million respectively.
DISCUSSION
1. Final Budget Position
Since March 17, 2005, 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:
_ New and Non-Recurring Budget was reduced by $750,000 (one-time);
_ Corporate Training budget was reduced by $200,000 (one-time);
_ The Strategic Initiative Fund was reduced by $550,000 (one-time);
_ Funding was provided for the following through increased taxation:
o Vancouver Police Department Initiatives at $4.9 million:
ù Sworn & Civilian Staffing (50 Officers & 27 Civilian) $3.2 million
ù Information Management (26 Civilian) $0.7 million
ù Information Technology (6 Civilian) $0.3 million
ù Community Policing Centres $0.7 million
o Priority positions within City Clerks and Corporate Services at $0.2 million
_ The general purposes tax levy has been increased by 2.99%, adding $13.2 million taxation revenue to the budget.
These adjustments bring the 2005 Operating Budget into a balanced position as follows:
|
($000) |
($000) | |
Revenues |
|
| |
|
Taxation Revenue |
$493,754 |
|
|
General Revenue |
149,062 |
|
|
Utility Fees |
121,851 |
|
|
Transfers |
8,428 |
$773,095 |
Expenditures |
|
| |
|
Departmental Expenditures |
$548,360 |
|
|
Utility Expenditures |
154,305 |
|
|
Capital Program |
64,986 |
|
|
Transfers |
5,444 |
$773,095 |
Net Budget Position |
|
$0 | |
Property Tax Increase Applied to Budget |
|
2.99% | |
2. Vancouver Police Staffing Approval
On March 17, 2005, Council approved an increase to the Vancouver Police Department (VPD) staffing levels by 50 sworn officers and 27 civilian staff for each of the years 2005 and 2006 with staff to report back on the financial implications of this decision.
Appendix 3 specifically identifies the positions to be created in 2005 and 2006, while Table 1 below provides a summary of the financial implications.
TABLE 1 - Vancouver Police Staffing Increase
1The Staffing Review had recommended 65 sworn officers and 35 civilian staff in 2005 and 27 sworn officers and 20 civilian staff in 2006.
As can be seen, the overall financial requirement for the positions approved in relation to the VPD Staffing Review, is $3.21 million in 2005 and $9.95 million in 2006. As the staffing increase for 2006 will be subject to Council approving a strategic operating plan and a report from the Steering Committee on overtime savings, shared services opportunities and other potential efficiencies relative to the 2006 staffing request, the final impact for 2006 would be reduced.
Table 1 also shows that the amendment to the overall police staffing approval by Council from that originally laid out in the Interim Budget Report, resulted in a $656,600 reduction from the Interim Budget estimates.
The overall financial requirement for all the approved Vancouver Police Department initiatives in 2005 total $4.9 million or 1.12% tax increase, as shown in Table 2. The incremental impact for 2006, without considering savings described above, is $6.9 million which would result in an estimated 1.53% tax increase.
Table 2 - Financial Implications of all Vancouver Police Department Approvals
|
2005 |
2006 | |||
|
Cost |
Tax Incr. |
Cost |
Increment |
Tax Incr. |
Council Approval |
$000 |
% |
$000 |
$000 |
% |
Sworn & Civilian Staffing (50 Officers & 27 Civilian for '05 & '06) |
3,209 |
0.73% |
9,951 |
6,742 |
1.48% |
Information Management (26 Civilian) |
649 |
0.14% |
633 |
-16 |
0.00% |
Information Technology (6 Civilian) |
333 |
0.08% |
410 |
77 |
0.02% |
Community Policing Centres |
747 |
0.17% |
887 |
140 |
0.03% |
Total Police Department Approvals |
4,938 |
1.12% |
11,881 |
6,943 |
1.53% |
3. The Budget Resolution
With approval of the Recommendation in this report, the 2005 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.
4. Final Steps
Three additional actions will be required of Council to put in place the necessary rating bylaws to provide for billing of the general purposes property tax levy:
_ On March 31, 2005, City Services and Budgets Committee will consider the enactment of an averaging by-law. The by-law would authorize continuation of three-year land averaging as the method for calculating property taxes for Class 1 (Residential) and Class 6 (Business and Other) for 2005.
_ On April 14, 2005, City Services & Budgets Committee will consider a report from the Director of Finance addressing the policy issues related to shifting the tax distribution as well as outlining the tax impacts of shifting of the tax levy from the non-residential classes to residential class.
_ On May 10, 2005, the Director of Finance will bring forward a report summarizing the property tax levies and introducing resolutions to fix averaged tax rates (if approved) and bylaws establishing general purpose and regional district tax rates.
CONCLUSION
The approval of the attached resolution will finalize the process of balancing the 2005 Operating Budget.
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