ADMINISTRATIVE REPORT
December 9, 1996
TO: Vancouver City Council
FROM: City Manager
SUBJECT: 1997 Budget
RECOMMENDATIONS:
A. THAT Council defer decisions, except in special circumstances,
on budget reductions for City programs and grants until after
the public information and consultation process.
B. THAT Council defer any decisions on additional expenditures
until after the public information and consultation process.
C. THAT Council instruct staff to give notice to agencies
receiving funding from the City that their 1997 funding is
under review and may be reduced significantly or not renewed
given provincial government funding cutbacks.
D. THAT Council consider programs or grants which have been cost
shared with the Province on an individual basis to determine
whether the City funding should be terminated now or the City
should accept the responsibility for its portion of the
funding for the period until the public information and
consultation process is completed.
E. THAT Council advise Tourism Vancouver that the allocation of
the Hotel Tax is under review and that the City may allocate a
portion of the Hotel Tax for the support of Infocentres and
APEC and reduce or withdraw its funding for these activities.
F. THAT Council review its decision to provide 50% Municipal
Assist to reduce the impact of Regional Development Levies.
PURPOSE
This report accompanies a number of reports describing the 1997 budget,
a proposed public consultation process to help establish the budget,
city funded programs in provincial areas of responsibility, funding for
Tourism Vancouver, municipal assistance for regional development cost
charges, and provincial funding for tenant assistance programs. It
provides procedural recommendations to Council for decision making on
budgets for city programs and grants.
BACKGROUND
The companion reports provide full background information for Council on
the anticipated 1997 budget situation and specific information in regard
to a number of programs which fall into the provincial area of
responsibility or are unique in regard to funding options.
DISCUSSION
As the report on the 1997 budget points out, the City's 1997 budget is
heavily impacted by a number of changes in expected revenues and
expenditures, largely but not entirely as a result of the unprecedented
reduction in provincial grant funding. As the report notes, these
changes are structural and must be met with permanent changes -- funding
from reserves can assist with transition but cannot be used effectively
to compensate for the reduction.
Notice of the cut in provincial funding was only given at the end of
November, leaving little time for the City to undertake reasoned
consideration of budget adjustments. Where the budget is to be reduced,
it is essential that it be done quickly, since costs for ongoing
programs are incurred on a continuing basis, and delays in the decision
to reduce programs will simply mean that the reduction must be deeper in
1997 to meet budget targets.
Timing of Council Decisions
Council is presented with difficult choices. Both significant increases
in taxation and major program reductions are undesirable; one or a
combination of both will be necessary. The proposed public consultation
program will assist Council in making those choices. For the
consultation process to be meaningful, however, most program decisions
must wait the results of the process. While it is clearly desirable to
make decisions on areas where activities will be reduced or eliminated
as early as possible, interest groups will want their opportunity to
participate in the public process
before the decision is made. Accordingly, this report recommends that,
except in special circumstances, Council defer decisions on City
programs and grants until after the public consultation process.
Approval of New Funding
Given the pressure on City budgets, the report recommends that approval
of any new programs and expenditures or the continuation of programs
which must be approved on an annual basis each year should be deferred
until after the public consultation process and decisions on existing
budgets.
Notice to City-funded Organizations
Where the City provides funding or grants to outside organizations, the
lack of notice from the Province has placed Council in the position of
passing on that inadequate notification to the groups that it funds.
This report recommends that Council give immediate notice to groups that
receive funding from the City that the funding is under review and may
be reduced significantly or not renewed, given provincial funding
cutbacks. This at least will allow these groups to avoid any
significant commitments which depend on City funding, pending Council's
decisions.
City-Provincial Cost Shared Programs
The companion report on City Programs in the Provincial Field details a
number of areas where the City provides substantial funding in what is
clearly an area of provincial responsibility. In some cases, the
proportion of provincial funding is substantial; in others, provincial
funding is a modest component.
Where the City provides the major proportion of the funding, the
question for Council is similar to City programs -- what is the relative
priority of the program, given its nature and the responsibilities of
the City. Where provincial funding is equal to or more than half of
overall program costs and has been eliminated, the issue is more likely
to be program transition -- how long, if at all, should City funding
continue in the absence of provincial funding. While efforts may be
made to have the Province reconsider its decision, we believe changes
are unlikely given the magnitude of the provincial funding cuts. In
order to minimize costs the City's decision should assume the provincial
decision is final. Two such programs are described in the report on
Tenant Assistance Programs.
This report recommends that Council consider these programs on a case by
case basis, evaluating programs on the nature of the
program and the proportion of provincial funding. Where a program
cannot be sustained without provincial funding, Council may wish to
terminate funding as early as possible, since the public consultation
program will not affect the outcome. The Vancouver Housing Registry
likely falls into this category, and Council may wish to terminate its
funding immediately, rather than expend City funds during a phase out of
service.
Tourism Vancouver
Funding for Tourism Vancouver is unique, as described in the relevant
report. It is likely that Tourism Vancouver will wish to make a
submission to Council in regard to the prospect of the City allocating a
portion of the Hotel Tax to specific activities. This report recommends
that Tourism Vancouver be advised that Council is considering allocating
funding to support Infocentres and offset City APEC costs, so that their
budget planning will reflect this potential change. Given the scale of
funding received through the Hotel Tax, the increase over previous
years, and the anticipated continuing increase in future years, Tourism
Vancouver should be able to deal with any decision that Council makes
after the public consultation process without undue hardship.
Municipal Assist to Regional Development Levies
This potential City cost is unique, in that it is a new expenditure in
1997, and that Council considered the issue only recently, prior to the
announcement of provincial funding cuts. As a new program, public
consultation is unlikely to provide significant input. Given that
significant costs could be incurred as a result of applications early in
the year, and the widespread practice of 100% of the GVRD cost being
recovered by development levies throughout the region, Council may wish
to review its decision at this time.
CONCLUSION
In the reports which accompany this report, Council has been provided
with information about the budget and a number of areas of expenditure.
This report provides a series of recommendations which propose
guidelines for Council's consideration of 1997 funding adjustments in
relation to the public consultation process to establish the budget
direction.