SUPPORTS ITEM NO. 1
CS&B AGENDA
FEBRUARY 20, 1997
ADMINISTRATIVE REPORT
Date: February 12, 1997
C.C. File No. 1605-1
TO: Standing Committee on City Services and Budgets
FROM: Director of Finance
SUBJECT: 1997 Operating Budget - New Revenues/Service Reductions
RECOMMENDATION
A. THAT Council review and take action on the individual revenue
increases totalling $4.265 million as set out in the Appendix
of this report, noting the City Manager's comments on each
item. Further that the finalized estimates of these revenue
items, and related staffing increases and other start up
costs, be subject to Budget Review and reported back to
Council in the Interim Report on the 1997 Operating Budget.
B. THAT Council review and take action on the individual
expenditure reductions totalling $3.075 million as set out in
the Appendix of this report, noting the City Manager's
comments on each item.
C. THAT all service cuts approved by Council this day be
implemented immediately and be subject to the layoff
provisions in the respective collective agreements between the
City and its Unions, if applicable.
D. THAT all new revenues, fees and charges approved by Council
this day be implemented as soon as possible in order to reduce
the amount of transition funding required in 1997.
GENERAL MANAGER'S COMMENTS
The General Manager of Corporate Services RECOMMENDS approval of A,
B, C and D.
COUNCIL POLICY
City Council is the approving body for the City's annual operating and
capital budgets and changes in authorized staffing levels.
City Council approves service cuts, new programs and new revenues.
PURPOSE
The purpose of this report is bring forward new revenue items and
service cuts for Council consideration and approval, arising from
instructions given to staff at the Council meeting of February 4th
during consideration of the preliminary report on the City's 1997
Operating Budget.
BACKGROUND
On February 4, 1997, City Council had its first opportunity to review
the preliminary estimates comprising the City's 1997 Operating Budget.
These estimates indicated revenues from all sources of $531,157,100 and
expenditures of $558,643,900, leaving a budget shortfall of $27,486,800
or $27.5 million rounded.
The staff report which introduced those estimates provided a strategy to
address the shortfall, as follows:
- a 2% base property tax increase to generate $6.6 million to cover
growth and inflation in core services;
- a 1% incremental property tax increase to generate $3.3 million to
cover growth and inflation in sewerage costs;
- application of the 1997 portion of increased revenues approved by
Council on January 30th relating to permit and development fees in the
amount of $3.6 million;
- application of the 1997 portion of new revenue opportunities (about $4
million annually) put forward by staff in response to the City's budget
problem in the amount of $2 million, subject to further Council action;
- application of a 3% incremental property tax increase to generate $9.9
million as an alternative to major service cuts in Policing, Fire
Protection, Traffic Management and Planning; and
- the balance of the shortfall, about $2.1 million, to be raised through
selective service cuts and administrative budget adjustments.
In reviewing the staff strategy, Council tabled its own strategy to deal
with the shortfall and, after considerable discussion, an action plan
comprising 16 recommendations was approved, with four of those
recommendations deferred to future meeting dates.
- Recommendation A recognized the previous approval of $3.9 million
of increased trade and development fee increases and instructed
staff to report back on new revenues of $4.755 million (annualized)
to the City Services and Budgets Committee on February 20th.
- Recommendation B established target service reductions for
departments totalling $3.051 million to be reported back in detail
to the City Services and Budgets Committee on February 20th.
- Recommendations C, D and E were referred to the City Services and
Budgets Committee on February 6th. These recommendations advanced a
total 1997 tax increase of 4.5%.
- Recommendation F referred the Tourism Vancouver, Regional
Development Cost Charges and City Programs in the Provincial Field
reports to the City Services and Budgets Committee on February 6th.
- Recommendation G eliminated the City's annual grants of $200,000 in
the health field as of April 1, 1997.
- Recommendation H instructed staff to investigate the restructuring
of the City's civic cultural institutions to provide cost savings
and efficiencies.
- Recommendation I instructed staff to identify items to eliminate
any remaining shortfall in the 1997 Operating Budget for further
Council consideration through a combination of revenue increases,
service cuts or administrative adjustments.
- Recommendation J instructed staff to report back on the detail of
service reduction items to the City Services and Budgets Committee
on February 20th.
- Recommendation K instructed staff to consider using Capital from
Revenue funds for annualizing and transitioning revenue increases
and service reductions for report back at a later date.
- Recommendation L received the 1997 preliminary Operating Budget
estimates for information.
- Recommendation M instructed staff to proceed with a normal budget
review process.
- Recommendation N requested the Provincial Government to reconsider
its withdrawal of the $1.9 million in CAP funding.
- Recommendation O instructed the Director of Finance to report back
on property tax policy options later in the year.
- Recommendation P was referred to the City Services and Budgets
Committee on February 20th for staff to report back on Vancouver
Parking Corporation matters.
On February 6th, Council dealt with the three reports referred from the
February 4th meeting of Council including recommendations C, D and E,
and made the following decisions.
- the publication contract to Tourism Vancouver was reduced from
$600,000 to $400,000 in 1997.
- the 50% municipal assist on Regional Development Cost Charges was
eliminated at a saving of $1.325 million in 1997.
- the report on City Programs in the Provincial Field was received
for information.
- recommendations C, D and E of February 4th were confirmed,
resulting in a target general purposes tax increase for 1997 of
4.5% and $14.85 million in additional revenues.
DISCUSSION
On February 4, 1997, Council instructed staff to report back on a number
of new revenue opportunities and the detail of service cuts
corresponding to the target budget reductions assigned to departments
that day. This report responds to that instruction and Council is
referred to the report Appendix sheets for the details, prefaced by a
summary sheet with the City Manager's comments.
For the new revenue opportunities identified by Council, staff have
estimated the following targets totalling $4.265 million (annualized),
as further set out in the revenue section of the report Appendix.
Resident Parking Fees $ 325,000
Parking Meter Revenue 1,750,000
Sewer/Streets Overhead 250,000
PowerSmart Loan 0
BIA Administration Fee 0
Board of Variance Appeal Fee 30,000
Demolition Fee 300,000
Increased Library Fines 75,000
Police Revenues 135,000
By-law Fines 1,250,000
Property Tax Search Fee 150,000
Total $ 4,265,000
Council has established the following departmental budget reduction
targets totalling $3.051 million (annualized, as follows:
Police $ 300,000
Fire 200,000
Park Board 700,000
Library Board 475,000
Support Services 500,000
City Clerk 76,000
Community Services 500,000
Engineering 300,000
Total $ 3,051,000
The details of the service reduction items are set out in the
expenditure section of the report Appendix.
1. Present Budget Situation
After taking into account all previous Council actions on the 1997
Operating Budget shortfall leading up to this present report, and with
the approval of all the items identified in the report Appendix, the
following budget situation results at the preliminary budget stage.
Preliminary Budget Shortfall $27,500,000-
Less:
Permit and development fees 3,630,000
New revenue opportunities 3,065,000
Departmental service reductions 3,075,000
Elimination of health grants 150,000
Tourism Vancouver reduction 200,000
50% municipal assist 1,325,000
Approval of 4.5% tax increase 14,850,000
Net shortfall before transition $ 1,205,000-
Less:
Transition Capital from Revenue to bring
budget into a balanced position, subject
to a further report on April 10/97 1,205,000
Current Budget Position $ Balanced
It is important to note that the current budget position shown above
does not include any provision for a wage/salary increase in 1997.
Additionally, staff need to review the budget estimates that contribute
to the preliminary budget position in accordance with Council policy
approved on February 4th. There are requests for service increases among
those numbers and staff will need to report them back to Council for
consideration at the interim stage of budget development.
2. Next Step
Once Council deals with this present report, staff will have the
necessary policy and instruction to begin a detailed review of all of
the 1997 Operating Budget estimates. This process will take about six
weeks to complete, after which the Budget Office will report back to
Council with an Interim Report on the Operating Budget. At that stage,
the details of the estimates for the 1997 Operating Budget will be
presented, including recommended actions to achieve a balanced position.
The Interim Report on the City's 1997 Operating Budget is tentatively
scheduled for Council review on April 10, 1997.
CONCLUSION
This report sets out in its Appendices, a number of new revenue
opportunities and a number of service cuts for Council consideration.
Approval of all of these items would total about $7.340 million on an
annualized basis to generate a corresponding reduction in the City's
1997 Operating Budget shortfall with transition funding.
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