April 13, 1999

TO: Mayor Owen and Councillors

Copy: Judy Rogers, City Manager

Corporate Management Team
Hugh Creighton, Director of Finance
Ulli Watkiss, City Clerk

FROM: Ken Bayne, Comptroller of Budgets & Research

SUBJECT: 1999 Operating Budget - Interim Report

During the last few weeks, staff have worked to bring the Operating Budget into balance within the 3.4% property taxation targets set by Council on March 11, 1999. Achieving that level has not been an easy task and has taken somewhat longer than anticipated. The final budget proposals are not to be considered by the Corporate Management Team until Wednesday April 14, the day before the interim report was to be presented to City Services and Budgets Committee. As a result, it has been impossible to produce and circulate a report on the budget within a time frame that would allow for appropriate review by Council on April 15.

Under normal circumstances, the Interim Report is the report of the staff committee that reviews the estimates with departments. The most important component of the interim report has been presentation of the options that Council has for bringing the budget into balance, including the establishment of a general purposes tax increase. These adjustments are then reflected in the final report on the budget which is tabled two weeks later. In recent years, however, Council has established taxation targets earlier in the budget process and staff have brought the budget back at the interim stage in a balanced position.

This is the situation in 1999 as well: With the final adjustments being proposed to the CMT on Wednesday, the budget will be in a balanced position with a 3.4% tax increase as previously approved by Council. This makes the interim report somewhat redundant. As a result, it is proposed to move directly to the Final Report on the Operating Budget that will be before City Services and Budgets Committee on April 29, along with a resolution adopting the estimates. This timing will not affect Council's ability to complete an appropriate review and, if necessary, make adjustments prior to adopting the estimates, in fact it will give Council additional time to consider the estimates prior to approval. The final report will be distributed as part of the normal Committee package distribution in the week of April 19.

As noted above, bringing the budget to a balanced position with a 3.4% tax increase has presented some challenges for staff. The final consideration by CMT on Wednesday is intended to ensure the budget to be presented to Council is satisfactory to the senior managers and to deal with several outstanding items. For the most part these items involve contingency and discretionary funding in the budget. Although it is uncertain what the resolution of these items will be it may involve a recommendation to Council to further reduce Capital from Revenue by deferring some expenditures into the next capital plan. Any such change will require a specific Council approval.

I will be at City Services and Budgets Committee on Thursday and will be in a position to provide a verbal update on the status of the budget, should the Committee desire it.

Ken Bayne
loc 7223.

(c) 1998 City of Vancouver