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HomeMy WebLinkAboutTR-49-84 r- J d CORPORATION OF THE TOWN OF NEWCASTLE TREASURY DEPARTMENT K. CAMPBELL, C.A.,TREASURER 40 TEMPERANCE STREET TEL.(416) 623-3379 BOWMANVILLE, ONTARIO L 1 C 3A6 REPORT TO THE GENERAL PURPOSE AND ADMINISTRATION COMMITTEE MEETING OF JUNE 4th 1984 REPORT NO. : TR-49-84 SUBJECT: PROPOSED 1985 BUDGET SCHEDULE REC OMMENDATION: It is respectfully recommended that the General Purpose and Administration Committee recommend to Council that this report be receive for information. BACKGROUND AND COMMENT: As discussed at the time of the 1984 budget discussions, Committee wished to see what further could be done to ease the budget process for 1985 and subsequent years. Staff have reviewed various options and feel that, at present, the timing of the approval of the Town's budget is not too far astray from that which would be desirable. Some other municipalities within the Region approve their budgets for the upcoming fiscal year by the end of December of the current fiscal year. In order to accomplish this, they must estimate their final fiscal position for the current year. I -gy - 2 - TR-49-84 BACKGROUND AND COMMENT: (continued) In addition, they must estimate the increases in the education and regional levies for the upcoming year. As Committee will realize there are inherent dangers in maldng any of the aforementioned estimates before final fiscal information is available. There are, of-course, advantages in having the upcoming year's fiscal plan in place on day one of the fiscal year. Also, the above system allows those municipalities, at their own discretion, to separate the taxes collected for other taxing authorities from those collected for the use of the local municipality. This system of setting the upcoming year's budget by the calendar end of current fiscal year appears to be most successful in municipalities where there is reasonable assessment growth each year to cushion unexpected expenditures, unexpected year end results, or a larger than anticipated education or regional levy increase. Also, it would seem prudent to be somewhat pessimistic in estimating levy increases inorder to provide a cushion for the municipality for those years when estimates are too low and therefore tax collections are less than the required levy payments. Once a system of early approval of the budget is implemented it should be followed annually which can present tactical problems in election years when a new council is in place as of December 1st and is expected to approve its budget by the completion of the calendar year. 3 - TR-49-84 BACKGROUND AND COMMENT: (continued) The budget process and the year end process are unavoidably linked. Reasonably accurate year end surplus or deficit positions are required to do the mill rate calculations. Since it takes the department until the end of the third week in January to close off the accounts payable each year and then set up any related accounts receivable ie: Ministry of Transportation and Communications subsidy, it is virtually impossible to get anything other than a ball park estimate on the surplus or deficit for the end of the calendar year. In the opinion of staff, there is no reason that the budget approval cannot be finalized in early February of each year. There are, however, some matters related to the budget which must be given due consideration by Council. Those matters are set out below: (a) The year end surplus or deficit will be a reasonable estimate, but will not reflect the exact year end position as that will not be known until mid February. (b) The actual prior year's results reflected in the budget document on an account by account basis will not be the final year end results. Those figures are not available until mid-February. Council can be supplied with up-to-date computer printouts to supplement those figures shown the budget document, but the revised actuals would not be incorporated into the budget document until final printing. - 4 - TR-49-84 BACKGROUND AND COMMENT: (continued) (b) (continued) With regard to actual figures reflected in the budget document, staff feel that Council should not rely to heavily, on the year to year comparisons of the prior year actuals to the current year budget. Municipal operations are such that budget to actual comparison for a given year is useful but year to year comparisons may not be as useful. The reason for this statement is that municipalities pursue different objectives year to year and this may be reflected in the actual results of a given year and bear little relationship to the upcoming budget year ie: in 1983 the Town built a new fire station, in 1984 there is no such construction; in 1983 major connecting link road work was undertaken, in 1984 completion of the project was done at much less cost. Such fluctuations in capital spending have a major impact on the budget and therefore make year to year comparisons less useful. Council's interest should focus on the budget presented and its mill rate impact. This is a matter separate from the detailed actual results of the prior year. (c) In some years, the actual Ministry of Transportation and Communications allocation and Unconditional Grant allocations may not be known to the exact dollar at the timing of the passing of the budget. We should however have reasonable estimates for those grants. 5 - TR-49-84 BACKGROUND AND COMMENT: (continued) (d) There would be only one printing of the draft budget document. All changes made at the informal discussions would be noted and incorporated into the final printing of the budget document. Council would be supplied with revised summarized budget documents as the discussions progress to a point where such information was useful. (e) The mill rate calculations based on preliminary budget figures would, in a normal year, be available by mid to late January. This is possible because, usually, we have our finalized assessment roll by that time. The year 1984 was unusual because of the reassessment which took place which delayed the receipt of the Town's assessment roll. The main thrust of the budget discussions in any year should be based on the current ,year's and future years' capital works and where the funding for such projects will be found. With regard to the current year's operating budget the discussion would most profitably center on desired changes in the level of service provided in any program, either increase or decrease. If the existing level of service is to be maintained with no staffing level changes, then these areas bear only a cursory review by Council in its budget discussions. For any changes in levels of service or levels of staffing anticipated in the preliminary budget, it is staff's responsibility to highlight those matters for Council. In addition, both staff and Council must be vigilent in their review of the budget to ensure that all cost saving measures which are .possible are taken for the benefit of the Town. - 6 - T R-49-84 BACKGROUND AND COMMENT: (continued) The schedules which is proposed for the 1985 budget process, both capital and current, are appended to this report as Schedule "A" and Schedule "B" for your review. Respectfully submitted, Kathryn. Campbell, C.A.. , B.Comm. Treasurer *gf Attachments SCHEDULE "All BUDGET SCHEDULE PROPOSAL 1985 CURRENT BUDGET ----------------------------------------------------------- JULY - AUGUST Preparation by Treasury of blank sheets for current year's budget. Transfer of budget on the pages and set up of 1985 format on word processor. Printing of blanks for departmental working copies of the current budget including summary pages and back up sheets. SEPTEMBER Preparatic�n--and---sul)�mission of budget guidelines by to Committee--. - Preparation of Salary and benefits budget by Treasury Department based on best estimates of costs for 1985. OCTOBER Preparation of 1985 Current Budget papers by the departments. NOVEMBER Review of Department budgets by staff and preparation of submission to Committee for consideration. DECEMBER/JANUARY Current Budget* submitted to Committee for consideration at the informal budget meetings. Insert actuals to end of November in budget document by Treasury staff. LATE JANUARY Current Budget submitted to General Purpose and Administration Committee for consideration and approval. FEBRUARY Finalized Current Budget presented to Council for approval. * Bound, indexed and pages numbered. 3T SCHEDULE "B" BUDGET SHEDULE PROPOSAL 1985 FIVE YEAR CAPITAL FORECAST ----------------------------------------------------------- AUGUST Preparation by Treasury of blank sheets SEPTEMBER, Preparation by Departments of 5 Year Forecasts. 1985 should include detailed back up sheets where necessary. 1986 - 89 should be summarized expenditure by major operation within each department. The current 5 Year Capital Forecast should form the basis of this document. OCTOBER Review of the 5 Year Forecast by Staff and preparation of submission to Committee. NOVEMBER 5 Year Forecast* submitted to Committee for consideration. JANUARY Capital Budget for 1985 to be given detailed consideration in current budget discussions in light of guidelines, grant allocations and other funding available from general funds, reserves, and reserve funds. LATE JANUARY 5 Year Capital Budget presented to General Purpose and Administration Committee for consideration and approval. FEBRUARY Finalized 5 Year Capital Budget presented to Council for approval. *Bound, indexed and pages numbered.