The favourable balance in the city's spending will be needed at the end of the fiscal year.

News 100 redBy Staff

October 1st, 2019

BURLINGTON, ON

 

In the weeks ahead city council will begin crafting the budget for the 2020 year. It will be the second budget this team has done – but this time around they have a much better grip on just what they are spending and where the money is coming from.

Mayor Meed Ward and Councillor Sharman were the only two members of council who, at the time, had a full understanding of what putting together a municipal budget meant. It was a steep learning curve for the five new members of Council.

In 2018 the Mayor was determined to bring in a budget under a 3% increase. Councillor Sharman wanted to ensure that there was some money left in the reserve funds.

The budget increase was kept under 3%

Ford Joan at Budget Bazaar

Director of Finance, Joan Ford

At the city council meeting last week the Director of Finance, Joan Ford, brought people up to date on where things stood at the end of June. Most people who work on budget refer to having either a surplus or a deficit – the municipal world talks in terms of variances from what they budgeted as either favourable or unfavourable.

Set out below is the position at the end of June. Any surplus (oops favourable variance) doesn’t get returned to the citizens. It gets spread around and into reserve funds and anything they don’t know what to do with gets dropped into the tax stabilization fund. At least that was the practice from 2010 to 2018.

Mayor Meed Ward is going to break a lot of the rules as she works to refashion the way city hall operates. Having a council that is more informed on financial matters it should be interesting to see what they decide to do with one of those favorable variances.

They decided to:

Direct the Director of Finance to report back on the city’s retained savings strategy upon confirmation of the 2019 year-end actual.

Budget variances 2019

If the variance holds at $574,174 it will cover the $503,000 that got scooped from the city’s bank account.

Year-end projections will be refined by staff in order to improve their degree of precision. Services will also continue to exercise due diligence when authorizing large expenditures.

Any savings are viewed as “one-time” revenue. From a multi-year budgeting perspective, the use of “one-time” revenues should be tied directly to “one-time expenditure priorities that may include transfers to reserve funds. To do otherwise results in the reliance on “one-time” revenues for funding ongoing expenditures and is contrary to multi-year budgeting principles.

Staff will report to Council in the New Year with a specific recommendation once the year end savings are quantified. Staff continue to recommend contributions to Reserve and Reserve Funds to allow the city the financial flexibility to respond to uncontrollable factors (such as economic cycles, revenue fluctuations, and severe weather events plus short term and one-time needs, and sustainability to plan for today and the future.

masked banditThe monitoring of corporate and service expenditures and revenues is part of the Operating Budget Performance policy which exists as a key component of the City’s financial management control system.

It will be interesting to see how the Finance department handles that $503,000 that slipped out of an account and is never likely to return.

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