Municipal Finances - New Brunswick · Presentation Overview •Budgeting and Financial Reporting...
Transcript of Municipal Finances - New Brunswick · Presentation Overview •Budgeting and Financial Reporting...
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Municipal Finances
Municipal Orientation 2016
Fredericton, NB
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Presentation Overview
• Budgeting and Financial Reporting
• Borrowing and Long-term Financing
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Definition
Municipality
• For the purposes of this presentation, the word
municipality includes city, town, village, rural
community and regional municipality
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Budgeting and
Financial Reporting
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Types of Funds
MUNICIPAL COUNCIL
GENERAL OPERATING FUND
GENERAL CAPITAL FUND
UTILITY OPERATING FUND
UTILITY CAPITAL FUND
RESERVE FUNDS
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Accounting and Reporting Objectives
• Budgeting in conformity with the Municipalities Act
• Reporting to Council
– GAAP
– PSAB
– Municipalities Act
• Fulfilling the Municipality’s duty to be publicly accountable
• Evaluating the operating results of the Municipality
• Communicating with the Municipal treasurer/administrator
• Internal Controls
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Accounting Standards
• GAAP (generally accepted accounting
principles)
– Annual Auditing Statement
– Profit Entities
– Consolidation
• Fund Accounting
– Cash Flow Type
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Annual Financial Statements
• Fiscal Year is Calendar Year
• Must be PSAB compliant
• Must be Audited – GAAS
• Notes are an integral part
• Formally approved by Council
• Public Document
• Fund accounting
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Role of Treasurer 77. Chief Financial Officer:
• collect, receive and deposit money
• open bank accounts
• keep the (financial) books
• custodian of all financial documents
• prepare year end statements for audit
• prepare periodic statements for council review
• insurance protection
• advise council on financial matters
• other duties as assigned
78. Mayor or council appointee signs cheques with Treasurer
The mayor or such other person as the council appoints, shall sign jointly with the treasurer all cheques issued by the municipality.
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Seven Steps in Budget Process
1. Establish a Budget Calendar
2. Request Input from Others
3. Collect Necessary Information
4. Review Information and Prepare Draft Budget
5. Review Draft and Make Changes
6. Approval by Council and Submission to ELG
7. Approval by Department (Minister of ELG)
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Budget Process
Who is Involved?
• Staff – Department Heads, Supervisors
• Treasurer / Accounting Staff
• Management Team
• Finance Committee (if applicable)
• Council
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BUDGET
Revenues Expenses
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Budgeting
What is a budget?
• Financial Plan
• Various budgets/multi-year budgets (Capital Plan)
• Authority to spend money
• Public documents
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Operating Fund Budget
• Prepared Annually
• Approved by Council resolution at a regular
meeting
• Establish tax rate for General Operating Fund
• Establish user fees for Utility Operating Fund
• Submitted to Minister of ELG on prescribed
forms
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Revenues
Services rendered to other governments:
• Protection services – Fire
• Transportation services – Summer and winter
maintenance
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Revenues
Sale of services:
• Arena
• Cultural centre and facilities
• Pool and beaches
• Amusement parks
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Revenues
Other sources of self-revenue:
• Licences and permits
• Building permits
• Fines
• Leasing of buildings
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Revenues
Other transfers:
• Surplus from second previous year
• Transfers from other funds (water and sewer)
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Expenses
General administration services:
• Legislative services
• General administration
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Expenses
Protection services:
• Police services
• Fire protection services
• Other – Animal control
• Emergency Measures
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Expenses
Transportation services:
• Common services – Administration,
engineering, workshops, etc.
• Road transportation – Summer maintenance,
ditches, winter maintenance, street illumination,
plaques, etc.
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Expenses
Sanitary services:
• Solid waste removal
• Regional Service Commissions
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Expenses
Community planning, land use planning
and development:
• Community planning – Commission
• Land use development
• Regional development commissions (industrial
parks, etc.)
• Other – Tourism (Tourism Bureau, tourism
promotion, downtown, etc.)
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Expenses
Cultural and recreational services:
• Administration
• Rinks and arenas
• Parks and playgrounds
• Historic sites
• Libraries
• Pools, beaches, marinas
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Expenses
Financial services:
• Debt service – Interest and principal
• Banking fees
• Discounts on debentures
• Contribution to the General Capital Fund
• Deficits from second previous year
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Mandate to cover through local
tax • Total budget (expenses) $7,660,000
• Less: Non-tax revenues $1,500,000
• Net budget $6,160,000
• Less: CFEG $625,000
• Mandate to cover through local tax $5,535,000
• Mandate to be covered $5,535,000
• Divided by tax base $374,300,000
• Tax rate $1.4784/100
• Thus, every .01$ of tax pays for $37,400 in municipal expenses.
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Capital Budget
• Annual multi-years
• Asset Management Plan
• Debt charges
• Capital Expenditures as defined by the Municipal Capital Borrowing Board (MCBB)
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Best Practices
• Year Round Planning
• Budget for revenues and expenditures, not tax
rates
• Start with expenses – Planning for each
program and service
• Forecast revenues – by source and type
• Include long-term and short-term plans
• Citizenship engagement
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Questions
• Your administrator/treasurer
• Other municipalities (i.e. AMANB List Serve)
• Community Finances Branch at ELG
• Your auditor
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Capital Borrowing and
Long-term Financing
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Overview
• Municipal Capital Borrowing Board (MCBB)
• Process Summary
• Application, by borrower
• Board Hearing
• Ministerial Approval
• Long-term financing
• Resources
• Key Message
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Capital Borrowing
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Municipal Capital Borrowing Board
Mandate
• The mandate of the Municipal Capital Borrowing
Board (MCBB) is to monitor and authorize long-
term capital borrowing of municipalities and
commissions.
Members
• Six senior civil servants are appointed to the
Board by the Lieutenant-Governor in Council
under authority of the Municipal Capital
Borrowing Act.
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Process Summary
1. Council resolution
2. Application to MCBB (Documents required)
3. Notice of public hearing(advertised in newspaper)
4. Application analysis
5. Public hearing
6. Ministerial approval
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Application, by borrower
• Resolution of Council approving five year
capital plan
• Authorization to borrow from MCBB
• Resolution of Council for borrowing amount
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Board Hearing
• Borrowing for legitimate capital expenses
• Amount within legislated limits
• Policies must be respected
• Must be financially able to undertake
borrowing
• Notice of hearing complies with legislation
• Objections may be provided by the public
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Ministerial Approval
• Must have approval from ELG before project
can begin
• Interim financing can be obtained
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Long-term Financing
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Authority for Long-term Financing
• Once project (or phase of a larger project) is completed
and final cost are known, arrangements for long-term
financing can be made.
• Resolution of Council for the Application for Financing
• Municipalities can only borrow long-term funds from
their own reserve funds, the provincial or federal
government, or the New Brunswick Municipal Finance
Corporation (NBMFC - Debentures)
• Debentures are issues semi-annually (spring and fall)
• Completion of “Application for Financing” form
• “Application for Financing” form signed by Clerk and
forward to ELG
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Resources
• Municipalities Act
• Municipal Capital Borrowing Act
• New Brunswick Municipal Finance Corporation Act
• Regional Service Delivery Act
• Guide to Municipal Capital Borrowing – http://www2.gnb.ca/content/dam/gnb/Departments/lg-
gl/pdf/GuideToMunicipalCapitalBorrowing.pdf
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Questions
• Your administrator/treasurer
• Community Finances Branch at the ELG
www.gnb.ca
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Role of Council Overview
• Approval of five year capital plan
• Approval of yearly budget
• Approve the audited financial statements
• Approve borrowing
• Transfer to and from reserves
• Awarding contracts following procurement policies
and legislation
• Ask questions!!
• Accountable to citizens!!
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Key Message / Best Practices
• Planning … planning … planning
Have a capital plan
Start your budgeting process early
Borrowing authority is valid for two years. You can
come to the Board once for all projects planned for
the year
• Don’t commit to projects without approval from the
Municipal Capital Borrowing Board (MCBB)
• Take into consideration inflation rates and future
needs when looking at tax rate and user fees
• Be informed! and Be transparent!