TAMRMS#: B06
7.3
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Budget Adjustment
Presented by: Suzanne Findlay, Manager, Financial Services, Financial & Strategic Services
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RECOMMENDED MOTION(S)
recommendation
1. That $257,400 of Assessment Growth Revenue be transferred to the Growth Stabilization Reserve.
2. That the 2024 final Consolidated Municipal and Utility Budget in the amount of $318,617,500 and the Net Tax Requirement of $134,204,700 as shown in the attachment titled “2024 Adjusted Consolidated Municipal & Utility Budget” be approved.
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PURPOSE OF REPORT
The purpose of this report is for Council to approve Administration’s recommended amendments to the approved Operation Budget prior to the finalization of the annual tax levy.
BACKGROUND AND DISCUSSION
On December 19, 2023 Council approved a Consolidated Municipal and Utility Budget of $318,424,400 and a net tax requirement of $134,112,500 which resulted in an average property tax increase of $226 per year or 5.5% for an average house valued at $500,000.
Prior to the presentation of the annual Tax Bylaw for Council’s consideration, Administration presents proposed adjustments to the budgets upon which the Tax Bylaw rates are based. Amendments can arise due to circumstances that have changed subsequent to the preparation/approval of the budget, adjustments to estimates, Council motions with spending implications, or new requirements of an emergent nature.
For 2024 Administration is recommending the following adjustments before the 2024 Tax Bylaw is passed.
Assessment Growth - increase of $468,000
In finalizing the 2023 Assessment Roll, the total weighted assessment growth rate was 2.24%
As per policy, Assessment Growth revenue will be applied as follows:
-25% to offset the base - $117,000
-20% as a contribution to lifecycle reserves - $93,600
-55% transferred to the Growth Stabilizaition Reserve - $257,400
As the reduction in the tax requirement from assessment growth is managed through the increased Assessment base only the transfer to reserve is reflected in the consolidated budget.
Snowflake Festival Funding - decrease of $10,000
City contribution to Downtown Business Association’s Operating Budget - decrease of $25,000
On December 19, 2023, Council approved the 2024 budget, which included the following motion:
PM-24-06
That the City matches the downtown Business Improvement Area operating budget up to $50,000 at 100% for 2024, 75% in 2025, and 50% in 2026. Plus an additional $10,000 for the same three years to support the Snowflake Festival and the funds come from the tax base.
On March 5, 2024, the Downtown Business Association’s (DBA) budget was passed. The DBA is the organization representing the St. Albert Downtown Business Improvement Area. The DBA’s 2024 contribution is $25,000, and as the City will match this amount, $25,000 is recommended to be removed from the 2025 budget.
On April 2, 2024, Council approved PM-24-149, which removed the $10,000 Snowflake Festival funding. Therefore, the $10,000 has been removed from the 2024-2026 budget.
Transit Revenue - increase of $170,000
Increased Transit ridership in 2023 resulted in actual revenue exceeding budget. This trend continues into 2024 and to reflect this Administration is recommending an increase of $170,000 to Transit revenue.
IT Priority Based Budget (PBB) maintenance contract - decrease of $29,300
A decision was made in early 2024 to discontinue using PBB. As the City no longer requires the PBB online tool and consulting services, $29,300 of expense is recommended to be removed.
Provincial Highway Maintenance (PHM) Grant - decrease of $119,100
The Municipal operating budget includes grant funds of $119,100 relating to the City’s allocation of the PHM Grant. This grant provided funds to municipalities to reflect the province’s responsibility in sharing the cost of operating and maintaining provincial highway routes through cities. It was a component of the Basic Municipal Transportation Grant, which was consolidated with the Municipal Sustainability Initiative (MSI) Grant in 2022. While the MSI program has been replaced with the Local Government Fiscal Framework (LGFF) in 2024 there was no communication to indicate the PHM Grant would be discontinued. However, in March the city received confirmation by Municipal Affairs that this grant is discontinued and thus Administration is recommending a reduction in grant revenue of $119,100.
Servus Place Revenue - increase of $50,000
During the 2024 budget deliberations BIR-24-20 and subsequent PM 24-20, Administration explored the opportunity to refine the Servus Credit Union Place operating budget. Although the postponed motion was not passed, Administration made the commitment to continue to monitor this trending and include any adjustments into the annual budget adjustment Agenda Report prior to final tax rate approval.
A review of the first three months of operations results in a positive adjustment of $50,000 being made to the Servus Credit Union Place operating budget. This is not as high as initially anticipated when BIR-24-20 was prepared, as Administration continues to observe revenue trends including evolving consumer spending habits. Any further financial adjustments will be made in alignment with corporate quarterly forecast processes.
Administration is not recommending any adjustments to the Municipal Capital, Utility Capital, or Utility Operating Budgets.
The above recommendations result in a $92,200 increase to the net tax requirement and Consolidated Budget. The adjusted Consolidated Budget is $318,617,500 and the net tax requirement is $134,204,700, resulting in an average property tax increase of $210 per year or 5.3% for an average house valued at $500,000.
Although the consolidated budget is increasing, the additional assessment growth is reflective of more properties over which to spread the levy, leading to a decrease in the average municipal tax on a per property basis.
Administration will continue to monitor the revenue and expenditures within the approved budget and communicate any forecast variances through the quarterly reports.
STAKEHOLDER COMMUNICATIONS OR ENGAGEMENT
N/A
IMPACTS OF RECOMMENDATION(S)
Financial:
As these budget amendments are based on a point in time, the inherent risk of exceeding or not exceeding could result in a surplus/deficit position for the City. The Financial Reserves policy is in place to ensure that fluctuations in budget estimates can be managed.
Compliance & Legal:
The final tax requirement must be established at this time in order to meet our historical and targeted timelines of passing the Tax Rate Bylaw and the issuing of Assessment and Tax notices by May 31st.
Program or Service:
None at this time.
Organizational:
None at this time.
Risks
See Compliance & Legal.
ALIGNMENT TO PRIORITIES IN COUNCIL’S STRATEGIC PLAN
Not applicable.
ALIGNMENT TO LEVELS OF SERVICE DELIVERY
Financial Planning
Stewardship of development of annual operating and capital budgets for Municipal and Utility operations.
The approved operating and capital budgets shall serve as the financial plan for the City and provide Administration with the direction and resources necessary to accomplish Council’s strategic direction and Council approved services and service levels in accordance with the Services and Service Levels Inventory.
ALIGNMENT TO COUNCIL DIRECTION OR MANDATORY STATUTORY PROVISION
N/A
IMPACTS OF ALTERNATIVES CONSIDERED
If Council does not wish to support the recommendation, the following alternatives could be considered:
Alternative 1. That Council “do nothing”. The current approved tax rate would not be reflective of Administration’s recommendations.
Alternative 2. Council can approve alternate amendments to adjust the budget.
Financial:
Administration’s recommendations are based on based on most current information. Both alternatives could further increase the inherent risk of exceeding or not exceeding the surplus/deficit position for the City.
Compliance & Legal:
None at this time.
Program or Service:
None at this time.
Organizational:
None at this time.
Risks
None at this time.
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Report Date: April 16, 2024
Author(s): Suzanne Findlay
Department: Financial & Strategic Services
Department Director: Anne Victoor
Managing Director: Diane McMordie
Chief Administrative Officer: Bill Fletcher