January 2019 CITY OF TRAIL City of Trail 2015 - 2019 Financial Plan 1
• General Overview – Legislation, process • Summary – Tab 1 of Budget Manual, assessment update, high level overview, impacts • Expenditures – Tab 3 of Budget Manual, review and approval of individual departmental budgets City of Trail 2015 - 2019 Financial Plan 2
City of Trail 2015 - 2019 Financial Plan 3
THE MUNICIPAL BUDGET/FINANCIAL PLAN Section 165 of the Community Charter indicates that a municipality MUST annually adopt a Financial Plan by Bylaw. The planning period for the Financial Plan is 5 years, that period being the year which the plan is specified to come into force and the following four years. The Financial Plan must set out the objectives and policies of the municipality for the planning period in relation to: Each funding source and the proportion of revenue to come from each source. The distribution of property taxes among the classes that are subject to taxes. The use of permissive tax exemption City of Trail 2015 - 2019 Financial Plan 4
THE MUNICIPAL BUDGET/FINANCIAL PLAN The Financial Plan must set out the following for each planning period: Proposed expenditures by the municipality The proposed funding sources The proposed transfers to or between funds. The total of the proposed expenditures and transfers for a year must NOT exceed the total of the proposed funding sources. The proposed expenditures must set out separate amounts for each of the following as applicable: The amount to pay interest and principal on municipal debt. The amount required for capital purposes. The amount required for other municipal purposes. Any deficiency with respect to revenue less expenditures must form part of municipal expenses in the following year. City of Trail 2015 - 2019 Financial Plan 5
THE MUNICIPAL BUDGET Budgets are calculated considering historical spending patterns as well as information that is available that will impact the budget in the current year. Following 2018 that involved the addition of new services and associated costs, the 2019 Budget is viewed as a “status quo” budget with adjustments made to budgets that reflect the current level of service and the associated estimated cost to provide the current services. Council should review the budget and make adjustments as deemed necessary. City of Trail 2015 - 2019 Financial Plan 6
2019 BUDGET REVIEW The review and approval process of the 2019 Budget includes the following components. The budget must be formally approved by May 15 th : Overview / Presentation Expenditure review/approval Revenue review/approval Budget changes / amendments Property tax options / implications Capital Budget review and approval Public consultation (as determined by Council) Finalize all budgets and tax rates Adopt Financial Plan and Property Tax Rate Bylaws City of Trail 2015 - 2019 Financial Plan 7
2019 BUDGET – REVIEW OBJECTIVE Primary Budget Objective: Determine the “equilibrium” property tax requirement. TOTAL Municipal Expenditures subtracted from TOTAL Other Municipal Revenues equals EQUILIBRIUM Property Tax Requirement Equilibrium is reflective of the fact that the budget cannot include a deficit and therefore municipal expenses must be fully funded and offset by Other Revenue or Property Taxes. City of Trail 2015 - 2019 Financial Plan 8
BUDGET MANUAL The Budget Manual is organized as follows and has six main sections: Tab 1 – High level summary and explanation of the 2019 Budget. Tab 2 – Revenues Tab 3 – Expenditures Tab 4 – Supporting information and analysis Tab 5 – Five year Financial Plans (General, Water, Sewer) – This forms the basis for the Financial Plan Bylaw that must be adopted by Council. Tab 6 – Detailed listing of General Ledger accounts for the General Revenue Fund. City of Trail 2015 - 2019 Financial Plan 9
BUDGET MANUAL (continued) Reviews focus on the high level summaries and associated service levels and summarized cost analysis. Tab 6 provides specific account information as required but the Budget will not be reviewed on an account by account basis. City of Trail 2015 - 2019 Financial Plan 10
2019 BUDGET – REVIEW OBJECTIVE Council should consider the longer-range impact of decisions and how they will impact the financial position of the City, including future property tax revenue requirements. Decisions made or not made can impact future years (i.e. capital funding, transfers to reserves) and have a compounding impact. This is especially important when considering the Five Year Plan. The Five Year plan suggests ongoing increase in property taxes to fund anticipated ongoing inflationary increases in operating expenses. City of Trail 2015 - 2019 Financial Plan 11
2019 BUDGET – PROPERTY TAX RATES Final step in the process once expenditures and revenues are finalized, is to review property tax options (distribution and tax rates) and impacts. 2016 resulted in the flat tax for residential properties being increased from $130 to $260 to offset the impacts that resulted from disproportionate variances in assessments. The flat tax was not adjusted in 2017 or 2018. Initial example property tax calculations can be found in Tab 4 of the Budget Manual. The initial calculation assumes no changes to the flat tax or variances to major industrial or the business ratio from last year. This includes apportioning the tax increase to major industrial taxes at 61.33% (as opposed to 50% which was the previously policy in accordance with the Job Protection Commission Agreement). City of Trail 2015 - 2019 Financial Plan 12
City of Trail 2015 - 2019 Financial Plan 13
BM 2019 ASSESSMENT ROLL 1. ROLL REVIEW - COMPLETED ROLL ROLL AT DECEMBER 31, 2018 Class 2018 Total Assess 2019 Change Assessments Change Assessments $ % CL1 - Residential 656,717,300 78,183,000 734,900,300 78,183,000 11.91% CL2 - Utilities 16,445,815 176,540 16,622,355 176,540 1.07% CL4 - Major Industry 205,318,700 7,751,600 213,070,300 7,751,600 3.78% CL5 - Light Industry 2,689,700 (47,700) 2,642,000 (47,700) -1.77% CL6 - Business 120,685,000 4,795,600 125,480,600 4,795,600 3.97% CL7 - Managed Forest 522,000 (11,000) 511,000 (11,000) -2.11% CL8 - Rec/Non-profit 1,243,000 234,000 1,477,000 234,000 18.83% 1,003,621,515 91,082,040 1,094,703,555 91,082,040 9.08% Average single family residence: 2019 assessed value 217,689 2018 assessed value 193,543 $ Change 24,146 % Change 12.48% The changes are almost entirely market driven. There is very little new development being added to the assessment roll. City of Trail 2015 - 2019 Financial Plan 14
ASSESSMENT TREND – 2003 TO 2019 BM Page 112 1,000,000,000 800,000,000 Class 8 600,000,000 Class 7 Class 6 Class 5 Class 4 Class 2 400,000,000 Class 1 200,000,000 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 15
PRELIMINARY TAX CALCULATION 2019 $260 Residential Flat Tax 2019 TAXES MUNICIPAL RATE CALCULATION Class 2019 RATIO DEBT DEBT GENERAL GENERAL FLAT TOTAL TOTAL % Assessed RATE TAX RATE TAX TAX TAX RATE Total Value 734,900,300 1.00 0.2281 167,630.76 3.7787 2,776,967.76 873,600 3,818,198.52 4.0068 26.23% Cl 1 - Residential 16,622,335 9.98 2.2772 37,852.38 37.7228 627,041.02 664,893.40 40.0000 4.57% CL2 - Utilities 213,070,300 10.46 2.3830 507,746.52 39.5101 8,418,428.86 8,926,175.38 41.8931 61.34% CL4 - Heavy Industry 2,642,000 0.70 0.1595 421.40 2.6564 7,018.21 7,439.61 2.8159 0.05% CL5 - Light Industry 125,480,600 2.24 0.5096 63,944.91 8.4492 1,060,210.69 1,124,155.60 8.9588 7.72% CL6 - Business 511,000 2.27 0.5177 264.54 8.5625 4,375.44 4,639.98 9.0802 0.03% CL7 - Managed Forest 1,477,000 1.48 0.3370 497.75 5.5736 8,232.21 8,729.96 5.9106 0.06% CL8 - Rec/Non-profit 1,094,703,535 778,358.26 12,902,274.19 873,600.00 14,554,232.45 100.00% City of Trail 2015 - 2019 Financial Plan 16
PRELIMINARY TAX CALCULATION 2019 vs 2018 TAX COMPARISON - BY PROPERTY TAX CLASS CITY OF TRAIL TAX LEVY - 2019 BUDGET Class 2018 2019 Change 2018 v 2019 Total Taxes % Total Total Taxes % Total Total Taxes % Change 3,688,684 26.13% 3,818,199 26.23% 129,515 3.51% Cl 1 - Residential 657,832 4.66% 664,893 4.57% 7,061 1.07% CL2 - Utilities 8,656,729 61.33% 8,926,175 61.33% 269,446 3.11% CL4 - Heavy Industry 7,220 0.05% 7,440 0.05% 220 3.04% CL5 - Light Industry 1,091,415 7.73% 1,124,156 7.72% 32,741 3.00% CL6 - Business 4,500 0.03% 4,640 0.03% 140 3.11% CL7 - Managed Forest 8,480 0.06% 8,730 0.06% 250 2.95% CL8 - Rec/Non-profit TOTAL 14,114,860 100.00% 14,554,232 100.00% 439,372 3.11% City of Trail 2015 - 2019 Financial Plan 17
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