Operating Budget 101

The following definitions may be referenced when reviewing the operating budget:

Annual Repayment Limit or “ARL” is legislated by the Ministry of Municipal Affairs and Housing reported on schedule 81 of the City’s Financial Information Return. This limit permits Ontario municipalities to issue debt to the extent that debt repayments do not exceed 25% of own-sourced revenue, however, the City has adopted an internal policy that limits repayments to 12% of own-sourced revenue.

Annualized Costs/Revenues are the conversion of any costs or revenues which were approved in the prior year's budget for a partial year to a twelve-month period for inclusion in the Base Budget. Annualized costs would normally include personnel and related costs and those costs related to municipal service contracts which began during the year or were subject to price escalations part way through the year. Annualized revenues would normally be associated with annualization of new operating revenues or increases in rates and utilization of services. These costs and revenues must be clearly identified in the Base Budget

Asset Management Plan is a strategic document that states how a group of assets are to be managed over a period. The plan describes the characteristics and condition of infrastructure assets, the levels of service expected from them, planned actions to ensure the assets are providing the expected level of service, and financing strategies to implement the planned actions.

Base Budget is the funding required by carry on existing programs at the same level of service as last year. This represents essentially a status quo starting point. The base budget is calculated as follows:

Current year Base Budget = Prior year approved budget + Inflation - One-time charges/revenue +/- Known uncontrollables +/- Annualized Costs or Revenues + Capital Impacts
 

Capital Impact are the additional operating costs that relate to operating or maintaining a capital project that has been completed and is now "in use". Capital impacts will be included as Base Budget adjustments in the operating budget.

City Boards Include the Belleville Library Board and the Belleville Police Board, which are partly funded by the City’s tax levy requirement.

Current Value Assessment or “CVA” is the assessed value that MPAC deems appropriate to calculate your property tax levy. Assessments are completed every four years with any increase in assessment being phased in over that period. Decreases in current value assessment are 100% applied in the first year of the new assessment.

Departmental Operating Plans are annual plans for each department of the City that include the responsibilities, goals, and objectives, planned results and the resources of the department for the particular year. The plan will be in line with the Corporate Strategic Plan and will provide reporting on the prior year’s results.

Discretionary expenses typically refer to costs that the City has some degree of control over and can adjust based on their priorities and available resources. Some examples of discretionary expenses include parks & recreation programs, economic development initiatives, cultural events, training costs, or any other costs that do not tie directly to providing services required by legislation.

Development Charge is a charge legislated under the Development Charges Act, 1997 that allows a municipality to impose a charge to fund capital projects or certain operating costs that are deemed necessary to service new growth under the notion that growth pays for growth. Charges must accompany a by-law and development charges study that forecasts growth and relevant growth-related projects.

Education Tax Levy is the tax levy of the School Board to fund the operations and capital infrastructure of schools. The City must collect and remit the tax levy on the province’s behalf.

Financial Information Return or “FIR” is the main data collection tool used by the Ministry of Municipal Affairs and Housing to collect financial and statistical information for all municipalities. The Municipal Act, 2001 requires that each municipality will annually report on its financial affairs, accounts, and transactions in the form of the FIR. This data is available for public review online.

Growth Assessment is the sum of assessed values that are added to the assessment base because of growth, such as new construction or major renovations. This value is added to the budget in the following year, but partial year growth assessments are estimated annually and are included under supplemental taxes. Growth assessment does not immediately result in more income for a municipality as new or changing property values will redistribute how much each ratepayer must pay. Revenue can only be increased by increasing the levy requirement/budget.

Infrastructure Gap is the value of current infrastructure relative to the value of infrastructure that is needed. Often this is quantitatively measured as the gap in funds between what is needed and what is available. When the need exceeds available resources, it may be referred to as an Infrastructure Deficit.

Municipal Property Assessment Corporation or “MPAC” is an independent, non-profit corporation funded by all Ontario municipalities to assess and classify all properties within the province in accordance with the Assessments Act and other regulations within Ontario. Fees paid to MPAC are paid through the County Tax Levy. 

Non-discretionary services are typically mandated by legislation or are fixed costs that the City must incur regardless of any budgetary constraints. Some examples of non-discretionary expenses include employee salaries & benefits, contracted obligations, utilities, insurance, or any other costs that tie directly to providing levels of services required by legislation (e.g., road maintenance, water, and wastewater).

Operating Issues are defined as a change in staff level, service level, policy changes, one-time charges/projects, and major external factors. Issues are meant to highlight new commitments of resources, so Council can see, approve, or decline variations from the status quo. Issues are displayed as changes to the Budget to emphasize the impact. External agency budget requests are included as operating issues as well.

Purchasing Policy is the internal policy approved by Council that regulates purchasing by the City to ensure a fair and equitable acquisition of goods and/or services.

Public Sector Accounting Board or “PSAB” is a regulatory board that sets public sector accounting standards. These standards represent the accounting framework that Canadian municipalities must adopt to ensure consistent treatment of accounting transactions. The City’s annual audited financial statements are in accordance with these standards.

Reserve is an allocation of funds that is not restricted by by-law or legislation but can be specific to projects that are of a nature prescribed and managed by approval of Council. A reserve is typically held in the general bank account and does not receive an annual interest allocation unless invested in accordance with the City’s Investment Policy. Reserves are administered and managed under the City’s Reserve & Reserve Fund Policy.

Reserve Fund is a fund set aside for a specific purpose as required by legislation, by-law, or agreement and can be obligatory (externally restricted) or discretionary (internally restricted). Reserve funds are held in separately grouped bank accounts and receive an interest allocation. Reserve funds are administered and managed under the City’s Reserve & Reserve Fund Policy.

Special Purpose Bodies include the following parties that are partly funded by the City’s tax levy requirement:

• Quinte Economic Development
• Belleville Quinte Regional Marketing Board
• Quinte Waste Solutions
• Quinte Conservation
• Stirling Arena
• 911
• Quinte Arts Council
• Volunteer & Information Quinte

Tangible Capital Asset (also known as infrastructure) is a non-financial asset having physical substance that is acquired, constructed, or developed and:

• Is held for use in the production or supply of goods and services;
• Has a useful life extending beyond the fiscal year;
• Is intended to be used on a continuing basis; and
• Is not intended for sale in the ordinary course of operations. 

User Rates are fees charged for user-pay services, such as recreation programs/facilities, permits, parking, water, and wastewater.

Weighted Assessment is the Current Value Assessment multiplied by the tax ratio. Certain classes, such as commercial, industrial, multi-residential, or farm, will have a different tax ratio than the residential class, yielding a shift in property tax revenue between classes. Diversifying the assessment base is therefore beneficial to ensure larger tax ratio classes are bringing in more of the overall levy requirement.