Dollars and Sense

Finances

Almost everything the municipality does has a cost associated with it. You will spend a lot of time on council making financial decisions. When making those decisions, your role as a councillor is to safeguard the taxpayer's money and make the best use of scarce financial resources.

Operating and Capital Budgets

At the centre of the municipal finance system is the budget. Through the budget, council decides the municipality's priorities for the next year by setting aside money for each program or service. The budget is the single most important policy decision council makes each year. Careful budget planning and control mean better services to the residents.

The MGA requires that every municipality adopt an annual operating and a capital budget. Property and business tax bylaws cannot be passed until both budgets have been adopted. Municipalities are not allowed to budget for deficit. As well, total revenues over a four-year period must be equal to or greater than total actual expenditures.

The operating budget is a detailed estimate of how much your municipality needs to spend to meet its ongoing financial obligations and provide programs and services to the residents. The capital budget is money set aside for buying or building fixed assets such as buildings, vehicles, water and sewer facilities, and land.

A long-range capital plan, covering three to five years should be in place. The plan sets out what capital expenditures are needed and when, the future cost of maintaining the asset when it has been built or purchased, and how the assets will be financed.

The budget is a plan of your expenditures and revenues over the course of the year. Council needs to keep an eye on what is actually happening to make sure that the municipal operations match the budget. You should receive regular financial reports from administration that compare actual results to the budget. Financial reports are a good source of information and budget control.

See sections 242-247 Municipal Government Act

Procedure for Expenditure Authorization

Each council must establish procedures to authorize and verify expenditures that are not included in a budget. If you make an unauthorized expenditure, or vote to spend granted or borrowed funds for a purpose other than that for which they were granted or borrowed, you could be held personally liable for the amount of the expenditure, grant, or borrowing.

See sections 248-249 Municipal Government Act

Borrowing:

The Minister of Municipal Affairs has, by regulation, established municipal debt and debt service limits. As long as a municipality is within the limits, no provincial approvals are required for borrowing, but the Minister's approval is required for any borrowing beyond the debt limits. If you vote for a borrowing that puts the municipality above the regulated debt limit you could be held personally liable for the amount of the borrowing unless the borrowing is approved by the Minister.

See sections 249, 252, & 275 Municipal Government Act

Auditor:

Each council must appoint an auditor for the municipality and must submit audited financial statements and audited financial information return to the Minister of Municipal Affairs by May 1 of each year. In addition, the financial statements or a summary of them must be made available to the public by May 1 of each year. The financial statements must disclose the municipality's debt limit as well as the salaries of the Chief Elected Official (mayor or reeve), individual councillors, the Chief Appointed Officer, and the designated officers of the municipality.