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2018-04-17 Finance Committee Agenda Packet - Open SessionCity of Saint John Finance Committee - Open Session AGENDA Tuesday, April 17, 2018 4:30 pm 8th Floor Boardroom, City Hall 1. Call to Order Pages 1.1 Approval of Minutes - March 13, 2018 1 - 2 2. Consent Agenda 2.1 Banking Resolution 3 - 5 2.2 City of Saint John Audit Services 6-15 3. Business Matters 3.1 Asset Management Phase 2 Project Update 16-27 3.2 2017 Capital Budget Analysis 28-49 3.3 Tri -City Procurement Initiatives 50-55 3.4 Public Engagement 56-69 3.5 Operating Budget Policy 70-80 1 Poeta Sy:1 rIN. m MINUTES — OPEN SESSION FINANCE COMMITTEE MEETING MARCH 13, 2018 AT 5:00 PM Stn FLOOR BOARDROOM, CITY HALL Present: Mayor D. Darling Councillor D. Merrithew Councillor G. Sullivan Councillor S. Casey Councillor D. Reardon Councillor G. Norton Also Present: City Manager J. Trail Deputy City Manager N. Jacobsen Commissioner of Finance and Treasurer K. Fudge Commissioner Growth and Development Services J. Hamilton Comptroller Finance C. Graham Senior Manager Financial Planning H. Nguyen Deputy Commissioner Administrative Services I. Fogan Deputy Fire Chief J. Armstrong Administrative Fire Office J. Hennessey Assistant Comptroller Finance and Administrative Services C. Lavigne Deputy Commissioner Transportation and Environment Services J. Hussey Director Corporate Performance S. Rackley -Roach Solicitor M. Tompkins Commissioner Saint John Water B. McGovern Police Chief J. Bates Director HR and Finance Police M. Corscadden Common Clerk J. Taylor Administrative Assistant K. Tibbits 1. Meeting Called To Order Councillor Merrithew called the Finance Committee open session meeting to order. 1.1.1 Approval of Minutes— December 6, 2017 Moved by Councillor Reardon, seconded by Mayor Darling: RESOLVED that the minutes of December 6, 2017, be approved. MOTION CARRIED. 1.2 Long Term Financial Planning sustainability, flexibility and vulnerability was discussed from a financial perspective. Ms. Rackley -Roach reviewed the proposed approach for public engagement used by other municipalities with a goal of obtaining citizen input on services and long range financial planning. Moved by Councillor Reardon, seconded by Mayor Darling: RESOLVED that the submitted presentation "Long Term Financial Planning", be received for information. MOTION CARRIED. 1.3 2018 Revised General Operating Budget Mr. Fudge reviewed the revised 2018 General Operating budget. A provincial funding agreement was approved resulting in an additional $3.4M in funding for 2018. The revised budget includes this additional funding which complies with the provincial agreement to minimize the impact on front line services. The overall City establishment has been reduced by 11 full-time positions, for a final establishment number of 630. The establishment is reduced by one inside worker position in the Police Commission, for a total of 203 positions. Overall establishment change is 845 positions to 833 positions. Moved by Councillor Sullivan, seconded by Councillor Reardon: RESOLVED that the Finance Committee recommend that Common Council approve the 2018 Establishment of Permanent positions at 630; and that the revised 2018 General Operating Budget be approved as submitted. MOTION CARRIED. 1.4 Water and Sewerage By -Law Amendment Mr. McGovern reviewed the proposed changes to the Water and Sewerage Bylaw. The proposed amendments include housekeeping items, the repeal of a provision considered inequitable and outside the city's authority, the creation of a new provision to improve the allocation of water costs among ratepayers, and improved by-law enforcement provisions. The provision related to improved allocation of water costs among ratepayers is projected to increase revenue to the utility by approximately $85k. Moved by Mayor Darling, seconded by Councillor Reardon: RESOLVED that the Finance Committee recommend that Common Council give First and Second reading to the amendment to the Water and Sewerage By-law, By-law No. M-16, attached to the submitted report dated March 6, 2018. MOTION CARRIED. Adjournment Moved by Councillor Reardon, seconded by Mayor Darling: RESOLVED that the open session meeting of the Finance Committee meeting be adjourned. MOTION CARRIED. The Finance Committee open session meeting held on March 13, 2018 was adjourned at 6:25 p.m. FINANCE COMMITTEE REPORT Report Date April 04, 2018 Meeting Date April 19, 2018 Chairman Councillor Merrithew and Members of Finance Committee SUBJECT: Banking Resolution OPEN OR CLOSED SESSION This matter is to be discussed in open session of Finance Committee. AUTHORIZATION Primary Author Deputy Commissioner/Dept. Head City Manager Craig Lavigne Cathy Graham/Kevin Fudge I Jeff Trail RECOMMENDATION It is recommended that Finance Committee endorse the following resolutions to be submitted to Common Council for adoption at its next meeting. Resolved: 1. That the banking business of the City of Saint John, or any part thereof, may be transacted with the Bank of Nova Scotia. 2. That any two of the: Commissioner of Finance Comptroller Assistant Comptroller Senior Manager Financial Planning, Reporting and Analysis Senior Financial & Economic Analyst be and are hereby authorized on behalf of the City: (a) To borrow money from time to time and in accordance with existing and applicable council resolution(s) in that regard, by way of direct advances by Promissory Notes, Overdraft, or Standby Letters of Credit/Letters of Guarantee; (b) To oversee banking business to include, without limitation, the operation of the City's accounts; the making, signing, drawing, accepting, endorsing, negotiating, lodging, depositing or transferring of any cheques, K3 -2 - promissory notes, drafts, acceptances, bills of exchange and orders for the payment of money; the approval of any administrative arrangement relating to any such banking business and defining the rights and power of the parties thereto; and the authorizing of any officer of such institution to do any act or thing on the City's behalf to facilitate such banking business; and (c) To delegate certain transactions which fall under a dollar threshold to designated positions in an administrative internal policy. 3. That any one of the: Commissioner of Finance Comptroller Assistant Comptroller Senior Manager Financial Planning, Reporting and Analysis Senior Financial & Economic Analyst be and are hereby authorized on behalf of the City: (a) To negotiate with or transfer to the Bank of Nova Scotia for deposit or discount with or collection by the Bank (but for the credit of the City's accounts only) cheques, promissory notes, bills of exchange, drafts, orders for the payment of money and other instruments, whether negotiable or not, purporting to be signed or endorsed on behalf of the City by any one of them or having the name of the City impressed thereon by rubber stamp or other devise without any signature; (b) To arrange, settle, balance and certify all books and accounts between the City of Saint John and the Bank and to receive all paid cheques and other vouchers, unpaid and unaccepted bills of exchange and other negotiable instruments and to sign the Bank's form of settlement of balances and release; and (c) To delegate any authority conferred on such person by sub -paragraphs (a) and (b) of this paragraph by any other employee of the City, by notice in writing filed with the Bank. 4. That all agreements, documents and instruments signed, drawn, accepted, endorsed or executed as aforesaid shall be valid and binding on the City. 5. That this resolution shall, from the time Common Council approves, supersede any previous resolutions and instructions respecting the transaction of banking business between the City and Bank of Nova Scotia. CI -3 - EXECUTIVE SUMMARY The Bank of Nova Scotia, which is the City's banker, requires certain resolutions to be passed by Common Council. One of these is the banking resolution that sets out the signing officers of the Corporation. As a result of the recent staffing changes it is necessary to modify the existing banking resolutions to reflect the actual staffing structure. PREVIOUS RESOLUTION M&C — 2006-266 Banking Resolutions STRATEGIC ALIGNMENT The recommendation aligns with Council's priority of fiscal responsibility and continuous improvement. REPORT The City's banking resolutions were last updated in 2006. There have been several staffing changes, realignments and banking technology advances that has occurred since that time. The purpose of these resolutions are to update staffing changes to reflect the current structure, as well as update the language in the resolutions to better reflect the current banking service environment the City operates in. SERVICE AND FINANCIAL OUTCOMES N/A INPUT FROM OTHER SERVICE AREAS AND STAKEHOLDERS Staff has reviewed the changes with Legal, the City Auditors and Bank of Nova Scotia. 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Head City Manager Craig Lavigne Kevin Fudge/Cathy Graham Jeff Trail RECOMMENDATION It is recommended that this report be received and filed. EXECUTIVE SUMMARY The purpose of this report is to provide the Finance Committee with an update on the 2017 General and Utility Fund Capital Budgets. This report will be broken down into two sections. The first section summarizes the projected 2017 General and Utility Capital costs compared to budget. The second section provides the Finance Committee a cost variance analysis based on projected capital costs for selected projects. PREVIOUS RESOLUTION N/A STRATEGIC ALIGNMENT This report aligns with being fiscally responsible by reporting to the Finance Committee the fiscal management of the City of Saint John capital funds. 01.1 -2 - REPORT Common Council annually approves Operating and Capital Budgets. The Finance Committee receives quarterly updates on the year to date operating results for General and Utility Fund Operating budgets. Those updates include a comparison of year to date actual operating expenses and projected year end results compared to budget. The Finance team will provide similar progress updates to the Finance Committee for the capital budget on a semi-annual basis. The Capital Budget analysis is more complex than an Operating Budget analysis given capital projects can span over multiple years, can include multiple budget numbers, can have carryover implications, may not change as frequently as an operating budget and can include several funding sources. For these reasons, it is recommended that Capital Budget updates be brought either on a semi-annual or annual basis to the Finance Committee rather than the quarterly updates brought for the operating budget. Staff closely manages the capital expenditures to ensure optimal delivery of projects within the approved capital budgets. Capital projects often have several phases including; planning, design, tendering and construction. Through these various steps; project scope, costs and other unplanned expenditures can affect the approved budget both positively and negatively. Therefore budget adjustments are generally managed within capital budget. Budget overages are offset by positive variances in other budgets and are brought to Common Council for approval. 2017 Capital Budget Analysis Total estimated expenditures for the 2017 General Fund capital budget were $17.11M which represents a positive variance of $1.81M or 9.55% of the approved budget. Total estimated expenditures for the 2017 Utility Fund capital budget were $13.412M which represents a positive variance of $973M or 6.76% of the approved budget. The projected expenditures are based on both final costing for projects that are complete and estimated costs for projects that are not fully complete or not underway. The General Fund and Utility fund projection do not include the City Market Project or the Safe Clean Drinking Water Project as these significant projects span over multiple year and will be reported separately in its entirety. Detailed 2017 Capital Budget information is listed in Appendix 1. Kul -3- 2017 Capital 2017 Variance Budget Expenditures CORPORATE $953,000 PUBLIC SAFETY $1,560,000 FLEET/TRANSIT & CITY $5,000,000 TRANSPORTATION $7,876,250 FACILITIES $1,907,000 PARKS & RECREATION $1,620,000 $850,000 $1,510,000 $5,000,000 $6,281,498 $1,848,098 $1,620,000 $103,000 $50,000 $0 $1,594,752 $58,902 $0 GRAN D TOTAL $18,916,250 $17,109,596 $1,806,654 SAINTJOHN WATER $14,385,000 $13,412,084 $972,916 NOTE: Expeditures are based on actual and estimates NOTE: City Market and SCDW not included in above figures The largest positive variance can be attributed to Transportation in the General Fund budget. The positive variances can be attributed to projects on McLellan Street, Pokiok Road, Asphalt resurfacing program having surplus upon completion. Saint John's Water's surplus can be attributed to projects on McLellan Street, Pokiok Road, SCADA System and Watermain Cleaning and Lining. Projects such as Morna Heights Wastewater Treatment Facility are anticipated to be over budget; however the overages will be managed within the overall Capital budget. 2017 Completed Capital Budget Projects Appendix 2 is a list of the top 10 projects that were approved in 2017 and have been substantially completed and final costing listed. The lowest tender price, along with the contractor names has been included. This appendix demonstrates the favorable tender pricing these projects received and how the overall managing of these projects contributed to the surplus in the Capital Budgets. In conclusion, staff from all service areas manage capital spending to ensure that the overall capital program is managed within its approved budget while ensuring best value for money for the citizens of Saint John. M-11 -4 - SERVICE AND FINANCIAL OUTCOMES The 2017 Capital Program cost projections have an anticipated overall surplus of $2.8M using the completed costs and estimated costs for the two funds. Some of these variances are estimates and are subject to change and some of these positive variances may be used to offset overages in other capital projects. INPUT FROM OTHER SERVICE AREAS AND STAKEHOLDERS Input was received from Saint John Water, Transportation and Environment, Saint John Transit and Finance and Administrative Services. 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E 0 @ � 0) % � 0 CC) 0 � � cn E \ � o 0 o 04cn E | 0 N N 00 � Or LO O m m � � � � Z C/) @ E � � � � D � E R — U $ m R � R 2 C: U & 4 $ V) 2 $ V @ U I co LO FINANCE COMMITTEE REPORT Report Date April 12, 2018 Meeting Date April 17, 2018 Chairman Councillor Merrithew and Members of the Finance Committee SUBJECT. 3 Finance Committee Report - Tri -City Procurement. docx OPEN OR CLOSED SESSION This matter is to be discussed in open session of the Finance Committee AUTHORIZATION Primary Author Commissioner/Dept. HeadCity Manager Cindy Calvin Kevin Fudge Jeff Trail RECOMMENDATION That the Finance Committee receive and file this report. EXECUTIVE SUMMARY The purpose of this report is to update the Committee on the progress of the Tri -City (Moncton, Fredericton and Saint John) 2017-2018 joint procurement initiatives. PREVIOUS RESOLUTION N/A STRATEGIC ALIGNMENT This report aligns with Council's Priorty for Fiscal Responsibility, specifically as it relates to "Advance a culture of continuous improvement to drive operational efficiencies". REPORT There has been an on-going effort for many years between the Procurment Departments of Moncton, Fredericton and Saint John to share information and procurement methods, enabling each City to obtain the highest level of goods and services at the lowest possible cost. In the Fall of 2011 these efforts were expanded to explore the possibility of jointly tendering selected goods and services. While a few items were jointly 6'511 -2 - procured between 2011 and 2016, the establishment of a Tri -City mandate was officially put in place in December 2016 by the City Managers of each City. The City Manager's engaged retired Fredericton Purchasing Agent, Bob Cormier, to prepare a Spend Analysis to identify potential opportunities for savings with joint procurement. From this framework, joint procurement initiatives were undertaken in early 2017. While there are challenges to overcome, good results have been achieved. Challenges to overcome include: ➢ Multi year contracts currently in place by one or more City ➢ Contracting a single vendor that is present in all three city who can provide a particular service. ➢ Cities employing different service models or Philosophies such as: o Lease vs buy o Internal inventory vs direct purchase o Inhouse vs contracted service Procurement initiative completed in 2017 and early 2018 include the supply of Plow Bades, Traffic Paint, Traffic signs, Highway Salt, Glass Beads, Street Trees and Cell Phone Plans. 2018 initiatives in progress or slated for later this year include: Stationery Supplies, Multi Function Printers, Bevereage Vending Machines and Fleet Equipment. SERVICE AND FINANCIAL OUTCOMES The various Tri -City joint procurement projects undertaken to -date have yeilded a total savings for the City of Saint John of $204,758 in 2017 and $194,708 thus far in 2018. These savings were derived from projects that include: ➢ Cell phone and data plans with an annual savings of $86,220 (2015-2019) ➢ Plow blades with annual savings of $11,088 (2017 and 2018); and ➢ Highway Salt with a savings of $107,450 in 2017 and $97,400 in 2018. INPUT FROM OTHER SERVICE AREAS AND STAKEHOLDERS Staff from Fleet, IT and Transportation have worked closely with Materials Management and their counterparts in Fredericton and Moncton to establish specifications, terms and conditions to enable the joint tendering process. ATTACHMENTS Power Point Presentation 6191 I I El z. i U e� u r 0 fo iuuuuuuuuuuuuuuuuuuuuuuiu mmi e imloft AL 2 - LO r e imloft AL 2 - LO CL ai Ln M U C) D r 4- 0 UO Q) Q) m N N t�A t�A w 8 0 4-J 51� 4 r llllj�u u Zn 0 < um 4-J 0) C uuuuuuuuuloiuuuuuuuuuuuul bn mmi 4-J CSI O< C'n to I I 0 0 0 0) 4— C11% 0 ca q) E2 0 CU 0) 6 "0 z 0 >1 o 0 5 '.(D OL a 0 0 CU c E o 0 :3 $- :3 cr 0 a) 0 w > 2 >> I I M�w GSI a Q) m Q) Q) m Q) 4--j Q) E 4--j nn W �U 1� C- N O CLO N C2A N O O N O i O i cn O E \ > N O Ov Q N N V 4-j oO Q 4-j N v v N O E ca ca v O cn Q p a.., - N H U 2 N cu O U '� N N c O N t�A O i O cn O r Q N N V i C a--+ O Q 0 v O Q p - N N O U '� N N i (� W = J N (n • 4--j Q) E 4--j (n Q) L� 4--j V) O .UO D U O U 06., Rt r -I FINANCE COMMITTEE REPORT M&C No. i/ fOLM(t OfSh,1 ej)0iW Report Date April 17, 2018 Meeting Date April 17, 2018 Service Area Finance and Administrative Services His Worship Mayor Don Darling and Members of Common Council SUBJECT: Operating Budget Policy FAS -004 OPEN OR CLOSED SESSION This matter is to be discussed in open session of Finance Committee. AUTHORIZATION Primary Author Commissioner/Dept. HeadL4 City Manager Kevin Fudge Kevin Fudge m I Jeff Trail RECOMMENDATION Be it resolved that: 1. Finance Committee recommends that Common Council approve the Draft City of Saint John Operating Budget Policy FAS -004; EXECUTIVE SUMMARY It is recommended that Common Council approve the Operating Budget Policy for the City of Saint John. The Policy applies to both General and Water & Sewerage Utility Operating Budgets. Operating Budget Policies are considered a best practice financial policy and instrumental to creating a fiscally responsible City and a key instrument in the development of a robust Long Term Financial Plan. PREVIOUS RESOLUTION N/A REPORT The Operating Budget is one of the most significant public documents a municipality produces as it sets forth the City's taxing and spending plans that fund explicit service priorities. The document also outlines the organization Me] -2 - service areas that are responsible for achieving service priorities and are accountable for spending tax payer's dollars. The operating budget is also an important communication tool for making spending transparent to elected officials and to citizens. An Operating Budget Policy is considered best practice for providing guidelines to Common Council and staff of the broader implications of budget decisions. The objective of the Operating Budget Policy is to: 1. Strengthen Financial Sustainability by budgeting recurring expenditures with recurring revenues and allocating one time revenues to one time expenditures or reserves; 2. Reduce Financial Vulnerability by gradually decreasing reliance on sources of revenue outside its controls such as operating grants from other government sources. Financial policies provide the "rules" that shape financial decisions. When policies are effective they can enhance the financial health of governments. By contrast, weak policies can create fiscal instability. The Operating Budget Policy includes fundamental principles that will protect the City from future structural deficits: 1. The City's Operating Budget shall align with Council approved policies and a Council approved Long Term Financial Plan; 2. The City must be able to bear the budgeted costs of providing services without incurring financial difficulty or risking other undesirable consequences; 3. The City will consider implementation of operational efficiencies, continuous improvement initiatives, and new revenue generation strategies when planning the operating budget; 4. The Operating Budget will be produced with a long-term lens of achieving a structurally balanced budget; giving taxpayers a better representation of the link between financial resources and services that can be delivered over the long term; 5. The City will seek to improve its mix of operating budget revenues to the extent feasible within the confines of the Local Governance Act, and other applicable legislation; The Operating Budget Policy also establishes important parameters to safeguard the City's Financial Health, including policy respecting the Use of Non -Recurring 71 -3 - Revenue, the setting of User Charges and Fees, and applications for Grant funding. USE OF NON-RECURRING REVENUE Non -Recurring Revenues are revenues that the City cannot reasonably expect to receive on an ongoing basis. Non-recurring revenue can introduce significant instabilities into the City's service provision strategy if they are used to fund ongoing services and programs. A best practice operating policy directs non- recurring revenues away from ongoing expenditures to prevent the probability of becoming structurally imbalanced. Some examples of Non -Recurring Revenue includes revenue that has an ending date of less than 36 months (except for intergovernmental funding agreements designed to improve long term sustainability), revenue spikes due to higher than normal transactional activity, and one time transactions, such as the sale of assets. The Operating Budget Policy states the following: "Non-recurring revenues shall be directed to onetime uses and away from funding ongoing services; and Short term revenue spikes should be treated in a similar way to non- recurring revenue" This policy serves to improve Financial Sustainability and Reduce Financial Vulnerability as it mitigates the risk of not having a Structurally Balanced Budget — a budget for which recurring operating revenues are sufficient to fund recurring operating expenses. USER FEES A user fee policy is important for ensuring that fees are fair and cover the cost of the service they are intended to fund. The Operating Budget Policy requires that service areas assess the cost of activities supported by user fees on an annual basis to identify the impact of inflation and other cost increases. The policy also prescribes that service areas should develop cost recovery policies for its user fees that describes the service cost recovery goals based on quantitative targets (percentage recovery of costs targets). Factors suggesting higher or lower levels of cost recovery are itemized in the policy for consideration. SERVICE AND FINANCIAL OUTCOMES This report and recommendation are in alignment with best practices and will support future strong fiscal management. Chc k here to enter text, roil -4 - ATTACHMENTS: FAS 004 Operating Budget Policy 01 (0,11-1- Title: Operating Budget Subject: Operating Budget Category: Finance and Administrative Services Policy No.: FAS-004 M&C Report No.: Effective Date: TBD Next Review Date: TBD Area(s) this policy applies to: Cross Corporate Office Responsible for review of this Policy: Finance and Administrative Services Related Instruments: Policy Sponsors: FAS-001 Asset Management Policy Commissioner of Finance and Administrative Services FAS-002 Investment Policy FAS-003 Reserves Policy FAS-005 Capital Budget Policy FAS-006 Debt Management Policy Document Pages: This document consists of 5 pages. Revision History: Common Clerk's Annotation for Official Record Date of Passage of Current Framework: I certify that this Policy was adopted by Common Council as indicated above. Common Clerk Date Date Created: Common Council Approval Date: Contact: TBD Finance and Administrative Services W11 TABLE OF CONTENTS 1. POLICY STATEMENT...................................................................................................... 2 2. DEFINITIONS...................................................................................................................2 3. PRINCIPLES AND STRATEGIES........................................................................................ 2 4. AUTHORITY.....................................................................................................................3 5. USE OF NON-RECURRING REVENUES.....................................................................................4 6. USER CHARGES & FEES............................................................................................................4 7. GRANTS.......................................................................................................................................5 8. VARIANCE REPORTING..............................................................................................................5 9. ROLES AND RESPONSIBILITIES....................................................................................... 5 rial City of Saint John Operating Budget 1. 2. 3. POLICY STATEMENT 1.1 The purpose of this policy is to outline the financial principles governing the funding of the City operating budget; 1.2 Operating budget planning shall comply with all relevant provisions of the Local Governance Act and all other applicable legislation; 1.3 The City's objectives with respect to the Operating Budget Policy are as follows: 1.3.1 Strengthen Financial Sustainability by budgeting recurring expenditures with recurring revenues and allocating one time revenues to one time expenditures or reserves; 1.3.2 Reduce Financial Vulnerability by gradually decreasing reliance on sources of revenue outside its controls such as operating grants from other government sources. DEFINITIONS Operating Budget — a Council approved plan containing the revenue and expenditure allocations required to provide City programs and services for the current fiscal year which must be aligned with a Council Approved Long Term Financial Plan; Basis of Budgeting — All budgetary procedures will conform to Provincial regulations; Structurally Balanced Budget — a budget for which recurring operating revenues are sufficient to fund recurring operating expenses; Non Recurring Revenues are revenues that the City cannot reasonably expect to receive on an ongoing basis. The source is most likely one-time if any of the followings applies: • Has a set ending date ranging between 12-36 months with the exception of intergovernmental funding agreements designed to improve long term sustainability; • Revenue spikes due to higher than normal transactional activity; • One time transactions, such as the sale of assets. PRINCIPLES AND STRATEGIES 3.1 The City will utilize the following principles and strategies in making decisions related to the operating budget: 76 2 City of Saint John Operating Budget 4. 3.1.1 Alignment with Strategy — the City's budgeted operations shall be in line with agreed upon Council priorities and the Long Term Financial Plan; 3.1.2 Affordability — the City must be able to bear the budgeted costs of providing services without incurring financial difficulty or risking other undesirable consequences; 3.1.3 Innovation —implementation of operational efficiencies, continuous improvement initiatives, and new revenue generation strategies will be considered when planning the operating budget; 3.1.4 Sustainability — the operating budget will be produced with a long-term focus of achieving a structurally balanced budget; giving taxpayers a better representation of the link between financial resources and services that can be delivered over the long term; 3.1.5 Diversification —the City will seek to improve its mix of operating budget revenues to the extent feasible within the confines of the Local Governance Act, and other applicable legislation. AUTHORITY 4.1 The operating budget establishes the spending authority for all Service Area activities and initiatives; 4.2 Operating budgets, at the Service Area level, cannot be reallocated without Council approval; 4.3 Service Area Commissioners are responsible for managing within their existing budget; 4.4 In cases where significant budget overruns are expected due to Emergencies such as severe weather conditions or EMO events, such cost overruns can be approved by the City Manager in advance and must be reported back to the Finance Committee as per Section 8 of this Policy together with recommended mitigation �iiT-b-IRVY&N 77 3 City of Saint John Operating Budget S. D1 USE OF NON-RECURRING REVENUES 5.1 Non-recurring revenues shall be directed to onetime uses and away from funding ongoing services. Examples of non-recurring revenues would include one-time sale of assets. Examples of acceptable uses would include funding Pay -As -You -Go for capital expenditures that would otherwise be funded by debt, funding the infrastructure deficit, or to build up capital or operating reserves; 5.2 Short term revenue spikes should be treated in a similar way to non-recurring revenue. USER CHARGES AND FEES 6.1 The City will seek to balance the need for services and the ability to raise fees, charges, and taxes to support those services. User fees will be assessed relative to the cost of providing the services; 6.2 Service areas should assess the cost of activities supported by user fees on an annual basis to identify the impact of inflation and other cost increases; 6.3 Council may decide against full cost recovery in cases where greater public benefit is demonstrated; 6.4 Factors suggesting a higher level of cost recovery include (1) the service is similar to services available in the private sector or through another agency; (2) there is a strong nexus between the amount paid and the benefit received; (3) the goal is to discourage use of a service or limit demand; (4) the service is regulatory. 6.5 Factors suggesting a lower level of cost recovery include (1) there is a community wide benefit to the service; (2) the fee will discourage compliance with regulation; (3) there is a weak correlation between the amount paid and benefit received; (4) collecting the fee is not effective; (5) is an emergency service that may depend on no notice. 6.6 Service areas should develop cost recovery policies that will be used as a basis for setting the charges or fees, as well as the service cost recovery goals based on quantitative targets (percentage recovery targets) and how the charges and fees will be levied and collected. 78 4 City of Saint John Operating Budget 7. 8. 9. GRANTS 7.1 Inter -Governmental funding opportunities will be pursued for initiatives that are in line with Council priorities, the approved budget, and the Long Term Financial Plan; 7.2 Any opportunities falling outside the criteria in 7.1 will require Council approved adjustment to the budget and the Long Term Financial Plan and be supported by a business case. VARIANCE REPORTING 8.1 The Finance Committee shall be informed on a timely basis on all significant unfavourable financial matters and will receive, as a minimum, quarterly financial budget variance reports; 8.2 Service Area Commissioners are responsible to present a quarterly report analyzing material variances and causes of such variances to the Finance Committee. ROLES AND RESPONSIBILITIES 9.1 Council shall: 9.1.1 Approve the operating budget as recommended by the Finance Committee; 9.1.2 Establish priorities through the Long Term Financial Plan. 9.2 The Finance Committee shall: 9.2.1 Review the operating budget and make recommendations for Council approval; 9.2.2 Ensure the operating budget is aligned with the Long Term Financial Plan. 9.3 The City Manager shall: 9.3.1 Direct the preparation and presentation of the operating budget; 9.3.2 Exercise financial control over all corporate operations in conjunction with the Finance Commissioner to ensure compliance with the operating budget approved by Council. 9.4 The Finance Commissioner and Finance Team shall: 79 5 City of Saint John Operating Budget 9.4.1 Prepare long range revenue and expenditure forecasts; 9.4.2 Review departmental budgets with individual departments; 9.4.3 Analyze and make recommendations on budget requests; 9.4.4 Review the consistency and alignment between budget requests and overall budget goals; 9.4.5 Consolidate all budget requests and their impact into a package that clearly communicates the City's budget objectives, pressures, and linkage to the City's Long Term Financial Plan. 80 6