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2018-06-13 Finance Committee Agenda Packet - Open Session MINUTES OPEN SESSION FINANCE COMMITTEE MEETING APRIL 17, 2018 AT 4:30 PM th 8 FLOOR BOARDROOM, CITY HALL Present: Mayor D. Darling Councillor D. Merrithew Councillor G. Sullivan Councillor S. Casey Absent: Councillor G. Norton Councillor D. Reardon Also Present: City Manager J. Trail Deputy City Manager N. Jacobsen Commissioner of Finance and Treasurer K. Fudge Comptroller Finance C. Graham Senior Manager Financial Planning H. Nguyen Commissioner Transportation & Environment Services M. Hugenholtz Deputy Commissioner Administrative Services I. Fogan Manager Materials Management C. Calvin Administrative Fire Office J. Hennessey Assistant Comptroller Finance and Administrative Services C. Lavigne Deputy Commissioner, Engineer B. Keenan Director Corporate Performance S. Rackley-Roach Commissioner Saint John Water B. McGovern Administrative Assistant K. Tibbits 1. Meeting Called To Order Councillor Merrithew called the Finance Committee open session meeting to order. 1.1 Approval of Minutes March 13, 2018 Moved by Mayor Darling, seconded by Councillor Sullivan: RESOLVED that the minutes of March 13, 2018, be approved. MOTION CARRIED. Moved by Mayor Darling, seconded by Councillor Sullivan: RESOLVED that the agenda for the Finance Committee meeting of April 17, 2018 be approved. MOTION CARRIED. Moved by Councillor Sullivan, seconded by Mayor Darling: RESOLVED that the Finance Committee endorse the following resolutions to be submitted to Common Council for adoption at its next meeting: 1. 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; accounts; the making, signing, drawing, accepting, endorsing, negotiating, lodging, depositing or transferring of any cheques, 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 t 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 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 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 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. MOTION CARRIED. 2.2 City of Saint John Audit Services Moved by Councillor Sullivan, seconded by Mayor Darling: RESOLVED that: The Finance Committee instructs the Commissioner of Finance & Administrative issue one Request for Proposal for all audit services; Finance Department works with the ABCs to determine if they are interested in joining the City in procuring audit services and whether they have any outstanding commitment with other accounting firms; Staff report back to the Finance Committee after receiving responses from the ABCs; and, Issue a Request for Proposal MOTION CARRIED. 3. Business Matters 3.1 Asset Management Phase 2 Project Update (Mr. S. Yammine, Energy Manager and Mr. H. Arisz of RV Anderson entered the meeting) Referring to the submitted presentation, Mr. Arisz provided an update on Phase 2 of the Asset Management project and discussed next steps in the process. Data collection efforts will take approximately 6 to 12 months and will provide a solid foundation of the asset inventory and condition of the assets, providing empirical evidence to support financial decisions. Moved by Councillor Sullivan, seconded by Mayor Darling: RESOLVED that the submitted presentation Asset Management Phase 2 Project Update, be received for information. MOTION CARRIED. (Mr. Yammine and Mr. Arisz withdrew from the meeting) 3.2 2017 Capital Budget Analysis Referring to the submitted report, Mr. Lavigne commented on the 2017 General and Utility Fund Capital Budgets including a discussion on the projected costs compared to the budget and a cost variance analysis, noting that capital projects often span multiple years. Responding to a question as to when additional capital proposals can be considered, Mr. Trail noted that Council will first have to determine if it wants to engage in additional capital projects, reduce borrowing further, or maintain borrowing at current levels. Mr. Fudge noted that a long-term capital budget policy will be implemented to assist in decision making. Moved by Mayor Darling, seconded by Councillor Sullivan: RESOLVED that the submitted presentation and report regarding the 2017 Capital Budget MOTION CARRIED. 3.3 Tri-City Procurement Initiatives (Councillor Casey entered the meeting) Mr. Fogan noted that the cities of Saint John, Fredericton and Moncton often consult with one another on the best way to procure goods and services. The goal is to align services and ultimately obtain better pricing on common items. Referring to the submitted presentation, Ms. Calvin provided an update on the goals and challenges of tri-city procurement including procurement initiatives and savings to date. Moved by Councillor Casey, seconded by Mayor Darling: RESOLVED that the submitted presentation and report entitled Tri-City Procurement Initiatives, be received for information. MOTION CARRIED. 3.4 Public Engagement Ms. Nguyen stated that public engagement is a best practice approach in terms of developing a long-term financial plan and can include a combination of citizen surveys, in-person events and on-line budget simulations. Ms. Rackley-Roach showcased the Budget Allocator and the Budget Simulator tool and commented on the pros and cons of each. Moved by Mayor Darling, seconded by Councillor Sullivan: RESOLVED that the Finance Committee approve proceeding with the Public Engagement Process and that implementation of the Budget Simulator on-line tool be approved. MOTION CARRIED. 3.5 Operating Budget Policy Mr. Fudge reviewed the submitted Operating Budget Policy as one of the suite of financial al sustainability and reduce its vulnerability. Moved by Councillor Sullivan, seconded by Mayor Darling: RESOLVED that the Finance Committee recommends that Common Council approve the Draft City of Saint John Operating Budget Policy FAS-004. MOTION CARRIED. Adjournment Moved by Councillor Sullivan, seconded by Mayor Darling: RESOLVED that the open session meeting of the Finance Committee be adjourned. MOTION CARRIED. The Finance Committee open session meeting held on April 17, 2018 was adjourned at 6:55 ƭ Ɠ Ʒ ŷ Ɠ ƚ Ļ W Ʒ ƒ Ɠ Ļ ź Ʒ ğ ğ { Ʒ { Ņ June 13, 2018 ƌ ƚ ğ ź Ǥ ĭ Ʒ ź Ɠ / ğ Ɠ ź C ķ Ļ Ʒ ğ ķ ź ƌ ƚ ƭ Ɠ ƚ / А Њ Љ Ћ 2112 2106 2100 2094 2088 2082 2076 2070 2064 2058 2052 2046 2040 2034 2028 2022 Deficit Millions Budget Amount 2112 2106 2100 2094 2088 2082 2076 2070 2064 2058 2052 2046 2040 2034 2028 2022 Deficit Millions Budget Amount Saint John Water April 2018 Budget Analysis End Forecast - City of Saint John April 2018 Year COUNCIL REPORT # found on Sharepoint. M&C No. Report Date June 04, 2018 Meeting Date June 13, 2018 Service Area Finance and Administrative Services Chairman Councilor Merrithew and Members of the Finance Committee SUBJECT: Capital Budget Policy FAS-005 OPEN OR CLOSED SESSION This matter is to be discussed in open session of Common Council. AUTHORIZATION Primary Author Commissioner/Dept. Head City Manager Kevin Fudge Kevin Fudge Jeff Trail RECOMMENDATION Finance Committee recommends that Common Council approve the Draft City of Saint John Capital Budget Policy FAS-005; EXECUTIVE SUMMARY It is recommended that Common Council approve the Capital Budget Policy for the City of Saint John. The Policy applies to both General and Water & Sewerage Utility Capital Budgets. The Capital Budget Policy is considered a best practice financial policy for municipalities which promotes fiscal responsibility and is a key instrument in the development of a robust Long Term Financial Plan. PREVIOUS RESOLUTION Click here to enter any previous relevant resolution. REPORT The Capital Budget is one of the most significant public documents a municipality infrastructure investment plan which includes renewal of existing infrastructure as well as new investments that contribute to the growth and prosperity The Capital Budget Policy responsible by requiring the implementation of a 10 year Capital Investment. Planning over the long term stimulates longer term thinking given the current - 2 - annual Capital Budget process only provides a single year vantage point. Long term planning also stimulates big picture thinking and will enable the City to look at investments more holistically to focus on long term goals. Finally, a forward looking Capital Plan will impose discipline and reinforces the need to stay within Council priorities while following sound financial practices and policies. CAPITAL BUDGET POLICY HIGHLIGHTS t shape financial decisions. When policies are effective they can enhance the financial health of governments. By contrast, weak policies can create fiscal instability. The Capital Budget policy includes the following main elements: 1. Each council shall adopt a Capital Budget for each calendar year; 2. The Capital budget shall align with the Council approved LTFP which includes a 10 Year Capital Investment Plan and a 10 Year Debt Plan; 3. Finance Committee will review the 10 year Capital Investment Plan Annually and recommend any major amendment to the Plan to Council for approval; 4. Investment decisions shall be evidence based applying Asset Management best practices; 5. The policy includes a Capital Prioritization structure that provides transparency in prioritizing capital investments with a stronger corporate governance structure; 6. The Capital Budget shall only fund expenditures that meet the definition of a Capital Asset per Generally Accepted Accounting Principles; 7. Only City owed Capital shall be funded through debt grants to outside organizations for infrastructure projects not owned by the City must be funded through the Operating Budget; 8. Inter-Governmental grants shall only be pursued for Capital projects that are in line with Council priorities, the approved Capital Budget, and the approved 10 Year Capital Investment Plan; 9. The Policy sets forth Capital Reporting requirements; 10. The Policy supports a transition to Multi-Year Capital Budgeting. The 10 Year Capital Investment Plan makes more strateg by allowing Council to focus on strategic priorities through a streamlined annual - 3 - Capital Budget process. In addition, as a component of the Long Term Financial Plan, the Capital Investment Plan considers affordability by setting infrastructure investments that achieve service and taxation objectives. CAPITAL PRIORITIZATION The Annual Capital Budget will prioritize requests based on the following criteria: 1. Mandatory must be completed due to legal or regulatory requirements; 2. Risk required to mitigate liability associated with health and safety, mitigate liability, or to mitigate sudden asset failure; 3. Priority of Council As stipulated in the 10 Year Capital Investment Plan (Long Term Financial Plan) and supported by evidence based asset 4. Positive Financial Impact The Capital request is not included in the 10 year Capital Investment Plan but can be supported by a business case that demonstrates a positive financial impact for taxpayers - would require a Council approved adjustment to the Capital Investment Plan and Capital Budget; 5. Discretionary New assets which aim to increase or enhance service levels to the residents and taxpayers. Requires amendment to the Long Term Financial Plan, the City strategic plans, and supported by a business case; INFRASTRUCTURE DEFICT The estimated replacement infrastructure is approximately $2.2 Billion dollars, while the infrastructure deficit (infrastructure at or beyond its theoretical service life) is estimated at approximately $434 million. In addition to the infrastructure deficit, it is estimated that another $217 million of replacement costs are expected in the coming decade. Combined, a total of approximately $651 million of assets are expected to need replacement in the next decade, consisting of $452 million in high risk assets and $199 million in low risk assets. The City is currently underfunding its infrastructure renewal requirements. According to RV (funding needed to eliminate the current infrastructure deficit and replace with assets as they reach the end of their service life is approximately $69 million per year compared to the average historical funding of $32 million. This represents a funding ratio of 45% (only 45% of the funding requirement is being met). - 4 - The infrastructure deficit cannot be affordably or sustainably funded through debt. The capital budget policy promotes increasing funding to Pay As You Go and Capital Reserves. A funding strategy will be developed through the creation of the 10 Year Capital Investment Plan (Long Term Financial Plan). Given the magnitude of the infrastructure deficit, in the short term, until such time the Capital Investment Plan and funding strategy is approved by Council, the policy prescribes that 90% of the Capital Budget shall be attributed to capital renewal projects and 10% for new infrastructure investment. SERVICE AND FINANCIAL OUTCOMES This report and recommendation are in alignment with best practices and will support future strong fiscal management. Click here to enter text. ATTACHMENTS: FAS 004 Operating Budget Policy Statement June 2018 CAPITAL BUDGET POLICY Title: Capital Budget Policy Subject: Capital Budget Policy Category: Finance and Administrative Services Policy No;: FAS-005 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-003 Reserves Policy FAS-004 Operating Budget Policy Document Pages: This document consists of 6 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 TABLE OF CONTENTS 1.POLICY STATEMENT 2. PURPOSE 3.DEFINITIONS 4.PRINCIPLES AND STRATEGIES 5.CAPITAL PRIORITIZATION 6. MULTI-YEAR CAPITAL BUDGET 7. CARRY OVER OF PREVIOUS YEAR APPROVED CAPITAL BUDGET 8.CAPITAL GRANTS .5 9. CAPITAL BUDGET SHORTFALLS & SURPLUSES.. 10. AUTHORITY .5 11. ROLES AND RESPONSIBILITIES .6 City of Saint John Capital Budget Policy 1. POLICY STATEMENT 1.1 This Policy applies to budgeting by the Municipality for capital funds; 1.2 Each council shall adopt a Capital Budget for each calendar year; 1.3 Capital budget shall align with the Council approved Long Term Financial Plan which includes a 10 Year Capital Investment Plan and a 10 Year Debt Plan; 1.4 Finance Committee will review the 10 year Capital Investment Plan Annually and recommend any major amendment to the Plan to Council for approval; 1.5 The Capital Budget Policy supports the City to achieve its current and future goals in a fiscally responsible and sustainable manner; 1.6 The Capital Budget Policy promotes making informed evidence based investment decisions based on Asset Management best practices; 1.7 The Capital Budget Policy shall comply with all relevant provisions of the Local Governance Act and all other applicable legislation; 2. PURPOSE The purpose of this policy is to: Improve the efficiency of the capital budget setting process by making more strate preparing them; Ensure that the Capital Budget plans are consistent with the goals set out by Council in its Strategic Plan; and Maintain the long term financial stability of the City. 3. DEFINITIONS Capital The definition of Capital shall be in accordance to the definition within Generally Accepted Accounting Principles which generally includes any expenditure on an asset acquired, constructed or developed with a useful life that is beyond the current budget year. Capital expenditure also includes major improvements, which alter or modernize an asset in order to substantially prolong its useful life or improve the physical output or service capacity; 2 City of Saint John Capital Budget Policy Capital Budget A plan of proposed capital expenditures to be incurred in the current year and over a period of subsequent future years (long-term) identifying each capital project and the method of financing; Lifecycle Cost - The total cost of an asset over its life cycle, including the initial purchase or construction cost, maintenance and operating costs, financing costs, and refurbishment costs; Affordability - Ability to pay for the debt servicing and life cycle costs of capital assets - the overall measure of affordability is the burden of debt servicing and life cycle costs ; Asset Management Process of developing, operating, maintaining, upgrading, and disposing of assets cost-effectively; Infrastructure deficit The gap between the funding that is required and the funding that is available for maintaining, updating, or replacing existing and aging infrastructure before serious problems occur. 4. PRINCIPLES AND STRATEGIES 4.1 The City will utilize the following principles and strategies in making decisions related to capital budget planning: 4.1.1 Affordability Capital Budget shall reflect the level of infrastructure investment required to achieve agreed upon service and taxation objectives in the Council approved Long Term Financial Plan; 4.1.2 Ownership Only City owned assets, which meet the definition of an asset pursuant to Generally Accepted Accounting Principles, shall be funded in the Capital Budget. Funding agreements prior to the approved Capital Budget Policy Council approval date are exempted from the policy; 4.1.3 Fiscal Responsibility The City shall reduce its reliance on debt and address the infrastructure deficit by increasingly funding Reserves and Pay- As-You-Go to fund infrastructure renewal; 4.1.4 Asset Management The Capital Budget shall consider the full life-cycle cost based on asset management best practices. 3 City of Saint John Capital Budget Policy 5. CAPITAL PRIORTIZATION 5.1 In the short term, to strategically manage the proportion of the capital budget that is Replacement shall be 90% of the overall Capital Program and 10% for New Capital. This ratio shall be replaced by The Capital Budget shall align with the Long Term Capital Investment Plan. 5.2 The Capital Budget shall only fund expenditures that meet the definition of a Capital Asset per Generally Accepted Accounting Principles. 5.3 Proposed Capital Budget Projects will be prioritized based on the following: 5.3.1 ağƓķğƷƚƩǤ Must be completed due to legal or regulatory requirements; 5.3.2 wźƭƉ Required to mitigate liability associated with health and safety, mitigate liability or to mitigate sudden asset failure; 5.3.3 tƩźƚƩźƷǤ ƚŅ /ƚǒƓĭźƌ As stipulated in the 10 Year Capital Investment Plan (Long Term Financial Plan) and supported by evidence based asset management 5.3.4 tƚƭźƷźǝĻ CźƓğƓĭźğƌ LƒƦğĭƷ The Capital request is not included in the 10 year Capital Investment Plan but can be supported by a business case that demonstrates a positive financial impact for taxpayers - would require a Council approved adjustment to the Capital Investment Plan and Capital Budget; 5.3.5 5źƭĭƩĻƷźƚƓğƩǤ New assets which aim to increase or enhance service levels to the residents and taxpayers. Requires amendment to the Long Term Financial Plan, the City strategic plans, and supported by a business case. 6. MULTI-YEAR CAPITAL BUDGET 6.1 To advance strategic financial planning, upon completion of the Long Term Financial Plan, the City shall move to approving Capital Budgets on a multi-year basis. 6.2 Each service area shall prepare and submit to the Finance Department their Capital Budget requests and 10 year Capital Investment Plans on the forms and in the format prescribed by the Finance Department. 4 City of Saint John Capital Budget Policy 7. CARRY OVER OF PREVIOUS YEAR APPROVED CAPITAL BUDGET 7.1 Approved capital budget projects must be started by the end of the second year after approval. 7.2 Approved capital projects not started after the end of the second year must be resubmitted for consideration in the next capital budget request unless the City Manager approves an extension to carryover for another year. 8. CAPITAL GRANTS 8.1 Inter-Governmental grants shall only be pursued for Capital projects that are in line with Council priorities, the approve Capital Budget, and the Approve 10 Year Capital Investment Plan. 8.2 Any opportunities falling outside the criteria in 7.1 will require a Council approved adjustment to the Capital Budget, 10 Year Capital Investment Plan and be supported by a business case. 9 CAPITAL BUDGET SHORTFALLS & SURPLUSES 9.1 Common Council must approve any adjustments to the Capital Budget for additional funding to cover Capital Budget shortfalls that exceed the City Managers authority level; 9.2 Capital Budget Surpluses, where budgeted Capital funds exceed actual capital expenditures shall be, with Council approval: 9.2.1 Realized as savings resulting in reduced debt financing; 9.2.2 Used to offset deficits in other approved Capital Budget shortfalls; 9.2.3 Leveraged to address the infrastructure deficit so long as the project is part of the Asset Management Plan and 10 Year Capital Investment Plan; 10 AUTHORITY 10.1 The capital budget approved by Council establishes the scope, funding and spending authority for each capital project listed in the capital budget document. 10.2 Council approval will be required for any adjustment to the capital budget that exceeds the City Managers . 5 City of Saint John Capital Budget Policy 10.3 Service Area Commissioners may authorize additional gross expenditures through change orders in provided that: 10.3.1 This policy is otherwise complied with; and 10.3.2 Funding is available to fund the over-expenditure, either from under- expenditures in other capital projects within the same Service Area or by deferral of other capital projects within the same Service Area. 11 ROLES AND RESPONSIBILITIES 11.1 Council shall: 11.1.1 Approve the capital budget as recommended by the Finance Committee; 11.1.2 Establish priorities through the Long Term Financial Plan. 11.2 The Finance Committee shall: 11.2.1 Review the capital budget and make recommendations for Council approval; and 11.2.2 Ensure the capital budget is aligned with Council priorities, the 10 Year Capital Investment Plan and the Long Term Financial Plan. 11.3 The City Manager shall: 11.3.1 Direct, in co-operation with the Finance Commissioner and Senior Leadership Team, the preparation and presentation of the capital budget; 11.3.2 Exercise financial control over all corporate operations in conjunction with the Finance Commissioner to ensure compliance with the capital budget approved by Council. 11.4 The Finance Commissioner and Finance Team shall: 11.4.1 Analyze and make recommendations on capital budget requests based on Plan, Financial Policies, and Asset Management Plan; 6 City of Saint John Capital Budget Policy 11.4.2 Prepare semi-annual Capital Budget reports for Finance Committee, highlighting variances, project status and recommendation on projected surpluses or deficits in capital program. 7 FINANCE COMMITTEE REPORT Report Date June 07, 2018 Meeting Date June 13, 2018 Chairman Councillor Merrithew and Members of Finance Committee SUBJECT: LNG Revenue OPEN OR CLOSED SESSION This matter is to be discussed in open session of Finance Committee. AUTHORIZATION Primary Author Commissioner/Dept. Head City Manager Kevin Fudge Kevin Fudge Jeff Trail RECOMMENDATION It is recommended that the Finance Committee submit the following report to Common Council with a recommendation to allocate the additional revenue for the LNG facility ($1,157,174) to Pay As You Go (Capital from Operating) for the purpose of reducing future borrowing needs. This recommendation is supported by Councils Operating Budget Policy FAS-004. EXECUTIVE SUMMARY Finance Committee has been provided advice on the need to keep new capital borrowing to $12 million or lower in ord. Recently the City received additional net revenue of approximately $1.2 for 2018 associated with the LNG property. This was unbudgeted revenue. This revenue is not guaranteed to be received in 2019 and should not be relied upon to fund general operations per the Citys Operating Budget Policy. Staff recommends the LNG revenue be used to reduce the Citys long term debt by increasing Pay As You Go funding (Capital from Operating). PREVIOUS RESOLUTION N/A STRATEGIC ALIGNMENT The recommendation aligns with Councils priority of fiscal responsibility. - 2 - REPORT 2018 LNG REVENUE & YEAR END SURPLUS The Province of New Brunswick repealed the Act to Comply with the Request of the City of Saint John on Taxation of the LNG Terminal that capped the property assessment for the Terminal at $18 million and fixed the property tax revenue at $500,000 per year. As a condition for approval, the Province obliged the City to bear all financial risks associated with potential future appeals. The 2018 property assessment for the LNG Terminal is $98 million dollars. The Province notified the City in May that this assessment has not been appealed for the fiscal year 2018. The net incremental revenue for Saint John in 2018 has as a result increased by approximately $1.157 million dollars. For the year 2019, the LNG property assessment reverts back to the fixed st property tax revenue at $500,000 until April 1 which is the 2019 deadline for appeal. If there is an appeal, the City will be left with $500,000 until the process comes to a conclusion. Given the financial risk of an appeal lies with the City, and given the uncertainty of the appeal process, the City cannot budget for the increase in revenue for the year 2018. Operating Budget Policy FAS-004 The Citys recently approved Operating Budget Policy states that the budget will be produced with a long term focus of achieving a structurally balanced budget. A structurally balanced budget occurs when recurring revenues are sufficient to fund recurring expenses. A structurally imbalanced budget occurs when non- recurring or short term revenues are relied upon to fund recurring expenditures. Non recurring revenue is defined as revenues that the City cannot expect to receive on an ongoing basis. Subsection 5.1 of the Council approved policy states: Non-recurring revenues shall be directd to onetime uses and away from funding ongoing services. 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. Long Term Debt The Citys Audited Consolidated Financial Statements presents long term debt as $241 million dollars. Saint Johns net debt, which is the sum of the Citys long term debt and other financial liabilities less the Citys financial assets, is 26 times - 3 - higher than the City of Fredericton and 3 times higher than the City of Moncton. Debt is a key indicator of the Citys overall financial health. Although the net debt ratio has continued to improve since 2015, it is important to continue to manage debt prudently while at the same time making the right strategic investments. As part of the Citys long term financial plan process the City will approve a long term Debt Management Plan supported by a Debt Management Policy. SERVICE AND FINANCIAL OUTCOMES The additional funds will reduce the need for increased borrowing and therefore reduce principal and interest charges. INPUT FROM OTHER SERVICE AREAS AND STAKEHOLDERS Click here to enter text. ATTACHMENTS N/A …ƦķğƷĻ ƚƓ Cƌƚƚķ ‘ğƷĭŷ ЋЉЊБ