FAS-005 - Capital Budget Policy_2022
Title: Capital Budget Policy
Subject: Capital Budget Policy Category: Strategic Services
Policy No.: FAS-005 M&C Report No.: 2022-279
Effective Date: September 6, 2022 Next Review Date: 2023
Area(s) this policy applies to: Cross Corporate Office Responsible for review of this Policy:
Strategic Services
Related Instruments: Policy Sponsors:
FAS-001 Asset Management Policy Chief Financial Officer and Chief of Staff
FAS-002 Investment Management Policy
FAS-003 Reserves Policy
FAS-004 Operating Budget Policy
FAS-005 Capital Budget Policy
FAS-006 Debt Management Policy
Document Pages:
This document consists of 4 pages.
Revision History:
Common Clerk's Annotation for Official Record
Date of Passage of Current Framework: ___September 6, 2022____
I certify that this Policy was adopted by Common Council as indicated
above.
__ ___2022-09-13_______
Common Clerk Date
City of Saint John
Capital Budget Policy
TABLE OF CONTENTS
1. POLICY STATEMENT .................................................................................................. . 3
2. PRINCIPALS AND STRATEGIES ..................................................................................... 3
3. CAPITAL PRIORITIZATION ........................................................................................... 3
4. CARRY OVER OF PREVIOUS YEAR APPROVED CAPITAL BUDGET .................................. 4
5. INTER-GOVERNMENTAL CAPITAL GRANTS…………………………………………………………………4
6. CAPITAL BUDGET SHORTFALLS AND SURPLUSES……………………………………………………….4
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City of Saint John
Capital Budget Policy
POLICY STATEMENT
1. This Policy applies to budgeting by the Municipality for capital funds.
2. Each council shall adopt a Capital Budget for each calendar year.
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.
4. Finance Committee will review the 10-year Capital Investment Plan Annually and
recommend any major amendments to the Plan to Council for approval.
5. The Capital Budget Policy supports the City to achieve its current and future goals in a
fiscally responsible and sustainable manner.
6. Capital Budget Investment decisions shall be evidence based and conform with the
Asset Management Policy.
7. The Capital Budget Policy shall comply with all relevant provisions of the Local
Governance Act and all other applicable legislation.
PRINCIPLES AND STRATEGIES
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.
2. Ownership – Only City owned assets, which meet the definition of 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.
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. Asset Management – The Capital Budget shall consider the full life-cycle cost based on
asset management best practices and adhere to the Asset Management Policy.
CAPITAL PRIORITIZATION
1. To strategically manage the City’s debt and infrastructure deficit, the General Fund
Capital Budget shall comprise of 80% Capital Renewal and 20% for New Capital and shall
align with the City’s Long Term Financial Plan and the City’s Strategic Plan. The Utility
Fund will shall comprise of 90% Capital Renewal and 10% for New Capital.
2. For the purpose of this policy, Capital Renewal is defined as assets that are at the end
of its useful life and contribute to the City’s infrastructure deficit.
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City of Saint John
Capital Budget Policy
3. Proposed Capital Budget Projects will be prioritized in the following order.
a. Mandatory – Must be completed due to legal or regulatory requirements.
b. Risk – Required to mitigate liability associated with health and safety, mitigate
liability or to mitigate sudden asset failure.
c. Priority of Council – As stipulated in the 10 Year Capital Investment Plan (Long
Term Financial Plan) and supported by evidence-based asset management
recommendations and are part of the City’s strategic plans.
d. Positive Financial Impact – The Capital request 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.
e. Discretionary – New asset which aim to increase or enhance service level to the
residents and taxpayers. Requires amendment to the Long-Term Financial Plan,
the City strategic plans, and supported by a business case.
CARRY OVER OF PREVIOUS YEAR APPROVED CAPITAL BUDGET
Approved capital budget projects must be started by the end of the second year after
approval.
INTER-GOVERNMENTAL CAPITAL GRANTS
Inter-Governmental capital grants shall only be pursued for Capital projects in line with
Council priorities, the approved Capital Budget, and the approved 10 Year Capital
Investment Plan.
CAPITAL BUDGET SHORTFALLS & SURPLUSES
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.
2. Capital Budget surpluses, where budgeted Capital funds exceed actual capital shall be,
with Council approval.
a. Realized as savings resulting in reduced debt financing.
b. Used to offset deficits in other approved Capital Budget shortfalls.
c. Leveraged to address the infrastructure deficits identified in the Asset
Management Plan and the 10 Year Capital Investment Plan.
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