Thursday, February 25, 2021

C-K moving forward with multi-year budgeting

The Municipality of Chatham-Kent is moving forward with a multi-year budgeting model.

Council approved staff recommendations to adopt a multi-year budget, beginning with the four-year period of 2024 through 2027.

A recommendation for administration to develop a multi-year budget policy and related bylaw was also approved.

Staff was also directed to review the Municipality’s existing financial policies and bring forward new or amended policies to ensure alignment with the multi-year budget process.

The report was brought to Council at their August 10 electronic meeting, after Wallaceburg Councillor Carmen McGregor entered a successful motion on April 6.

“There are significant staff resources required to develop the annual budget,” McGregor said in her motion.

“There may be economic advantages for multi-year infrastructure and operational purchases.”

Steven Brown, director of budget and performance services, said in a staff report there are several advantages and disadvantages with respect to multi-year budgeting.

“A major issue that emerges in the multi-year budgeting process that needs to be addressed concerns years where there would be an election,” brown said in his report.

“If done correctly, a multi-year budget will straddle election years. For example, municipal Council is elected to a four-year term. With the next term starting in December of 2022, and running to December 2026, ideally, a four year budget cycle would then take effect on January 1, 2024 and continue to December 31, 2027.”

Brown added: “The lag time in the budget cycle gives a newly-elected Council the opportunity to educate itself, develop its strategic plan and priorities, and direct administration to implement various initiatives. Similarly, because the budget cycle will overlap with the next election, a new Council will not be thrown immediately into making major budgetary decisions just weeks after an election.”

Brown said some further advantages to multi-year budgeting, include:

– Significant savings in Council and administration time, as they are not spending several months of the year on the annual budget.

– Potential to redeploy staff to other functions such as completing departmental service reviews.

– Enables Council to implement multi-year vision which flows through business plans to be incorporated into the operating budget.

– Encourages a focus on achieving longer-term plans, goals, and objectives.

– Improves financial management and long-range strategic planning.

– Better alignment with (infrastructure) funding from other levels of government and planning projects.

– Provides a better link between capital and operating investments and activities.

– The longer-term view is said to produce better, more thoughtful budgets.

Brown said some further disadvantages to multi-year budgeting, include:

– Discomfort with forecasting longer-term revenues and expenditures.

– Publishing of potential property tax increases.

– Additional effort required for implementation.

– Perceived loss of flexibility in making budgetary decisions.

Brown said many of the disadvantages may be addressed through various mitigation strategies such as: amending existing financial and budget policies and procedures; producing, monitoring, and updating socio-economic outlooks/forecasts; addopting an extensive public engagement process to obtain public input; and establishing a budget review process for ensuring compliance with budget policies, processes, and targets.

In addition to multi-year budgets, Brown said administration will be undertaking service reviews during year’s two to four of the budget that may yield savings that could be used over time to either reduce the pressure on the taxpayer or to expand the scope and/or accelerate delivery of Council’s strategic plan initiatives.

Brown added these service reviews will include techniques such as: zero-based budget analysis on the service or department, Lean Six Sigma or organizational redesign.

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