Last in a four-part series
St. John’s city council is considering a staff proposal to change the timeline of its budgets.
Instead of presenting a one-year financial plan each December, the goal is to have a three-year budget which will correspond with the province’s property assesment cycle that city property taxes are based on.
Taxes are determined by multiplying the assessed value of a property by the mill rate, which the city can adjust annually.
The city’s director of finance, Bob Bishop, said linking the budget with the assessment cycle has a number of advantages.
“It provides some discipline, because typically what will happen (is) there’s almost like a scramble to see how low we can put the mill rates in year one of your assessment cycle and then inevitably you end up bouncing them back up in the following two years,” he said.
Bishop said the move will also encourage city staff and council to think more about long-term planning.
And it would give residents an idea of what to expect in taxation over that three-year period.
Ward 1 Coun. Danny Breen is chairman of the city’s finance committee. Moving to a three-year budget was one of seven points on a list of priorities he presented to the committee at its last meeting.
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Breen said council always wrestles with where to set the mill rate to “soften the blow” for taxpayers when assessments go up.
He said a three-year budget cycle will give more predictability to budget planning, and will allow the city to tentatively set mill rates for the period.
“You know what the assessment rates are for the next three years, so you tie your mill rate to that,” Breen said.
The city would still present a budget each year. But the two years following Year 1 would either just reaffirm the numbers against the three-year plan or be tweaked as needed to balance the books — including possible mill rate adjustments if required.
Bishop said the city already does three-year financial projections.
“So this expands on it quite a bit,” he said.
Bishop said the move will mean some more work for budget staff in the first year of the plan, but much less work in the following two.
He said three-year municipal budgets are uncommon in Canada, but there are examples of cities that use them, including Calgary.
Bishop sees at least one disadvantage.
For the city to be in line with the provincial assessment cycle, the first three-year budget would be presented this coming December for 2013 to 2015.
Because there will be a municipal election in the fall of 2013, the new council will take over near the end of year one.
“The next council may not be as happy with the decisions that the previous one has made, so that has the potential for a lot of discussion,” said Bishop.
He and his staff are still working on the details of how the city would move to a three-year plan before it is sent to council for approval.
But he said there seems to be a lot of support for the move around the council table.
Bishop will update the finance committee at its next meeting on where staff is in its research.