Mayor's Report - April 2008

On April 28^th Belcarra’s 2008 annual budget and 2008-2012 five-year financial plan was presented to the community. A few residents attended the information session and their questions contributed to a good discussion for all who were there. (The Financial Plan presentation is posted here in PDF format.) In addition, I am pleased to provide the following information regarding the financial health of the municipality.

The “Financial Planning Objectives” used to guide the development of the current five-year financial plan originated from the Capital Planning Form held in November 2000, and are as follows:

2008 Municipal Tax Levy

The 2008 municipal tax rate has been reduced from $1.61 to $1.45 per $1,000 of assessed value, a reduction of 10% in response to the increase in property assessments. This levy will yield a total of $485,602 on the $330,090,100 municipal assessment role. The “bottom line” is that the increase in Belcarra’s 2008 municipal property tax levy is 4%. Note: The municipal tax levy accounts for 71% of Belcarra's overall annual budget, and only 34% of the overall property tax.

Provincial Government Grants

The Province continues to provide the “Small Community Grant” program for all municipalities under 15,000 residents. Under that program, Belcarra’s grant from the Province increased by $40,000 in each of the years 2006 and 2007. The 2007 Provincial Grant amount received by Belcarra was $183,060. Belcarra will receive similar increases for 2008 and 2009. This will offset increases to the municipal tax levy required to make-up the amount lost to inflation over the 15 years during which the grant remained “frozen” as well as offset the provincial tax levy implemented in 2007 for Police (RCMP) services.

Licence & Permit Fee Revenue

Licence & Permit Fee Revenue in 2007 amounted to $36,302. For 2008 Licence & Permit Fee Revenue is projected at $30,000 in anticipation of providing 2008 services at the same levels as in 2007.

Investment Revenue

An important financial consideration is the management of municipal funds in order to maximize investment revenue. During 2007, $23,345 was earned as interest on investments. This was a result of competitive interest rates paid by the bank on the municipal accounts. A similar investment strategy is proposed for 2008.

BUDGET HIGHLIGHTS

The 2008 budget has been set at $901,136 which is 14.7% higher than the 2007 actual expenditures. Note, however, this total includes a transfer from the equipment replacement reserve of $95,066 to replace municipal equipment, namely for the purchase of a new truck and new tractor this year. The components which comprise the 2008 budget are: General Fund Program (including Public Works); Recycle & Refuse Program; Main Roads Network Program, and Capital Program.

General Fund Program – Planning & Consulting

The 2008 budget for Planning & Consulting has been set at $59,000. This budget includes provision for general planning consulting services and contingency for consulting services to implement the Belcarra Potable Water Infrastructure Project, predicated on the Preferred Option Predesign Study completed by Dayton & Knight to provide the municipality with GVWD water from the District of North Vancouver.

General Fund Program – Public Works

The 2008 Public Works budget for roads, drainage and general purposes has been set at $66,775. This budget includes $29,200 for roads and drainage maintenance, $6,000 for hazard tree assessment and removal, $11,100 for municipal hall and building maintenance, and $3,250 for fire protection watermain maintenance.

Recycle & Refuse Program

Beginning with the 2008 budget, progressive steps will be implemented in this and successive budgets towards making the Recycle & Refuse Program a self-sustaining utility. The 2008 Recycle & Refuse User Fee has been increased from $150 per residence to $160 ($320 if the residence contains an accessory suite). The fee increase of $10 is needed to offset increased hauling costs (read increased fuel costs and travel times due to traffic congestion) from the contractor that provides the service. Calculated on the basis of 334 users, the 2008 Recycle & Refuse User Fee revenue will amount to $53,440. Council will continue the curb side tree chipping service and the large item pickup service generating some revenue to offset costs to provide these services.

Main Roads Network Program (Bedwell Bay Road)

TransLink funding in 2008 will remain unchanged from the $63,038 in 2007 for the maintenance of Bedwell Bay Road under TransLink's Main Roads Network (MRN). The 2008 Program includes minor improvements to the Bedwell Bay Road pathways.

Capital Program

The 2008 Capital Program has been set at $263,793 to reflect Council’s commitment to maintaining its roads and municipal facilities infrastructure and completing the fire protection infrastructure works:

PROJECT DESCRIPTION	PROJECT COST	GENERAL REVENUE	OTHER FUNDING	RESERVE FUNDS
Municipal Hall New Roof / Improvements (Reserve Contribution)	$10,000	$10,000	---	---
Senkler Bridge Water Main Conduit	$5,000	$5,000	---	---
Municipal Recreation Area (Capital Improvements)	$2,000	$2,000	---	---
Replace Municipal Truck / Plow / Spreader	$88,000	$35,620	---	$52,380
Replace Municipal Tractor / Mower	$83,486	$40,800	---	$42,686
Recycle Facility Site -- Security Gate, Cardlock System, Security Camera, Access Improvements	$52,400	$52,400	---	---
MRN -- Bedwell Bay Road Pathways	$500	---	$500	---
MRN -- Future Works Reserve Contribution	$22,407	---	$22,407	---
TOTAL CAPITAL	$263,793	$145,820	$22,907	$95,066

2007 YEAR-END NOTABLES

Reserve Funds

As at December 31^st, 2007, the municipal financial reserves were as follows:

During 2007, interest earnings from the reserve accounts amounted to $6,693. This increase in interest earned in 2007 over $5,729 in 2006 is due to an increased reserve balance. In 2008, $95,066 will be used from the Equipment Replacement Reserve, reducing the balance for interest accrual. An interest accrual of $4,280 is projected for the reserve funds. Note: Capital reserve funds cannot be used, even temporarily, for operating in order to offset borrowing costs, and all interest earned by the reserve funds must be accrued to the reserve funds.

Borrowing Costs

The cost of borrowing money during 2007 (interest and bank charges) was $2,809. This was slightly higher than the 2006 costs of $2,098. These costs include the offset accrued interest paid on Tax Prepayments. For 2008, the projected borrowing costs are estimated to be $3,000.

The most important factor influencing annual borrowing costs is the prevailing interest rate from January until July, when the 2008 taxes are received. However, as a result of Belcarra's property tax prepayment program, there is a reduced requirement to borrow operating funds during the first six months of the year.

As can be appreciated, the prompt payment of taxes means that borrowed funds can be quickly paid back, and investments made earn interest and offset the cost of borrowing during the first half of the year.

Taxes Receivable

As at December 31^st, 2007, the 2007 taxes receivable totalled $22,256. This amount represents an increase of $14,343 in taxes receivable and includes the balance of $7,913 reported at December 31^st, 2006, plus applicable interest in accordance with rates set by the Province.

An important consideration with taxes receivable is the fact that the Village has to borrow funds to operate and pay the School Taxes whenever property owners do not pay taxes. This places an additional financial burden in the form of increased borrowing charges. It is imperative that every effort be made to reduce the level of unpaid taxes.

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