FINANCIAL PLAN

Transcription

1 City of Kamloops FINANCIAL PLAN

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3 Financial Planning Process at a Glance The following schedule provides the dates for the Financial Plan process. July-September 2013 Budget preparation guidelines established. Department managers prepared and submitted their operating and capital budget requests. October-November 2013 Senior Management and Finance staff reviewed the department's budget submissions. Council held two public budget input workshops. December 2013 A draft Five-year Financial Plan was presented to Council. Council adopted a Utility Rates Bylaw setting the rates for January March 2014 Council reviewed the results from the public budget input workshops. Council considered additional budget items not included in the base budget. Council hosted another pubic budget input meeting. April-May 2014 Council adopted the Five-year Financial Plan Bylaw and the 2014 Tax Rate Bylaw. 1

4 Five-year Financial Plan - Overview The Five-year Financial Plan offers residents a review of the comprehensive fiscal process that guides the City of Kamloops in responsible management and operation of its many programs and services. This guide is prepared annually by the City's Financial Services Division in consultation with all municipal departments and senior administration and outlines estimated costs for in three separate categories: General operating budget for essential services such as Kamloops Fire Rescue; RCMP; transit; parks, recreation and culture; roads; and infrastructure improvements. Utility budget for water and waste removal. Capital budget by fund and program. Within these pages, you will find highlights of how taxes are divided among municipal functions and services, day-to-day operating costs, challenges, and opportunities impacting the City while making the best use of community tax dollars and how all of this affects the average homeowner. A more in-depth analysis of costs is presented in the back of this guide, beginning with estimated costs associated with the general operating budget. This section includes budgets for individual programs and services in 2011, 2012, 2013, and The Detailed Program section also includes a program summary, highlights on how it has impacted the overall general fund, and any changes in service levels for the current fiscal year. A detailed breakdown of utility costs for the water and sewer utility fund follows, while the final section includes estimates on capital costs for services such as police and fire protection, roads, parking, public works, transit, facilities, parks, playing fields, and fleets, among others. 2

5 CONTENTS Section A - Introduction Message from the Chief Administrative Officer...5 Message from the Finance Director Financial Plan - General Fund Operations...8 General Fund Expenses for Challenges, Opportunities, and Efficiencies Affecting the City Budget...10 Your Tax Dollars are At Work Every Day...11 Service Paid for in How City Property Taxes are Shared...13 Total Cumulative City Debt...14 City Programs and Functions and the Corporate Management Hierarchy...15 Corporate Policies and Explanations...16 Financial Plan Process and Timing Budget Basis Municipal Funds Property Taxes Grants-in-aid Financial Position...22 Financial Equity 3

6 Section B - General Fund See section front for details on content Section C - Program Detail See section front for details on content Section D - Utility Funds See section front for details on content Section E - Capital See section front for details on content 4

7 Message from the Chief Administrative Officer Over its current term, Council has given administration both explicit and implicit direction with regard to achieving sound fiscal management and accountability practices. Under the direction of the Finance Department, staff utilized several initiatives to operationalize Council's direction in the development of the Five-year Financial Plan These initiatives allowed for not only increased cost avoidance but also a reduction in costs. Given the success of the initiatives, it is anticipated they will continue to be used and expanded upon for future year's budget preparations. In order to meet Council's mandate, the Finance Department developed a budget process in early summer That plan was communicated to all management staff through two mandatory attended pre-budget meetings. Principally, the meetings provided a review of expectations for the upcoming budget process, identified timelines and guidelines, and gave direction on key requirements. Four changes key points were insisted upon: Budget operationally at the three-year average for each expense account line item - if a request is over the three-year amount, then the overage has to be rationalized. Your comments count. The City of Kamloops Five-year Financial Plan outlines the estimated budget for all City operations so citizens may understand where money is being invested and provide input on how tax dollars are being spent. Budget amounts have to be adjusted to reflect past business cases presented to Senior Management or Council, past initiatives designed to reduce costs, or increased efficiencies (i.e. the external review of the Purchasing and Inventory Control Division and purchasing practices). The capital budget must be based upon zero-based budgeting, taking into account internal and external resources required to undertake the work. In addition, the overall capital dollar amounts cannot be greater than the amounts specified in the previously adopted financial plan. Identify all capital projects where early capital approval is required in order for tendering to happen earlier in 2014, with the intent that earlier tendering and tendering balanced throughout the year will allow for more bidders, thereby achieving better tendering prices. Staff taking the meetings to heart, and the results from the above direction is encouraging. The thorough review of three-year averages for all accounts reduced general and utility budget amounts by $614,000. The implementation of the external purchasing review reduced general and utility budget requests by a combined $153,000 and produced an additional cost avoidance of $69,500, which is in addition to the $48,000 budget reduction and $317,000 in cost avoidance realised in Efficiencies reduced miscellaneous general budget amounts by $45,000 and held miscellaneous expense increases in the utility budgets to a combined $79,000. Zero-based capital budgeting resulted in a reduction of tax dollars needed for 2014 capital by $386,000 in general capital, by $1,491,000 in the water capital, and by $937,000 in sanitary sewer capital. Overall, the process allowed administration to present to Council a very tight provisional financial plan in early December 2013, as well as leave a large amount of gas tax available to be utilised by Council when they discuss supplemental budget items, the results of fall public input sessions, and tax allocation between sectors in February

8 Message from the Finance Director There were a number of challenges facing the City as we developed the Financial plan. Personnel Costs The labour contracts with CUPE, IAFF, and management were being negotiated during the budget process in the fall of An increase of $1,373,629 has been included in the 2014 expenditures. The City will see an increase of two mechanics in the Public Works and Utilities Department, a business analyst for the Information Technology Division, and a 0.6 FTE increase for a gardener to look after the increase in landscaping requirements with the additional capital works completed in RCMP There is an increase in the RCMP contract of $24,361 for 119 members and Council approved the addition of one member July 1, 2014, for an additional cost of $74,060. The total RCMP budget increase is $470,403. The majority of the increase is a reduction in the estimated percentage of vacancy by the RCMP. Administration has been budgeting at 95% (112 members) of the contractual amount (119 members) as the budget was not being spent due to turnover, maternity leave, sickness, etc. In addition, in those years where vacancy was greater than 5%, the budgeted difference went into a reserve account to cover costs when the actual costs were above 95%. The RCMP is doing a better job of securing personnel closer to the contractual amount; therefore, the City is increasing the funding to 97% (115) of the contractual amount. Vehicle Costs It is estimated that costs to service and run the City fleet of approximately 400 vehicles and pieces of equipment will increase in 2014 by $454,000. This is mainly due to projected increase in fuel costs and required maintenance in response to tighter Commercial Vehicle Safety and Enforcement regulations. Hydro Costs Hydro costs will increase by 8% in 2014, which is an increase of $385,551 in the general operating costs of the City, but the increase is much more significant in the water and sewer utilities. The water increase is $462,000 and the sewer increase is $488,500, with the upgraded wastewater plant being commissioned in April of this year Municipal Election 2014 Municipal Election will add $125,898 to the operating expenditures. The City does not budget an amount each year for an election, it taxes for it in the year it is held. Interest Revenue There is a decrease in interest revenue due to a drop in interest rates. The primary investment objectives are the preservation of capital and high liquidity, and the secondary objective is to maximize the return on investment. The drop in the bond market in 2013 required a repositioning of a portion of the portfolio to a shorter term, high-interest savings account. Transit Fare Revenue and Expenses Transit revenue and expenses were overstated by BC Transit in 2013, requiring a net reduction in revenue and expenses in Transit of $66,213 for

9 Overall Reduction in Expenditures The implementation of the external purchasing review reduced overall general operating and utility budgets by $153,000 and produced an additional cost avoidance of $69,500. A thorough review of three-year averages for all accounts reduced budgeted expenditures for 2014 by $614,000. Capital Budget In 2014, the City again initiated a zero-based capital budget. Staff had to rebuild their budgets based upon current needs and priorities and what could reasonably be expected to be done with internal resources and the availability of external resources, such as consultants and contractors. The other proviso was that one could not ask for more money than what was identified in the 2013 Five year Financial Plan. The result of this exercise was a reduction in not only the base capital budget of $78,743, but a reduction in the amount of projects on the additional request list. Water and Sanitary Sewer Utility Water Utility In 2013, $2.62 million was drawn from the Water Utility Reserve Fund in order to meet operational and capital requirements of the water utility. Revenue was reduced as the first phase of universal meter customers were billed on the new metered rate structure. There was an increase in operating costs due to an increase in water breaks. The budget for 2014 reflects these operational issues going forward with a reduction in revenue and increases in hydro and operating costs. Sanitary Sewer Utility A 5% increase in sanitary sewer rates ($468,000) is required in order to keep the Sanitary Sewer Reserve Fund at an appropriate level. This is due to the operationalization of the new wastewater treatment plant ($43 million upgrade). Personnel and material increases for plant operations are estimated to increase over 2013 by $1.3 million in The long-term borrowing will be put in place in the fall of 2014 (approximately $25 million), which will increase the debt service costs (interest and principle payments) over the term of the debenture. Summary of Rate increases for 2014 Property Taxes - 2% $35.12 for the average home Sewer Levies - 5 % $12.92 per home Water levies - 0 % Solid Waste Fees - 0% Council froze the major industry tax rate for 2014 at the 2013 levels, which increased residential taxes by approximately $12. Total for the average residential home $

10 2014 Financial Plan - General Fund Operations Revenue Real property taxes 90,356,000 93,144,000 Special assessments 4,411,382 4,350,931 Fees, rates, and sales of service 25,988,676 27,093,622 Grants 15,968,988 16,623,293 Investment income 3,858,884 3,498,071 Sale of capital assets 75, ,000 Private contributions 78,254 88,254 Total Revenue 140,737, ,923,171 Expenditures Cemetery 536, ,754 Community development 4,701,846 4,760,773 Corporate administration 11,350,307 13,851,991 Environmental services 256, ,358 Fire services 15,409,693 15,644,395 Infrastructure maintenance 7,850,877 7,890,619 Legislative and enforcement 4,480,589 5,184,534 Parks, recreation, and culture 24,568,510 25,866,849 Police services 25,203,486 25,372,520 Public transit 16,374,578 16,020,097 Solid waste 7,462,582 7,679,995 Debt servicing costs 6,248,754 6,596, Total General Expenditures 124,444, ,626,329 8

11 Operating Expenses for % Sewer Utility Operations 5.87% Water Utility Operations 8.61% Debt Servicing Costs 0.32% Cemetery 3.14% Community Development 9.13% Corporate Administration 0.18% Environmental Services 10.31% Fire Services 5.06% Solid Waste 10.56% Public Transit 5.20% Infrastructure Maintenance 3.42% Legislative and Enforcement 17.05% Parks, Recreation, and Culture 16.72% Police Services 9

12 Challenges, Opportunities, and Efficiencies Affecting the City Budget This page summarizes highlights of changes from the approved 2013 general fund budget to the 2014 budget. Influencers INCREASE Details City Staff Wages and Benefits $1,373,629 Wage and benefit increases for CUPE, IAFF, and Management staff. ($1,217,755). Annualization of approved staff in 2013 ($58,480). Addition of 2 mechanics, 1 business analyst, and 0.6 gardener net of budget reductions ($97,394). Contracted RCMP Services $470,403 Increase of RCMP costs (net of federal grant) to provide the same number of members as in 2013 ($341,559). Annualization of RCMP Member added in 2013 ($54,784). Addition of RCMP Member ($74,060). City Vehicles $454,000 Increase of the price of fuel and replacement provisions for the City's fleet of vehicles. Hydro $385,551 Increase hydro costs based on projected rate increase Municipal Election $125, Municipal Election costs. Solid Waste $123,747 Increase in solid waste expenses funded by taxation. Interest Revenue $101,000 Decrease in interest revenue due to lower interest rates. Other Budget Changes (Expenses) Transit Fare Revenue and Expenses Other Budget Changes (Revenue) $75,961 Increase of expense from various programs throughout the City. $66,213 Decrease in transit fare revenue ($304,312). Decrease in transit expenses ($238,099). $33,562 Decrease of revenue. Influencers DECREASE Details Other Budget Changes (Expenses) $283,004 Reduction of expense budgets to reflect actual results of prior years. Capital Expenditures $78,743 Decrease of capital projects funded from current property taxes. Competitive Bids $60,217 Cost saving from competitive bids. 10

13 Your Tax Dollars are At Work Every Day Tax revenue is invested in services and infrastructure that maintain the high quality of life Kamloops residents enjoy. Typical Daily Household Tax and Utility Expenditures City Taxes and City Utilities Account for $7.44 of the total Income Taxes City Taxes 4.97 Cell Phone 2.72 City Utilities 2.67 Power 2.58 School District 2.29 Cable 1.78 Natural Gas 1.75 Telephone 1.08 Internet 1.07 TNRD/HD/BCAA 0.86 $0 $5 $10 $15 $20 $25 $30 $35 $40 Valuations based on: Property taxes based on average British Columbia Assessment Authority assessed value of $343,111 in Statistics Canada average household expenditures in BC used to estimate daily Income Taxes and GST/PST expenditures. Calculated city taxes exclude the Homeowners Grant discount. City utility payments include 10% discount for prompt payment. Property taxes and Utility Fees based on 2014 budget and rates. Total City Levies: $7.64/day City Taxes: $4.97/day Police services $1.10 Parks, recreation, and culture $0.98 Fire services $0.80 Infrastructure maintenance $0.59 Capital $0.44 Debt servicing costs $0.28 Public transit $0.26 Corporate administration $0.24 Legislative and enforcement $0.16 Community development $0.10 Cemetery $0.01 Environmental services $0.01 City Utilities: $2.67/day Water $ 1.49 Sewer $ 0.74 Garbage and Recycling $

14 Service Paid for in 2014 Average Assessment: $343,111 Police services $ Parks, recreation, and culture $ Fire services $ Infrastructure maintenance $ Capital $ Debt servicing costs $ Public transit $93.69 Corporate administration $86.48 Legislative and enforcement $58.56 Community development $37.62 Environmental services $4.32 Cemetery $0.96 CITY TAXES TOTAL $1, Water $ Sewer $ Garbage and recycling $ UTILITY RATES TOTAL $ Total $2,

15 How City Property Taxes are Shared (2014 Rates) The City of Kamloops collects taxes from a variety of sources each year with the majority coming from residential property taxes - almost 60%. Residential Tax rate = 5.28 Share of city taxes = 59.7% Business and Other Tax rate = Share of city taxes = 28.1% Recreation/Non-profit Tax rate = Share of city taxes = 0.2% City fiscal management Farm Tax rate = Share of city taxes = 0.1% Utilities Tax rate = Share of city taxes = 2.9% Major Industrial Tax rate = Share of city taxes = 7.3% Light Industrial Tax rate = Share of city taxes = 1.7% 13

16 Total Cumulative City Debt TOTAL DEBT 120,000, ,000,000 $85.8 M 2,187,401 $101.7 M 16,720,390 $109.9 M 19,071,473 $102.7 M $100.3 M $98.5 M 16,613,232 14,116,493 11,609,228 80,000,000 24,713,250 20,871,715 20,140,103 17,462,548 22,849,254 22,947,190 60,000,000 40,000,000 58,933,585 61,153,134 64,879,647 63,114,900 58,074,494 59,004,023 20,000, General Fund Water Fund Sewer Fund 14

17 City Programs and Functions and the Corporate Management Hierarchy City Programs To serve the citizens of Kamloops, City operations are divided into 65 programs. These programs represent everything the City does as part of its annual operations. These include police and fire protection, road maintenance, parks and recreation programs, development services, and provision of the water and sewer utilities, as well as administrative services that support City Council and the other operating programs such as human resources, payroll, accounting, and information technology. These programs are grouped within two distinct hierarchies, the corporate management structure and the function served to the general public. Corporate Management Hierarchy Within the corporate management structure, each program is assigned to a division and department. Each division has a manager who oversees the operations of the programs within his/her authority. In turn, each division manager reports to a department director who has authority over all programs within his/her department and represents the interest of the department at the Senior Management table. There are seven departments, each of which reports to the Chief Administrative Officer. They are: Administrator's Department Parks, Recreation, and Cultural Services Finance Development and Engineering Services Public Works and Utilities Corporate Services and Community Safety Human Resources Functional Hierarchy Within the functional hierarchy, each program is assigned to one of 15 functions. A function is a broad grouping of like services. The classifications used are the same as those in the Financial Plan Bylaw and in the annual financial statements. The functions are: Solid Waste Development Cemeteries Legislative and Enforcement Police Corporate Administration Fire Water Infrastructure Maintenance Sewer Public Transit Debt Servicing Parks, Recreation, and Culture Capital Expenditures Environmental 15

18 Corporate Policies and Explanations Financial Plan Process and Timing The Financial Plan process began in July Guidelines, a timetable, and current operating reports were sent to all the program coordinators. A capital plan and a financial plan for each program was prepared by the managers. The Chief Administrative Officer and the Senior Management team met in early November to review the capital plan and determine what would be presented to Council. During October, each department director reviewed his/her program operating budgets. In November, the program operating budgets were reviewed with the Chief Administrative Officer and the department directors. In December 2013, the Financial Plan and the Utility Rates Bylaws were presented to Council for amendment. Starting in January 2014, Council began deliberations of the Financial Plan. Each department presented its budget to Council and explained the services it provides, the significant impacts each department dealt with when preparing its budgets, the budget adjustments made to respond to these impacts, and the effects on the services it provides. Council considered the information received from City staff, as well as the input received from the general public, and directed Administration to make any necessary adjustments to the plan. In April 2014, the City received the Authenticated Roll from the BC Assessment Authority, allowing us to determine the amount of new growth in the City. With that information, revenue projections were revised in the Financial Plan. In early May, Council adopted the Financial Plan and Tax Rate Bylaws at an open Council meeting. Budget Basis The operating budget is prepared on an incremental basis. This means it focuses on changes from the previous year's budget. These changes might include new or expanded programs, non-controllable cost increases, salary and employment benefit increases, and the removal or addition of one-time, non-recurring revenues and expenditures from the preceding year. 16

19 Municipal Funds Operating and Capital Funds The City has three operating and capital funds: the General fund, the Water fund, and the Sanitary Sewer fund. In broad terms, the General fund represents the cost of providing all municipal services other than the water and sanitary sewer utilities. Costs that are in excess of user fees and other non-tax revenue raised are funded by property taxes. The Community Charter requires that all revenue sources be identified to cover all anticipated expenditures. The Charter does not allow the City to incur an accumulated deficit. The Water and Sanitary Sewer funds are both self-sufficient utilities. The revenue raised by each fund through user fees or other sources can only be used to fund the expenses in each respective fund. Like the General fund, the Community Charter does not allow the City to incur an accumulated deficit in either utility fund. Revenue cannot be transferred between funds. Statutory Reserve Funds The Community Charter controls the creation and use of statutory reserves. Statutory reserves are created through a bylaw of Council and require approval of two-thirds of Council to expend funds from these reserves. There are restrictions as to the type of expenditures that can be funded from each statutory reserve. The City has six statutory reserves as follows: Tax Sale Property Reserve Fund; Parking Facility Reserve Fund; Debt Retirement Reserve Fund; Local Improvement Reserve Fund; Land Sale Reserve Fund; and Equipment Replacement Reserve Fund. Statutory in Trust Fund The Cemetery Perpetual Care Fund represents funds held in trust by the City for the permanent care of grave sites and columbariums in the municipal cemeteries. 17

20 Property Taxes Service Levels The majority of the City's revenue is obtained through property taxes. When preparing the budget, we first determine the amount of revenue required to provide all municipal services to our residents. Then we determine the amount of revenue (other than property taxes) we can expect to receive through fees and charges, federal and provincial government grants, investment income, etc. The difference between the budgeted expenditures and the other revenue represents the amount of property tax revenue the City must collect to provide the services to the levels prescribed by Council. To adjust the amount of property taxes required, we must adjust the service levels provided. If we lower the service level provided, we can lower the budgeted expenditures and consequently lower the property tax revenue requirement. Our challenge is to determine the appropriate service level to provide weighed against the cost of providing that service. When the cost of providing a service increases (through inflation and other cost of living increases), we must either raise more revenue to provide the same level of service or adjust the level of service provided. The Tax Rate The City determines the "tax rate" (a charge per thousand) by dividing the sum of all the property values in the City by the amount of property tax revenue that must be collected. The tax rate is simply a means of determining how much each individual property owner must pay. The rationale for this approach is that owners of larger properties should pay more than owners of smaller properties or that these individuals have an ability to pay more than those in lesser valued properties. An alternative approach would be to charge every home the same amount regardless of its value. We have chosen to adopt the former approach whereby the actual amount paid by each property owner is determined by the value of his or her property. Consequently, we must calculate the tax rate each year based on the revenue we must collect and the assessed values of all the properties in the City at that time. Changes in the total assessed values in the City will cause the tax rate to change, but will have no effect on the amount each property owner must pay unless his/her assessed value change is different than the average. The following spreadsheet illustrates the effect assessments have on the tax rate. Tax Rates and Property Tax Revenue The following example shows how much each of five property owners must pay to provide the City with $5,000. Please note that although the tax rate changes, the amount the City collects remains the same. Year 1 Year 2 Assessed Value Tax Rate (charge per Property Taxes thousand) Assessed Value % Change from prior year Tax Rate (charge per thousand) Property Taxes Property Tax Increase (%) Property 1 150, ,000 10% % Property 2 150, ,000 10% % Property 3 200, , ,000 15% , % Property 4 200, , ,000 5% % Property 5 300, , ,000 10% , % 1,000,000 5,000 1,100,000 10% 5, % In the above example, the owners of properties 1, 2, and 5 pay the same amount of property taxes in both years as the assessed value of their property changed by the same amount as the average of the entire group. The assessed values of properties 2 and 3 changed by different amounts; therefore, the total amount they paid was different. 18

21 Property Tax Increases Much of the discussion of the budget will focus on the effect the budget will have on property taxes. If the cost of providing the same level of service increases and there are no additional revenue sources, the City must increase the property taxes collected to provide these same services. The only alternative is to adjust the level of service provided. To ensure everyone is fully aware of how much more they are paying for the services we provide, any property tax increase will be expressed as a percentage of the total amount we need to collect. The actual tax rate changes from year to year will not reflect the property tax increase as it is also affected by the assessed values as shown on the example on the previous page. The following example outlines the effect a 5% tax increase has on the tax rate and the total amount paid by the property owners (the same data from the first example is used). Property Tax Increases and the Tax Rate Year 1 Year 2 Assessed Value Tax Rate (charge per thousand) Property Taxes Assessed Value % Change from prior year Tax Rate (charge per thousand) Property Taxes Property Tax Increase (%) Property 1 150, ,000 10% % Property 2 150, ,000 10% % Property 3 200, , ,000 15% , % Property 4 200, , ,000 5% , % Property 5 300, , ,000 10% , % 1,000,000 5,000 1,100,000 10% 5, % You will note from the above example that although the tax rate decreased by 4.5%, the total amount collected by the City actually increased by 5%. Unlike the federal and provincial governments, we will express this to our taxpayers as a 5% increase in property taxes as opposed to a 4.5% decrease in the tax rate. This is significant to note as the federal and provincial government like to claim that they have not increased income taxes even when they are collecting more money from you. Assuming that the combined federal and provincial income tax rate is 40%, individuals earning $40,000 a year will pay $16,000. If these individuals receive a 5% raise (new income level = $42,000), he/she will pay 5% more in income tax (40% of $42,000 = $16,800) even though the rate is still 40%. 19

22 Grants-in-aid City Council has a current policy whereby the City may support voluntary, not-for-profit organizations. These grants are subject to annual review and approval. Fees for service and operating grants The largest portion of the grants is given to organizations either in the form of fees for service or operating grants. These organizations provide a service to the residents of the City that is deemed desirable by the City. If these organizations did not provide these services, the City would use its own forces to provide the same service. In 2013 and 2014, the following fee for service agreements and operating grants included in the budget were: Fees for service: 2013 Budget 2014 Budget BC Wildlife Park $310,000 $316,200 Crime Stoppers $104,510 $105,590 Kamloops Community YM/YWCA $200,940 $204,959 Kamloops Heritage Railway $200,000 $200,000 Community Arts Council $36,031 $36,751 Sagebrush Theatre $132,000 $134,640 Kamloops Art Gallery $324,729 $331,224 Graffiti Task Force $150,000 $150,000 S.P.C.A. $31,200 $31,824 Chamber of Commerce $123,500 $123,500 Community Gardens $20,000 $20,000 Operating grant: 2013 Budget 2014 Budget Kamloops Symphony Society $95,156 $97,059 Western Canada Theatre $161,288 $164,514 Boys and Girls Club $72,468 $73,917 Venture Kamloops $562,440 $573,689 Tourism Kamloops $250,000 $250,000 Ambassador grants $33,980 $34,500 Other operating grants $135,900 $132,900 20

23 Community Social, Cultural and Recreational Events The City also provides grants for community events, cultural activities, and to social organizations within the City. The following grants are included in the 2013 and 2014 budgets: Community events: 2013 Budget 2014 Budget Canada Day in the Park $12,500 $12,500 Canada Day fireworks $15,000 $15,000 KIBIHT $10,000 $10,000 Music in the Park $100,000 $100,000 Tournament bids $330,000 $310,000 Thrive festival $75,000 $0 Other events $31,000 $30,000 Grants recommended by commissions and boards: 2013 Budget 2014 Budget 24 Social Planning grants $92,000 $92, Arts Commission grants $55,000 $55,000 Property Tax Exemptions Social agencies are supported through property tax exemptions. City Council also provides property tax exemptions to specific heritage properties within the City. The total amount of permissive tax exemptions (at City Council's discretion) allowed in 2013 was $492,123. Through provincial legislation, churches are exempt from property taxes. Only the actual footprint of the building is exempt through provincial legislation, but City Council can choose to provide an exemption for the entire property. The total amount of tax exemptions provided in 2013 for these properties was $272,851. The federal and provincial governments, their agencies, and Crown corporations are also exempt from property tax. The City receives a grant from the federal and provincial governments on behalf of their agencies and Crown corporations equal to the taxes that would be assessed on private commercial land and improvements of equal value. The total amount of grants in lieu of taxes received in 2013 was $1,955,

24 Consolidated Statement of Financial Position Year Ended December 31, 2013, with comparatives for (Restated) Financial assets Cash (note 4) $ 16,105,546 $ 19,105,739 Short-term investments (note 4) 115,912, ,015,933 Accounts receivable (note 5) 21,397,596 18,989,980 Long-term investments (note 6) 346, , ,762, ,444,641 Liabilities Accounts payable (note 7) 25,115,220 20,751,106 Payroll benefits payable 3,751,022 3,923,667 Post-employment benefits payable (note 8) 7,605,000 7,424,476 Landfill post-closure costs (note 9) 2,378,272 3,802,326 Deferred revenue (note 10) 30,363,916 34,346,813 Long-term debt (note 11) 96,834,236 95,782, ,047, ,030,464 Net debt (12,284,816) (11,585,823) Non-financial assets Inventory 1,176, ,770 Prepaid expenses 893, ,875 Tangible capital assets (note 12 and Schedule 1) 1,072,115,218 1,042,509,532 1,074,184,961 1,044,287,177 Accumulated surplus (note 13) $ 1,061,900,145 $ 1,032,701,354 Commitments and contingencies (note 17) See accompanying notes to consolidated financial statements. * Sally Edwards, BBA, CMA * * Peter Milobar* S. E. Edwards, BBA, CMA Peter Milobar Finance Director Mayor 22

25 Notes to Consolidated Financial Statements Year Ended December 31, 2013, with comparatives for Accumulated Surplus: (a) Reserves for operating purposes Balance at December 31, 2012 (restated) Interest income and contributions Transfers to operations and capital Balance at December 31, 2013 General fund: Affordable Housing $ 817,145 $ 138,630 $ - $ 955,775 Art Gallery 464,069 8,967 (8,967) 464,069 Arts Legacy 229, ,044 Bi-centennial Legacy 332,989 13, ,728 Canada Games Legacy 568, ,300 Climate Action 401, , ,088 Community Arts 7, ,999 Downtown Parking Reserve - 51,166-51,166 Deferred Operating 4,034,666 2,365,695 (1,215,466) 5,184,895 Environmental Grant 30, ,000 General Building 97,195 5, ,339 Heritage Foundation 190,000 20, ,000 Insurance 777,043 16,233 (225,446) 567,830 Oak Hills Dyke 12, ,932 Police Contract 2,462,073 1,165,375-3,627,448 Return to Work 237, ,146 Health Benefit Premiums 367,000 - (200,000) 167,000 Solid Waste 1,293,382 2,448,095 (1,168,407) 2,573,070 Sports Legacy 192, ,019 Working Capital 1,889,467 - (78,060) 1,811,407 Youth Legacy 4, , BC Summer Games 97,474 1,883-99,357 Water fund: $ 14,506,216 $ 6,439,073 $ (2,896,346) $ 18,048,943 Deferred Operating $ 768,000 $ $ (167,348) $ 600,652 Sewer fund: Deferred Operating $ 50,000 $ - $ 0 $ 50,000 Venture Kamloops Business Development Society: Reserve fund $ 55,141 1,103 (32,452) 23,792 $ 15,379,357 $ 6,440,176 $ (3,096,146) $ 18,723,387 23

26 Notes to Consolidated Financial Statements Year Ended December 31, 2013, with comparatives for Accumulated Surplus (continued): (b) Reserves for capital purposes Balance at December 31, 2012 (restated) Interest income and contributions Transfers to operations and capital Balance at December 31, 2013 Statutory reserves: Tax sale property fund $ 10,519,741 $ 628,757 $ (415,162) $ 10,733,336 Local improvement fund 618, ,589 (4,000) 951,034 Debt retirement fund 1,447,325 27,966 (355,167) 1,120,124 Parking facility reserve 1,319, ,429-1,531,960 Land sale reserve fund 1,470,681 1,047,484 (139,380) 2,378,785 Equipment replacement fund 16,792,249 5,163,113 (3,958,724) 17,996,638 32,167,972 7,416,338 (4,872,433) 34,711,877 Non-statutory reserves: General fund $ 8,821,481 $ 7,448,200 $ (3,541,876) $ 12,727,805 Water fund 9,688,507 2,542,601 (867,068) 11,364,040 Sewer fund 5,196,477 2,384,645 (2,115,741) 5,465,381 23,706,465 12,375,446 (6,524,685) 29,557,226 Airport capital fund $ 3,129,317 2,276,135 (1,954,102) 3,451,350 $ 59,003,754 $ 22,067,919 $ (13,351,220) $ 67,720,453 24

27 Notes to Consolidated Statement of Financial Position Year Ended December 31, 2013, with comparatives for Accumulated Surplus (continued): (c) Current funds General fund: Balance, beginning of year $ 10,955,772 $ 11,795,560 Operating Surplus (deficit) for the year (2,569,637) (839,788) 8,386,135 10,955,772 Water fund: Balance, beginning of year 6,631,303 6,104,542 Operating Surplus (deficit) for the year (2,623,035) 526,761 4,008,268 6,631,303 Sewer fund: Balance, beginning of year 6,057,997 4,877,043 Operating Surplus (deficit) for the year 270,785 1,180,954 6,328,782 6,057,997 Kamloops Airport Authority Society: Balance, beginning of year 401, ,609 Operating Surplus (deficit) for the year 3,868 3, , ,577 Venture Kamloops Business Development Society: Balance, beginning of year 85, ,936 Operating Surplus (deficit) for the year (85,568) (51,368) - 85,568 $ 19,128,630 $ 24,132,217 25

28 Notes to Consolidated Statement of Financial Position Year Ended December 31, 2013, with comparatives for Accumulated Surplus (continued): (d) Capital equity (Restated) General fund: Balance, beginning of year $ 752,582,806 $ 746,036,128 Net capital equity addition for the year 5,242,742 6,546, ,825, ,582,806 Water fund: Balance, beginning of year 82,864,903 79,518,997 Net capital equity addition for the year 2,073,366 3,345,906 84,938,269 82,864,903 Sewer fund: Balance, beginning of year 50,138,371 45,233,503 Net capital equity addition for the year 15,006,914 4,904,868 65,145,285 50,138,371 Kamloops Airport Authority Society: Balance, beginning of year 48,573,777 48,071,377 Net capital equity addition for the year (181,102) 502,400 48,392,675 48,573,777 Venture Kamloops Business Development Society: Balance, beginning of year 26,170 10,129 Net capital equity addition for the year (272) 16,041 25,898 26,170 $ 956,327,675 $ 934,186,027 Total Accumulated Surplus (Restated) General fund $ 796,988,431 $ 786,866,275 Water fund 100,911,229 99,952,713 Sewer fund 76,989,448 61,442,845 Statutory reserves 34,711,877 32,167,972 Kamloops Airport Authority Society 52,249,470 52,104,671 Venture Kamloops Business Development Society 49, ,878 $ 1,061,900,145 $ 1,032,701,354 26