Operating and Capital Budget Status Reports
Operating and Capital Budget Status Reports (Q1 and Q2)
Quarterly operating and capital status reports are prepared as part of the reporting framework approved by Council. Operating reports present actual year-to-date revenues and expenditures against the amounts previously budgeted for in the corresponding period. Year-end forecasts are also presented in the second quarter report. Capital reports provide a listing of the capital projects / programs, the authorized expenditure budgets, actual expenditures and commitments incurred to date and the remaining amount to be spent. The purpose of the reports is to present either the march 31 year to date (Q1) or the June 30 year-to-date operating and capital results (Q2) for City Wide Tax Supported Programs and Rate Supported Programs along with providing a year-end forecast. Results for boards and commissions are not included with this report, specifically the results for Ottawa Police Services, Ottawa Public Library, Ottawa Public Health. The operating and capital reports for Transit Services are also presented in separate reports to their Board.
- Q2 Tax and Rate Supported Program - 2022
- Q2 Transit - 2022
- Q1 Tax and Rate Supported Program - 2022
- Q1 Transit - 2022
- Q2 Tax and Rate Supported Program - 2021
- Q2 Transit - 2021
- Q1 Tax and Rate Supported Program - 2021
- Q1 Transit - 2021
Annual Year end disposition reports
Year End Disposition Reports
As part of the finalization of year end operations, and in conjunction with the preparation of the financial statements, it is necessary to obtain Council approval of the disposition of any surplus or funding of any deficit. The annual report provides an analysis of the results of the operations for all tax and rate supported City programs.
Credit rating Information
Why our City’s excellent credit rating is good for you
The City of Ottawa is rated by Standard and Poor’s Rating Services and by Moody’s Investor Services.
The City’s credit ratings are based on a number of factors including debt levels, reserve fund balances, capital funding requirements, long-range planning and economic outlook and reflect strong fiscal outcomes and prudent financial management.
The City of Ottawa’s excellent credit rating helps investors and creditors measure the City’s ability to meet its financial obligations. Excellent credit ratings mean that it is less expensive for the City to borrow money. The City’s lower costs for capital improvements can be passed on to you as a property taxpayer and as a stakeholder.
City of Ottawa Credit Ratings
A credit rating is a current assessment of the creditworthiness of a borrower with respect to a specified obligation. It indicates the capacity and willingness of a borrower to pay interest and principal in a timely manner.
The City of Ottawa’s current ratings are as follows:
|Moody's Investment Service||Aaa|
|Standard & Poor's||AA+|
Long-term Ratings are also assigned an outlook indicating the likely direction of an issuer's rating over the intermediate term, typically ranging from 6 months to 2 years. The outlook is denoted (P) for Positive Outlook, (N) for Negative Outlook or (D) for Developing Outlook. No identifier is attached to the rating if the outlook is Stable.
Fiscal Framework 2007
This council-endorsed fiscal framework is the city’s high-level roadmap to sustainable finances. It is the financial constitution that guides all financial decisions and is the primary instrument to measure the city’s financial condition. It is also the financial plank of the City’s commitment to provide residents with the best municipal government in Canada.
The foundation of the fiscal framework is a set of overarching principles of responsible financial management.
The principles outline the City’s basic philosophy and orientation on financial matters.
For each of ten key financial elements a range of guiding principles, targets and accountabilities are provided.
The guiding principles provide general parameters on the approach the city intends to take on specific financial elements.
The targets are measurable outcomes. They can cover different timelines. Some are permanent; while others have a medium-term horizon, such as a term of council.
The city should always be moving towards a target, sustain itself at a target level, or exceed a target.
Accountabilities articulate reporting details and responsibilities related to the framework.
This includes the requirement for Council to review and approve the framework at the beginning of its term.
Using the Framework
The framework serves multiple purposes:
- Preamble to the long range plan;
- Guidance and reference to the budget process;
- Reference in any Council debate involving the use of funds; and,
- An accountability and communication tool for Council and residents.
The framework represents Council’s direction of where it wants to take the city's finances over the long-term. As such, it provides a "red flag” when short-term budget directions or financial decisions take the city away from its targets. It helps to avoid the situation where a series of minor decisions can, over time, erode the city’s overall financial condition.
The fiscal framework is an accountability and communication tool to help the city achieve the goal of financial sustainability. To ensure this happens, city staff will report on compliance with all aspects of the framework on an annual basis.
Dealing with conflicts and priorities
While the framework is a comprehensive and integrated set of policies and goals, some contradictions are inevitable. For example, policies limiting debt may impede the goal of maintaining capital assets. A financial target on transit recovery may contradict Council’s strategic priority for rider-ship. This framework ensures that all long-term financial objectives are fully considered when conflicts arise.
By adopting a comprehensive fiscal framework, none of the financial consequences of a Council decision is ignored or hidden. The impact of financial decisions can be modelled against the framework to reveal if goals are being achieved.
In the course making day-to-day and year-over year decisions, the framework draws the attention of Council to the long-term financial health of the city.
The City of Ottawa is a complex, legislated entity with over 100 lines of business and an operating and capital budget in excess of $2 billion. With oversight from its elected council and a provincial ministry, it is inundated by regulation, accountability regimes and transparency mechanisms. On finances, the city faces strict legislative reporting guidelines and controls. But the bottom line is that financial choices faced by the City of Ottawa are no different than those that face a responsible homeowner. Consequently, the language used to describe the city’s approach to its finances in the fiscal framework should be understandable to most residents.
A work in progress
In its initial years, the fiscal framework should be considered a work in progress. That’s because many targets require research and new systems and procedures for evaluation and priority setting need to be developed.
The Long Range Financial Planning Committee and Council will review the framework over the coming years to ensure it is complete, functional and effective.
Note: Accounting standards for municipal government are changing. In 2009, the city will move to full accrual accounting, with capital assets recorded on its balance sheet and depreciation an expense on its statement of operations. This change will provide an opportunity to gain greater insight into the city’s finances, which should be integrated into the fiscal framework
The goal of the framework is to place the city’s finances on a sound and sustainable footing so that financial, service and infrastructure standards can be met without resorting to unplanned increases in rates or disruptive cuts in services. The financial principles articulated below provide the integrated foundation to the city’s approach on finance:
The ten financial elements are:
- Asset management
- Growth and development
- Strategic initiatives and enhancements
- Operating surplus/deficit
- User fees and service charges
- Property taxation
- Program review
- Fund balances and municipal position
The fiscal framework is a high-level document; appropriate for Council and residents who are interested in financial matters. Staff will have more detailed and prescriptive policies (i.e. debt and capital leasing policy and investment policy) and targets for internal management purposes. In some instances Council will approve these detailed statements of policy.
Asset management encompasses the protection, maintenance and replacement of the city’s assets. The various branches of the city identify the maintenance required for a 10-year period, which is disclosed through the Long-Range Financial Plan. (The 10-year asset maintenance gap as of 2007 is estimated to be $942 million). With the introduction of tangible capital assets to the financial statements in 2009, the City will disclose the depreciated value of all assets. This work will facilitate the development of a comprehensive asset management framework.
- Capital assets are maintained and/or replaced using models of best economy
- An objective and transparent asset management framework is used to evaluate asset condition and the corresponding need and priority for maintenance or replacement
- In years where an asset maintenance gap exists, priority in spending is as follows:
- Assets that impact public health, safety and core city operations
- Where long term financial returns are highest
- Capital assets that the City does not require to meet its current or future program or operational requirements are disposed
- Asset maintenance gap to be gradually eliminated and assets fully sustained thereafter:
- Road rehabilitation and ditching renewal by 2010
- Sidewalks, street signals and stop sign renewal by 2010.
- Sanitary and storm sewer and water line replacement by 2015
- Facilities and parks by 10 per cent per year
- All other assets by 2017
The asset management framework will be in place for all assets by 2009 (schedules exist today for many asset categories)
City Manager to oversee the delivery of asset management reports to Council on an annual basis
Includes capital projects and operating costs related to the growth of the city. The Development Charges Act permits the City to fund the growth portion of new infrastructure required to support new development from a charge levied at the building permit stage. This infrastructure must be maintained by the City, resulting in the need for an increased operating budget. While new residents bring in more taxation, they also participate in City programs, resulting in increased costs to maintain the same standard of service.
- Asset acquisitions are subject to a cost and benefit analysis that considers initial and lifecycle expenditures and alternative financing arrangements
- The Development Charge (DC) Bylaw will be used to recover the costs of growth to the full extent permitted by legislation (thereby minimizing the financial burden of the costs of growth on existing residents)
- Growth projects are undertaken as DC’s are collected, consistent with the DC Background Study. Certain projects can proceed in advance of collection of DC’s:
- Sewer and water projects as they are needed in the development cycle
- Commitments can be made to fund transit and road work based on estimated DC’s
- Other methods will be explored with developers/others to fund growth related projects that are not eligible for development charges
- Official Plan discussion about options to expand the urban boundary should include the projected impact on the operating budget and capital budget as well as estimate property tax revenue.
- The costs of growth included in the operating budget will be covered by the taxes from new assessment
- DC’s to be applied to the full extent permitted by legislation
- The costs of growth included in the operating budget will be limited to amount of new taxes being raised
- Status of Development Charge accounts reported by the City Treasurer annually to Council and the Province
Strategic Initiatives and Enhancements
Strategic Initiatives include capital projects and additional operating requirements that enhance the quality of life in the City, respond to changes in demand for services, enable organizational efficiency, implement recommendations from the Auditor General or are required because of regulation. These items are not related to growth nor are they required to maintain existing assets or programs. Council will establish its priorities for strategic initiatives and enhancements at the beginning of its term.
- Capital strategic initiatives will be advanced based on their priority as established by Council over a multi-year timeframe
- Dedicated sources of funding, including funding from other levels of government, to be considered as the first source of financing for strategic initiatives (relative fairness in funding from other levels of government will be sought)
- Local and special levies are considered for strategic initiatives that benefit particular communities
- Council will assess asset management status and the sustainability of City finances when considering strategic initiatives and enhancements
- Identification and analysis of the impact of future operating cost should be completed
- Strategic initiatives and enhancements are highlighted in budget documents, and where possible on the tax bill or other documents that communicate City finances to residents
- No target is set for strategic initiatives and enhancements, other than the general financial limitations imposed by the fiscal framework
- Strategic initiatives and their sources of funding to be identified in the operating and capital budget
Includes long-term debt and capital lease obligations. As stipulated in the Municipal Act, long-term debt can only be used to finance capital assets. The term of the debt must be equal or less than the life of the asset. The Province limits the total amount of debt that a municipality can issue to 25 per cent of its own-source revenues (all revenue received less Federal and Provincial Grants). The City issues debt that is repaid from a variety of sources including the water/sewer rate, development charges provincial/federal gas tax and property taxation.
- Debt to be used only for the purchase, construction, or replacement of assets.
- Debt must be affordable to the citizens. The overall measure of the affordability of debt is the burden of principal and interest relative to city’s own source revenue (i.e. not including government grants)
- Debt must not result in significant tax increases
- The total amount of debt issued must not compromise the City’s credit ratings
- Debt may be considered when it leverages funds from other levels of government.
- Debt used for on-going repairs of existing assets phased out by 2012
- Principal and interest for tax and rate supported debt not to exceed 7.5% of the city’s own source revenues
- Additional debt permitted for identifiable legacy projects that benefit multiple generations.
- The increase in debt servicing for non-legacy projects in any year will not be greater than one-quarter of 1 per cent of taxes from property
- Council authorizes new debt financing with the annual budget
- The City Treasurer will report to Council on new debt in accordance with the Debt and Financing Policy and the delegated authority for issuing new debt.
- The City Treasurer will include in the Annual Report a review of debt against the targets.
Ontario municipalities may not budget an operating deficit. Operating surpluses are carried forward to subsequent years as a revenue source. Operating deficits, if not funded from other sources within the year, become the first item of taxation in the subsequent year. Council is given latitude on how to allocate a surplus. Staff report quarterly to Council on the status of spending against budget and provide forecasts at the mid-point and third quarter, identifying any actions that may be required to eliminate a potential deficit.
- A deficit is funded by prior year surpluses (tax rate stabilization reserve, or capital reserves if required)
- Surpluses are brought forward to following year as revenue; then allocated to:
- Replenish the tax rate stabilization reserve
- Replenish other reserves
- Reduce any asset maintenance deficit
- Reduce or maintain the property tax rate
- Branch staff to respect and manage a global budget (higher than expected spending in one area is first offset by savings in another)
- Staff will be recognized for their ability to generate savings and other efficiencies in managing operations
- Forecast of year end results provided to Council with the second and third quarterly reports
- One per cent of tax supported spending (not including Police spending) to be maintained as a minimum balance in the tax stabilization reserve to cover potential deficits
- The disposition of a prior year surplus or deficit is reported annually to Council by the City Treasurer
- City Treasurer to issue quarterly reports on finances with comparisons of actual year to budget and previous year
Council is required to approve a balanced budget each calendar year. The budget is approved before the year commences in a non-election year; and must be finalized before the final tax bills can be issued in an election year. Included in the operating budget is a forecast for the two following budget years. Assumptions and their associated risks are disclosed in the budget. Council also approves a capital budget that identifies the projects that will be undertaken during the year and how they will be funded. The capital budget also provides a forecast of projects that will proceed within the term of Council and an outlook that extends to ten years. Capital spending against budget is reported at mid and end of year, with adjustments identified throughout the year.
- Respect for the taxpayer through a commitment to continuous improvement and a high regard for economy, efficiency and effectiveness in city programs
- Permanent expenditures are to be financed from permanent sources of revenue
- One-time sources of revenue are phased-out within the term of Council
The operating budget to be segmented by:
- Water and Sewer Rate supported;
- Police Budget
- City Budget
For each budget, Council will consider a range of program:
- Efficiencies; and,
The budget will be presented on a functional basis with operating and capital combined
- Follow a financially sustainable budget by 2010
- Develop a tax policy that recognizes inflation beginning in 2008
- Establish an outcome-based budgeting format and process beginning in 2008
- The budget to be presented on a functional basis by 2009
- The City Treasurer to comment on spending relative to budget and the prior year in the quarterly reports
- Budget documents and the Annual Report to reveal extent of Council control over various categories of expenses
- The Annual Report to include an analysis of budget to actual and prior year (operating and capital) and explanations for the differences
User fees and service charges
Funding of municipal services that benefit individual and commercial users by charging fees and service charges
- Users of municipal services that do not benefit the community as a whole (where an individual chooses to use the service or not) to have some responsibility for the costs of those services; thereby reducing the property tax requirement
- Objective criteria is used to determine where user fees apply, and for the range of fees to be applied
- Recovery rates for services consider:
- Operating and capital costs;
- Extent of private, commercial and community benefit (note: community benefit includes environmental considerations)
- Use of service by non residents (not including tourists);
- Rates for commercially available services
- Impact of changing user fees on demand
- Service fees implemented where individual beneficiaries of the service can be identified
- Fees subject to periodic study and review
- Programs to mitigate the impact of fees on specific users should be adjusted in accordance with fees
- Changes in user fees to be transparent
- Capital and operating costs for water, sewer and solid waste for landfill operations and garbage collection to be 100 per cent recovered by fees (includes associated development charges)
- Transit fares to recover 55% of defined costs:
- Attain a 50 per cent target by 2010 and progress each year thereafter
- Services of a private or commercial benefit, or those routinely supplied to non residents, subject to 100% recovery
- Services that provide a community or common good to recover between 20% and 80% of capital and operating costs.
- User fees and service charges updated annually
- Target recovery rates will be established for all categories of user fees by 2009
- Report on user fees and recoveries to be published on an annual basis by the City Treasurer
The taxes calculated from an assessment of property value. Includes property taxes and payments made in lieu of taxes by the senior governments and their agencies.
Tax levels adequate to fund/protect the city’s:
- Financial condition;
- Investment in infrastructure;
- On-going expenditures; and
- Liabilities incurred
- Affordability is assessed by the overall level of revenue required to finance the city’s needs relative to other major Ontario cities
- To the extent possible, the burden of property taxes is to be reduced by diversifying revenue sources, such as user fees
- The relationship between taxes and spending are highlighted on the tax bill where possible; including using separate levies for categories of expenditures not fully within Council’s control
- In most years, tax increases to maintain existing services should not exceed the rate of inflation (Consumer Price Index for Ottawa)
- The rate of total economic growth of the region is the upper limit on property tax increases
- The tax bill will detail the components of city spending and changes in tax levels
- City Treasurer to comment in the annual report on the adequacy of revenue raised to meet the city’s needs on a sustainable basis
All programs are subject to periodic internal and external program review. Staff reports to Council on performance against pre-determined standards on a quarterly basis.
- Branch Directors will appear before the appropriate Standing Committee once every term to:
- Review established service-level standards
- Review branch performance with respect to established outcome-based performance measures
- Branches subject to periodic external program review
- Investments in government business enterprises subject to periodic review to consider public policy mandate and performance
- Ottawa is a full participant in Ontario benchmarking initiatives and is committed to outcome based performance measurement
- Branch review by a Standing Committee of Council to begin in 2008
- Each Branch is subject to a detailed external program review, including its operating budget and service level standards once during each term of Council.
- All new discretionary programs are subject to review within five years of their approval by Council.
- Review of investment in government-owned enterprises to be undertaken every five years
- City Manager (or designate) to issue quarterly performance report
- Schedule for internal and external program reviews to be publicized
- Program review reports made public
- City Manager to supervise report on investment in government-owned enterprises
Fund Balances and Municipal Position
The municipal position on the city’s consolidated statement of financial position—its balance sheet— represents the difference between recorded assets and liabilities. Like all municipalities in Canada, it does not today include physical assets (buildings, fleet, roads, sewers and other infrastructure). The Public Sector Accounting Standards Board has changed the rule so that these physical assets will be recorded in the city’s financial statements in 2009. When this is done, the municipal position will be more meaningful, and will indicate the extent to which the net book value of the city’s total assets is financed by debt versus taxpayers.
The municipal position is also being expressed as the difference between the city’s fund balances (including reserves, reserve funds and equity in business enterprises) and amounts that will be recovered from future taxes (long term debt and liabilities related to employee benefits). This relationship means that sustaining reserve and reserve fund balances serves to protect the city’s municipal position.
Given the substantial change in municipal accounting, it is appropriate to wait until 2009 to establish guidelines and targets for the newly defined net municipal financial position. However, in the interim, guidelines are nonetheless relevant to sustaining the city’s overall financial condition.
- The City will sustain an appropriate level of municipal equity to manage risk and to generally sustain the finances of the corporation. This will be accomplished by maintaining the level of fund balances on the city’s financial statements at or above current levels until 2009.
- A policy will be developed thereafter that ensures the net municipal position of the city is sustained or enhanced. A target range will then be established for the municipal position relative to the city’s long-term debt and assets
- Fund balances on the city’s statement of financial position will be sustained in real terms for 2008 and 2009 (i.e. current balance plus the consumer price index)
- A policy establishing a level or range for net municipal position will be prepared and approved for 2009 when physical assets are recorded on the city’s statement of financial position
The City Treasurer will report on the maintenance of the fund balances for 2007/08 as part of the annual financial statements and will make the recommendation for a new policy on municipal position for 2009