2016-2018 Fiscal Management Strategy
The Fiscal Management Strategy (FMS) is prepared annually and presented to the Council of the Regional Municipality of Wood Buffalo (RMWB).
The purpose of the FMS is to provide a high level overview of the Municipality’s operating and capital needs for the current year and the next two years. The FMS also provides a context for reviewing and setting property tax rates, user fees and charges and other municipal services charges.
The document outlines, at a high level, the anticipated sources of revenue and expenses over the time period 2016- 2018, with comparisons to prior years. Although, the 2016 Budget and the Financial Plans for 2017 and 2018 were approved in December of 2015, the FMS is an avenue to re-evaluate budget assumptions, based on new information that was not available at the time of the budget preparation and approval.
Considered in the 2016-2018 Fiscal Management Strategy is the impact of the approved 2016 property tax bylaw, which directly impacts municipal revenue. The 2016 revenue budget of $830.7 million was approved by Council on Dec. 8, 2015, after reducing property tax revenue by $30 million.
As per the adopted bylaw 16/007, the 2016 property tax revenue is calculated using 2015 tax rates as a base, minus two per cent, plus taxes applicable to new construction growth. As a result, it has been identified that the Municipality will have $46.2 million additional property tax revenue in 2016. The FMS is based on committing the $46.2 million within the Emerging Issues Reserve (EIR) to fund the costs associated with potential assessment appeals. Even with the commitment of the $46.2 million to EIR, it is anticipated that there will be a significant shortfall of funds available to respond to assessment appeals.
The FMS includes reference to the Municipality’s current debt and debt limits. The Municipality has a policy, which permits a debt limit up to 85 per cent of the provincially legislated limit. The proposed debt limit reduction to 75 per cent of the provincially legislated limit ensures that the Municipality continues to be prudent with the debt that is carried, in consideration of the current economic climate. A review of the debt service limit will be conducted in response to current economic conditions.
The FMS is used as a base to build the 2017 Budget and Financial Plans for 2018 and 2019.
The RMWB experienced a major wildfire in May 2016. The information related to the property tax revenues and the contribution to the Emerging Issues Reserve has been updated and reflected in the Amended Budget – per Bylaw 16/007 as outlined above. All other information is based on pre-fire information.
Explanations of variances to this budget will be provided quarterly financial reports to Council.