Municipalities are responsible for ensuring they receive sufficient revenue in order to
pay for their expenditures. Planning for revenues and expenditures is accomplished by various
means such as the development of a five year financial plan
and an annual municipal report.
Expenditures are related to a wide range of services that municipalities provide to their
citizens as well as the costs of general administration. With the exception of municipal
roads and policing, the decision to provide other services is the responsibility of
municipal council based on their vision for the community and the needs of their citizens.
Once the amount of expected expenditures has been estimated, municipalities must determine
how funds will be raised to meet those expenditures. The main source of revenue for local
governments is property taxation. However, revenue
may also be received from user fees such as
water rates, business license fees, parking tickets, development cost charges,
grants from senior levels of government, building
permits, the rental of recreation facilities, borrowing
and interest earned on investments.
The methods of cost recovery are varied so that municipalities can fairly assign costs
according to their circumstances. In some cases, municipalities may feel that a
service benefits the entire community and that
property taxation should be used to recover the costs. Municipalities can even vary the tax burden
between different classes of property such as residential, business, and industrial. In some
cases, municipalities may feel that costs should be recovered from a
specific group of people
or properties that benefit more directly from a service. For example, user fees are often
used to recover some of the costs of operating recreation facilities. In addition,
municipalities can create local service areas where the costs of a service like sidewalks
are paid by owners of the properties that front on the sidewalk. Development costs can be
assigned to people that develop or subdivide property.
There are a number of accountability provisions that apply to municipal finances. For
example they must produce annual audited financial statements that are prepared in
accordance with generally accepted accounting principles established by the Public Sector Accounting Board (PSAB) of the Canadian Institute of Chartered Accountants. The
municipal report must be presented at a public meeting. Municipalities must undertake
a process of public consultation regarding the development of their financial plan. Also,
municipalities must make available, upon request, a report respecting how a parcel tax
or rate was determined.
The Local Government Department provides financial information and advice to a wide range of clients including:
In addition, the Department is responsible for collecting
statistics relating to
municipal finances including assets and liabilities, revenues and expenditures, property
taxation and assessments.