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Municipal Finance


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.


The Province’s Community Infrastructure Planning Decision Support Tool can be used to assist local governments in determining  the long-term lifecycle costs of alternate development scenarios.

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 annual 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 Divisiont provides financial information and advice to a wide range of clients including:

In addition, the Division is responsible for collecting statistics relating to municipal finances including assets and liabilities, revenues and expenditures, property taxation and assessments.


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