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Local governments 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, an annual budget and an annual municipal report. Among other items, the annual report must include a progress report on the performance of the municipality with respect to their stated objectives and measures.

Once the expected expenditures have been estimated, local government 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.

Cost recovery methods are varied so that local governments can fairly assign costs according to their circumstances. In some cases, local governments may feel that a service benefits the entire community and that property taxation should be used to recover the costs. The majority of property taxes are calculated using the assessed value of land, improvement or both (i.e. house, barn, garage, yard) and a municipal tax rate. Municipalities can even vary the tax burden between different classes of property such as residential, business, and industrial.

In some cases, local governments 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.


Expenditures are related to a wide range of services that local governments provide to their citizens as well as the costs of general administration. With the exception of municipal roads and solid waste disposal, the decision to provide other services is the responsibility of a municipal council or regional district board based on their vision for the community and the needs of their citizens.

There are a number of accountability provisions that apply to local government 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 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, local governments 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:

  • local governments;
  • other Ministries such as the Ministry of Finance and Ministry of Provincial Revenue;
  • the Canadian Institute of Chartered Accountants;
  • the Government Financial Officers’ Association;
  • the Municipal Finance Authority; and
  • BC Assessment.

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



Municipal Revenue Sources Review


The Ministry has completed an internal review of municipal revenue sources looking at the broad scope of municipal revenues including property taxation and revenue from other sources.  The review resulted in eight detailed papers and an executive summary.


The eight papers are:


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