Municipal and Northern Relations

The key deadlines for municipalities to adopt their annual Financial Plan and tax levy by-law are set out in The Municipal Act. The Act also outlines other important requirements in the budget process. The following timeline is provided to assist municipalities in completing these requirements:

January	Adopt the interim operating budget
January to April 30 (or earlier)	Prepare Financial Plan (operating budget, capital budget and 5-year capital plan) Hold public hearing for presentation of Financial Plan
May 15	Adopt Financial Plan / Submit copy to Municipal Government(legislated) Adopt Tax Levy By-Law (legislated)
June 15	Submit Tax levy By-Law to Municipal Government (legislated)

Question 2: What is an interim operating budget and why does it need to be prepared?

The interim operating budget covers the period from the start of the fiscal year (January 1^st) and provides authority for your municipality to make operating expenditures before the adoption of your annual budget. An interim operating budget is not required if the municipality has already adopted their Financial Plan by January 1^st.

The interim operating budget should contain only the funding needed for expenditures to maintain municipal operations until your annual Financial Plan is adopted. The interim operating budget is for operating expenditures only - capital expenditures must be authorized in the annual capital budget.

General Operating Budget

Question 3: Is the operating budget prepared on a PSAB or cash basis?

The operating budget continues to be prepared on a cash basis. It should not include PSAB adjustments for expenses such as amortization.

Question 4: What should I budget for Provincial grants?

Provincial grant amounts aren't finalized until the Province tables its own budget in the Legislature. Municipalities should budget the same amount they received the prior year for on-going, per capita grants such as the Municipal Programs Grant and General Assistance Grant.

Question 5: How do I budget to recover an operating deficit from a previous year?

Municipalities with an operating deficit in a previous year must ensure they have received provincial approval to incur the deficit and for the method of recovery before reflecting the recovery in their current year's Financial Plan. If you have questions about how to request this approval, or are unsure if a deficit has been approved, please contact a Municipal Services Officer at (204) 945-2572.

Recovery of a prior years' deficit is recorded on the Sundry Revenues page (Page 9) of the Financial Plan, and:

· If the deficit is being recovered from a transfer from reserves or surplus, the transfer is recorded on the Budgeted Revenue and Transfers page (Page 2) on the "Transfers from Accumulated Surplus or Reserves" lines.

· If the deficit is being recovered through taxation over one or more years, the amount recovered in the current year is recorded on the Calculation of Tax Levies page (Page 8) on the "Deficit Recovery - General" line.

Calculation of Tax Levies (Page 8)

Question 6: How do I complete the Calculation of Tax Levies page? (Page 8)

You will need to start by getting the information needed to complete this page. This includes the current year's assessment information, education requisitions, and debenture debt and special service levy amounts.

· Current year assessments - Information is provided on the Property Tax Mill Rates worksheet which is available on Manitoba Municipalities Online (MMO).

· Education Requisition - Municipalities receive an annual notice of Provincial Education Support Levy (ESL) requirements from the Public Schools Finance Board and an annual notice of Special Levy requirements from their local School Division(s) by March 15^th each year. The mill rates that your municipality is provided for the ESL and Special Levy must match what is included in your Financial Plan.

· Debenture Debt / Special Service Levies - Information on Debenture Debt and Special Service Levies is available in your approved by-law. Municipalities also enter updated information on all approved debenture debt and special service levies in the MMO - Municipal Local Improvement By-law Maintenance screen.

Question 7: How do I budget for converted fees and grazing leases?

Municipalities must allocate a portion of the revenues they receive from grazing leases and converted fees (i.e. fees for mobile homes based on a municipal licensing by-law) to the local school divisions.

Assessment information for grazing leases and / or converted fees is available on the Property Tax Mill Rates worksheet on MMO and should be included when calculating school division levies. The mill rates and revenues raised should be the same as those provided in the school division requisitions.

All grazing lease and converted fee revenue (including the education portion) should be included on the Budgeted Revenue and Transfers page (Page 2).

Question 8: Council is planning to implement a new levy that requires Municipal Board approval (a special service or local improvement). Does the levy need to be approved before I can include it in the Financial Plan?

Municipalities need to have their special service and local improvement by-laws approved by the Municipal Board before holding the public hearing for their Financial Plan. If the levy is not included in the Financial Plan and the Municipal Board subsequently approves it, the municipality will need to hold another public hearing on the Financial Plan. This could delay the adoption of the Financial Plan.

Question 9: How much should I budget for the allowance for tax assets?

The Allowance for Tax Assets establishes a provision for municipalities to address uncollected property taxes. There is no standard amount however to ensure the allowance is sufficient; however, municipalities should consider:

· The opening balance of the allowance for tax assets account,

· The amount of uncollected taxes in previous years, and

· Whether any reductions in tax revenues are anticipated due to in-year changes in property assessment.

Utility Budget

Question 10: Can I increase water or sewer rates to balance the Utility Budget?

Any changes to water and sewer rates require approval from the Public Utilities Board before they are included in the annual Utility Budget. Please contact the Public Utilities Board at (204) 945-2638 for further information on this process.

Question 11: How do I budget to recover a utility operating deficit from a previous year?

Municipalities must receive approval from the Public Utilities Board (Municipal Act s. 164(5)) for utility fund deficits and the method of recovery. Please contact the Public Utilities Board at (204) 945-2638 for further information on utility deficit approvals.

Once the recovery is approved, the amount of the deficit should be recorded on Page 9 and in the Utility Budget. The corresponding rate rider or transfer from reserves / accumulated surplus should be reported in the revenue section of the Utility Budget.

Capital Budget and 5-Year Capital Forecast

Question 12: What should be included in the Capital Budget?

The Capital Budget (Page 13) should reflect the capital projects and purchases Council plans to undertake in the current year. The Capital Budget is comprised of three parts:

Part 1 - Provides a basic description of the capital project / purchase, the estimated cost and the source(s) of funding.

Part 2 - If reserves are to be used to fund the capital project / purchase, the name of the reserve fund is provided along with the amount to be transferred and the reserve's opening balance.

Part 3 - If borrowing is to be used, the amount to be borrowed, term and annual payment are provided.

Question 13: What if the borrowing for our capital project hasn't been approved yet?

All anticipated capital projects and purchases which will be funded in full or in part by borrowing will require Municipal Board approval. Municipal Board approval may be obtained at any time during the year, but must be obtained prior to starting the project or making the purchase.

Question 14: Why is the 5-year capital forecast required? What years does it cover?

The 5-year capital forecast identifies your municipality's capital infrastructure priorities, providing information to citizens and other key stakeholders on your planned projects, including costs and proposed funding sources.

The forecast covers 5 years starting in the next fiscal year (i.e. 2017-2021 for the 2016 Financial Plan), as the Capital Budget already covers the current year. However, many municipalities choose to extend their forecast to 10 or even 20 years.

Question 15: How do I budget for multi-year capital projects?

Some capital projects may take longer than one year to complete. There are two approaches to budgeting for multi-year capital projects.

1. Budget for the total estimated project cost in the current year and identify the funding sources in the Capital Budget (Page 13 - Part 1).

2. Budget only the amount estimated to be spent in the current year in the Capital Budget (Page 13 - Part 1). The remaining project costs are included in the appropriate years within the Five Year Capital Expenditure Program (Page 14).

Public Hearing

Question 16: No citizens have shown up to the public hearing in several years. Do I still have to hold a public hearing?

Yes, The Municipal Act (s 162(2)) requires that a public hearing be held. The public hearing allows Council to present the Financial Plan and receive important input and feedback from citizens.

If there are concerns about attendance at public hearings, there are many methods that can be used to encourage public participation. CAO's could consider not only providing public notice, which is required in the Act, but using other methods to advertize the public hearing such as social media.

Question 17: What do I need to do to prepare for the public hearing?

You need to ensure that you give proper notice of the public hearing. Requirements for the timing and content of the notice are in The Municipal Act (s.420(1) and (2)).

Make sure that you have copies of the draft Financial Plan ready for citizens who may request it once the notice is published.

Take into account the size, location and accessibility of the venue where you plan to hold the public hearing. Council chambers may be used, but other venues, like the community hall, may be more conducive to public participation.

Consider summarizing the most relevant information for citizens, such as changes to services or taxes, reserve and debt levels, and capital projects. You will want to seek direction from Council about the format of the hearing in terms of who will be presenting and what information should be covered.

Question 18: Can the Financial Plan be changed after the public hearing?

Yes. However, a new public hearing must be held if the change to the Financial Plan results in an increase in taxation, or an increase in transfers from reserves or accumulated surplus, or an increase to the Capital Budget (Municipal Act 162(3)).

Question 19: When do I need to hold a public hearing for reserve transfers? Does the hearing for the Financial Plan fulfill this requirement?

Public notice and a public hearing is required whenever Council is proposing a transfer or expenditure from a specific purpose reserve for a purpose other than what is authorized by the reserve fund by-law. Expenditures from the general reserve which are not included in the Financial Plan also require a public hearing.

The hearing and the notice must be separate from the public hearing for the financial plan. However, the two hearings could be held on the same day, one after the other. This allows citizens to receive clear information and an opportunity for input when funds that were levied for a specific purpose are reassigned.

Submitting the Financial Plan

Question 20: How do I submit the financial plan and the tax levy by-law to the Province? Do they need to be signed and sealed?

Municipalities submit a signed and sealed copy of the financial plan and the tax levy by-law through Manitoba Municipalities Online. The CAO and Head of Council must sign the Operating Budget (Page 1), Capital Budget (Page 13), and 5-Year Capital Plan (Page 14).

Question 21: I am having difficulty completing the Financial Plan in order to file it by the May 15^th deadline. Is it possible to get an extension to file it?

It is important to meet the legislated deadline of May 15^th to adopt and file your municipality's Financial Plan. Municipalities have the authority to impose taxes and spend public funds. Therefore it is important for you to have a Financial Plan in place in a timely manner so that citizens know how much they will be taxed and where these tax dollars are being spent.

It is recognized, however, that municipalities may have difficulty completing their Financial Plan on time due to extreme and unforeseen circumstances. In these situations, municipalities may request, in writing, an extension to complete it. Municipalities should explain the extenuating circumstances behind this request.

Amalgamated Municipalities - Financial Plan Template

Question 22: Do I need to use the 2016 Financial Plan template for amalgamated municipalities if we don't have differential mill rates?

No, your municipality may use the standard template in this situation.

Question 23: Where do I find the Financial Plan template for amalgamated municipalities?

The Financial Plan template for amalgamated municipalities has been updated for 2016 and is located on MMO under "Documents". A description of the changes has been added to the Financial Plan Guidelines for Amalgamated Municipalities and a sample financial plan is also provided for your reference.

Question 24: What are the changes to the 2016 Financial Plan template?

The two main changes are:

· Subpages have been added for last years' budgeted and actual figures for revenues and expenditures, and

· Grant-in-lieu (GIL) listing (Page 9 - Part 1) has been replaced with Reserve Transfers.

Question 25: Why are special service and debenture debt levies recorded in the "At-Large" column?

Expenditures funded through special services or debenture debt levies should be recorded in the "At-Large" column on the appropriate expenditure page. Each special service and debenture levy should then be reported on a separate line in the appropriate area on Page 8.

The special service or debenture debt levy will only be raised on properties that were identified in the by-law approved by the Municipal Board.

Get Started

Stay Connected to the Manitoba Government