What is a city budget?

    Like your own personal budget, the City’s budget is divided into two types of expenses – the operating budget and the capital budget.  

    What is an operating budget?

    The City's operating budget includes daily or regular expenses to keep things running smoothly. In your household, these would be things such as gas for your vehicle or groceries for your family. For the City, this includes garbage collection, clean water, and the maintenance of facilities like Crystal Pool and community centres, to name a few. 

    The operating budget is the largest portion of the City’s draft budget, at $264.7 million for 2022. The operating budget is determined based on what it will cost to continue existing City services and programs at service levels set by Council.  

    The City's operating and utility budgets include capital funding and reserve savings that provide annual funding to ensure the City's infrastructure is maintained for residents today, and the future.  

    What is a capital budget?

    The draft capital budget for the City is $97.1 million for 2022. A number of factors are taken into consideration when creating each year’s capital budget including master plans such as the Parks and Open Spaces Master Plan, transportation plans, and the City’s Strategic Plan.  

    Other factors include safety considerations (traffic calming and crosswalks as an example)replacement costsage and condition of current City assetsmaintenance historyrisk assessment (what are the possible risks if this asset were to fail?)coordination with other capital projects (a stormwater main replacement might trigger updated curbs and sidewalks, so that a road is only dug up once), and future capacity needs 

    The 2022 Draft Budget aims to increase investments in the City’s capital budget to accelerate the replacement and rehabilitation of water distribution, sanitary sewer and stormwater systems, among other infrastructure Victoria residents depend on. This will help keep the City’s underground assets in good condition, reduce future infrastructure cost and repairs, and create a more climate-resilient city. These upgrades will help ensure safe, reliable service for a growing city and help protect critical underground infrastructure from earthquakes and a changing climate, such as sea level rise and extreme storms. 

    What happens when a capital project is not completed in a given budget year?

    If a capital project that is underway is not completed in a given year, it is automatically rolled over into the work plan for the following year. 

    How is the City's revenue generated?

    Similar to most Canadian municipalities, taxation is the largest source of revenue, financing the majority of the services provided by the City 

    The City’s revenue budget totals $264.7 million. The City’s revenue is generated mainly from taxation at $153.0 million. User fees are the second largest source of revenue collected by the City at $48.6 million.  

    The remaining revenue consists of parking fees and fines revenue that provide the City with $17 million in revenue, followed by cost recoveries of $14.2 million, which includes recovery from Esquimalt for our amalgamated Police Department; other income at $13.1 million which includes revenue from the conference centre, real estate, investment interest, and revenue from property taxes for stormwater utility; grants at $5.8 million; and funding from reserves at $3.0 million. 

    What are user fees and charges?

    The second largest source of revenue are user fees and charges that are charged for the use of City services. The City operates the water distribution systems for both the City of Victoria and the Township of Esquimalt.  

    Water utility fees and charges represent $22.9 million out of the total user fees and charges budget of $48.6 million. Sewer utility fees and charges are the second largest source of user fees at $7.6 million, followed by stormwater utility fees and charges at $5.9 million, permits and licenses at $5.2 million, solid waste and recycling at $3.4 million, recreation fees at $2.8 million and other user fees and charges at $854,000. Other user fees and charges include fees for rezoning, records, plan searches, fire prevention and sale of hanging baskets. 

    What is the estimate for New Assessed Revenue in 2022?

    The City estimates $800,000 in New Assessed Revenue in 2022. As per the City’s Financial Sustainability Policy, the first $500,000 of new property tax revenue resulting from new construction is transferred to the City’s ReservesCouncil has already allocated $740,000 of this revenue, leaving $60,000 to be invested.  
    For the 2022 Draft Financial Plan, and as part of the 2021 financial planning process, Council approved allocating $218,960 for grant to the South Island Prosperity Partnership and $20,000 for a grant to Theatre SKAM, and these amounts have been incorporated.

    Will there be a 2021 Surplus that will roll into 2022?

    It is too early to estimate the surplus at this time. Given COVID’s impact on the City’s revenues, there will be no surplus this year.

    What are some of the challenges facing this year’s budget decision making?

    In addition for Budget 2022, Council is also considering investing in new programs and services to advance community priorities including preparing for a changing climate, supporting businesses to help grow the local economy, enhancing public safety, improving housing affordability and reducing plastic waste, among others. The addition of new services has the potential to increase property taxes.