Town of Canmore

Budget Surplus

Why is there a surplus?

The Municipal Government Act requires the Town of Canmore to adopt an operating budget where the estimated revenues must cover the estimated expenditures. This means we can't budget for a deficit. 

But, sometimes there is a surplus at the end of the year because of unanticipated increases in non-tax revenue from fees, or greater than anticipated growth, or sometimes there has been savings in expenses. 

For example, in 2018, net revenues were $634,000 over budget and expenses were $791,000 under budget.  When added together, the surplus represents a variance of 2.8% of the annual expenditure budget of $50.4M, an amount comparable to other municipalities. The main reasons for the surplus in 2018 were:

$ Amount

Revenue Description

772,000

Increased revenue from planning fees

(162,000)

Decreased revenue from franchise fees

(106,000)

Decreased policing fine revenue

130,000

Increased all other revenue sources (net)

$ Amount

Expense Description

(460,000)

Savings in contracted services and professional fees – includes lower planning contracted services ($152,000), policing contract costs ($244,000), recreation programming, IT, public works, and finance assessment services, offset by increased engineering and planning inspections costs.

(400,000)

Net general savings in all other line items across departments such as travel and training, telecommunications, advertising, printing, power, natural gas and supplies.

69,000

Net salaries, wages & benefits over budgeted slippage ($351,000)

What happens to the surplus?

In 2018, Council voted to transfer the $1,424,726 surplus to five reserves:

Reserve

Proposed 2018

General Operating

$447,000

Tax Stabilization

$349,726

PAH

$378,000

Asset Replacement/Rehabilitation

      $200,000

Flood Mitigation

$50,000

Total

$1,424,726

Consideration was also given to using some or the entire surplus to reduce the 2019 tax requirement. However, when a surplus gets used in this way, it creates pressure to make up that amount in the following year's budget, potentially creating an even larger tax increase.

Given that any reduction in taxes this year would have to be made up in the following year, this isn't recommended. By allocating some of the surplus to the Tax Stabilization Reserve, it can be used in the future to mitigate and smooth unusual items in the operating budget, which may help to keep tax increases to a minimum.

Reserve Funds

Canmore is sustainable only if both its capital infrastructure assets and its financial assets can be maintained over the long term. The Town of Canmore has a policy to establish reserve funds to ensure the long-term financial stability and flexibility of the Town of Canmore, to position it to respond to varying economic conditions and changes affecting the Town’s financial position, and to ensure the organization has the ability to continuously carry out its responsibilities. 

Below are some of the reserve funds held by the Town of Canmore. To read the policy and learn about the rest of the reserve funds, see the pdf Reserves Policy (3.69 MB) .

Fund

Purpose Funding Source
General Municipal Operating For working capital purposes, to provide funding for unanticipated operating expenditures in the course of providing municipal services, and for unforeseen general operating emergency expenditures.  One time transfers and one-time unbudgeted sources of revenue. 
Corporate Operating Contingency Subject to multi-year budgeting being approved by Council or required by provincial legislation, to fund unexpected or emergent operating demands that arise as a natural consequence of multi-year budgeting. Original fund established by a transfer from the general operating reserve and then annually from municipal property taxes.
Tax Stabilization To mitigate tax rate increases in cases of an emergent, non-recurring nature. One time transfers and one-time unbudgeted sources of revenue. 
General Municipal Capital To fund new capital projects or for capital expenditures necessary in cases of emergency.   Transfers from property tax revenue, unspent annual contributions to capital from operations, and one time transfers to boost reserve levels.
Asset Replacement/Rehabilitation To fund asset rehabilitation and replacement capital projects.  Transfers from annual operating surpluses, electrical franchise fees, budgeted transfers from municipal property tax revenue, and other one-time transfers to boost reserve levels.
Flood Mitigation Structure Maintenance To fund the work required to maintain flood mitigation structures, particularly after an event. Budgeted transfers from municipal property tax revenue.
PAH To fund the construction and operation of PAH units and acquisition of land as determined in consultation with Canmore Community Housing Corporation.   Mill rate assessment on residential and non-residential sectors, and one-time transfers to boost reserve levels per Council resolution or policy.

Website Security Test