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City 'capital envelope' policy to get overhaul

Draft policy will come back to standing committee on finance in October

By: Victoria Paterson

  |  Posted: Saturday, Apr 19, 2014 06:00 am

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One of the city’s more elusive financial policies is set to get a less confusing name.

A new name for the “capital envelope” practice will be part of a policy overhaul that will be presented in draft form to council’s standing committee on finance in October.

The city’s capital envelope practice is, at its simplest, a funding formula that helps set how much money from the municipal operating budget is allocated to meet capital requirements.

That amount has been fixed at $12.4 million since 2010. There are three components to the capital envelope: pay as you go funding, transfers to reserves and long-term debt servicing.

The proposed new name for the capital envelope is “capital funding formula” but it’s not guaranteed that’s the new name suggested in the draft policy when it comes back.

Either way, council was pleased with the idea of changing it.

“In my opinion it’s infinitely superior,” said Coun. Cam MacKay.

During Monday’s standing committee on finance meeting, committee members, which consists of all of council, passed a few recommendations that will be taken into consideration with the policy.

First up was a motion to update the name, which passed unanimously.

Second was that the capital funding formula (the capital envelope) be established as a percentage of the audited capital cost base (excluding land costs) beginning with the current amount of the capital envelope.

That one was passed in a 5-2 vote, with MacKay and Coun. Sheena Hughes in the minority.

Hughes felt this would mean there would always be a tax increase. “If we need to have more money coming in, we can always put more in,” Hughes said.

The third recommendation would have the funding allocations to pay as you go amounts periodically reviewed and analyzed to see if those transfers align with capital projects and potentially adjust them.

The motion suggests every three years, and the adjustment be the average of the three year variance, but Heron, who liked the motion as she felt it handed control back to council, noted that doesn’t only have to be every three years.

That review could also start as early as this year using the last three year’s data.

“It’s finally giving council the opportunity to make a difference on the tax rate,” Heron said.

The motion passed in a 6-1 vote, with Hughes the lone dissenting voice.

“This is a dangerous motion. It seems innocent,” Hughes said.

The final motion passed saw the recommendations to be brought back as part of a draft policy for review, a motion the mayor wanted. That motion was passed in a 5-2 vote, with MacKay and Hughes against.


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