Staff Report: Revenue Anticipation Borrowing Bylaw (Background for Bylaw No. 1683)

Staff Report

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To

Council

Date

20/03/2017

Department

Finance

Subject

Revenue Anticipation Borrowing Bylaw – Bylaw No. 1683

Commentary

Bylaw #1683 on tonight’s agenda would give authority to temporarily borrow up to $10 million to cover current expenses until taxes are collected.

The main source of revenue for local government is taxation. Taxes are levied at the beginning of June and are due on the first business day in July. Expenses on the other hand are incurred throughout the year. This means that municipalities are faced with a cash flow shortage in the first six months of the year. This shortage can be at least partially offset by accumulated surplus and reserves.

The Community Charter resolves this issue by giving Council the authority to borrow temporarily and repay any amounts borrowed out of tax collections when they are received. Adoption of a revenue anticipation bylaw does not require any approvals.

While the bylaw authorizes up to $10 million in borrowing, only the amount(s) actually required to cover current expenses will be borrowed

Financial Implications

The ability to do temporary borrowing is advisable due to the large capital projects – e.g. Westshore Parkway completion – that are currently under way.

Legal Implications

Revenue anticipation borrowing is authorized by section 177 of the Community Charter

Options

1. That Council give three readings to “Revenue Anticipation Borrowing Bylaw No. 1683, 2017” ; or
2. That Council not proceed with Bylaw No. 1683

Respectfully Submitted,

Submitted by:
Steve Ternent, Treasurer