Multi-Year Budget

 Approved 2024/2025 Detailed Operating & Capital Budget

 Approved 2024/2025 Capital Budget Project Details

 2024/2025 Climate Budget

The 2024/2025 MYBB process will be made up of similar key steps undertaken for the previous two-year MYBB process as follows:

1. The Administration will develop the cost to maintain existing services such as expenditure growth, inflation, and revenue estimates.  This step is also used for administrative priorities such as the correction of base budgets and phase-in of funding plans.
    
2. The Administration  will provide a a budget status update to Governance and Priorities Committee. A series of Special Budget Meetings will be held to review business lines and options presented by the Administration to help mitigate the revenue gap for 2024 and 2025. 
    
3. Meetings where the 2024/2025 Budget will be discussed and where we welcome public input include:

• June 14, 9:30 to 5:30 - Regular Governance and Priorities Committee
• June 22, 9:30 to 5:30 - Special Budget Meeting  CFO Presentation GCP Special Budget Meeting June 22, 2023 
• July 25, 9:30 to 5:30 - Special Budget Meeting
• August 15, 9:30 to 5:30 - Special Budget Meeting
• August 31, 9:30 to 5:30 - Special Budget Meeting

4. The Administration will use cross-divisional teams to discuss City Council’s strategic priorities and develop options to achieve these priorities. 

5. The Administration will present a list of Business Plan Options to City Council for prioritization. These prioritized options will form part of the reporting to City Council’s Business Plan and Budget Review.

In addition, at its January 25, 2023, regular meeting, City Council resolved in part:

“That a climate budget approach, as outlined in the report of the General Manager, Utilities and Environment dated January 10, 2023, be approved in principle for implementation during the 2024/2025 budget planning cycle”

To note, Administration has incorporated steps for the inclusion of a Climate Budget for the 2024/2025 MYBB.

 2024/2025 Budget Status Update CFO Presentation, June 7, 2023
  News Release June 7, 2023: 2024/2025 Budget Status Update
 2024/2025 Budget Status Update CFO Presentation, June 14, 2023
  Information Report: 2024/2025 Budget Status Update, June 14, 2023
 News Release July 19, 2023: 2024/2025 Budget action plan: revised funding gap, numerous options to lower property tax
 2024/2025 Budget Information Report, July 25 GPC Special Budget Meeting
 News Release July 25, 2023: City Council shaves projected funding gap by $21.6 million in 2024 and $1.6 million in 2025; additional reduction measures on deck for August meeting
 News Release August 9, 2023: City Council, Administration will continue work to reduce projected funding gap in upcoming 2024/2025 Budget meeting
 News Release August 15, 2023: City Council continues work to reduce 2024/2025 budget funding gap
 News Release August 23, 2023: Work continues to reduce City's projected funding gap: Next Special Budget Meeting August 31
 News Release August 31, 2023: City Council leverages fourth special budget meeting to further close projected funding gap

Why has the City reported out a starting funding gap in looking ahead to the next two years?

The funding gap discussion is not new and is common amongst municipalities.

Identifying the starting funding gap helps identify the cost to maintain services in future years as a start to the budget planning process. The City of Saskatoon has used this process in the past to illustrate the expenditure and revenue pressures facing the City.

The City is creating a plan in advance of presenting the formal 2024/2025 Multi-Year Budget for City Council’s final approval in November 2023. Unlike other federal and provincial orders of government, the City’s budget planning process takes place in public meetings.

The City’s larger than normal funding gap heading into 2024 and 2025 is due to the City facing unprecedented financial budgetary challenges, reflected in the revenue and expenditure estimates.

The three largest pressures on the City’s 2024/2025 Budget are:

• Significantly higher-than-normal inflationary pressures, as several product and service inputs are seeing inflationary impacts of 30% or greater relative to the previous year
• Lower than anticipated post-pandemic revenue recovery in areas such as Transit, Leisure Centre Revenue, Parking, Fines and Penalties
• The removal of $10.0 million in one-time Covid-related funding in 2024

What does the starting projected funding gap for the City mean, and does that mean the City has a huge budgetary deficit?

A funding gap, unlike a deficit, is forward-looking. To be transparent, the City of Saskatoon is looking ahead into 2024 and 2025 to identify the resources required to maintain services amidst significant inflationary and other financial pressures, and to create a proactive plan to address them. By contrast, a deficit is backward looking and it compares actual, not estimated, revenues and expenditures based on assumptions and decisions in a previous year. If a budget deficit occurs at the end of a year, the City will need a reactive plan to address it.

The projected starting funding gap represents the starting point for City Council’s 2024/2025 Multi-Year Budget discussions.

By legislation, the City cannot pass a budget deficit and must balance its budget where incoming revenue equals outgoing expenses.

Amid ongoing inflationary budget pressures and trends, the City has identified the fully transparent projected costs over the next two years to maintain and deliver City services at the service levels they are currently delivered at today.

Why are the property tax rates even mentioned if they are unlikely to happen?

Coming out early and stating the transparent projected cost to maintain existing services and the associated funding gap gives lead time in the multi-year budget planning process. City Council and Administration have time to investigate options and make decisions to find savings, reduce the City’s expenditures, and adjust service levels and other revenues where required before final budget review and approval in November 2023.

The equivalent property tax rate increase is mentioned because the public has asked what the impact would be if the funding gap was not mitigated. This is another transparent way to illustrate the potential worst-case tax impact if the City continued with the current delivery of services when factoring in our 2024 and 2025 estimated expenditure and revenue realities.

Is the reporting out on Full-Time Equivalent employees different from city to city? 

Differences in how municipalities report and the services they provide can have a large impact on the amount of FTEs they report out on.

The reporting of Full-time Equivalent Employees (FTEs) varies across municipalities in Canada since it is not standardized - service levels and how services are delivered are different too.

Several factors and limitations can affect the number FTEs any city reports on so comparing FTEs across municipalities is challenging. It can be inaccurate to-state like-for-like direct comparisons when only looking at the total number of FTE employees any city has.

When comparing FTEs across Canadian municipalities, it is important to consider the following structural differences:

Contracted vs. in-house delivery: The FTEs it takes to deliver city services can vary dramatically if a city has chosen an in-house model versus a contracted model. For example when a City operates a municipal police service such as the Saskatoon Police Service they will include the associated FTE’s in their reporting however when a municipality outsources their police service to the RCMP, for example, they typically do not show these resources in their FTE count.

Service Levels: Cities have different service levels as set and approved by City Council and this can drive FTE requirements. Understanding the set service levels between cities can help inform a useful comparison. A city may have more FTEs for park maintenance if they mow park space twice a week versus a city with a lower FTE count because they set their service level at a lower frequency, such as mowing once every two weeks. If only total FTE counts are compared, it would not show this.

Local vs Regional vs Provincially delivered services: When comparing municipalities across provinces it is important to note differences in their mandated or legislated responsibilities. While municipalities within the same province are consistent there are examples in some provinces where the provincial or regional body delivers services. For example, in BC, public transit is delivered by a provincial agency with regional satellites, so transit FTEs are not counted in the city’s budget documents. The City of Saskatoon supports Saskatoon Transit and Access Transit, so these FTEs are all included in the total number.

Tax-Supported vs. Non-Tax-Supported: The City of Saskatoon delivers several services that are non-tax supported including utilities, Building and Plumbing, Parking, Licenses and Permits, Golf Courses, Impound Lot, Nutrien Playland, Gordon Howe Campsite and Land Development. The nature of tax-supported vs. non-tax-supported can vary between cities as a service provided in one municipality may be tax-supported while another municipality may have it as a non-tax-supported service. This will again affect total FTEs per capita.

Presentation Differences: While the general definition of what an FTE is (1.0 FTE = approximately 1,900 to 2,080 annual working hours depending on collective agreement working hours) is consistent across municipalities, what is reported in a city’s budget documents can vary sizably. There is no legislative or standardized way to present FTE information, so each city can report at its discretion.

Governance/Operational Structures: Municipal governments' structure can vary, and these differences can affect the reported number of FTEs a city has. While the general core of services (road maintenance, police, fire, etc.) are relatively consistent, there can be examples where a service is delivered in one city but not another.

Unlike most cities, the City of Saskatoon operates its own power company, Saskatoon Light & Power, the City of Saskatoon is in the land development business through Saskatoon Land, and we also have a Water/Wastewater utility. These Divisions return revenue to the City to be reinvested in programs and services for our growing community.

For the full information on City FTEs and how Saskatoon compares to other municipalities check the Administrative report here.

Have the City of Saskatoon’s FTEs per capita decreased since 2016?

Yes. The City's FTEs per Capita (Per 1,000 Persons) have decreased since 2016.

For example, Civic Operations (Tax-Supported Less Police) in 2016 had 7.95 FTEs/1,000 persons and in 2023 it is estimated to be 7.68 FTEs/1,000 persons.

Undoubtedly, employee costs represent a significant part of any city’s municipal operating expenses. The City of Saskatoon is transparent in its current use of approved FTEs to deliver and maintain quality services at Council’s set service levels, make progress on City Council’s priorities within its 2022-2025 Strategic Plan and respond to a rapidly growing and diverse city.

Is any portion of the starting funding gap for 2024 or 2025 a result of the City planning for a new downtown arena, new central library or because of the roll-out of green carts or other major projects?

No. The Downtown and Entertainment Event District does not contribute to the funding gap for 2024 and 2025. The funding plan for this project is currently in development and will be presented to City Council for consideration through a series of reports beginning in late 2023/early 2024. While the exact funding plan is yet to be determined, a key overarching goal is that this project does not rely on property taxes.

No. The Green Cart Collection Program is funded through a combination of phase-in funding over several years and a monthly utility fee for single-family homes. The monthly Green Cart utility fee covers collection, composting, cart maintenance, education programs and program management. More billing information can be found at saskatoon.ca/utilityrates.

No. The New Central Library is an independent taxing authority, as reflected in the Library Levy, separate from the City of Saskatoon municipal property taxes. The funding plan for this project began in 2009, providing an affordable path to a new central library. The Saskatoon Library Board will be presenting their budget and their own potential property tax impact later in 2023. More information can be found at Saskatoon Central Library / Cost & Funding Plan.

Regarding all other remaining capital projects, the reliance on property tax depends on the specific funding source of each individual project. Many of the City’s capital projects do not rely on property taxes such as development projects, utility projects or projects that receive funding from other levels of government. The most significant annual capital project that relies on property tax funding is the City’s Paved Roadway and Sidewalk Preservation program which received $32.9 million in 2023.

Why has the City released early budget forecasts now, identifying the starting funding gaps and projected property tax increases for 2024 and 2025? It’s still several months before finalizing the 2024/2025 Budget in November.

Administration’s 2024/2025 Budget Status Update provides a transparent view of the funding required funding to maintain existing service levels, maintain infrastructure for a growing city, and achieve City Council priorities as outlined in the 2022-2025 Strategic Plan.

The City is committed to providing City Council meaningful options over several planned Special Budget Meetings that could significantly help shift the 2024 and 2025 property tax rates.

The additional Special Budget Meetings are planned over the next months in the lead-up to November’s Budget Deliberations. At these Special Budget Meetings City Council will review options presented by Administration aimed at significantly lowering the property tax rate for the 2024 and 2025 budget cycles.

As always, residents and members of the business community are invited to submit emails, write letters or request to speak in person during the planned upcoming Special Budget meetings.

It is important to note identifying the funding gaps and any mention of early projected property tax rates is meant solely as the starting point for the rest of the year – it is by no means the finalized property tax rate increases over the next two years. City Council will explore savings options put forward by Administration and will work to find solutions to make investments in core services and programs to support the residents of Saskatoon. The 2024/2025 Budget and property tax rates will be finalized at City Council’s final 2024/2025 Budget review and deliberations in November 2023.  

How will the City’s budget planning process involve and inform residents in the decisions to set the final property tax rate increase for 2024 and 2025?

Throughout the budget planning process, the City will be transparent through regular reporting, news releases, social media posts and other communications.

Members of the public can participate in the 2024-2025 multi-year budget process by submitting a letter and/or requesting to speak to council or contacting your City Councillor directly.

How will Council use public feedback to inform budget discussions?

Consistent with the engagement approach used in previous years, an online panel survey with a sample size of 800 will be conducted in 2023 via the following surveys:

• Civic Satisfaction & Performance Survey
• Civic Services Survey

These two surveys measure residents’ perceived quality of life in Saskatoon, satisfaction with civic services, areas for improvement, and future priorities.

By completing both surveys in 2023, both Administration and City Council will have statistically reliable results available to inform them as part of the 2024/2025

Budget discussions in the months leading up to City Council finalizing its budget in November 2023.

What is an operating budget?

The City’s operating budget outlines the City’s spending plan to deliver core civic services to residents, and for the operational priorities to advance City Council’s priorities within the 2022-2025 Strategic Plan. The operating budget provides for the day-to-day expenses to keep the City’s operations running, including property taxes, user fees, licenses, and government grants.

Roads, bridges, pathways, and public transit that move people; police, bylaws, and fire services to keep people safe; parks, waste management, and drainage to keep neighbourhoods clean and healthy; and social programs and leisure activities to make Saskatoon a great place to live, work learn and play.

Operating Expenditure increases are usually the result of two key considerations:

• The cost to maintain existing services: Every year the City is faced with increases in expenditures because of inflationary requirements such as cost of living increases to wages, contractual obligated increases to contractors and vendors, and utility rate increases. And, as Saskatoon grows, there is the need to provide the existing service level over an expanded service area. For example, new neighbourhoods require transit service, street sweeping, roadway and park maintenance, and garbage collection, among other requirements. Without increases to the operating budget to account for inflation and growth pressures, the City may be unable to continue to provide the existing service levels.
   
• Service level improvements: Based on the City’s 2022-2025 Strategic Plan, there are several areas that City Council has directed the Administration to prioritize over the next several years. While some of these priorities can be achieved without financial impact, several initiatives may require financial investment. Examples include enhanced support for efforts within the reconciliation, equity, diversity and inclusion spaces, community safety, and Bus Rapid Transit.

What is the City’s capital budget?

The City’s capital budget focuses on the long-term, it provides investments in assets for the future of the city. The capital budget provides for the cost of construction, major repairs, major purchases, and the replacement and renewal of assets such as bridges, buildings, roads, technology and equipment.

The City uses a variety of revenue sources and tools to pay for the projects contained in the capital budget such as borrowing, government grants, utility rates, and reserves. Although the City’s Capital and Operating Budgets are distinctly different, there is a relationship between the two.

The City’s capital budget and operating budget are linked.

To pay for some capital projects, the City transfers funds from the operating budget to various reserves. These reserves are then used to provide funding for the capital costs of various projects. Similarly, when the City borrows to pay for capital projects, the debt repayment comes from the City’s operating budget.

Once the projects in the capital budget are fully constructed or operational, the City is required to pay for the ongoing maintenance and/or the operation of the project.

For example, when the City builds a new bridge, there is an obligation to ensure the bridge is maintained. When the City constructs a new recreation centre, we must ensure there is enough staff to operate the building. If a new transit vehicle is purchased, it will require a driver and yearly maintenance costs. These obligations, therefore, have an impact on the operating budget.

Can the City budget for an operating surplus or a deficit?

As required by The Cities Act, all municipalities in Saskatchewan need to approve a balanced budget each year. Operating expenditures must be covered by operating revenues and if there is any remaining gap, property taxes must fund the remaining portion.

Legislation mandates that the City cannot budget for an operating surplus or deficit, unlike federal and provincial governments.

How does inflation impact the City’s budget?

The costs to deliver City services rise with inflation as the cost of goods for the City continues to increase. As the cost of asphalt, labour and materials rises, so does the costs to maintain services. Unlike the Province or Federal Government, the majority of the City’s revenues do not receive inflationary increases, and this creates significant pressure on the City’s budget, especially when inflationary pressures are high.

Does population growth impact the City’s budget?

The cost to deliver services rises as the city grows with new neighbourhoods and more people calling Saskatoon home. As additional hectares of park space or kilometres of roadways are added, so are additional costs to maintain them. However, many of the City’s revenue sources also benefit from growth as new properties are constructed or facilities and programs see increased users. While not always perfectly aligned, revenue growth typically covers expenditure growth in a well-planned city.

Where does the operating money come from for the City to pay for its programs and services?

The City of Saskatoon generates operating revenue to pay for the delivery of its programs and services from seven source categories: general revenues, taxation, franchise fees, grants-in-lieu of taxes, government transfers, user fees, and investment income.

In 2022 and 2023, approximately half (49.5% and 50.4%) of the City’s 2022 and 2023 operating revenue comes from taxation. Taxation has been steadily rising as a share of operating revenues for two reasons:

• Tax-supported expenditures have been consistently increasing due to inflation, growth and service level increases; and
• Other non-tax revenues have not been keeping pace with rising costs, and this puts more pressure on the property tax to fund the revenue gap or shortfall.

• Improved transparency and decision-making by providing City Council and residents with more information early in the budget planning process about the funding the City requires, where City funds are used, linking service costs to service levels and outcomes, and better connecting long-term goals to short-term spending decisions.
   
• Increased accountability for the City to deliver services to residents effectively and efficiently, while maintaining its focus on a sustainable future.
   
• Creates capacity within the organization by allowing more time in off-cycle years for Administration to perform value added work for residents as opposed to constantly budgeting. The City is often asked to do more with less and multi-year budgeting has saved thousands of hours every cycle in staff time.
   
• Importantly, the multi-year budget process provides the framework which allows the City to quickly adapt, respond and adjust to changing municipal, provincial, and federal environments if needed. There could be unforeseen changes to economic forecasts, council-directed changes or external factors (such as a pandemic) that could require the City’s budget to be adjusted over the multi-year cycle.