Local Government Finance: Selected Topics

Financing for local governments in British Columbia is an important aspect of ensuring that municipalities and regional districts can deliver services, maintain infrastructure, and meet the needs of their communities. Municipalities and regional districts finance their day-to-day operations and capital projects using a variety of revenue sources, including property taxes, parcel taxes, grants, user charges, licence fees, developer contributions, reserve funds, asset sales, and borrowing. Planning for these financial needs is an integral part of their budgeting process, which involves developing a financial plan that forecasts expenditures and revenues over a five-year period. Pursuant to section 165(5) of the Community Charter and section 374(5) of the Local Government Act (the “LGA”), the total of the proposed expenditures and transfers set in the financial plan for a year cannot exceed the total of the proposed funding sources and transfers from other funds for that year, meaning local governments cannot run deficits on purpose. In addition, the legislation requires any deficiency resulting from actual expenditures exceeding actual revenues for any year, to be included in the subsequent year’s financial plan as a planned expenditure. Therefore, understanding their financial tools is critical to the successful and efficient operation of a local government.

In this paper, we begin by reviewing a new and potentially significant power to generate funds towards the cost of constructing community amenities: the amenity cost charge provisions. We will then examine a key local government financing tool: the power to borrowing money.

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