Actually, the way Vancouver keeps its books makes a lot of sense – just ask rating agencies
This week’s report from the C.D. Howe Institute complaining about how Canadian cities keep their books actually ranks Vancouver as tied in second place with four other municipalities for accuracy and transparency of its budgeting.
But that didn’t stop the Vancouver Sun’s Don Cayo from damning Vancouver and Surrey for budget practices that “make no sense” even though Vancouver has already implemented the overwhelming majority of the C.D. Howe recommendations. (The one exception is a recommendation not used by any municipality.)
In fact, one credit rating agency declared last year that “Vancouver displays strong governance and management characteristics. The city uses a long-term financial planning framework, including a ten-year Capital Strategic Outlook, a four-year Capital Plan, and an annual consolidated budget (capital and operating) with a four-year outlook.”
To set the record straight, I sent the Sun this letter this morning, along with an invitation for Mr. Cayo to meet with the city’s finance team:
Don Cayo’s fear that the City of Vancouver’s solid financial performance and transparent budget reporting are “just a blip” is unwarranted.
One major credit rating agency concluded last year that “Vancouver demonstrates strong financial management, which has a positive impact on its credit profile. The city has a robust set of financial policies and its annual financial statements are audited and unqualified. In addition, it provides transparent, easy-to-access disclosure to pertinent information and prepares detailed operating and capital budgets.”
Virtually all of the “best practices” proposed in the recent C.D. Howe Institute report Cayo cites have been Vancouver policy for some time, some for more than 10 years. No wonder the report rates Vancouver as one of the top cities in Canada for budget transparency.
Since 2001, Vancouver has accounted for revenue and expenses on a gross basis, and budgeted that way in the past several years. Budgets are set on an accrual basis, with the exception of depreciation for capital assets, to allow citizens greater visibility into capital spending and debt funding of capital assets. The difference is clearly noted in the financial statements, as suggested by the CD Howe report.
Following a review done by PWC in 2012, the city introduced a number of changes mentioned in the report, including budgeting gross expenditures, reconciling budgets to financial statements, and approving budgets prior to the start of the year.
The city also improved its consultation process and quarterly reporting, and developed service plans to give taxpayers a clear understanding of what was being received for their taxes and fees.
The C.D. Howe report is critical of some municipalities for imprecise budget forecasts. But in 2008, a year in which the global economy suddenly ground to a halt and revenues slumped, Vancouver made significant mid-year adjustments to close an unexpected budget gap of more than $50 million. These measures were successful, the budget was balanced and the initiative became the cornerstone of the Vancouver Services Review, which has produced savings of over $53 million in a five-year period.
Careful management has enabled us to keep our taxes increases at the mid to low end of the range for Metro municipalities, with an average tax increase of two percent over the past five years.
Vancouver is proud of its efforts to achieve continuous improvement of budget planning and reporting. If Mr. Cayo has any further doubts, our financial management team would be happy to meet with him to set his mind at rest.
Chair, City Finance and Services Committee