progressive budget 

Whistler adopted a progressive new approach to its municipal operating budget Monday that encourages entrepreneurial activity, provides incentives to save money and gives department heads greater flexibility in managing their budgets. The new approach — called the Expenditure Control Budget — is adapted from the book Reinventing Government, by David Osborne and Ted Gaebler. Osborne and Gaebler found that traditional government budgeting systems do not promote efficiency, innovation or effectiveness, but rather encourage spending, reward bad performance, over emphasize control and discourage entrepreneurial activity. Some parts of the new Expenditure Control Budget will be phased in over two years. The key element is the Annual Adjustment Formula, which is based on inflation and population growth. The adjustment for the 1998 budget will be 2.7 per cent. Normal growth in departmental services is funded through the AAF. New programs or services require council appropriation of new money outside of the formula. That may come from increased taxes, cuts to existing services or programs, new fees or charges, or increased productivity. Fifty per cent of any savings generated through improved productivity or innovation will be retained by that department, to be used in accordance with guidelines approved by council. Twenty-five per cent of the savings will be allocated to an Innovation Fund, as a means of financing the fund over time. The final 25 per cent of savings will be allocated to a Continuous Improvement Fund, to support initiatives designed to make the municipality more effective and a better place to work. The Innovation Fund is one of the incentives for staff to save money. The fund is intended to provide the investment capital required to explore innovative and creative ways to make the municipality more efficient and effective. The fund may be used to make loans to departments and/or work groups and will be repaid through retained savings on a pre-defined repayment schedule. Part of the ECB process includes reducing the municipality’s dependence on property tax revenues. A number of strategies are being used to meet that objective, including ensuring that fees and charges bring in as much revenue as possible. Existing fees and charges will be increased by one per cent above inflation. A two or three year phase in program is likely for charges that will see a larger increase. However, a locals-only program is also planned for fees and charges, where it can be legally done. Another strategy to reduce dependence on property tax revenues involves challenging each department to find at least one new revenue source, with the overall objective being to collectively raise an additional $100,000 over two years. Department heads will also have greater discretion in spending their budgets. The role of the municipal administrator, the finance department and department heads also changes under the ECB approach. The finance department’s responsibility shifts from one of control to providing financial budgetary expertise. A senior management team, comprised of the municipality’s directors and the administrator, will be responsible for preparing recommendations for council’s consideration relative to major issues, services and programs. Mayor Hugh O’Reilly called the ECB approach "leading edge" and said it was the most progressive budget he’s seen in nine years on council. A separate document will be coming to council that will address the municipality’s long-term capital spending program. Currently the capital program is largely funded by development. However, as buildout approaches the capital program will have to be increasingly supplemented by general revenues.

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