What goes into the City budget and how are property tax increases determined? In this week's episode, host Bob Evans talks to City Manager Doug Gilchrist about the new Council, the budget, and the important task of managing residents’ money.
Welcome to Kelowna Talks, a podcast presented by the City of Kelowna that explores the "why" behind the decisions that shape your city. Tune in for weekly episodes with host, Bob Evans, Partnerships Office Director with the City of Kelowna, as he welcomes guest subject matter experts to explain the processes and decisions that influence the lives of the citizens.
Kelowna Talks - EP 18
Doug 00:00
You've heard me say it before, I think the most important thing we do is manage other people's money. All the rest is the process to get there. And it's absolutely crucial that they have the confidence and trust in us to do that.
Zoe 00:12
Welcome to Kelowna Talks where we explore the why behind the decisions that shape your city. Together, we open the curtain and dig deep into current issues, plans and policies that come out of City Hall. Thanks for joining us as we talk about Kelowna, and the topics that matter to you.
Bob 00:37
Hi, everyone, I'm Bob Evans, partnership director at the city of Kelowna and host of our Kelowna Talks Podcast, I acknowledge that our community is located on the traditional ancestral unceded territory of the Syilx, Okanagan People. So here we are municipal elections, now behind us, we have several new faces around the council table, three new councillors and a new mayor. The weeks following an election can be steep, a steep learning curve, for these new members, there's a lot of information they need to understand. One of the biggest items is the annual city budget. So today we're talking about onboarding those new members, council and the budget and sort of a bit of a budget 101 for our listeners, because it's significant and everything we do as a city relies on that budget. Joining us today, we have our city manager, Mr. Doug Gilchrist. Welcome, Doug.
01:28
Thanks a lot, Bob. Appreciate being here.
Bob 01:30
Well, we're glad to have you. It's been a few episodes, and we've been wanting to get you in the seat. And here you are. So we usually start off by asking people when you're not at City Hall, and your case is probably just a small couple of minutes a day. But what do you do when you're not managing the city.
01:48
Yeah, I spend a fair bit of time there, that's for sure. But like everybody else, we have another life. I'm a father of two young kids, eight and 10 years old, and they're a blast. So I do a bit of coaching with one of them. Coaching lacrosse, and spend lots of time with the other skiing and boating, biking and everything like that. And, my wife, so pretty close family and do lots of great stuff up in Kettle Valley, and a little bit of traveling when we can find the time.
Bob 02:18
Enjoying the beauty and the bounty of our city. Good to hear. So with the new councillors and a new mayor, you know, in the seat for the next four years, what have the last couple of weeks looked like for you with them in terms of bringing them up to speed teaching them the ropes, let's say on what it's like to be a mayor and council in the city of Kelowna.
02:38
Yeah, the last few weeks since the election is certainly been a whirlwind. It's a busy time for any municipality. But when you have a change of four new councillors come into a council that changes everything, it changes the dynamic of Council, it changes the approach. They may have some new priorities, new ways of communicating and wanting to do things. And so uncovering all of that so that you can end up with a really cohesive team that is aligned with the organization or the organization more appropriately, the organization becomes aligned with the new council. So, that's been going really well. We have a pretty robust orientation program for councils. And we were well prepared. There's a great team of staff around the executive office and throughout the organization that put a put a ton of time into ensuring we were prepared, regardless of who was on council. And then we spent four days with them a couple of weeks ago, getting them oriented.
Bob 03:39
What does that look like? I've had certain staff inside City Hall going, What's it going to be like with a new mayor and new new council? And what I've been saying is that we have a job to do as professionals and doesn't really matter. I mean, it does, because obviously, the mayor and council set priorities in a direction, but as staff we do our job professionally, regardless of who's at the helm. So I don't know, help me out with that one. And what do you say to staff? You know, with, with new leadership at the helm?
04:02
I say that, yeah. That's a perfect message. Bob, I mean, public service, if you don't believe in that public service isn't the place for you? Right. So the some of the things I've been saying to staff and people ask me similar question is the things we needed to accomplish before October 15, are mostly the same things we need to accomplish now. Whether it's public safety, or homelessness, or, you know, pandemic recovery, economic efforts, facility development, all those things are still on our agenda to complete, as well as all the services that aren't in the political realm, you know, like snow clearing and cultural programs and things like that. All of those are based business that we have to continue on with, the way we go about doing that business, and how far we go in certain directions will definitely change as a result of a new council. And that's a good thing. Right cities change councils need to change accordingly. And then we need to respond. So I'm hoping all of our staff really pay attention and listen to counsel so that we can follow their lead. Community elects them and their direction is our direction, their priorities will become our priorities. And that's a an important message to be, I think, filtered through the organization. And there's nothing to be afraid of, if there's, you know, change is uncomfortable for some people. But change can be a really good thing for an organization. And so far, I've seen nothing but positive things
Bob 05:29
Change can be exciting, change is exciting for me anyways. And, you know, I guess that brings us to this the second part of our discussion today, which is the budget. And you tell me, but I guess this is maybe one of the first chances that council gets to actually put their personal stamp on the direction of the city. And we're looking at preliminary budget going to council December 1 is my understanding, and then a debate or deliberative various aspects on December 8, help us help our listeners understand the budget process that obviously starts way before that, before it gets to council. It's quite an elaborate, integrated process. And a lot of people behind the scenes are working on it. And it's it's a big, big effort, can you help our listeners understand what goes into the prep before it sits in front of counsel?
Doug 06:20
Sure. I probably won't do it justice, because I know there's a lot of people behind the scenes that do more associated with the budget than even I'm aware of. But in essence, we have about $170 million taxation budget, only a component of our budget is tax funded. So 170 odd million is tax funded. And the balance comes from reserves, grants and fees and charges, those are the kind of the big buckets anyway, but in any given year, we could spend upwards of 500 million, depending on the size of the capital program for that for that given year. So what we bring to council is the changes to the tax component of the budget. And that starts generally, early in kind of May, June for both capital and some of the operating. And it goes through a filtering process. And people bring their needs and wants to the table, hopefully, more often now than perhaps in the past. But hopefully, based on a divisional plan, or a strategy, where they've identified the resources they need the program they need to develop or advance and the capital needs that have been identified. And then comes through to the divisional directors, ultimately, the senior leadership team and finally culminates in what's called the city manager budget review week, that happens in October, where we really get down to brass tacks on what's necessary, what's nice to do, and what isn't gonna make the cut for the year.
Bob 07:46
So there you go. It's it's a multiple month process with dozens and dozens of people with their hands and their eyes on it and ultimately gets to you for final decision on what goes to council.
Doug 07:56
Yep, it does. Ultimately, it's my recommendation to council and then once they approve it, it's their budget. You know, we do have budget improvement processes that I think are really important that we want to do a better job of. And ultimately, those will streamline our budgeting process. So it isn't so laborious every year for so many people in the organization, trying to free up some hours so they can spend more time on the work they're doing then the budget planning.
Bob 08:20
So give me an idea what that means, a budget improvement process...
Doug 08:23
So it's largely our finance team that are tasked with it. But I'll give you an example of sort of rolling up things into buckets, as an example, city of our size, taking line item budget improvements in that 10 or $20,000, is really not efficient, and it doesn't encourage council to fly at the level that we believe they should in terms of good governance. So rolling up some programs into bigger buckets that give a little bit more latitude around how the money is spent within a program or a policy level the council has established that would be one example. And the other one, which I think is gonna be a really significant effort for organization, the next little while is service based budgeting, really having getting a better handle on what councils getting for every dollar they agree to spend, so that we can show them and to the community, quite transparently, almost like a sliding scale. For this amount of money, you get this level of service. If you invest more money, this service goes up by X. If you pull money off the table, it goes down by Y some services like street sweeping, it's very easy to do, right? If you had more money, we can do another sweep other services like planning or partnerships or some things do with arts and culture or communications, it's much more difficult to define service levels. But we're going there in a big way.
Bob 09:47
A question I have Doug is when we look at tax increases every year and last year in 2022. The tax increase was 3.94%. I want the listeners to understand a little bit about a little bit more about that decision making process in terms of our targets for those increases and the impact of those targets in terms of that value added that you were just talking about, and how we fully judge it, you know, in some instances, and, again, I empathize that as a homeowner in the city has and as a taxpayer, on the implications of those increases, but I also want a good city and I want a city that can grow holistically and provide more opportunities and ensure our long term sustainability. This sounds like an election platform, we've already had the election, but the, you know, the idea of what's the process and what goes into making those final decisions,
Doug 10:39
it's a balancing act, you know, it is definitely more an art than it is a science. In some ways, my nature is to make it a science and put systems around it. But the reality is, it's, you know, you have to have one foot in each camp, the political side and the administrative side. And I think getting to a place of understanding of what it costs to run the city, and what you get for your money is an important education. So the time we spend with our community and with our council, helping them understand what they're getting for their their money, I think is critical. You know, you've heard me say it before, I think the most important thing we do is manage other people's money, all the rest is the process to get there. And it's absolutely crucial that they have the confidence and trust in us to do that. So our job isn't just to manage the money well, and provide great services, it's to educate them on how we do that, so that they have confidence when they're paying their tax dollars there. They realize, yeah, we get good money, or we get good value for this. And we're not gonna protest kind of working over a certain amount of money. Once you get to that point. I think the adjustments year to year are easier, people can understand that there's an eight or 10%, inflation, and those and our basket of goods is even more expensive than, you know, typical household when you're buying fuel and tires and things like that. So when you when you have them in a place of trust and confidence in municipal government, which is tough for any level of government these days in our world, then the adjustments are a little bit easier for them to swallow and understand. We have the same cost pressures have as households do and if not more, but we also have some revenue levers, you know, your office, the partnership offices, trying to pull some more of those levers so that we don't have to rely on taxpayers as much in the future. And I'm quite proud that we are on the lower end of the spectrum of taxes per average household. And we only rely on taxes for about 25 to 30%, depending on the year of our overall revenue base. That's really sound fiscal management. And that's not common in every municipality.
Bob 12:44
My understanding is that The ofCity Vancouver for instances is the reverse of that, from a percentage perspective.
Doug 12:51
Yeah, they are, and it depends on how you calculate it. But at minimum, they're closer to 50%. Tax funded. And so when we go through things like a pandemic, their reliance on taxation has a much, much bigger impact on their cash flow and their potential future budgeting so and just like your own portfolio, diversification is important. We don't have a lot of lead legislative tools for financial diversification, but we are pressing for new ones with the province, we've asked for a new fiscal relationship, which means essentially a new deal on how we fund municipal governments and the doors open a little bit on that. So we're hopeful on that front. But in the meantime, we'll use the legislative authorities that we do have to get creative. And I know through some of the work you and your team are doing, we're going to find new ways to generate some revenue so that we don't have to have as heavy reliance on the taxpayer.
Bob 13:44
So yeah, you mentioned my own portfolio. So keeping my head in the sand is probably, I'm not sure if that's a good or bad strategy at this stage, just buckle down a little bit, I guess...
Doug 13:56
Innovation is in our values as a city for a very purposeful reason. It was it didn't just fit an acronym or something that was, you know, pie in the sky. It's very purposeful, that we want the entire army of staff, we have 1100 staff roughly. And we want them all thinking about innovative ways to do their job, to create efficiencies, and to look for alternative revenues. It might be through partnerships, it might be for going costs or cost avoidance. Or it might be actually generating money that we can put into facility development or asset renewal or things like that.
Bob 14:31
It's a great reminder to all of us of the culture that you're trying to instill as our leader, Doug and having us all think and look and be creative and be entrepreneurial in our in our vision on how we can do differently, how we can do it more effectively and how we can attract different revenue streams to the city. Maybe that's my own personal sales pitch, but back to the budget had to get back and one of the questions I had as we go through the budget period, we've talked about, we identifies the city P1 and P2 projects. Can you help our listeners understand how a project gets that designation and what that means to the to the debate at council chambers?
Doug 15:11
Sure. So P1 means you made it through city manager budget review, and that we're making a recommendation for council to fund that and included in the budget. So when we present Council, the budget, P1's will total up to a certain funding amount as well as a percentage increase. And the P2's are outside of my recommendation. But they remain in the budget presentation document that goes to Council and the public. So both of them can see what's important that we're not able to fund right. And council may choose to take something out of that priority two, and make it a priority one and fund it increasing taxes or pull something off the table. That's a P1 to make room for something else.
Bob 15:54
Okay, that's fair. So that's probably one of the focuses of the of the conversation on the council chamber during during those meetings. What happens after December 8. So Council gets the budget package. They make some, they have some conversations, they have some beta buttered, they make some decisions. And then what happens?
Doug 16:02
Well, ideally Budget Day is a day and no more. But you know, people look at it and think, Well, they only spent two hours or six hours on Budget Day. That's not enough oversight. Budgets, really a program, it's not a day by December 8 is the culmination of a lot of time and effort and work and touch points with counsel, starting back in as early as June to the previous year. Really understanding what they're looking for in the budget, massaging it going back and checking in with them again. So that when we do present it on December 8, there's no surprises, they generally understand what's in there and why it's in there. And most of it is as a result of their direction, perhaps their priorities, right, that had been set. So at the end of Budget Day they adopted or ideally, by resolution, that's provisional budget is approved. Once provisional budgets approved, we can start spending, even though final budget doesn't happen doesn't actually occur until May, when it's finally adopted, we have all of our revenues, confirmed our carry overs, all of that kind of stuff is dealt with reserve allocations. And then we do adopt final budget in May.
Bob 17:18
I have a little fact here, I wanted to do a bit of a shout out to the finance team. My understanding is the city has been awarded the, this is long, the Government Finance Officers Association Distinguished budget award 20 years in a row. A, That sounds great. But further than that, it must mean that, you know we're doing a good job under the eyes of other governing bodies that our approach to budgeting has attracted some attention.
Doug 17:43
Yeah, that's an award that we should all be very proud of, particularly the finance department who's charged with it, and has the most amount of energy into delivering it. And our citizens should be proud that they have a government that cares enough about the way we manage our money and communicate our budget back to the community because that's part of one of the awards that we get from GF way as well. I just hate to be the finance director in place when we don't get it.
Bob 18:09
It's 20 years running.That's a pretty substantial track record. Well, that's pretty much the end of our time today, Doug, I appreciate you showing up and sharing with us how the new mayor and council members are being oriented to their duties in the city than you and the background around the budget. Is there anything we've missed that you want to share with our listeners on either of those two topics before we wrap up?
Doug 18:37
I don't think so, Bob, we just want to thank you for doing these. I think it's an innovative way of communicating out to our staff and others. And I'm really excited. We're doing this kind of work. And I'm excited about our staff and council. You know, we've built something really special here in the city with their level of talent and passion that we have in staff. And I'm excited about new council and the direction they're going to help take us I'm sure we're gonna be able to deliver on their results is as well as we have on previous councils.
Bob 19:06
Well said and I'm excited to so thank you, Doug, for joining us today. Okay, thank you.
Zoe 19:13
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