Budget Process
The Finance Department is responsible for the budget process, including the Operating, Capital, and Reserves Budgets.
Every year City Council, the Chief Administrative Officer, and City staff work together to develop a draft annual budget. Council reviews the budget and makes decisions to achieve a balance between service and scope levels, infrastructure needs, resource availability, and appropriate tax rates & user fees to serve the residents of the City and lead the development of a safe, vibrant and sustainable city.
The budget serves as an outline for how the monies that come into the City should be spent to maintain and improve the City. The budget helps in determining which objectives have the highest priority and will produce the greatest positive impact in the community.
Annual budgets cover current operating, capital projects and reserve funding.
Budget Calendar
| Month | Detail |
|---|---|
| September | Proposed Departmental budget requests for the next year are compiled and reviewed. Staff provide Council with a presentation of high-level budget issues at a Strategic Priorities Council Meeting. |
| October | The City Management Team prepares Draft Operating, Capital, and Reserves Budgets; this is issued to Council, and made available to the public at the end of the month. |
| November | A Budget overview presentation is reviewed with Council at a public Strategic Priorities Council Meeting. The public is given the opportunity to provide input regarding the budget. |
| December | Council deliberates the details of the budgets, and makes changes until they agree upon an acceptable level of taxation, water & sewer rates, and user fees to be collected by the City for the next year. |
Annual Budgets Prepared
Operating
The Operating Budget provides for the costs for the City to provide municipal services to its inhabitants, and forms the basis of the amounts to be raised through taxation and user charges. Examples of operating expenses include: salaries and wages, insurance, supplies, fuel, and utilities to name a few.
Capital
The Capital Budget provides for the construction and acquisition of capital works. A capital expenditure may be defined as any significant expenditure to acquire or improve land, building, engineering structures, machinery and equipment. The Capital Budget represents the municipality’s intention to proceed with certain programs of capital works and services. Examples of capital expenses include: new buses, new roads, and new sewers just to name a few.
Reserves
Reserves can take many forms, and can generally be described as funds that are set aside for specific purposes, usually to plan for future large expenditures. The Reserves Budget identifies what expenditures will be funded from Reserves and what sources of revenue will be utilized to maintain or build the Reserve balances. With a great deal of infrastructure (roads, sewers, parks, arenas, facilities, etc.) to maintain, the budgeting process is used to plan for future repairs and replacement needs by identifying how to build reserve balances over time and identifying when to utilize these to fund future expenditures as approved by Council.
Sewer
The Sewer Budget provides for the costs for the City to operate and maintain the municipal sanitary sewage system and the sewage treatment plant. Such costs are to be recovered by charging a sewer charge based on the amount of the water consumption charges for water users that have access to the municipality’s sanitary sewer system.
Water
The Water Budget provides for the costs for the City to operate and maintain the water distribution system in order that the water acquired through the Lambton Area Water Supply System (LAWSS) is provided to municipal ratepayers.
Funding City Expenditures
City expenditures are funded through property taxation, user fees, water & sewer rates, grants, and other revenue. Approximately 53% of expenditures are collected through property tax. The remaining city expenditures are funded through federal/provincial grants, user fees, water/sewer rates, and other revenue. There are 3 components of a tax rate, they include:
Tax Rate Components
Education
This rate is set by the Ministry of Finance and is consistent for the Province. This rate is generally published in April for the current taxation year. Residents can elect to have this portion of their property taxes directed to various school boards.
County
This rate is set by County of Lambton Council, and is generally set in March for the current taxation year. Included in the County of Lambton Council are 4 City of Sarnia Councillors and the Mayor.
Municipal and Transit
This rate is set by City of Sarnia Council, and is set in December of the year prior to the taxation year. The rate is set by taking the total approved budget less user rates, fees and other forms of revenue and dividing it by the total assessed value of property in the City, taking into account the various rates of taxation for various tax classes (residential, multi-residential, commercial, industrial, etc.). The Municipal portion is also referred to as the General Levy.
The combination of these 3 components of the property tax rate is multiplied by your property assessment value (determined by Municipal Property Assessment Corporation (MPAC)) to determine your total property taxes owing for a year.
Calculating your Taxes
To calculate your total property tax bill, multiply your property assessment by the total residential tax rate.
For example, the property taxes for a home which has been assessed at $200,000 this year may be calculated as follows:
Property’s Current Value Assessment (CVA) $200,000.00
x Tax Rate* of 1.500000%
_______________________________________________________
Total Property Taxes = $3,000.00
* Sample tax rate.
Note: this example is for illustration only.
The City collects the total property tax amount, and then forwards the Education taxes to the Ministry of Finance, and the County taxes to the County of Lambton. The Municipal and Transit portion of the property taxes collected are retained by the City of Sarnia to fund the operating, capital, and reserve budgets.