Understanding Municipal Budgets & Finances
The municipal budget helps set the financial direction for the County and determines how municipal services, programs, operations, and projects are funded.
You don't need to be an accountant to start understanding the budget.
This guide explains some of the basic parts of municipal budgeting and what residents may want to look for.
1. The Municipal Budget
The municipal budget sets out how the County plans to fund services, programs, projects, and operations.
The budget connects the services and work planned by the County with the money needed to pay for them.
What to look for:
Look for significant changes from previous years, new projects or spending, changes in revenue, and areas where costs are increasing or decreasing.
2. Operating Budget
The operating budget covers the ongoing costs of providing County services and carrying out day-to-day operations.
This may include staffing, fuel, materials, utilities, contracted services, maintenance, and other regular operating costs.
What to look for:
Look at which service areas are increasing or decreasing, significant changes from the previous budget, and explanations provided for major changes.
3. Capital Budget
The capital budget covers major assets, infrastructure, and long-term projects.
This may include roads, bridges, buildings, vehicles, machinery, equipment, and other significant County assets.
Capital projects may be funded through taxes, reserves, grants, borrowing, or a combination of funding sources.
What to look for:
Look at the total project cost, when the project is planned, how it will be funded, and whether the cost or scope has changed.
4. Balancing the Budget
Municipalities must prepare budgets where estimated revenues and transfers are sufficient to cover estimated expenditures and transfers.
This means the County must identify how planned spending will be funded.
Funding may come from property taxes, grants, user fees, utility revenue, reserves, and other sources.
What to look for:
Look at how the budget is being balanced, where funding is coming from, and whether reserves or other funding sources are being used to support planned spending.
5. Where the Money Comes From
The County uses several sources of revenue to help fund municipal services, operations, and projects.
These may include property taxes, grants, user fees, utility revenue, investment income, and other sources.
What to look for:
Look at how much of the budget relies on different sources of revenue, whether significant funding has changed from previous years, and whether any revenue is one-time or intended for a specific purpose.
6. Reserves and Financial Planning
Reserves can help the County plan for future projects, major purchases, unexpected costs, and other financial needs.
Council may budget money to be added to reserves or use reserve funds to help pay for planned expenditures.
What to look for:
Look at whether reserve funds are being added or used, the purpose identified for the funds, and how reserve use fits into the County's broader financial plan.
7. Multi-Year Financial Planning
Municipalities are required to prepare written financial and capital plans that look beyond the current budget year.
Longer-term financial and capital plans can help identify future operating needs, major projects, infrastructure costs, and how those costs may be funded over time.
What to look for:
Look at projects or costs planned for future years, whether estimated costs are changing, and how future spending may affect reserves, borrowing, or other funding needs.
8. Borrowing and Debt
Municipalities may borrow money for municipal purposes, subject to the Municipal Government Act and Alberta's municipal debt and debt service limits
Borrowing creates a financial obligation that must be repaid over time and may include interest costs.
What to look for:
Look at why borrowing is being proposed, the amount, the repayment period, the cost of borrowing, and how future repayments may affect the County's finances.
9. Budget Changes During the Year
An approved budget may need to be adjusted when circumstances, project costs, funding, or priorities change.
Council may be asked to approve a budget amendment or additional funding for a project or expense.
What to look for:
Look at what is changing, why the change is needed, how much money is involved, and where the additional funding will come from.
10. Budget Approval and Council's Role
Council is responsible for adopting the municipal operating and capital budgets.
Administration prepares information, estimates, and recommendations to support the budget process, but Council considers the proposed budget and makes the final decisions through Council motions.
What to look for:
Look at the proposed budget, changes made during Council discussions, motions passed by Council, and the final approved budget.