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Online Consultation | 2018 – 2019 Operating Budget
By UNA
ONLINE CONSULTATION | 2018 - 2019 OPERATING BUDGET
Residents have been asking us to improve the way we communicate and increase engagement in the community. In response, we are providing residents with more information related to the fiscal challenges we’re experiencing, and the steps underway to address these significant financial challenges. Our ability to generate revenue directly affects our ability to serve our community. We believe it’s important for residents in the university neighbourhoods to be informed about our budget decisions and the impacts on residents. Over the next two weeks, we are seeking your comments and feedback surrounding the information provided on this page and through social media.
To participate in this online consultation, please provide feedback by email to finance@myuna.ca.
OUR CHALLENGE - DECREASING REVENUES
DECREASING REVENUES
Over the past five years, the UNA’s revenue from the UBC Services Levy has dropped by 30%. UNA receives the bulk of its funding from the UBC Services Levy, which is one of the two property tax‐like charges paid by property owners in the university neighbourhoods. In 2012, the Services Levy revenue was nearly $4 million. By 2017 it dropped to $2.8 million. Over the same five years, population in the university neighbourhoods increased by 48% (from 8,600 residents in 2012 to 12,700 in 2017).
WHY ARE UNA REVENUES DROPPING?
It’s all about the declining property tax rate – also called mill rate – and both the UNA and UBC do not have any control over this annual rate.
Here’s how it works:
The amount paid for property taxes is a combination of the mill rate and property value. Each year, a local government decides what they want to spend on services. Then they take all the property values in the area and set the mill rate to collect enough taxes to deliver those services. If property values rise faster than the budget, the mill rate is lowered, even though the amount you paid in property taxes increases. At UBC, residents pay two property tax‐like fees:
- Provincial Rural Tax: This goes directly to the provincial government, which sets the rate. This tax is to help pay for rural area public services, in particular local road maintenance and policing.
- UBC Services Levy: A portion of this levy is retained by UBC to pay certain expenses relating to the neighbourhoods and to add to reserves. The remainder is transferred to the UNA to pay for services such as recreation programs and facilities, landscaping and road maintenance.
At UBC, the mill rate for these two fees added together must be the same as if your property was in the City of Vancouver. Vancouver mill rates have been declining rapidly because of a significant increase in property values – including large estates, single family homes, and multi‐family homes. Vancouver can charge lower mill rates, but still collect more revenue for its budget each year given these property value increases. Unfortunately, this formula is not working for university neighbourhoods, which are not increasing in value at the same pace. As a result, each year there is less revenue available for UNA services. The UNA and UBC have no control over this mill rate. Over the past few years this has resulted in a continued decline in the revenue available for UNA services. At the same time, expenses have continued to increase due primarily to increased population, which affects cost of services (e.g. water and sewer), capital investment (e.g. new recreation centre), and the province’s decision to recover fire services costs from UBC neighbourhoods.
IMPACT ON RESIDENTS
A continued decline in revenue results in difficulty:
- Maintaining current service levels
- Implementing new requests for programs and services
- Maintaining a sustainable financial model
MEASURES TO PROTECT SERVICES
PROTECTING SERVICES
Starting in 2014, the UNA’s expenses have exceeded its revenue. Simply put – there has not been enough money coming in through the UBC Services Levy and other revenue sources to cover operational costs. The province’s decision to recover fire costs from UBC’s neighbourhoods placed additional pressure on UNA’s resources. A Joint Financial Task Force was created, with representatives from the UNA and UBC, to address the growing financial pressures caused by the funding deficit.
A number of measures have been implemented to maintain services:
- Reduced UNA administrative costs. The UNA reduced its administration costs, which resulted in operational cost savings without reductions to service levels. The UNA also moved into smaller office space, which has reduced rent costs by 40%.
- Reduced fees paid to UBC. UBC committed to five years of financial support to the UNA by reducing fees and administrative costs that the UNA pays UBC for service delivery.
- Used reserve funds (savings). The reserve funds that were created to alleviate changes in revenue will be reduced to $500,000 in a contingency fund by 2019. The UNA and UBC are working together to determine strategies to manage operations, as well as exploring options for a more sustainable finance model.
IMPACT ON RESIDENTS
- Services have been maintained but there is no budget for expanding and enhancing programs without assistance from other funding sources.
- The reduction of the reserve fund impacts the ability to weather unexpected expenses.
LONG-TERM FISCAL HEALTH
STRATEGIES FOR LONG-TERM FISCAL HEALTH
Strategies for budget management over the next four years are limited to factors that UBC and the UNA can influence. Neither the UNA nor UBC alone can change the Services Levy rate to generate more revenue. They have taken steps to address this issue and have completed a service review that has identified opportunities to improve the efficiency of operations and enhance the resiliency of the UNA’s finances. A number of strategies are being implemented over the next few years:
- Collaborate on services. UNA and UBC are exploring a number of options to collaborate on a variety of services. For example, community centre and neighbourhood field rentals are now managed by UBC recreation staff, reducing UNA costs and improving services.
- UBC Community Services Grant. UBC has committed to 4 years of additional financial support through a Community Services Grant, funded by land development proceeds.
- Restructure UNA administration staff. The UNA has restructured from an Executive Director and an Operations Director to a management team of an Executive Director and three managers –Recreation, Operations and Finance. This was accomplished without cost increases and provides support for more responsive service delivery.
- Reduce office space. The UNA recently moved into a smaller office space which reduced rent costs by 40%.
- Review Operations. A more detailed operations review is in progress to review internal resource allocation to maximize staff skills and expertise. In the interim, two staff vacancies have not been filled.
IMPACT ON RESIDENTS
- Services will be maintained at current levels
- Budget decisions regarding expanded or new services will be based on available funding
These measures provide for some additional revenue and ongoing efficiencies to help offset the declining Services Levy revenue. Learn more about the budget in the section below.
BUDGET OVERVIEW & DISCUSSION
SHARE YOUR FEEDBACK
If you have thoughts about the budget, we want to hear them. Please send us an email to share your feedback.