Presentation on Strategic Planning and Capital Budgeting Westin November 2002

1
Presentation on Strategic Planning and Capital
Budgeting Westin - November 2002

• Mark Gilbert

2
Topics

• Tying strategic planning with capital planning
• Capital infrastructure issues
• Asset type life
• Maintenance
• Financing options
• Debt policies
• CIPs

3
Strategic Plans

• A systematic way to manage change
• Focuses on the allocation of resources
• Documents (and maintains) a course for a
  municipality
• Looks at where we are, where we want to be, the
  strategies needed to get there, and the positive
  / negative influences of internal external
  forces

4
Capital Infrastructure

• Long term assets used in the delivery of services
  
• The life of these assets physical, accounting
  financing purposes
• Maintenance issues and ongoing expenses
• Capital upgrades
• Impact on operating budget

5
Methods of financing

• Borrowing (incurring debt)
• Pay as you go / capital out of revenue
• Reserve funds
• Grants
• Development charges / User fees

6
Capital Improvement Plans

• A multi year plan that identifies capital
  projects to be funded during the period
• It is reviewed annually
• Includes an inventory assessment
• Includes maintenance and rehabilitation of
  existing infrastructure
• Purpose is to provide a formal mechanism for
  decision making and a link to long range plans
• Advantages limitations
• The process

7
Debt management policies

• Establishes the mix of financing methods for a
  municipality
• Relates type and location of infrastructure to
  method of financing
• Structural features of debt
• Term of borrowing by asset type
• Source of debt repayment taxes / user fees
• Debt ratio limits

8
Best practices

• Goal to develop recommendations and promote
  guidelines of professional practice in budgeting
  
• Include capital budget policies such as
• debt issuance and management,
• debt level capacity
• use of one time revenues

9
Factors that contribute to a strong credit rating

• Working capital reserves / surpluses
• Debt affordability reviews and policies
• Multi-year financial forecasting
• Quarterly financial reporting
• Pay as you go capital funding policies
• Rapid debt retirement policies

10
Summary

• Capital budgeting should be part of the strategic
  planning process
• The adoption of strong financial policies related
  to infrastructure management will assist
  municipalities in achieving their goals
• The way that infrastructure is financed and
  maintained either contributes or detracts from a
  municipalities ability to meet its strategic
  goals
• Capital improvement plans and debt management
  policies complement the strategic planning
  process.

11
And finally

• The strategic planning process recognizes that
  each community is unique
• This is reflected in the capital infrastructure
  needs of communities and the financing choices
  available