City Budget Accuracy - Who Are the Leaders and Laggards? -- C.D. Howe Institute

TORONTO, Nov. 23, 2011 /CNW/ - A new study from the C.D. Howe institute lifts the veil on opaque budgeting and routinely missed spending targets in Canada's major cities. In "Holding Canada's Cities to Account: An Assessment of Municipal Fiscal Management," Benjamin Dachis and William Robson report groundbreaking research on major Canadian municipalities, and grade cities on the clarity of their budgeting and financial reporting, and on their records in hitting - or, more often, missing - budgeted spending targets.

"Cities are the most visible level of government for most Canadians, providing services such as waste collection, policing and transit. Yet their budgets are the most opaque," said Mr. Dachis, a Policy Analyst at the Institute.

Municipalities typically present numbers in their budgets that do not match the numbers in their end-of-year financial reports, says Mr. Robson, President and CEO of the Institute. "So councillors and taxpayers who seek to hold these municipal governments to account face a daunting task. Worse, when you do peer through the messy numbers, you find that most cities routinely miss budget targets by large amounts."

Dachis and Robson also note, however, that amid the mixed record are municipalities with clearer numbers and better records for spending control. Leaders that earned "A"s for budget clarity are Surrey, BC, and Markham and London in Ontario.  Their performance, along with improvements in financial reporting at the federal and provincial levels in recent years, show that progress is possible.

To improve financial performance and budget clarity, say the authors, Canadian cities should copy some of the past decade's budgeting reforms by higher-order governments. Specifically, either of their own accord or by provincial mandate, Canadian cities should:

  • Adopt accrual accounting in budgets;
  • Integrate operating and capital budgets;
  • Present multi-year budgets;
  • Report department-by-department results on the same basis as in budgets; and
  • Show gross, rather than net revenues and expenditures.

These changes would create clearer, more consistent budgets and help bring the financial management of Canada's municipalities into line with their fiscal impact and their importance in Canadians' lives.

For the study go to:

SOURCE C.D. Howe Institute

For further information:

Benjamin Dachis, Policy Analyst;
William Robson, President and CEO,
C.D. Howe Institute

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