KID council seeks to adopt new capital planning, budgeting policy

A draft capital planning and budgeting policy that will help guide council decision-making on capital projects for Kananaskis Improvement District (KID) will not pass before the municipality’s 2023 budget is set.

Councillors agreed the policy is a step in the right direction to assist KID in establishing capital plans and expanding capital funding for approved capital commitments relevant to municipal service delivery, but said it needs further tweaking before it can go to first, second and third reading.

Meanwhile, budget discussions are set to begin in early December.

“Ideally, this would have been done six or nine months ago – it wasn’t. So, it’s not going to be a perfect guidance to our capital [budget] decisions,” said chair Melanie Gnyp, a member of KID’s budget and audit committee at council’s Nov. 8 meeting.

“We still wanted to bring it forward to let you know where it was going and start shaping that environment that we should be thinking in. But this is still in process as far as development into a stronger document, with all the bits and pieces together.”

The policy aims to ensure council confidence in capital spending from reserves, grants, and other capital fund spending through a standardized, flexible, and rigorous decision-making process.

Following council's 2021 capital budget deliberations, the budget and audit committee requested the development of the capital planning and budgeting policy.

“Historically, our capital budgeting and planning has been pretty straightforward with emphasis on the protective and emergency services sector, but more recently – in the last year or so – we’re exploring and expanding new opportunities for capital investment,” said Gnyp. “That adds complexity and the potential for competing priorities for investment dollars and administrative capacity.

“Having a policy that guides decision-based on an agree-to-consult due process and understanding accountabilities and responsibilities will hopefully streamline capital budget development and also help to provide a level playing field for proposals.”

The policy’s design, draft and content are influenced by similar policies adopted by neighbouring and nearby municipalities and counties.

“Some of the [organizations] we leaned on a bit more than others would be Kneehill County, the Town of Banff and Town of Canmore,” said CAO Kieran Dowling. “Kneehill County in particular because we’ve heard of their ability under the Government Finance Officers Association (GFOA) – they have managed to win some awards relating to financial management. They’ve got some pretty good experience and examples to draw from there.”

The KID capital planning and budgeting policy aims to meet and align with council’s priorities, specifically around organizational effectiveness, fiscal responsibility and sustainability.

In drafting the policy, the budget and audit committee desired a document outlining a process, tools – such as forms, and objectives for which capital investment from KID council can be standardized year-over-year.

While the policy expectation includes standardization, flexibility for council is also a priority. Some councillors, however, felt that language was not explicit enough in the draft document.

Coun. Darren Enns pointed to the use of the word ‘shall’ in parts of the document as too restrictive to allow council the flexibility necessary to navigate capital funding, planning and financial decisions on a case-by-case basis.

The first bullet point of the guiding principles for capital planning and budgeting in the draft policy states “capital budgets and plans shall align with KID council’s strategic priorities.”

While Enns agreed with the notion that capital spending should align with council’s strategic priorities, he preferred the use of the word ‘should’ over ‘shall’ in most or all instances it was referenced throughout the document.

“Whenever I see the word ‘shall’ in a piece of legislation I kind of get antsy because it’s quite a confining word. It doesn’t give you any options,” said Enns.

“The reason I like ‘should’ is because we’ve spent money [before] on capital items which are unforeseen and that may not have a really strong connection with a strategic priority.”

Costs associated with unanticipated and urgent capital expenditures can include fixes to aging infrastructure, legally relevant requirements, and increasing economic uncertainty.

Coun. Erum Afsar said she was pleased to see a policy on capital projects come forward to allow for better future planning and focused discussions at council, citing deliberations earlier in the year to procure a quint fire truck for the Kananaskis Emergency Services Centre (KESC).

“I like the fact that we want to have a policy on capital projects,” she said. “I don’t think we’ve had one and we haven’t really focused too much on capital projects.”

Afsar said it would have been useful to have a capital planning and budgeting policy in place while initial discussions were taking place over the fire truck – which currently has two vendors bidding on a request for proposal (RFP) to add another aerial ladder unit to KESC’s fleet.

“We didn’t have a way of necessarily prioritizing [the project], aligning it with our strategic plan,” she said.

Afsar agreed with Enns’ points about the use of what could be considered as limiting language throughout the draft policy and said she, too, would like to see it modified – especially so as not to inadvertently commit to one particular approach to funding over another.

“I would hate for us to not approve capital projects because we don’t have those funding sources [presently],” she said. “I think we have a reality where we probably have capital projects that may be in the books but are unfunded, but those are the larger vision of KID.

“As council, that’s where we could start looking at where we could get those dollars or where we could be creative in terms of how we can fund these projects.”

Guiding principles for capital planning and budgeting in the draft policy are outlined with focuses on fiscal responsibility, budget forecasting and contingency planning, methods of funding, predictability, transparency, alternate service and program delivery, asset management, and considerations for business case-based scenarios.

Gnyp and Dowling, who helped to create the draft policy which originated with a former KID councillor, assured council the document is meant to guide decision-making only, not direct it.

Council accepted the information as presented and directed the budget and audit committee to work with administration to consider and make changes to the document according to council debate.

The draft policy is expected return to council for further deliberation sometime in early 2023.

Jessica Lee, Local Journalism Initiative Reporter, Rocky Mountain Outlook