It’s all about the Capital.....
November 25th week will be a critical time for Council, because this is when we review the overall City of Calgary Capital Budget for the remaining portion of the 4 year budget period. As you may recall, in September Council reviewed the 2015 operating budget and voted to reduce the operating budget from 4.7% to 3.5%. Last year’s total revenue was $3.62 billion dollars; it is important to note that the City of Calgary is not allowed to run deficits. When we review the capital budget, consideration must be made for the operating costs implications, which may vary depending on the specific project. This will have future implications on the operating budgets.
To date, with the downturn in the economy, cost savings have ranged between 10%-20% in infrastructure projects (less or none on materials and goods from the U.S.A.). More companies are available for the projects and the number of bidders have increased significantly, resulting in competitive bids. In general, executing the approved capital projects on a yearly basis (burn rate) ranges between the 50-60% mark. Remaining projects and budgets are then pushed to the next year. The greatest challenge of executing the capital budget is acquiring the proper number of qualified personnel, and the second is balancing the overall personnel budget long term.
To increase the “Burn Rate” (project completion percentage) and take advantage of the lower costing will require specific targeting and a focused team. This team will need to address the personnel challenge in terms of quality and numbers, without impacting long term employee budgets.
The 2015-2019 Capital budget is $8.12B; when we roll over 2014, the total Capital budget is almost $10B. This does not include potential grant money for the Green Line. To put it in perspective, this figure is close to the amount of the provincial Heritage Fund.
The majority of the Capital budget funds are available for projects WITHOUT borrowing any monies (approx. $8B rounded). During budget discussions, projects will need to be reviewed for relevancy, priorities and potential repurposing.
As the Capital Budget process approaches, I will continue to keep you informed by posting additional information.
Vice Chair, Priorities and Finance
This content represents the personal views and opinions of the Councillor and should not be taken as a statement of policy of The City of Calgary. The inclusion of any external content does not imply endorsement by The City of Calgary.