The Cities Act and The Municipalities Act require municipalities to prepare and adopt a budget on an annual basis, and no council may authorize a tax levy without having adopted the annual operating and capital budget for that year.
Setting the municipal budget should be done as soon as possible in order to provide staff with the guidance needed to achieve the municipality's goals for the year. Ideally this process should be completed prior to the beginning of the fiscal year.
The budget process has two components. One involves the routine maintenance and operations of the municipality (the operating budget) and the other deals with capital planning (the capital budget).
Development of a budget is beneficial because:
- A budget identifies priorities as determined by council;
- A budget is a tool to communicate those priorities to the public and to staff; and
- A budget assists with determining whether existing financial resources are sufficient to meet municipal spending needs.
It is important to note that municipalities may choose to develop their own format and that this is not a prescribed form. Locally developed budget forms should parallel the financial statement format used by the municipality. This will ensure line by line comparison of actual versus budgeted figures.