REPORT CARD: Vaughan gets D+ on its budget’s financial clarity for 2019

Budgets approved late for both Vaughan and Markham gives them lower scores than the year before

Yorkregion.com
December 17, 2019
Dina Al-Shibeeb

Vaughan has received D+ on its report card following the C.D. Howe Institute grading financial presentations of 31 major Canadian municipalities for 2019.

Vaughan’s score, based on its most recent budgets and financial statements, dropped from a C- last year.

While Vancouver scored A+ for the “clarity” and “completeness” of its financial presentations, Vaughan isn’t the worst since both Windsor and London, Ont., received an F.

The city has not responded to Yorkregion.com's Dec. 12 request for a reaction to the report card.

The report graded the municipalities on a range of criteria.

For instance, Vaughan scored a one out of a possible three marks for submitting its 2019 budget -- approved Feb. 20 -- seven weeks late.  Unlike Vancouver, which scored, 3, for submitting its budget two weeks early.

Low scores were also handed out if the budget was consistent with the Public Sector Accounting Standards (PSAS), budget’s comparison to last year’s budget’s projections, and if the budget present city-wide gross expenditure.

In its report, the institute described a “useful budget” as the one showing “projections for the year about to start along with the expected results for the year about to end, letting users see whether their municipality expects revenue and spending to rise or all.”

For its financial statements, Vaughan also scored a zero for not explaining variances from the budget plans.

The institute, meanwhile, said financial statements will be more “useful” if they “show and explain the differences between the results and the beginning-of-year plans.”

“We award zero if the municipality's financial statements do not explain the difference between results and budgets intentions,” the report said.   

Neighbouring Markham also featured in the report and received a C+, down from its previous A ranking

“York Region and Markham have featured among our top performers in previous versions of this report card, but their later budget release dates – dictated by provincial legislation in an election year – set them back this year,” the report said.

What does the report recommend?

The report gave many recommendations including its “overarching” proposal that “municipal governments should present budgets using the same PSAS and format that they use in their year-end financial statements.”

Vaughan scored only -1 - if its budget is PSAS-consistent.

The institute explained how the PSAS, which has “evolved in the 1980s,” has more of a “comprehensive” approach to accounting.

With PSAS there is more zooming in on what’s considered as assets and liabilities. For instance, it considers “liabilities such as pension promises and environmental cleanup” as “market debt.”

It also described how “today's approach” to municipal budget as having “roots in the past, when modern accrual accounting did not exist, and cash was a natural focus.”

Municipalities were “much smaller,” however, “modern” governments currently have “far greater taxing power and capacity to borrow.” This makes their “comprehensive net worth - their service capacity - a more salient focus.”

Despite senior governments adopting PSAS, municipalities are not following suit. Even with the Province of Quebec, which requires its municipalities to report PSAS-consistent budget, not all of them do so.

“Most do not, and those that present supplementary PSAS-consistent information in their budgets typically do not do it in user-friendly ways.