Local Government Revenue Anticipation Borrowing
Municipal borrowing limit has been clarified.
Updated March 25, 2020
Municipality's and regional district's fiscal year starts January 1, and they do not collect taxes until July. If they cannot fund operations between January and July from existing cash surplus, they can borrow against their anticipated revenue for the year.
Revenue anticipation borrowing is authorized by bylaw, and a current liability intended to cover current-year operating expenditures included in the local government's five-year financial plan bylaw. Revenue anticipation borrowing is not meant to be used to cover long-term borrowing needs or capital financing.
Limit on Borrowing
The revenue anticipation borrowing amount is not included in the municipal liability service limit calculation, and does not require electoral approval, or approval by the Inspector of Municipalities. However, there is a limit to the amount a local government may borrow to cover operating costs.
Once property taxes and other revenue sources have been collected, the tax revenue or revenue from other governments should be used repay the borrowing.
Regional District Limit
Regional districts may borrow money to meet expenditures before revenue from all sources has been received.
The maximum amount that municipalities may borrow is limited to the amount of unpaid taxes imposed during the current year and any money due from other governments.
If the borrowing takes place before the adoption of the current year tax bylaw, then amount of taxes imposed in the current year is deemed to be 75% of the preceding year's tax levy.
If there is revenue anticipation borrowing outstanding, revenue received from taxes in July must be used first to repay that borrowing.
Money Due from Other Governments
Money due from other governments, such as the B.C. government, can include annual grants such as:
- Small community grants
- Traffic fine revenue sharing
- Grants in lieu of taxes
It does not include major infrastructure grant funding.