Glossary

This glossary provides definitions of terms used in relation to the budget. To read a definition, click on the glossary term.

Allocations

The process of distributing the cost to deliver corporate support services across various departments and/or cost centres.

For example, the Region divides the cost of providing IT support services across all departments.

Personal Finance Comparison

If you share a house with multiple roommates, an allocation is similar to sharing the cost of your internet or cable bill.

Annual Report

A comprehensive report on an organization’s activities and financial performance over the course of one financial year.

Appeal

The process of applying to an authoritative organization to change a decision. For instance, if you disagree with MPAC’s assessment of your property, you have the option to file an assessment appeal.

If you are disputing your tax bill, you may file a tax appeal.

Appreciation

An increase in the value of an asset or good over time.

Assessment Growth

The sum of all of the changes that happen to a property within a calendar year, including:

  • New construction
  • Major renovations
  • Demolitions
  • Property value appeals
Budget

A budget is a financial plan that outlines the money the Region will raise and spend within a year.

It is the plan that aligns the Region's priorities with the services we deliver to residents. It directs what infrastructure will be purchased, built and repaired.

Personal Finance Comparison

The way the Region uses a budget is similar to someone's personal financial budget.

Both the Region's budget and a personal budget have to balance regular income (pay cheque, pension) against items like:

  • Debt payments (loans, mortgages, credit cards)
  • Living / operational expenses (utilities, groceries, clothing)
  • Savings / reserves (RRSP, rainy day fund)
  • Optional expenses (vacation, entertainment)
Capital Budget

The capital budget is the annual plan for the purchase of capital assets. Capital assets include things like:

  • Roads
  • Water treatment plants
  • Sewers
  • Buildings
  • Machinery and equipment

The Region updates a 10-year capital budget and plan each year to ensure that we have enough funds to maintain our aging infrastructure. Additionally, we plan for higher replacement cost of assets and new projects that will support community growth.

Personal Finance Comparison

Capital assets are similar to long-term investments that you make in your personal life, like your car or house.

These assets are typically paid for over a period greater than one year and by borrowing money, like your mortgage or car loan.

Claw Back

When MPAC re-assesses all properties in Ontario, some commercial, industrial or multi-residential properties decline in value. Ordinarily, this decline would decrease property tax.

However, the capping program uses a "clawback" to fund revenue shortfall resulting from lower assessment values by withholding some or all of the reduction to property owners.

Credit Rating

A credit rating is an estimate of the organization's ability to meet their financial commitments based on previous transactions.

Niagara Region’s credit rating is evaluated by Standard and Poor’s bond agency each year. In 2015, the Region maintained its "AA" credit rating with a stable outlook.

Personal Finance Comparison

While the criteria used to determine the Region’s credit rating and your personal credit rating may differ, the effects of the rating operate in a similar way.

Among other issues, your credit rating directly affects the interest rate you receive on a loan, which affects how much money you will pay in addition to the funds you have borrowed.

Credit Risk

The potential that an organization or person who borrows money from a bank will fail to meet its required payment terms.

Debt

Annual principal and interest costs included in the operating budget to pay for the construction of new capital projects (i.e. roads, bridges, buildings, water plants).

Debt differs greatly from a deficit as it is often used to pay for significant capital projects, while a deficit refers to not having enough money to pay for operating expenses.

Personal Finance Comparison

Debt can be thought of like your home mortgage or car loan. It is assumed for a large purchase that you wouldn’t have enough cash on hand to purchase outright.

In other words, you borrow money to purchase an asset and pay it off overtime (20 or 30 years), almost always with interest.

Deferred Revenue

Products or services that have not yet been provided to the customer. As the product or service is delivered over time, it is recognized as revenue on the income statement.

An example of this would be development charges, gas tax and government grants.

Deficit

A deficit would occur if the Region’s actual net operating expenses exceeded its budgeted net operating expenses.

Deficit differs greatly from debt in that a deficit refers to not having enough funds to pay for operational expenses like salaries, utilities or fuel. Debt, on the other hand, pays for significant infrastructure projects where you have an asset (i.e. new roads, bridges, water plants).

It’s important to note that the province does not allow Niagara Region to run a deficit.

Personal Finance Comparison

Think of a deficit like using your overdraft or Tax Free Savings Account to pay for regular expenses like groceries, hydro bill or gas for your car. These day-to-day expenses are similar to the Region’s operating expenses and should be paid for using regular income rather than savings earmarked for long-term plans.

Development Charges

Fees collected from new property developments and redevelopments in order to pay for growth related costs such as roads, water, wastewater and planning costs. These are required to provide service and accommodate growth.

Financial Forecast

A projection of Niagara Region’s year-end financial results. The forecast is used as guidance for financial decisions and recommendations.

Fixed Cost

Fixed costs are fees that do not change based on the amount of services you use.

The cost to operate the Region's water system is 90 per cent fixed.

Personal Finance Comparison

It's like renting a car for a day; a $100 rental fee is charged to you regardless of how much gas you use or how many kilometres you drive.

In the case of water rates, costs for infrastructure like water and sewage treatment plants are similar to the car rental fee - they need to be covered regardless of how much they are used.

Grants

All funds received from the provincial and federal governments to help pay for programs and services delivered by the Region.

Personal Finance Comparison

Students may apply for grants to help offset the cost of post-secondary education.

Gross Operating Budget

The total cost to deliver programs and services. This is before funding and subsidies for cost-shared services are applied.

Personal Finance Comparison

The gross operating budget is similar to the cost of your groceries before your coupons and rebates are used to reduce the overall cost of your groceries.

Investments

A monetary asset purchased with the intent that the asset will provide income in the future.

Levy

Includes all revenue received from area municipalities (on behalf of residents), including Regional property taxes, payment-in-lieu and supplemental.

Liquidity

The ability of an organization to obtain funds to meet immediate or short-term financial obligations.

Personal Finance Comparison

A person’s ability to withdraw cash from savings or obtain cash through lines of credits.

Mandated Services

Under provincial and federal regulations, Niagara Region is required to provide a variety of programs and services for residents, businesses, organizations and municipalities.

Municipal Property Assessment Corporation (MPAC)

A non-profit corporation responsible for assessing the value of homes and businesses across the province.

Net Operating Budget

Pays for the daily business of the Niagara Region and its boards and agencies. This budget pays for programs and services, including the staff to deliver those services, supplies and repayment of debt for major projects.

This is the amount of the operating budget that is paid for by your Regional property taxes.

Personal Finance Comparison

The net operating levy budget is the cost of your groceries after your coupons and rebates have been used to reduce the overall cost of your grocery bill.

Property Assessment

The process of establishing a dollar value for your home or business for property tax purposes.

Property Class

MPAC assigns all properties and/or land in Ontario to one of seven classes according to its primary use:

  • Residential
  • Multi-residential
  • Commercial
  • Industrial
  • Pipeline
  • Farm
  • Forest
Property Reassessment

Every four years MPAC reevaluates the current value of your property or home. Depending on the value of your home (increase value or decrease), you may pay more or less property taxes.

Residents and property owners will receive their next assessment in November 2016.

Property Taxes

Taxes charged to property owners according to the assessed value of each property.

Property taxes are collected and administered by the local area municipality in which the property is located. The local municipality distributes the Region its share of property tax revenue and the education property taxes to the Ministry of Education.

Operating Rate Budget

Pays for rate based services such as:

  • Waste management
  • Curbside collection
  • Recycling and landfill sites
  • Water and waste water treatment
  • Biosolids management
  • Lab services

Costs for these services are charged to municipalities based on usage (water and wastewater) and number of households (waste management). The rates charged to residents for each of these services will vary depending on where they live.

Reserves

Money set aside to mitigate future fluctuations in the economy, changes to government funding and unanticipated events. Examples include:

  • Taxpayer relief
  • General capital levy
  • Employee Future benefits reserve

Personal Finance Comparison

In personal finance terms, reserves can be thought of in two ways:

  1. Like your “rainy day fund” - a savings accounts where you put away funds every pay cheque to help pay for unexpected expenses like a car repair or a larger-than-usual utility bill.
  2. Money you need for a “big ticket item” down the road. These items might include a down payment on a new car, a new roof or to replace your furnace.
Reserve Funds

Differ from reserves as they must be used to meet a specific purpose(s), as defined by the Municipal Act.

As an example, the development charges we collect are reported as deferred revenues or reserve funds. These funds must be used towards infrastructure developments (i.e. roads, buildings, street lights) related to economic growth.

Revenue

Money received through ordinary activities.

The Region receives its revenue from user fees, services charges, grants and investment income.

Subsidy

Funding received from other levels of government to offset the cost for programs that Niagara Region delivers on their behalf.

Personal Finance Comparison

A GST rebate received from the government to offset the cost of paying sales taxes.

Supplemental Revenue

Additional money received within the calendar year as a result of assessment growth.

This money is budgeted for based on historical trends and used to fund existing programs and services.

Personal Finance Comparison

If you are a small business owner, this is similar to the additional customers that you anticipate in the year ahead, as a result of population growth.

Surplus

A surplus occurs when the Region spends less than it thought it would, or raises more revenue than planned.

Niagara Region allocates surpluses to reserves.

Tax Capping

The Province of Ontario introduced the Tax Capping program to protect commercial, industrial, and multi-residential properties from significant tax increases. This program limits or "caps" tax increase at 10 per cent as a result of changes to property value.

Capping protects landowners from paying the full amount of taxes based on the assessed value of the property as they are paying less tax than if they calculate their taxes using the general formula.

Tax Write-offs

Loss of revenue due to reductions in property assessment values.

Uploading

The alignment of service delivery between municipal and provincial (or other levels) governments.

User Fees

Includes shared services revenue without shared services agreement, licences, permits, approvals, and fees and service charges on the User Fee By-Law such as:

  • Child care fees
  • Health fees
  • Police fees (i.e. accident reports, etc.)
  • Seniors homes fees (i.e. long-term care accommodations fees)
  • Road fees
  • Other miscellaneous fees (i.e. zoning)
Variable Cost

Variable costs are fees that change based on the volume of services you use.

Personal Finance Comparison

If you rent a car for a day, not only do you have to pay a flat or fixed rate for the rental, you often to have to pay variable fees based on how many kilometres you drive.


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