supporting small communities: doubling the small community grant program overview of the new grant...
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Supporting Small Communities:
Doubling the Small Community Grant Program
Overview of the new grant allocation formula
July 12, 2006 Supporting Small Communities 2
Grant Program Principles The new grant program seeks to balance:
Stability and responsiveness Consistent, reliable funding model Ability to project future year funding
Equity and equalization Similar sized municipalities get similar grants Reflect, and offset, differences in tax base strength
Simplicity and transparency Straightforward calculation Public data sources
July 12, 2006 Supporting Small Communities 3
Current Program Deficiencies The allocation formula is complex
Adjustments are made to the public data before use
1998 grant levels are “locked in” for some, but not all, municipalities
The allocations are therefore not responsive to changes in local conditions
July 12, 2006 Supporting Small Communities 4
2005 Allocation Distribution
-
50
100
150
200
250
300
350
400
450
500
550
- 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000
Population
Gra
nt
($T
ho
us
an
ds
)
July 12, 2006 Supporting Small Communities 5
Design Goals
1. Deliver on program principles
2. Overall doubling of program
3. Minimize negative outcomes
July 12, 2006 Supporting Small Communities 6
Proposed New Formula Grant is the Sum of Three Components
Basic funding Minimum guaranteed for all under 15,000
Population based funding Peaks at 5,000 residents
Assessment equalization funding Based on comparison with municipal average
July 12, 2006 Supporting Small Communities 7
Basic Funding Starting amount of $200,000
Full funding for all municipalities with less than 15,000 residents
Partial funding for municipalities with 15,000 to 23,000 residents
No base funding for municipalities with more than 23,000 residents
Results in a significant increase against the current formula: Average grant will increase from $159,897 in
2005 to (approximately) $310,508 in 2009
July 12, 2006 Supporting Small Communities 8
Population Funding Population funding peaks at 5,000
Add $50 per capita for first 5,000 residents Maximum funding at 5,000 residents, is $250,000
Subtract $25 per capita for each resident over 5,000
Reaches zero at 15,000 residents Reduces basic funding by $25 per capita over 15,000
residents
5,000 population threshold is consistent with current formula and police costs
July 12, 2006 Supporting Small Communities 9
Equalization Funding Assessment equalization funding
$50,000 multiplied by ratio of individual to average municipal per-capita assessment
2006 average municipal per-capita assessment is just over $13,000
Granisle Qualicum Beach Whistler
Per-capita assessment $ 3,000 $ 13,000 $ 116,750
Assessment ratio13,000
3,000= 4.4
13,00013,000
= 1.0_13,000116,750
= 0.1
Equalization funding $ 220,000 $ 50,000 $ 5,000
July 12, 2006 Supporting Small Communities 10
Other Elements Use three-year data averaging
Rolling three-year average used for population and assessment data
Population and assessment data still collected and “locked in” annually
Data averaging provides stability and reduces risks associated with errors
July 12, 2006 Supporting Small Communities 11
Other Elements Use the most recent and reliable third-
party public data available
Data sources: BC Statistics population estimates, as released
annually in December BC Assessment converted value of land and
improvements, as released annually in March
July 12, 2006 Supporting Small Communities 12
Other Elements Establish a minimum grant amount
Allocations less than $100,000 reduced to zero Minimum payment is equal to ½ basic funding
amount Generally limits municipalities with more than
19,000 residents from eligibility Exception where tax base is comparatively weak
Current minimum payable grant amount is $75,000
July 12, 2006 Supporting Small Communities 13
Proposed Allocation Distribution
-
50
100
150
200
250
300
350
400
450
500
550
- 5,000 10,000 15,000 20,000 25,000
Population
Gra
nt
($T
ho
us
an
ds
)
July 12, 2006 Supporting Small Communities 14
Other Variations Considered Constrained by upper spending limit of
$50 million Three components linked by maximum
spending If increasing one component, must decrease
the other two
Base Funding
Per Capita Funding
Equalization Funding
$ 23 million $ 13 million $ 12 million
July 12, 2006 Supporting Small Communities 15
Variation 1 – Raise the Basic Additional basic funding lifts and flattens
the distribution curve Requires reductions to population and
assessment components
Maximum benefit would be gained at the small and large end of the spectrum
Very small municipalities may lose independence and fiscal discipline as transfers exceed current expenditure levels
July 12, 2006 Supporting Small Communities 16
Variation 2 – Raise the Population Additional per capita funding creates a
steeper “spike” at 5,000 Requires reduction to basic and assessment
components
Population becomes dominant factor, and population change has dramatic effects
Eliminates grants to larger municipalities with comparatively poorer tax-bases
July 12, 2006 Supporting Small Communities 17
Variation 3 – Raise the Equalization Additional equalization funding creates a
wider range of allocations Requires reduction to basic and population
components
Highly targeted equalization funding as assessment becomes the dominant factor, and small assessment change has dramatic effects.
Very small municipalities may lose independence and fiscal discipline as transfers exceed current expenditure levels
July 12, 2006 Supporting Small Communities 18
Comparison of Current to Proposed
-
50
100
150
200
250
300
350
400
450
500
550
- 5,000 10,000 15,000 20,000 25,000
Population
Gra
nt
($T
ho
us
an
ds
)
July 12, 2006 Supporting Small Communities 19
Change from Current to Proposed
-50%
0%
50%
100%
150%
200%
250%
300%
- 5,000 10,000 15,000 20,000 25,000
Population
Pe
rce
nta
ge
In
cre
as
e t
o G
ran
t A
llo
ca
tio
n
July 12, 2006 Supporting Small Communities 20
Transition Plan – Getting There The Premier promised that program would
double between 2006 and 2009 $25 million in new funding by 2009
Budget 2006 provides: 2006: $6.5 million ≈ 25% 2007: $6.5 million ≈ 25% 2008: $6.5 million ≈ 25%
July 12, 2006 Supporting Small Communities 21
Transition Plan – Getting There 2006 – Everyone wins in the first year
Current allocation + 25% of the difference
Payments under the current allocation formula were made on May 12, 2006
Additional payment in July provides 25% of the difference between the current and new formula allocations
July 12, 2006 Supporting Small Communities 22
Transition Plan – Getting There 2007-2008
Additional 25% difference increases on top of current formula allocations
Current allocation + 50% of the difference in 2007 Current allocation + 75% of the difference in 2008
Any decreases at 33% of the difference each year
2009 – New allocation formula in effect
July 12, 2006 Supporting Small Communities 23
Transition Plan – Getting There New municipalities
Treated like all other municipalities Current allocation + 25% of the difference in 2006 Current allocation + 50% of the difference in 2007 Current allocation + 75% of the difference in 2008 New formula allocation in 2009
Current formula using zero as 1998 grant
Current allocations in 2006 through 2008 based on annually updated data
July 12, 2006 Supporting Small Communities 24
For more information Media Contact:
David Crebo, Communications Manager Phone: (250) 356-6334 Email: [email protected]
Municipal Staff Contact: Contact your Financial Analyst
www.mcaws.gov.bc.ca/lgd/infra/munrdist.htm