City council got tired of surprises so they cut up the city manager’s credit card.
Frustrated with finding out about budget overruns on city projects after the fact, council Monday night changed the amount of money the city manager can spend on capital projects without first seeking council approval.
A couple of years ago council changed the amount the city manager could approve without going to council to five per cent of the city’s operating budget … roughly $9 million. The main advantage it allows staff to address project schedule constraints. There may be cost implications to pause a project pending council approval of a budget increase.
Since the policy changed council has been ‘blindsided’ by budget overruns on several major projects, including the new firehall, which is over budget by $2 million. Much of that overrun was due to staff changing the scope of project, also without council’s prior approval. The cost of upgrading the city’s Second Avenue parkade has almost doubled since it was first approved three-and-a-half years ago. It went from $2,725,000 to $5,169,446. And the list goes on.
Council has put an end to it not knowing about cost overruns.
On Monday, council amended its fiscal policy to read: ““Budget amendments in a calendar year or transfers equal to the lower of: five per cent of the capital project budget, or $100,000 per project, may be approved by the city manager. If the budget amendments in a calendar year exceed the above totals, subsequent budget amendments must be approved by council.”
Essentially, any project budget equal to or greater than $2 million would have the budget
amendment authority set at $100,000. Anything greater would have to be approved by council.
“This is response to wanting to have some more reporting back to council, but not too much,” said Coun. Garth Frizzell, who chairs the finance and audit committee. “We want to make sure that we don’t get reports back when we get variances by the cost of box of paper clips, but that we do when the variance gets really high.”
The changes bring Prince George more in line with other municipalities.
Coun. Cori Ramsay, who highlighted this issue months ago, likes the new policy.
“I’m really pleased to see this is based on a capital project budget, not operating budget,” she said. “I think that’s where we got into a difference of opinion.”
Coun. Kyle Sampson is also supportive of the change.
“I believe what was in place, wasn’t working,” he said. “… We’re going to be able to control the budget, we’re going to be able to make sure the budget stays on budget, and on scope, if not, we’re going to hear about at council.”
Mayor Lyn Hall supported the changes.
“At the end of the day, this gives council more oversight on these projects that we’re seeing continually being built in the city, and that’s a good thing,” said Hall. “… I think it’s ultimately important that we have some oversight.”
In addition, unspent funding for an approved capital project can be carried forward to the following year’s financial Plan, if the project has begun. Council will now be notified of those funds.