Public finance and capital planning
A budget shows what a government plans to spend. A capital plan shows what it plans to build. Neither shows if the plan pays for itself over the life of the assets. DDA tests the assumptions that each budget and capital plan depends on.
01 The delivery chain
A capital plan works through a sequence. Growth or asset decline creates a need. A study defines the project and its cost. Council approves funds. Revenue sources supply them: taxes, user fees, connection charges, reserves, borrowing, and senior-government grants. Procurement and construction follow. The asset then needs operating and renewal money for its whole life.
Each link can fail. A grant can fund construction and leave operating cost to the local tax base. A project can start in one year and need renewal money twenty years later, when nobody in the current council is in office.
02 The evidence problem
Municipal financial statements report tangible capital assets at historical cost less amortization. That value understates the cost to replace the asset. A water main laid decades ago sits on the balance sheet at a fraction of its replacement price. DDA reports both figures and states the renewal gap.
Asset management plans give condition, remaining life, and renewal cost. The plans depend on the quality of the condition data. An asset listed at 35 percent remaining life can be closer to failure than the number suggests if the assessment was old or partial.
The financial plan in British Columbia covers five years. A renewal spike in year six does not show up. DDA extends the view to the full renewal cycle.
Tax base concentration is a second gap. One industrial taxpayer can carry a large share of a small municipality's revenue. The assessment roll shows the share. When that taxpayer closes or reduces output, revenue falls at once. A mill closure that removes ten percent of taxation is a shock that a five-year plan rarely tests.
Borrowing capacity has its own rule. The liability servicing limit in British Columbia ties to controllable and sustainable revenue. A large project can push a small municipality against the limit before the project finishes.
03 Where it usually breaks
Renewal timing breaks most plans. Capital cost comes in a spike, and revenue comes in a line. A reserve that covers average annual renewal cost fails when three large assets reach the end of life in the same five years.
Revenue concentration breaks the plan in a small community. Grant dependence breaks it in another way: a program can end, change its terms, or favour other projects.
Growth can also break the plan. New development brings new revenue and new servicing cost, and the connection charge covers a defined list of works. Services outside that list load the tax base. DDA tests if growth pays for the growth-related cost or shifts it to existing taxpayers.
04 What the work can produce
The work can produce a capital and reserve plan that extends beyond the five-year view, a renewal-gap analysis with replacement-cost values, a tax-base concentration and shock test, a debt-capacity analysis, a growth-cost analysis, a scenario set with breakeven values, and an assumptions register. It can also produce a review of a proposed bylaw or rate change with its effect on each class of taxpayer.
05 Connected capabilities and related thinking
This area uses Fiscal and scenario modelling, Evidence reconstruction, and Economic and market analysis. For growth and land, see Housing and municipal planning. For projects that create or remove tax base, see Mining and critical minerals and Forestry and forest communities.
06 Bring the question
Send the financial plan, the capital plan, the asset management plan, or the budget that rests on a forecast. DDA will find the assumption that carries the result and test how far it can move.