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Finance Matters


Financial Terms

Finance Matters contains a series of articles addressing key topics to help you understand the City’s finances and terminology.

If you have a finance related question that you would like to see as a topic for a FINANCE MATTERS article, please email us at or mail a letter to Finance Department, City of Mission, 8645 Stave Lake Street, Mission, BC   V2V 4L9


Asset Management

What is asset management, and how much money does the City need to save for maintaining and replacing aging infrastructure?

Asset management is a city’s plan for how to manage municipal infrastructure to provide services to residents and other users in a way that meets their expectations, while at the same time being financially sustainable.  It is a systematic approach to maintaining and replacing assets or infrastructure, with the goal of maximizing the life of each asset and minimizing lifecycle costs.  The City currently practices asset management at the departmental level; however we are in the process of developing an integrated corporate wide asset management system in order to create a more sustainable community now and for years to come.

As with all cities, Mission’s infrastructure, including our roads, pipe networks and parks, are aging.  With this aging infrastructure, comes an increase in maintenance and operating costs, as well as significant costs for asset replacement.  Asset management will identify gaps between long-term costs and available funding.  Funding will need to be set aside now to ensure that future generations are not unfairly burdened with higher taxes to cover asset renewal costs, and that they will be able to enjoy the same level of services that residents currently enjoy.

Balancing a Budget
Balancing Act

Just as it can be hard for a family to balance what they want versus what they need or can afford, the same holds true for the City of Mission.

It’s natural for residents to want additional programs or services from its municipality, or even to keep what they already have.  Every year as costs increase, more money is needed to maintain the current service levels.


Communities all across Canada are facing an unavoidable, multi-million dollar bill to replace old infrastructure such as aging bridges/ overpasses, water/sewer pipes and road surfaces.

On top of all the upgrades to aging infrastructure are the environmental issues facing municipalities such as carbon emissions, green-house gases, and drinking water purification systems, to name a few.


Mission only has a few sources of potential revenue, namely:

Property Taxes – paid by residential and commercial landowners based on a valuation of their land and structures;

Utility Fees – paid by users of municipal utilities such as water, sewer, curbside refuse and recyclables/compostable pick-up, and/or drainage;

User Fees – paid by people/home owners who use a municipal service, such as the recreational programs through the Leisure Centre, business licenses, development permits, etc.; and

Government Transfers – The City applies for all available federal and/or provincial government grants where the City is eligible.

Borrowing - Debt

The City tries to avoid or minimize borrowing whenever possible by saving in advance for capital projects, as this saves taxpayers interest costs.  when the district does not have enough savings or where its savings are committed to other projects and a project needs to proceed, the City has two borrowing options:
1.borrow externally from lenders or bondholders through the Municipal Finance Authority (MIA); or
2.borrow internally from our own reserve funds (savings).

The City uses internal borrowing whenever possible as this option provides greater flexibility in terms of the interest rate and the length and timing of the repayments.

The City currently has about $6.2 million of outstanding external debt.  Principal and interest payments of $0.8 million are made annually on this debt.  The City has an overall external borrowing limit of $214.1 million (determined by legislation), which is well above our actual amount of debt.

Budget Terms Defined

The market valuation established for real estate and certain personal property by the British Columbia Assessment Authority (BCAA) as a basis for levying property taxes.


A financial plan that sets out all planned revenues and expenditures for the budget period.

Capital Funding

The funding provided for capital projects through operating budget contributions, reserves, debt, grants from other levels of government, or other sources.

Debt Limit

The Provincially legislated limit by which a municipality may incur debt (an obligation resulting from the borrowing of money).  Debt servicing costs (i.e. Principal and interest) may not exceed 25% of the previous year’s revenue.  Incurring debt beyond these limits requires prior Provincial Government approval.


Charges incurred (whether paid immediately of unpaid) for operations, maintenance, debt servicing, acquiring an asset, or service or settling a loss.


The system of public works in the City, consisting of immovable physical assets, that delivers an essential public service (e.g. road network, water and sewer systems, public buildings, parks, etc.).

Reserve Fund

An allocation of accumulated net revenue.  There are two types of reserve funds:

Statutory reserve funds are required under Provincial statute and non-statutory reserve funds are established at the discretion of Council.

Reserve funds are created by bylaws and are used for the specified future purposes set out in the bylaws.


(Accumulated) Net economic resources; the amount by which all assets, both financial and non-financial exceed all liabilities and indicates that a government has net resources available to provide future services.

(Annual) The difference between annual revenues and expenses.  If the difference is positive it is referred to as Annual Surplus, if it’s negative, it is an Annual Deficit.

Reserves and Surpluses

Reserves are money that is set aside for specific capital and operating purposes. Surpluses are funds that accumulate when annual revenues exceed annual expenses.  A certain level of accumulated surplus is required to fund operations and emergency expenditures.

Reserves are important because they are used to fund vital infrastructure (roads, water and sewer systems, buildings, etc.) that eventually needs to be replaced.  Reserves are also used to fund new community facilities and programs.

Reserves are like savings accounts that allow us to provide for the future by limiting borrowing.  For example, we are saving money to expand our landfill site and to replace our water lines.

The City has been steadily building its reserve/surplus balances to ensure our community is sustainable over the long run.  The City has a comprehensive reserve and surplus policy which sets out what each reserve/surplus is to be used for and the monetary levels that we are working towards.  You can view this policy or obtain a hard copy from the Finance Department.