Montreal gets a C+ for financial transparency

As Montreal gets ready to adopt its $6.17-billion budget for 2020, a leading Canadian research institute is giving it a C+ for financial transparency.

“Overall, Montreal is pretty much mid-pack,” said Farah Omran, a policy analyst for the Toronto-based C.D. Howe Institute, which released a report Tuesday rating the 2019 budgets of 31 cities across Canada for clarity.

While its score was average among Canadian cities, Montreal performed far better than other Quebec municipalities on financial transparency, with Laval, Longueuil and Quebec City all getting an F. “Montreal is better than other Quebec cities in the sense that it does explain why they didn’t hit their spending targets,” Omran said.

“The budgets of most major cities in Canada are confusing, arrive late and give councillors, ratepayers and voters little insight about the upcoming year’s planned spending, revenue or bottom line,” the 22-page report says.

One of the main problems is that most cities do not follow the same accounting method — called accrual accounting — for their budget documents that they use for their year-end statements, it says.

Under accrual accounting, capital expenses — like building a road or sewer — are spread over the lifespan of those assets. However, most city budgets report them as a cash outlay, the report says.

Because their budgets often overstate how much money municipalities will spend in the year ahead, they are left with surpluses at the end of the year.

Cities were also graded on passing their budget before the start of the financial year (Montreal got 3 out of 3), placing budget and capital works totals where readers can easily find them (1/3), showing the results for the previous year (1/2), showing gross expenditures (2/2) and explaining variances with the previous year’s projections (2/2).