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User Guide to the Fiscal Arrangements Model

1. FNST simplified approach Property Tax The property tax input requirements are listed in model display 10 the line references refer to the rows in the display and identified in column A of the input data sheets Property taxes are calculated for 9 different categories of land and up to 5 separate mill rates In addition property tax calculations are made for 2 distinct owners on TSL status Indians and non member residents The distinction is made in order to allow for separate modeling of property tax types i e local vs provincial portions of property tax and member vs non member tax payers This section is limited to the issue of mill rate and land assessment values section 3 deals with the timing and existence of agreements that cover the different components of property tax flows Fiscal Arrangements Model User Guide June 21 2003 Rows 1 3 identify the property type and units for which the mill rates are to be entered There are 9 rate classes noted in columns C through K and mill rates are to be entered as per 000 of assessed value The 9 property types are Residential Utilities1 Unmanaged Forest Land Major Industry Light Industry Business Managed Forest Land Recreation Non Profit Farm Rows 4 8 identify the mill classes as they are applied to the assessed value by property type Five classes have been set up to allow the user to easily input the value Note a zero should b
2. NIOJ CO Fiscal Arrangements Model User Guide June 21 2003 This group covers costs associated with the protection of people and property Row 12 total annual cost of policing services and the year in which these costs are first borne by the First Nation government Row 14 total annual cost of local firefighting costs and the year in which these costs are first borne by the First Nation government Row 15 total annual cost of forest fire firefighting services and the year in which these costs are first borne by the First Nation government note these costs may be included in row 14 in which case the user would input a 0 cost in row 15 Row 17 allows the user to input another category of related costs and timing Row 18 is a catch all for those program costs not explicitly identified in rows 12 through 17 Model Display 21 Protection of People and Property Expenditure Data Requirements 11 Cost in year P amp S Year P amp S Protection of persons and property Commences sighs tia Policing 12 13 14 Firefighting Local 15 16 17 Other programs 18 All others 19 Forests Recreation and Culture Recreation and cultural programs are those offered outside the regular school curriculum and does not include any investments in major capital This section has two categories of input Row 22 allows the identification of a specific program their initial costs and the year
3. Row 8 A check variable calculated by the model to ensure that the sum of payments in row 7 equals 100 if it does not an error will be indicated on the options sheet Rows 10 11 identifies annual in accordance with the years in row 6 transfers and disbursements from the capital transfer Row 12 the annual percentage interest rate earned by the settlement trust in nominal terms Row 13 the annual percentage interest rate earned by the settlement trust in real terms this is the rate used to determine income from the settlement trust for OSR inclusion calculations Row 15 total amount of outstanding negotiation loans on effective date dollars Row 16 repeats of line 6 Row 17 a decision is made by the user on the appropriate repayment schedule of the loans the user can choose to use a schedule similar to that identified in row 7 the payment schedule of the capital transfer or the schedule the user specifies in row 17 A Fiscal Arrangements Model User Guide June 21 2003 response of yes implies that row 7 schedule will be used a reply of no chooses the schedule in row 17 Row 18 the annual percentage repayment of the loans over the agreed to time frame Note the repayment period cannot exceed 20 years Row 19 A check variable calculated by the model to ensure that the sum of the repayment schedule in row 17 equals 100 if this sum is different an error will be indicated on the control page Row 20 The perc
4. 17 the line references refer to the rows in the display and identified in column A of the input data sheets Input requirements for have been broken down into 4 groups kindergarten 1 12 post secondary and other education Kindergarten expenditures are disaggregated into e administration costs in row 2 escalated by a price driver in row 27 and e per student costs in row 5 escalated by the price driver for k 12 levy identified in row 28 Kindergarten costs are then projected by the model as the sum of 1 summing administrative costs plus the number of students identified in row 4 2 the per student cost multiplied by the enrollment and escalated by the growth in the population age cohort The next grouping is for students in grades 1 through 12 these expenditures are modelled in a similar fashion to kindergarten Row 8 identifies the number of students enrolled in 2001 Row 9 identifies the per student annual levy for 2001 The 1 12 annual levy is then the product of the annual levy which is projected to grow at the k 12 price driver identified in row 28 and the number of students being paid for which is projected by the growth in that age cohort Row 11 identifies other annual costs for 1 12 education these costs are projected to grow at the rate of the age cohort and the price driver for other program costs identified in row 30 Post secondary expenditures are modeled as the sum of administrative costs tuition and stu
5. 21 2003 Row 5 cubic meters of timber per hectare used to determine hectares to be harvested annually Row 6 timber inventory cubic meters used to determine depreciation allowance Assumptions pertaining to the FN corporation approach Row 7 gross sales value i e revenue per cubic meter Row 8 total operating cost per cubic meter Row 9 percentage of profits retained by the corporation 100 implies that all revenue is retained by the corporation 0 implies all profits are transferred to the FN government value may range between 0 and 100 Row 10 reforestation cost per cubic meters of timber harvested a cost borne by the corporation Assumptions pertaining to the Stumpage Approach Row 11 gross stumpage rate in dollars per cu meter Row 12 fees and permit revenue per hectare in dollars per hectare Model Display 6 Forestry Data Requirements A B d Forestry option Stumpage Approach 2 FN Corporation Approach Proceed 3 4 Forestry AAC cubic meters 5 cu meters hectare 6 Timber inventory 7 FN corporate approach assumptions Sales value cubic meter 8 Labour and logging costs per cubic meters 9 Retained earnings by corp 10 11 Stumpage approach assumptions Stumpage rate 12 Reforestation cost m3 Fees and permits per hectare Fiscal Arrangements Model User Guide June 21 2003 Demographics Overview The demographic module of the model was primarily created
6. Row 35 Row 36 Row 36 Row 37 identifies the number of homes that qualify for the HOG by ownership as noted by the column headers in row 33 the percentage of homes by ownership type identified in row 34 that have an assessed value less that that noted in column C of row 35 identifies the number of homes that qualify for the HOG by ownership as noted by the column headers in row 33 column C this value is calculated by the model and is based in the minimum assed value required to qualify to receive the HOG the percentage of homes by ownership type identified in row 34 that have an assessed value less that that noted in column C of row 35 These homes fall under the lower threshold for the HOG and do not qualify column C this value is calculated by the model and is based in the minimum assed value required to receive the full value of the HOG identifies the percentage of homes by ownership as noted by the column headers in row 33 that have an assessed value that falls between the floor row 35 column C to start receiving the HOG and the floor row 36 column C that receive the full value of the HOG In other words this is the percent of homes that receive a partial HOG the annual dollar value of the home owners grant HOG Model Display 11 Home Owners Grant HOG Data Requirements 32 otal residential units that may qualify for HOG Property Property owned or owned or leased by
7. cost to the First Nation government under a stumpage regime and as a cost to the forestry corporation under the corporate approach to forestry exploitation Model Display 23 Land and Resources Expenditure Data Requirements 24 cost in year Pgs Year P amp S commences Commences 25 Land and Resource management 26 Office functions e g survey and title transfer functions 27 Municipal type functions e g planning zoning approvals 29 Provincial type functions e g land titling environmental protection waste management approvals 31 Fish Management costs 32 Forest Management costs a Gov t cost under a stumpage approach a corp cost under a corp approach hectare Employment and Development Fiscal Arrangements Model User Guide June 21 2003 This section outlines the costs of employment and development programs the First Nation government may choose to have in place Four program areas are included in this section general employment youth employment tourism and economic development programs Row 34 identifies the general administration costs Row 36 identifies the average annual expenditures on general employment training programs Row 37 identifies the average annual expenditures on other general employment programs Row 39 identifies the average annual expenditures on youth training programs Row 40 identifies the average annual expenditures on other youth employment programs Row 42 identifies
8. data inputs in the Cash and Loans section of the input sheet Resources revenues from resource activities Fees and Charges revenues accruing to the First Nation government from the imposition of fees and charges Values follow from what the user places in the OSR input section of the assumptions sheets Fiscal Arrangements Model User Guide June 21 2003 Property tax revenues accruing to the First Nation government from the collection of property tax on all classes of property on TSL or under a tax agreement with BC Both the local and provincial portions of property tax can be modelled The user inputs all assessed values and mill rates for any particular community modelled All other tax revenues revenues accruing to the First Nation government from the collection of all non property related direct taxes or tax revenues transferred to the First Nation government under a tax agreement with either Canada or BC or both Values are determined by the taxes generated by residents and assumptions on tax agreements between the parties Corporate transfers First Nation corporation profits transferred from the corporate entity to the First Nation government Profits are assumed not to be subject to OSR inclusion until they are transferred to the First Nation government Values are calculated based on the profitability of the enterprises and assumptions on the portion of profits transferred to the First Nation governm
9. from fees charges and other sources are input on an annual basis two OSR inclusion rates may be used one rate for fees and charges and another against all other revenue sources these OSR inclusion rates are identified in the input OSR options sheet Specific Input requirements Row 1 set by the model this row identifies the initial year of the Final Agreement Rows 2 3 identify inputs for a Cap and Floor OSR exemption In this type of exemption a basic floor of OSR is to be available to the First Nation government if the floor is not achieved addition funding is transferred from the funding governments The OSR cap identifies the threshold level at which OSR is taken into account in the funding transfer All OSR less than the cap is not taken into account when determining the funding transfer Both the floor and cap are determined by multiplying the per capita cap and floor amounts but the total status Indian population of the First Nation Row 2 is the dollar amount of the per capita OSR Cap Row 3 is the dollar amount of the per capita OSR Floor Rows 5 6 identify inputs for a basic and personal OSR exemption The basic OSR exemption is a constant dollar exemption applied to total OSR It therefore represents the amount of OSR that can be earned annually prior to the imposition of an offset The personal OSR exemption is a per capita OSR exemption which is applied in a similar fashion to the basic exemption but is calculated
10. i iieeiies wei cieiiesi en dSEE EAR wins E eden SEENEN wench doles 52 Results Tax and Employment Shee erreien g eG ieee naan tae 55 Without prejudice i Fiscal Arrangements Model User Guide June 21 2003 Overview General This model has been produced as an illustrative tool for use by the Parties at negotiation tables in the BCTC Process The model can be used to analyze a wide range of fiscal options for a given community profile taking into account various economic development scenarios This fiscal model was developed by a modeling consultant with the participation of the Department of Indian Affairs and Northern Development British Columbia and the First Nations Summit as part of the work of the Fiscal Relations Working Group Disclaimer The fiscal model and the copyright to the model are owned by British Columbia However as agreed to by the Fiscal Relations Working Group the model cannot be modified without the written consent of Canada British Columbia and the First Nations Summit The results produced by the model are for illustrative purposes only and use of the model is entirely voluntary British Columbia Canada and the First Nations Summit make no representation as to the accuracy or reliability of the model and are not liable for any decisions taken or agreements entered into by First Nations based on model outputs or projections The model includes procedures for estimating First Nation tax revenues While t
11. in row 5 Row 6 identifies the per unit construction cost which is escalated at the construction price index row 7 identifies the required infrastructure increase above construction costs to cover all non construction costs infrastructure hookups expansion site survey etc The final component to capital is expenditures on new non housing this is identified in row 8 and is assumed to increase at a rate identified by the new construction price index identified in row 10 Row 9 identifies the annual long run maintenance cost to the annual new non housing asset expenditure This represents the additional cost of maintaining the asset expenditures identified in line 8 over its lifetime and is based on a similar logic that underlies the major maintenance and replacement expenditures associated with the existing stock of assets Model Display 18 Capital Expenditure Data Requirements A B Cc D 1 Capital 2 Existing MM and replacement 2 3 4 New Housing Housing projections 20 years 5 Unit cost 6 Infrastructure markup 7 New non housing 8 Annual expenditure 9 Annual long run maintenance cost on asset base 10 New construction price index Fiscal Arrangements Model User Guide June 21 2003 Government The government expenditure section is broken down into the following groupings e General government Local services Protection of persons and property Recreational and culture Land and resource man
12. in which the program commences Row 23 is a catch all for all other recreation and cultural programs and the years they start Model Display 22 Recreation and Culture Expenditure Data Requirements 20 Cost in year P amp S Commences Year P amp S commences Recreation and Culture All others Fiscal Arrangements Model User Guide June 21 2003 Land and Resource Management Row 26 identifies the costs of conducting general landowner functions and the year in which the First Nation government assumes those responsibilities for example Improvements Survey and title transfer Assessment control Safety and protection Row 27 identifies the additional costs associated with general municipal government functions and the year in which the First Nation government assumes those responsibilities for example Planning Zoning Sub division approvals Fire protection Row 29 identifies the additional costs associated with general provincial government functions and the year in which the First Nation government assumes those responsibilities for example Land titling and registration Forest practices Environmental protection Wildlife management Mining and quarrying Waste management plans approval Row 31 identifies annual fish management costs Row 32 identifies the per hectare forest management cost associated with logging activities This value is applied as a
13. of the base 2007 on TSL population into cohorts is available for the user to input any changes to the model s initial forecast of population by cohort shows the model s final disaggregation of the base 2001 on TSL population into cohorts Note there is a restriction on the age cohorts that they must sum to the 2001 on TSL population Rows 15 16 Rows 18 19 Rows 21 24 Row 21 Row 22 Row 23 Row 24 Rows 27 30 Row 27 Row 28 Row 29 Row 30 number as input on row 5 identify net migration of status Indians by year on off TSL number of persons Note the actual annual population count is adjusted by the net migration after the determination of the total population forecast as determined by rows 5 and 6 identify the method by which employment is to be determined the user can choose between determining employment levels as a result of an initial and a target participation and employment rate or by explicitly identifying the year and quantum on additional employment Row 18 requires the choice variable yes or no row 19 indicates the inverse of row 18 identify employment characteristics identifies the participation rate for status on TSL females percentage Column D requires the 2001 base level while column E requires the user to input a projection of these rates for the year 2025 the model will then interpolate between these two points in a linear fashion is similar to row 21 except that i
14. the adjusted matrix below Note this option only applies to funding from Canada Row 12 Canada and BC one time funding amount for Laws Row 13 Canada and BC one time funding amount for Training Row 14 Canada and BC one time funding amount for all other implementation costs Row 16 Canada and BC annual for each of 5 years funding for resources Row 17 Canada and BC annual for each of 5 years funding for training Row 18 Dies and BC annual for each of 5 years funding for all other one time ongoing unding Rows 20 26 funding for non final agreement funding amounts the user may input the funding organization for reference and note ant associated funding amounts line 26 is by default all other funding agencies not noted in lines 20 25 Model Display 13 Funding Data Requirements A B C D onwards l 2 Base year for funding amount f A Health 6 Social 7 Capital 8 Government 9 10 Total Block Approach Single block amount supercedes component approach Canada only if non zero 11 Treaty related 12 One Time Implementation Laws 13 Training 14 Other 15 16 One time 5 year per annum Resource 17 Training Fiscal Arrangements Model User Guide June 21 2003 Organization Adjusters The adjusters component of the funding portion of the model identifies the annual adjustments made to the agreed upon funding amounts Two periods of adjus
15. to provide specific information for the status on TSL population although there is an accommodation for identifying non status population growth the primary focus in on the status demographic Generally the demographic forecast modeling works in a two stage process Stage 1 predicts the total status population into the future based on an initial population count based on a 2001 base year and a long run growth rate in this base population Stage 2 disaggregates this forecast of total population into age cohorts that are subsequently used by various other routines in the model In order to disaggregate the population in to these age cohorts information on the current and future breakdown of population was required A breakdown by age and sex ratio s for futures years was obtained from the Department Of Indian Affairs and is based on their forecasts of demographic trends in the Status Indian population for British Columbia The projections of total population are then multiplied by the forecasted age sex ratios and the cohort data is arrived at by summing over the appropriate age groups The model then allows users to adjust this forecast for base year cohort levels if more accurate data is available The model allows for two methods of determining future employment and income levels Option one determines employment levels as a result of initial and target participation Projection on employment levels by sex type of employment and locati
16. transferred to a contingency account which in turn is used to balance any shortfalls between the available OSR and the revenue required to provided agreed upon program and services AUPS which are to be directly funded by the amount of OSR Opening balance Balance at start of year Additions contingency portion Contingency portion of OSR from revenue Actual OSR in excess of FFA OSR Amount by which actual OSR exceeds OSR determined under the per FFA OSR calculation chosen on the Options sheet Actual OSR under FFA OSR Amount by which actual OSR falls short of OSR determined under the per FFA OSR calculation chosen on the Options sheet FFA OSR in excess of AUPS Amount by which OSR determined under the OSR calculation chosen on the Options sheet exceeds the cost of assumed programs and services FFA OSR under AUPS Amount by which OSR determined under the OSR calculation chosen on the Options sheet falls short of the cost of assumed programs and services Income Income generated by the contingency account Total Transfers to Revenue Total amount of revenue transferred from the contingency account to revenues in any year This transfer accounts for any shortfall in either OSR levels or costs of AUPS Closing balance Closing balance at end of year Fiscal Arrangements Model User Guide June 21 2003 Results Revenues Sheet OSR Source Subsequent c
17. BC sales tax PIT BC personal income tax from on TSL status CIT BC corporate tax from First Nation corps Municipal rural BC share of non school property tax School BC share of school tax Total Sum of BC tax revenues Revenues to First Nation Government FNG through tax FN agreements or direct taxation GST FNST GST FNST tax receipts PST BC sales tax PIT Canada Canada personal income tax receipts PIT BC BC personal income tax from on TSL status Tobacco Tobacco tax only included if a tax agreement exists Fuel Fuel tax only included if a tax agreement exists Alcohol Alcohol tax only included if a tax agreement exists Munic rural share of non school property tax School share of school tax Total Sum of FNG tax revenues Total tax Sum of Canada BC and FNG tax revenues Canada share BC share Canada s share of total tax revenues modeled BC s share of total tax revenues modeled FN share FN Govts share of total tax revenues modeled June 21 2003
18. User Guide to the Fiscal Arrangements Model Without nreitidice Fiscal Arrangements Model User Guide June 21 2003 Table of Contents Re EE 1 TE ei COT ege ee E ee 1 Minimum PRE lun EE 1 Model Studen ci sais cinac NEEN RN AAEE RA EATA 3 Representation of Revenue Gide nnmnnn nnmnnn 3 Representation of the Expenditure Gide 4 First Nation Government Buden 6 The Spreadsheet Structure css ceccccceceseeeseeeceeeeeenseneeeaneeeeseeeseseeeeceeeeseeeseseeeseaneeseseeeseeeseeceeees 7 SC lieler EE 8 Running the model 9 OPTIONS SMES EE 9 Hput OSR Options SRST 6 cess secicccces s ccecsasccccecses cassessadectencs cecsestaccnsccsccsensshscatescecceassencdveccceceseisens 10 NEM OR AG a E A E E A O A 12 Capital Transfer and Loans ee oes sos ois vc x zens 8 vic oa devia 0 wes sok nen E ada wd vn vee EKAN ARASA AARAA EEAS 13 Own Source Revenue ee 52s ccs estate 15 RETTEN 18 RIESEN 21 EOE EE 28 AOSE 0s Gis tere a ais Gerd AoW a Gis BESS eR 30 EES 32 e LEE 32 MM Ms cee dee EE EE EE EEN 34 E E 36 Me PO EE EE 38 HEEN getest E E 39 Economie DevelopMent oxcs isseccscidecsdlisixecsnxseseardleceeedikigbae KEEKO ai ceed ke ee es 44 el 47 Results Budget Sheet c cccccccccccssssesscssencecsecesessessaeceececesnsesstensaccecebsssesseneuesecsaanessnenanegees 47 Results Revenues Sheet cccccccceciiccstcsaveck cocsnccdsaanvextsacd secs dagavecicasadecesagasscecaaaaeckddaveckaveaaecisananect 50 Results Expenditures hee 2 cir
19. agement Employment and development The final 2 groups are special cases e Debt and investment Debt and investment outlines the First Nation government s initial financial position excluding negotiation loans e Treaty implementation Treaty implementation costs are specific to the costs of implementing the Final Agreement and are assumed to be short run in nature General Government General government expenditures are administration costs which are input in dollars on row 2 There is flexibility to indicate what year the admin program starts in Generally admin is ongoing and the recommendation is to input costs and the year consistent with the first effective year Model Display 19 General Government Exp Data Requirements A B C D Cost in year PRS Year P amp S commences Government commences 1 General Government 2 Administration 500 000 2005 Local Services This section contains inputs for local services e row 5 identifies costs and timing for waste disposal e row 7 identifies costs and timing for snow removal and road maintenance All other local service costs should be summed and inputted in row 9 Model Display 20 Local Services Expenditure Data Requirements 4 Cost in year Pas Year P amp S commences Local Services commences garbage pickup disposal 10 000 2005 snow removal road maintenance 10 000 2005 9 Other programs 10 000 2005 Protection of persons and property
20. alculated by the model Grey cells are fixed and can not be changed these usually refer to years or titles The first several rows of the model identify the names and assumed key dates in use by the model Row 1 is the sheet name and is set by the user when if the sheet is renamed and will appear on the Options sheet Row 3 is set by the user and is the title of the particular set of assumptions this name will appear on the title section of the Options sheet Row 5 is set by the user and is the year in which the AIP has been ratified this value will appear on the Options sheet Row 6 is set by the user and is the year in which the agreed to funding numbers are based this value will appear on the Options sheet Row 7 is set by the user and is the year in which the final agreement becomes effective this value will appear on the Options sheet Model Display 2 Key Date Requirements D Base year of funding amount 7 Effective Year Fiscal Arrangements Model User Guide June 21 2003 Capital Transfer and Loans Overview The capital transfer and loans portion of the model identifies the transfer to the First Nation from Canada and BC of the cash component associated with the Final Agreement The model places capital transfers into a category within the model called Settlement Trust The main inputs to this section are e the amount of the capital transfer e the rate of retur
21. also provided in this results sheet as indicated below Rather than repeat the discussion of program descriptions of the expenditure section the user is advised to refer back to the previous section for further description Health current dollars MSP Administration Transfer Total MSP Non Insured Health Administration Patient costs Other programs Total non insured Local programs Administration Other programs Total Local Health care Total Health Care Expenditures Education current dollars Kindergarten nursery school Admin Variable cost Total K 12 Tuition Other costs Fiscal Arrangements Model User Guide June 21 2003 Other programs Total Post Secondary Admin Annual allowance Variable Transportation Shelter Graduation Total Other Education Total Total Education Expenditures Social Services current dollars Basic Needs Admin Income Assistance Special needs Other basic needs programs Total Soc dev amp Support Adult Care admin Adult Care variable Other Soc Dev programs Total Daycare Admin Variable Total Other social Total Total Social Services Expenditures Capital current dollars Major Maintenance and replacement existing capital assets Total expenditure on MM and replacement of existing stock Housing Number of units constructed Finished cost per unit
22. as a per capita dollar amount multiplied by the number of on TSL status Indians Row 5 is the dollar amount of the annual basic exemption Row 6 is the per capita dollar amount of the personal exemption Note that the two types of exemption are mutually exclusive and should not be combined Model Display 4 OSR Exemptions Data Requirements 1 2 Cap and floor exemption Per capita OSR exempt cap status on off TSL 3 Per capita OSR floor status on off TSL 5 Basic and Personal exemption Basic OSR exemption 6 Personal OSR exemption status Indian on TSL Fiscal Arrangements Model User Guide June 21 2003 The fees charges and other revenue sources data requirements are listed in model display 5 The line references refer to the rows in the display and identified in column A of the input data sheets It is assumed that the revenues identified in this section are net of collection costs The user may specifically identify the name of the particular revenue source in column B or simply input an aggregate figure for fees and charges and other sources respectively Row 1 set by the model this row identifies the first 20 years of the Final Agreement Rows 2 7 up to six separate sources of fees and charges can be identified and listed in these rows the units are assumed to be net revenues expressed in current dollars A single OSR inclusion rate is applied to this category Rows 9 11 up to three separate s
23. ashion as MSP costs Row 6 identifies the non insured administration costs and is escalated by the same administration driver identified in row 25 while row 6 identifies the patient costs which is also grown by population and a price driver in this case the price driver is identified in row 27 Line 9 allows the user to input a value for all other non insured health costs and the price driver allows for non insured health costs identified in row 27 to escalate over time Local programs Fiscal Arrangements Model User Guide June 21 2003 The final program grouping is the local programs this is split between administration costs and a series of program costs that the user may specify Administration costs are inputted and forecasted as previously indicated for MSP and non insured Specific local program costs are summed by the model and escalated using the price driver for other programs identified in row 28 The disaggregation allowed in lines 14 23 are solely for ease of user entry and are all forecasted in a similar fashion However the user may indicate different start years for the specific programs Price drivers The fourth input group is identified in rows 25 28 These are the price drivers used to escalate the individual health components are discussed above These are annual nominal rates of increase in percentage terms Note all costs identified in Column C are for program levels in 2001 Model Display 15 Health Expend
24. chosen and OSR in any year exceeds the Transferred to Investment Account Annual surplus less ST portion Investment account Annual beginning of year Investment account balance Starting balance include value noted in line 52 of government expenditure section Balancing account transfer Amount transferred from balancing account if negative Loans required to cover previous deficit Loans required to cover previous years deficit Withdrawals Amount transferred from balancing account if positive Income Income generated by the investment account OSR offset OSR inclusion amount associated with the Investment Account Closing balance Closing balance at end of year Loan account Annual beginning of year Loan account balance include Starting balance value noted in line 48 of government expenditure section New loans New loans required to cover previous years deficits Repayment Amount of loan repayment made in that year Interest Amount of interest accumulated by the outstanding loans in that year Closing Closing balance at end of year Fiscal Arrangements Model User Guide June 21 2003 Contingency Account The contingency account will only exist if the user inputs non zero values into the contingency rate line 3 of the input OSR options sheet Under this regime a portion of the annual OSR offset amount is not used to decrease the Funding transfer but rather is
25. dent allowances and other program costs Row 15 identifies the 2001 administrative cost Row 16 identifies the base number of post secondary students paid for by the First Nation government Row 17 identifies the per student annual allowance Row 18 identifies the per student annual tuition this is escalated by the post secondary price driver identified in row 29 Row 20 identifies the total annual expenditures on transportation Row 21 identifies the total annual expenditures on shelter Row 22 identifies the total annual expenditures on graduation The expenditures in rows 20 22 are escalated by the long term growth rate for other program costs identified in row 30 Other education program costs are identified in row 25 and are an annual dollar value that is increased over time by the long term growth rate for other program costs identified in row 30 Fiscal Arrangements Model User Guide June 21 2003 Note all costs and students identified in Column C are for program levels in 2001 However the start year for the program is variable Model Display 17 Education Expenditure Data Requirements A B C D d Year P amp S Education Cost in 2001 EE Kindergarten Administration Administration costs 10 000 2005 Enrollment other costs Per student variable cost 1 12 Tuition Enrollment in 1 12 9 1 12 per student school board levy NI aj A N CO 15 Administration Admini
26. driver for special needs programs and services percent annual price driver for all other social programs and services percent Note all costs identified in Column C are for program levels in 2001 However the start year for the program is variable and is set by the user Fiscal Arrangements Model User Guide June 21 2003 Model Display 16 Social Expenditure Data Requirements A B Cc D y Year P amp S Cost in 2001 ENCES Social 1 Basic Needs 2 Administration Administration costs 3 4 Income Assistance Recipients 5 IA per person annual 6 7 Special needs Enrollment 8 Cost per individual annual 10 Other basic needs programs 12 Soc dev amp Support 13 Adult Care Administration costs 14 Number of adults in care Cost per in care adult excluding admin 16 17 Other Soc Dev programs Cost 18 19 oa O n Daycare 20 Administration Administration costs 21 Enrollment 22 other programs Cost per individual annual 23 24 Other social 25 other programs Cost 26 27 Price Drivers Annual admin increases 28 IA benefits growth rate 29 Daycare cost growth rate 30 Special needs cost growth rate 31 Long term growth rate in other program costs Fiscal Arrangements Model User Guide June 21 2003 Education Education expenditures are listed in model display
27. ducation Local Sum of Canada and BC funding amount for Local Capital Sum of Canada and BC funding amount for Capital Social Sum of Canada and BC funding amount for Social Total FFA Sum of Canada and BC program funding Non treaty related Sum of Canada and BC funding amount for non treaty related Implementation Sum of Canada and BC funding amount for implementation Total other Sum of Canada and BC other funding Total funding amount Sum of Canada and BC other funding Fiscal Arrangements Model User Guide June 21 2003 Results Expenditures Sheet Total Expenditures Subsequent columns contain a 20 year projection of expenditures current dollars Health Total First Nation government expenditures on Health Education Total First Nation government expenditures on Education Social Total First Nation government expenditures on Social Capital Total First Nation government expenditures on Capital Government Total First Nation government expenditures on Government Treaty Implementation Total First Nation government expenditures on treaty implementation Debt servicing cost Total First Nation government expenditures on debt servicing Total Expenditure Requirements Sum of First Nation government expenditures on Programs The above table provides a summary of the expenditure programs that the user has identified in the input data sheets Projections of the various costs and programs under the main headings in
28. e entered if there is no applicable rate for that class and type The 5 mill classes are Municipal Regional Dist H Hospital School Other Row 9 sums the mill rates for each property type Row 11 fixed in the model identifies the year for which the user is to input the assessed value of property type for this section a 35 year outlook of assessed values are required A 35 year projection is required as this section as does population commences in 2001and therefore the projections are necessary in order to allow for scenarios in which effective date is set at a future data and to still accommodate a further 20 year outlook Rows 12 20 the 35 year projection of assessed values for each of the 9 property types identified in column B for status landowners or status property tax payers Note that assessed values must be input as the actual assessed values divided by 1 000 as mill rates are applied per 1 000 of assessed property value Row 22 fixed in the model identifies the year for which the user is to input the assessed value of property type for this section a 35 year outlook of assessed values are required Rows 22 31 the 35 year projection of assessed values for each of the 9 property types identified in column B for all other non status landowners or other non status property tax payers Note that assessed values must be input as the actual assessed values divided by 1 000 as mill rates are applied pe
29. en input data sheet the following parameters will be shown Title description of the input data sheet AIP Year the year of the AIP was ratified by all parties Base Funding Year this is the year in which the base funding amounts are negotiated on Effective Year this is the first year of the Final Agreement The errors area will identify any major input error that have been made and contains a link to assist in identifying the errors Fiscal Arrangements Model User Guide June 21 2003 Input OSR Options Sheet The input OSR options sheet stores up to six user specified sets of alternative OSR assumptions that the user can choose from in the options sheet under OSR Approach Note that the values provided in the spreadsheet are for illustrative purposes only The OSR treatment input requirements are listed in model display 1 see following page The line references refer to the rows in the display and identified in column A of the input data sheets Row 1 this row identifies the first 20 years of the Final Agreement Row 2 column A is a label set by the user that identifies the OSR regime identified by the block of rows and columns This name is automatically picked up and displayed in the options sheet under OSR Approaches Row 2 columns CV identifies the OSR phase in schedule in percent a value of 0 means that 0 of the calculated applicable OSR will be applied against the funding transfer while a value of 100 im
30. ent All other sources other sources of OSR not included in the above categories e g lease revenues Values are input by the user within the OSR input section of the assumptions sheets Model Display 1 OSR Data Requirements A B C D E FAND ON Phase in schedule general 1 2 4 Inclusion rate Commercial Investment 6 Inclusion rate Resources 7 J 8 e 9 Inclusion rate Property Tax 10 Inclusion rate corporate transfers 11 Inclusion rate all other sources Fiscal Arrangements Model User Guide June 21 2003 Input Data Sheet This section deals with the input data sets There are 6 separate input sheets that the user can update and rename in order to facilitate speedy assessment of alternative assumptions and impacts The sheets are all similar in design this section identifies the cells and provides a short description of the data requirements purposes and mathematics that underlie the sections data and or forecasting routines The discussion in this section will proceed line by line through the data requirements of the input sheet However the user should note that the line references contained herein refer to the rows in the display and identified in column A of the input data sheets The input sheets are colour coded to simplify input and identify the different variable types Generally the sheets are protected so that the user cannot edit cells set or c
31. entage of annual nominal income earned by the settlement trust that must be retained in the Trust Model Display 3 Capital Transfer and Loans Data Requirements E A B C D ONWARDS Cash amount in real dollars Base year of capital amount 1 Capital Transfer 3 Agreed upon rate of return pre effective year 4 Agreed upon rate of return post effective year 5 6 Payment schedule Gross payment schedule 7 Input payments schedule must sum to 100 8 Sum of payments schedule g Em 10 Distributions 11 Transfers 12 Nominal rate of return on Settlement Trust investments 13 Real rate of return on Settlement Trust investments 14 Negotiation Loans 15 Total outstanding loan amount on effective year 16 Gross payment schedule iv Use Capital payment schedule 18 Input payments schedule must sum to 100 19 Sum of payments schedule 20 Settlement trust income Percent of annual nominal income that must be retained in the Trust Fiscal Arrangements Model User Guide June 21 2003 Own Source Revenue Overview The Own Source Revenue data input section identifies the various OSR exemptions as well as OSR from fees charges other sources and Forestry resources Inputs for the calculation of OSR from tax and investments are made in the Capital Transfer and Tax sections of the input sheet OSR
32. entifies the price and volume adjuster in percentage terms in effect over the post effective date period Model Display 14 Adjusters Data Requirements Fiscal Arrangements Model User Guide June 21 2003 A B C D Funding Adjusters Pre effective date Post effective date Canada adjuster matrix Price Volume Price Volume _ 1 Health 2 Education 8 Social 4 Capital 5 6 Government UNIVERSAL Single block approach only 8 BC adjuster matrix Pre effective date Post effective date a Price Volume Price Volume 10 Health 11 Education 12 Social 13 Capital 14 Government Fiscal Arrangements Model User Guide June 21 2003 Expenditures This section deals with the data requirements for First Nation Government expenditures A working assumption is that the First Nation may choose to assume program and service responsibilities at a future date To accommodate that flexibility the input data sheets have been constructed as follows The line references refer to the rows in the display and identified in column A of the input data sheets Col A amp B identifies the various program and program inputs that may be included as a First Nation Government expenditure Col C in most cases this column identifies that initial year or years 2001 as indicated program costs However in some circumstances e g education this column will also include initial levels for economic drivers Co
33. ents on the loans showing as ongoing government debt charges Figure 3 Budget Structure First Nation Government Revenue First Nation Government Expenditures Fiscal Arrangements Model User Guide June 21 2003 The Spreadsheet Structure Figure 4 graphically depicts the spreadsheet structure The model is comprised of a number of sheets that are grouped into 3 classes e Class 1 Class 1 sheets are the input and control sheets as listed below Options this is the main control sheet of the model It identifies the input sheets and assumptions in use and allows users to switch input sheets and OSR options Active Assumptions This sheet shows the input data that the model is currently using to generate the results Its contents are set by the choices made in the options sheet The user may not edit this sheet Input OSR options this sheet contains 6 alternative OSR regimes as set by the user The user specifies phase in rates and inclusion rates for each stream of OSR The model will use one of the six OSR options in its calculations depending on which OSR option has been selected on by the user the Options sheet Input 1 Input 6 these are the data input sheets where the user inputs First Nation community data Once chosen on the Options sheet an input sheet becomes part of the active assumptions sheet which the model will use to generate the results There are multiple sheets to facilitate the comparison
34. esults revenues this sheet provides annual information on all First Nation government revenues by source and calculates the amount of OSR if any that is used to offset funding transfers from other governments Figure 4 Spreadsheet Structure OSR me SSC Options l Hu Class 1 Active Assumptions MODEL CALCULATIONS Class 2 Results Tax and Results Results Results Budget Expenditures Revenues Employment Class 3 Fiscal Arrangements Model User Guide June 21 2003 Running the model Options Sheet This is the main control sheet in which the user makes choices and decisions on which set of inputs to run through the model The sheet also provides for the choice of OSR inputs In addition there is an error indicator to inform the user if any serious input errors exist in the assumptions The user must identify the following Input Data Sheet this is the data sheet the user wishes to run note the user may rename the data sheets and the new names will appear in this box automatically OSR Calculation this is a choice on whether the OSR inclusion amount is to be calculated based on annual calculations or if the OSR inclusion amount is to be determined only at the start of a fiscal agreement OSR Approach this is the name of the series of OSR assumptions to be used in the analysis The names and assumptions are contained in the input OSR sheet Based on the information contained within the chos
35. fies the year for which the user is to input the employment gains by numbers of jobs Rows 7 34 column A title name or other identifier associated with the economic development opportunity or project for which the corresponding new net full and part time job numbers are associated Row 7 column C AK the number of new net incremental full time jobs for members of the on TSL status Indian labour force associated with the project identified in column A Fiscal Arrangements Model User Guide June 21 2003 Row 8 column C AK the number of new net part time jobs for members of the on TSL status Indian labour force associated with the project identified in column A on the previous row Rows 10 35 have identical input requirements as in rows 7 and 8 These additional rows are provided so that the user can explicitly identify up to 10 different projects and opportunities However what is used in the calculations within the calculations of model are the summed values determined in rows 2 and 3 The new employment levels determined here are added to the employment levels determined by the model based on the historical participation and unemployment rates Therefore what these cells represent are net new jobs associated with the projects over and above the status quo For example a new project that employs 10 people full time in year 1 and only 5 people full time in the second and subsequent years would be inputted as 10 in the first cel
36. hose procedures use some of the same parameters used by the federal Department of Finance the methodologies and data inputs differ Consequently the estimates that are produced by the model will differ from those calculated by the Department of Finance The Department of Finance is prepared to work with interested First Nations in British Columbia to produce more accurate estimates of potential First Nation tax revenues which could possibly be used with other outputs from the model Canada does not use this model for estimating First Nation tax revenues User Guide The purpose of this user guide is threefold e First this guide provides users of the fiscal model with the instructions on how to execute the model and identifies all the options and parameters available for manipulation e Secondly the guide documents the data sources and data inputs that the model requires Data can be broadly classified into two groups a variables and information specific to a particular FN or FN profile and b variables and data of a generic nature e Third the guide provides overviews of the methodologies used within the model that are not directly accessible to the model user Minimum Requirements The model was created in MS Excel 2000 on an IBM compatible computer under a Win XP operating system and has been tested in a Windows 95 and Window 98 environment Some of the macros contained in the model may not operate properly in any version lower then E
37. ified in column D and E and escalating those values to effective date post effective date funding amounts are determined by applying the post effective date adjusters to the effective date funding amount If the user wishes to manually input different funding amounts to be contained in future FFA s then columns E through J allows the user to input data which ill supersede the models calculation for that year and the adjusters will be applied to this new number from that point on Note that the agreed upon values for future FFA s are required to be in the dollars for that future year Row 2 set by the model this is the year in which the funding for agreed upon programs and services was agreed to Row 3 denotes the Canada and BC columns for the input of the subsequent funding amounts Row 4 Canada and BC funding amount for Health Row 5 Canada and BC funding amount for Education Row 6 Canada and BC funding amount for Social Row 7 Canada and BC funding amount for Capital Assets Row 8 Canada and BC funding amount for Government Fiscal Arrangements Model User Guide June 21 2003 Row 9 sum of rows 4 through 8 Row 10 identifies an option in which the user specifies a total Canada funding amount rather than funding by individual component Values in this cell greater than 100 will supercede the component approach This funding option has specific universal pre and post adjusters associated with it as identified in line 10 of
38. incial income taxes Rows 8 12 identifies the various sales taxes note the model assumes that the existence of a FNST agreement will supercede all agreements for fuel tobacco and alcohol The treatment of GST FNST are predicated on the period of the transactions tax exemption If a GST FNST tax agreement occurs during the period of the transactions tax exemption the value of the tax agreement will be based on the GST revenue paid by status on TSL members once the tax agreement enters the post exemption period the value of the agreement will be based on the FNST calculated amount Fiscal Arrangements Model User Guide June 21 2003 Rows 14 17 identifies the school and non school portions of property tax paid by status and all other residents on TSL Model Display 12 Tax Agreement Data Requirements A B D Transfer Rate C Year agreement commences Tax room or coordination agreements Personal income Corporate Income Provincial income tax Personal income Corporate Income ZO O ann a a GE EE PST Fuel Alcohol Rural Munic component Property Tax status residents School component status residents Rural Munic component all other residents School component all other residents Federal income tax Fiscal Arrangements Model User Guide June 21 2003 Funding Overview The funding
39. ions Based on user targets 19 Based on economic development projects 20 21 2001 2025 target 22 Employment Characteristics Participation rate female status Indian 23 Participation rate male status Indian 25 Unemployment rate male status Indian 26 27 2001 2025 target Type of employment employed females employed full time 28 employed females employed part time 29 employed males employed full time 30 employed males employed part time Fiscal Arrangements Model User Guide June 21 2003 Tax Overview The model includes procedures for estimating First Nation tax revenues It is important to note that these estimates will differ from estimates produced by the Department of Finance While the FRWG model provides a ballpark estimate of tax revenue interested First Nations should work directly with the Department of Finance to generate more accurate estimates of the revenues that would be associated with the exercise of their tax powers Tax sharing arrangements with Canada will be bilateral agreements between the federal Department of Finance and individual First Nations and will incorporate the federal Department of Finance revenue estimation methodologies A matrix is set out in the model to enable the user to specify the type of tax agreement that may exist between the First Nation and British Columbia or Canada the year it commences and the percentage of tax reven
40. isplay 25 Debt and Investment Data Requirements Debt and Investments 48 Current outstanding debt load 49 Loan rate 50 Period of amortization 51 52 Current investments initial account balances 53 Rate of return Treaty Implementation In this section the user identifies costs associated with the implementation of the final agreement Funding for these costs is inputted in the treaty implementation section of the Funding group It is expected but not required that the implementation expenditures and funding sum to similar amounts Row 55 Row 56 Row 57 is set by the model and identifies the effective year identifies the one time expenditures to be undertaken in the effective year In practice some of these one time expenses may occur during the period leading up to effective year and spill over into the 2 effective year e g law making The user should aggregate the one time costs and ensure some consistence with the one time funding amount identifies the one time funding provided over a 5 year period this is an annual amount provided each year for 5 years Again there is a practical relationship to the 5 year one time funding amount identified in the funding section Fiscal Arrangements Model User Guide June 21 2003 Model Display 26 Implementation Expenditure Data Requirements 55 Treaty Implementation 56 One time expenses 57 One time 5 year ongoing annual amou
41. iture Data Requirements A B C D Year P amp S Health Cost in 2001 commences MSP Administration a costs Non Insured Health Adminstrator Administaton costs __ EE costs fre EES Other programs o o aoo Local programs ee S Administration input names for reference id Other programs Other programs Other programs Other programs Other programs Other programs ail alal lais 2 fo i el a ofr 20 Other programs 21 Other programs 22 Other programs 23 Other programs 25 Price Drivers 27 annual non insured increases 28 annual local program increases Fiscal Arrangements Model User Guide June 21 2003 Social Social programs expenditures are listed in model display 16 the line references refer to the rows in the display and identified in column A of the input data sheets Input requirements for have been broken down into 4 groups basic needs social development and support daycare and other programs Row 2 Row 4 Row 5 Row 8 Row 9 Row 10 Row 13 Row 14 Row 15 Row 17 Row 20 Row 21 Row 22 Row 25 Row 27 Row 28 Row 29 Row 30 Row 31 basic needs 2001 administration cost escalated over time by the admin price driver identified in row 27 numbers of people receiving income assistance from the First Nation government This base year number is escalated by the growth in IA recipients pro
42. jected by the employment module annual per recipient social assistance payment this figure is escalated by the price driver for IA programs identified in row 27 number of people receiving special needs support from the First Nation government this is escalated at the long term population growth rate annual per recipient cost of special needs sum of all other basic needs expenditures adult care 2001 administration costs escalated over time by the admin price driver identified in row 27 numbers of people receiving adult care from the First Nation government annual per recipient cost of adult care escalated over time by the other social service costs price driver identified in row 31 sum of all other social development and support expenditures escalated over time by the other social service costs price driver identified in row 31 daycare 2001 administration costs escalated over time by the admin price driver identified in row 27 number of children enrolled in daycare escalated over time by the growth in the 0 5 age cohort annual per recipient cost of daycare escalated over time by the daycare price driver identified in row 29 sum of all other social program expenditures annual price driver for social administrative programs and services percent annual price driver for income assistance programs and services percent annual price driver for daycare programs and services percent annual price
43. l D identifies the years in which the program and service is being assumed or delivered by the First Nation government If the program or service is never assumed this column may be left blank The general format for units are as follows all financial inputs are in dollars all demographic inputs students patients are in number of people all price drivers are in annual percentage growth The user will note that most expenditures categories include at least one reference to other programs in some cases the user has the ability to input several explicit programs and program titles in other circumstances the user is limited to a single input The category of other programs is used so as to keep the list of possible programs and services manageable It is recommend that the user sums the expenditures on the programs not explicitly listed under the respective category and input the estimate Health Input requirements for Health expenditures have been broken down into 4 groups MSP costs non insured health costs local programs and price drivers MSP costs MSP costs are disaggregated into administration costs and the MSP premium costs Rows 2 and 3 respectively The administration price driver in row 25 escalates administrative costs while premium costs are escalated by the growth in population and the price driver for MSP premiums identified in line 26 Non insured health costs Non insured health costs are modelled in a similar f
44. l and 5 in each subsequent cell Since the model adds these new jobs to the status quo employment levels it is important that the user identify all jobs associated with new employment opportunities Model Display 28 Economic Development Employment Data Requirements A B Cc D E ONWARDS Economic Development 2001 2002 2003 full time employees part time employees oy A oj N gt Economic development projects 2001 2002 2003 7 full time employees 8 part time employees 9 10 full time employees 11 part time employees 12 13 full time employees 14 part time employees 15 16 full time employees 17 part time employees 18 19 full time employees 20 part time employees Fiscal Arrangements Model User Guide June 21 2003 Ei title Oo full time employees 23 part time employees 24 25 full time employees 26 part time employees 27 28 full time employees 29 part time employees 30 31 full time employees 32 part time employees 33 34 full time employees 35 part time employees Fiscal Arrangements Model User Guide June 21 2003 Results Sheets This section shows the contents of the four results sheets and provides an explanation of the contents of each cell Results Budget Sheet Scenario description test 1 From active assumptions sheet Effective year 2003 From active assump
45. leased by Home Owners Grant status Indians others not receiving HOG i e hose assessed value is less than 36 receiving partial amount i e those whose value are between 37 alue of HOG individual Fiscal Arrangements Model User Guide June 21 2003 Tax Agreements The model uses methodologies set out below to estimate potential tax revenue that a First Nation government might receive pursuant to entering into a tax agreement with Canada or British Columbia While the FRWG model provides a ballpark estimate of tax revenue interested First Nations should work directly with the Department of Finance to generate more accurate estimates of the revenues that would be associated with the exercise of their tax powers These estimates provided by the Department of Finance could possibly be used with other outputs of the fiscal model Tax sharing arrangements with Canada will be bilateral agreements between the federal Department of Finance and individual First Nations and will incorporate the federal Department of Finance revenue estimation methodologies Personal income tax estimates for members are derived using demographic data employment characteristics including participation rates assumptions about the proportion of members working full time or part time positions and in high or low wage positions and current federal personal income tax rates Consumption tax First Nations Goods and Ser
46. n on capital transferred e outstanding loans to Canada and BC at effective date e the schedule of payments of the capital transfer and the schedule of repayments of any negotiation loans if different and e any distribution and or expected transfers out of the fund It is assumed that the capital transfer will be held in a non taxable settlement trust and that income generated by the settlement trust is treated as own source revenue to the First Nation Specific Input requirements The Capital transfer and Loans input requirements are listed in model display 3 The line references refer to the rows in the display and not the rows in the data input sheet Row 1 the capital transfer amount identified in the Final Agreement in real dollars in the year in which it was agreed upon Row 2 the year in which the cash amount in real dollars was agreed to Row 3 the annual percentage interest rate for the capital transfer component in effect between the agreed upon date identified in line 2 and the effective year of the Final Agreement Row 4 the annual percentage interest rate the capital transfer component post effective year of the final agreement and in effect until the capital transfer component is fully paid Row 6 set by the model this row identifies the first 20 years of the Final Agreement Row 7 the annual percentage payout of the capital transfer component over the agreed to time frame Note the pay out period cannot exceed 20 years
47. nd services Charges T t Fees ax agreements Resource Other revenues Own Source Funding Re ITT E Transfer Other First Nation Transfers Government Revenue Fiscal Arrangements Model User Guide June 21 2003 Representation of the Expenditure Side FN government expenditures are modelled for 5 major categories Education Health Social Capital and Government Services Within each of these categories the model provides the flexibility for adjustment to program expenditures over time for example price drivers inflation and or a volume driver population growth Figure 2 Expenditure Structure Demographic and employment Price drivers characteristics Social Services Health Capital amp Services Housing First Nation Government Expenditures Fiscal Arrangements Model User Guide June 21 2003 Legend Financial Links Influences S Outputs used in Eet Model Evaluation REVENUES Tax Revenues Gross Transfer Total FN OSR Inclusion Rates amp Phase In Committed to AUP Overview of Outputs used in FRWG Model Demographics The demographics of the First Nation influence both demand for program expenditures and supply of tax revenues O Other Sources of OSR FN OSR Committed to AUPS Net Transfer Total Revenues EXPENDITURES Agreed Up
48. nment Total Expenditures expenditures Fiscal Arrangements Model User Guide June 21 2003 Total revenue less total expenditures surpluses are added to government investment accounts while deficits are deducted from the investment account and Annual surplus deficit then borrowed if required This following shows the transactions and balances in the various accounts and funds Accounts Funds Subsequent columns contain a 20 year projection of balances Settlement Trust Starting balance Annual beginning of year Settlement Trust balance Additions to the Trust for a particular year generally will Net additions reflect the net cash transfer for that year Distributions from the Settlement Trust as identified in Distributions Active Assumptions Income generated Total annual income generated by the Settlement Trust Income retained by the trust as specified in line 20 of the Income retained input assumptions Closing Closing balance at end of year Balancing flows Annual surplus Annual budget surplus will be negative if deficit Income retained by the trust as specified in line 20 of the input Settlement Trust transfer assumptions OSR transferred to the Contingency account as specified on line 3 of Contingency account transfer input OSR options sheet Additional Contingency account Additional transfers to the Contingency account resulting when the transfer per annum OSR option is
49. nsfer Funding current dollars CANADA Health Canada agreed upon funding transfer amount for Health Education Canada agreed upon funding transfer amount for Education Local Canada agreed upon funding transfer amount for Local Capital Canada agreed upon funding transfer amount for Capital Social Canada agreed upon funding transfer amount for Social Total FFA Total Canada agreed to funding amounts Non treaty related Other federal funding Fiscal Arrangements Model User Guide June 21 2003 Implementation Implementation funding from Canada Total other Total Other Federal Funding Total funding amount CANADA Total federal funding from all sources prior to taking OSR into Account British Columbia Health BC agreed upon funding transfer amount for Health Education BC agreed upon funding transfer amount for Education Local BC agreed upon funding transfer amount for Local Capital BC agreed upon funding transfer amount for Capital Social BC agreed upon funding transfer amount for Social Total FFA Total BC agreed to funding amounts Non treaty related Other BC funding Implementation Implementation funding from BC Total other Total Other BC Funding Total funding amount BC Total provincial funding from all sources prior to taking OSR into account Total Funding Health Sum of Canada and BC funding amount for Health Education Sum of Canada and BC funding amount for E
50. nsfer Total SA income on TSL status Indians El transfer Total El income on TSL status Indians Total BC family bonus Total family bonus income on TSL status Indians Total PST credit Total PST credits on TSL status Indians Total GST credit Total GST credits on TSL status Indians Total CCTC credit Total Canada child tax credits on TSL status Indians Total old age security and guaranteed income supplement OAS GIS income on TSL status Indians Total income Sum of income from all sources Property Tax Rural Munic component status Total property tax from status Indians excluding the provincial residents portion or school tax School component status residents Total provincial portion or school tax from status Indians Rural Munic component all other residents Total property tax from all other residents excluding school tax School component all other residents Total provincial portion or school tax from all other residents Total Total property tax from all residents Tax Revenues to Governments Canada GST FNST GST FNST tax receipts PIT Personal income tax receipts CIT Corporate income tax receipts Tobacco Tobacco tax only included if a tax agreement exists Fuel Fuel tax only included if a tax agreement exists Alcohol Alcohol tax only included if a tax agreement exists Total Sum of Canada tax revenues Fiscal Arrangements Model User Guide BC PST
51. nt Price Driver The entire government section with the exception of debt and investment and treaty implementation costs are assumed to have an identical price driver which is identified in row 59 Model Display 27 General Government Expenditure Driver Data Requirements D I Price Drivers General price pressure At Economic Development In row 18 of the Demographic input section the user is asked to make a choice on how the model will determine future employment levels The user is asked to choose between 1 determining employment levels as a result of initial and target participation and employment rate levels or by 2 explicitly identifying the year and quantum of any additional employment explicitly gained by First Nation members This section of the input sheet is where the economic development projects and employment levels associated with the second option are to be inputted The economic development input requirements are listed in model display 28 the line references refer to the rows in the display and identified in column A of the input data sheets Row 1 fixed in the model identifies the year for which the user has input the employment levels Row 2 calculated by the model as the sum of the new net full time employees identified in rows 7 34 Row 3 calculated by the model as the sum of the new net part time employees identified in rows 8 35 Row 6 fixed in the model identi
52. of different scenarios e Class 2 Class 2 sheets are the calculation sheets these are not visible or accessible to the user e Class 3 Class 3 sheets are the output sheets these sheets are listed below Results budget this is the summary financial position of the First Nation government it summarizes revenues and expenditures by major category and indicates whether the First Nation government is in a surplus or deficit position for the year It also shows the balance of several funds including the Settlement Trust the Investment Account the Loan Account and the Contingency Account The Contingency account is an optional account that is created by the model when the user wished to run an option where OSR is targeted to specific programs and the FN is responsible for the risk in achieving the determined level of OSR and any cost over runs in delivery Results tax and employment this sheet provides detail on the employment characteristics of the First Nation It includes population projections employment levels personal income levels and sources social program dependency information and identifies the tax revenue flow to Canada BC and the First Nation government under the tax agreement assumptions that have been made by the user Results expenditures this sheet provides an annual projection of First Nation government expenditures for all expenditure categories modelled Fiscal Arrangements Model User Guide June 21 2003 R
53. olumns contain a 20 year projection of revenues Settlement Trust Annual income from the settlement trust Transfers from FN business Annual transfers from First Nation corporation profits Investment income Annual income from the First Nation government investments Contingency Account income Annual income from the Contingency Account Tax Annual tax transfer and tax collected Fees and charges Annual revenues from fees and charges Resources Annual revenues from resources e g stumpage Other Sources Annual revenues from all other sources Total OSR Sum of the OSR sources Offset amounts Settlement Trust OSR offset amount from the settlement trust income Transfers from FN business OSR offset amount from corporate transfers Investment income OSR offset amount from investment income Contingency Account OSR offset amount from Contingency account income Tax OSR offset amount from tax revenues Fees and charges OSR offset amount from fees and charges Resources OSR offset amount from resource revenues Other Sources OSR offset amount from other revenues Total Potential OSR Sum of the OSR offset amounts Impact of Floor and cap Impact of floor and cap exemptions Basic and personal exemptions Impact of basic and personal exemptions OSR offset amount OSR post exemptions Transfer to Contingency account OSR transferred to contingency account Net OSR Offset amount OSR post exemptions and transfers to the Contingency account Tra
54. on Programs amp Services AUPS Other NAUPS Total Expenditures he investment account receives surpluses and absorbs deficits where possible If there is a surplus in the account at the end of the year it is invested The income that is generated by the investment of surplus forms OSR for the First Nation in the following year and is subject to inclusion rates depending on the fiscal option Surplus Deficit Deficit Surplus Investment Account D addition to capital payments 50 of interest income is returned to the settlement trust Settlement Trust Fiscal Arrangements Model User Guide June 21 2003 First Nation Government Budget Once the revenue and expenditure amounts are determined the model compares the two sides and determines if the FN Government is running a surplus or deficit for the particular calendar year Surpluses In the event of a surplus the amount of the surplus less any interest to be retained in the settlement trust is placed in an investment account that will generate interest annually This revenue appears in Line 8 of the Results Revenues Worksheet as Investment Income Deficits Budgetary deficits are assumed to be financed through a draw down on the First Nation s investment account If funds are depleted within the investment account the balance is financed through loans that can be amortized over a time period set by user with paym
55. on are then obtained through the use of the demographic projections and user inputs of participation employment and location variables and projections Option two the user explicitly identifies the economic activity and subsequent employment and income levels by projection year Specific Input requirements The demographic input requirements are listed in model display 7 the line references refer to the rows in the display and not the rows in the data input sheet Row 1 identifies the base year of the input data for this section It is fixed at 2001 and all data must be adjusted to reflect this base year of data input Row 2 total population count of non status residents on TSL in 2001 number of people Row 3 annual long run growth rate in of non status residents on TSL percentage Row 4 total status population on and off reserve in 2001 number of people Row 5 actual or expected proportion of status Indians living on TSL in 2001 number of people Fiscal Arrangements Model User Guide June 21 2003 Row 6 annual long run growth rate of status residents identified on line 5 on TSL percentage Rows 9 14 Note columns C and E will show the value associated with the input data sheet Column C Column D Column E selected in the Options sheet in order for the user to alter the population numbers as outlined here the input data sheet must first be selected in the Options sheet shows the models initial disaggregation
56. ources of other revenues can be identified and listed in these rows the units are assumed to be net revenues expressed in current dollars As noted the user may specify a different OSR inclusion rate to be applied to this category of revenues Model Display 5 OSR Revenue Data Requirements A E ONWARDS Fees and Charges Other sources of OSR The forestry section begins with a specification of the type of Forestry enterprise that is in place The user may specify a stumpage approach or a corporation approach in which it is assumed that the FN is operating its own forestry enterprise Note that the forestry calculations do not model volatility in the forestry sector For example they do not include the potential volatility in demand for timber as a result of changes in the international market i e softwood lumber dispute with the United States Rows 1 2 identify the method by which Forestry activities are undertaken the user can choose between a Stumpage approach where a 3 party is charged royalties by the First Nation to harvest forest resources and a FN corporation approach Row 1 requires the choice variable yes or no row 2 indicates the inverse of row 1 Row 3 set by the model this row identifies the first 20 years of the Final Agreement Row 4 annual allowable cut in cubic meters by year for the first 20 years of the Final Agreement Fiscal Arrangements Model User Guide June
57. plies that the full amount of applicable OSR will be applies against the funding transfer Applicable OSR is the amount of OSR determined by the product of OSR and inclusion rate that is to be taken into account when determining the transfer to a First Nation government Row 3 columns CV identifies the contingency rate by year for the projection period This rate is applied against the calculated amount of applicable OSR and the resulting amount is deducted from the OSR offset amount and is transferred into the Contingency account Rows 4 11 identify the inclusion to be applied against the particular sources of OSR identified in the corresponding column B for the year identified in row 2 The inclusion rate will range from 0 100 and denotes the percentage of the revenue from the particular OSR revenue source that will be considered as applicable OSR The sources of OSR are defined as follows Commercial Investment income accruing to the First Nation government from the return on investment of their non settlement trust investments including the investment and contingency accounts Investment income generated through invested surplus would also be included here Settlement Trust income accruing to the First Nation government from the return on investment of the cash portion of the capital transfer It is assumed that these funds are held in a non taxable settlement trust Income earned by the settlement trust is dependent on the
58. portion of the model identifies the funding transfer to the First Nation from BC and Canada associated with the following types of funding by major program area e funding amount for Agreed upon programs and services e funding amounts for implementation both one time and 5 year e funding amounts for programs and services outside of the final Agreement The main inputs to this section are the agreed to funding amounts in dollars or the year in which the funds are agreed to Specific Input requirements The funding input requirements are listed in model display 13 The line references refer to the rows in the display and identified in column A of the input data sheets Rows 2 through 10 identify the agreed to funding amounts typically contained in a Fiscal Financing Agreement or other similar fiscal agreement The model identifies 5 funding categories for both Canada and BC and allows the user to set funding amounts for future FFA agreements Column C identifies the funding amounts for Canada on the agreed to funding year Column D identified the BC amounts also in the agreed to funding year as noted in row 2 Columns E and F identify the same funding categories for the second FFA columns G and H identify the funding amounts for the third FFA while columns and J identify the same for the fourth FFA The default calculation is for effective date funding amounts by apply the pre effective date adjusters to the agreed to funding amounts ident
59. r 1 000 of assessed property value 000 Fiscal Arrangements Model User Guide June 21 2003 Model Display 10 Property Tax Data Requirements A B Cc D E ONWARDS Property Tax mill Unmanaged rates Purpose of Tax Rate Residential Utilities1 Forest Land 2 1 2 3 3 1000 1000 e E E a E 5 Regional Dist H 6 Hospital 7 School 8 Other o hom O 10 000 Residential 13 Property owned or leased Utilities1 14 by status residents Unmanaged Forest Land EE 16 Light Industry Kee 18 Managed Forest Land 19 Recreation Non Profit 20 Farm 21 23 Assessed values 000 Residential 24 Property owned or leased Utilities1 25 by non status residents Unmanaged Forest Land 26 Major Indust E 28 Business 29 Managed Forest Land Forest Land 30 Recreation Non Profit 31 Farm Fiscal Arrangements Model User Guide June 21 2003 Homeowners Grant The Home Owners Grant HOG input requirements are listed in model display 11 the line references refer to the rows in the display and identified in column A of the input data sheets The following assumptions deals with the application of the HOG to residential taxpayers the default assumption is that the government who is receiving provincial school tax portion of property taxes is funding the HOG program Row 32 Row 33 Row 34 Row 35
60. s on PST GST G amp S 11 BC Provincial Sales Tax PST rate 12 GST GST FNST rate Additional Tax Revenues The model allows for a tax agreement between Canada and the First Nation in the area of personal income tax that includes income tax paid by all residents on TSL The demographic and employment portions of the model calculate the portion of income tax payable by on TSL status members the tax payable by other residents is an exogenous input as follows Row 1 fixed in the model identifies the year for which the user is to input the estimated value of any personal income tax transfer Row 2 the annual dollar value of the non status residents component of personal income tax agreement between Canada and the First Nation government As a default the model also calculates the value of the FNST bases on the simplified approached as developed by department of Finance However in some cases the actual amount of the FNST agreed to will be known and the user may want to input data that supercedes the results of the simplified approach Row 3 provides the flexibility to overwrite the model calculations of the FNST Row 3 the amount of FNST estimated to be transferred to the First Nation Government under a FNST agreement with Canada this value replaces the FNST value calculated by the model Model Display 9 Additional Tax Revenues 1 2001 2002 2003 PIT agreement __ residents annual 3 FNST annual year default is
61. stration costs 16 Number of students Per student annual allowance allowance 18 tuition Per student annual tuition 19 20 Other programs Transportation 21 Other programs Shelter 22 Other programs Graduation 23 24 Other Education 25 Other programs Cost 26 Price Drivers Annual admin increases 28 Growth in K 12 lev 29 Growth in per student post secondary allowance amp tuition 30 Long term growth rate in other program costs Fiscal Arrangements Model User Guide June 21 2003 Capital Capital is broken down into three components and the user should note the linkage to the associated capital funding section The first component is expenditures for major maintenance and replacement of the existing asset base The expenditure characteristics of this category are by nature very lumpy as replacement occurs at discrete intervals The model assumes that the funding and expenditures on this category will be smooth Practically this is accomplished through the use of a capital authority and a capital stabilization fund Such a fund is not explicitly modeled here but implicitly assumed Row 2 identifies the annual expenditure on major maintenance and replacement The forecast of this category is linked to the growth in the capital funding amount The second component of capital expenditures is housing The user can input a 5 year and long term forecast of new housing starts
62. t pertains to males identifies the unemployment rate for status on TSL females percentage Column D requires the 2001 base level while column E requires the user to input a projection of these rates for the year 2025 the model will then interpolate between these two points in a linear fashion is similar to row 21 except that it pertains to males identify type of employment identifies the initial and projected level of full time female employment percent the model will then interpolate between these two points in a linear fashion is calculated by the model and shows the subsequent part time female employment projections is similar to row 28 except that it pertains to full time male employment rates is also calculated by the model and shows the subsequent part time male employment projections Fiscal Arrangements Model User Guide June 21 2003 Model Display 7 Population Data Requirements E ONWA A B Cc D RDS re ee 2 Population Total non status population on TSL 3 Annual long run growth in non status on TSP population 4 Total status population on plus off reserve mid year value 5 Total status population on reserve mid year value 6 Annual long run growth rate for status Population 7 8 age cohorts 9 10 11 12 13 14 1 16 Net migration impacts after application of LR annual gr rate 7 SS 18 Employment project
63. the average annual expenditures on tourism advertizing Row 43 identifies the average annual expenditures on other tourism opportunity developments Row 45 identifies the average annual expenditures on all economic development programs Model Display 24 Employment Expenditure Data Requirements A B Cc D 33 a Year P amp S Employment amp Development commences cals 34 Administration 100 000 2005 35 36 general employment Training SS ar Program 38 39 youth programs Training 40 Program Eas 41 42 Tourism Advertising 43 Opportunity development 200 25 44 45 Economic development Program Fiscal Arrangements Model User Guide June 21 2003 Debt and Investment This section identifies the First Nation government financial status on effective day Row 47 Row 48 Row 49 Row 50 Row 52 Row 53 is set by the model and identifies the effective year identifies the current outstanding debt on effective day not including any loans identifies in the Capital and Loans section identifies the average annual interest rate applied to the debt amount identifies the period of time in years over which the debt is amortized identifies the current investments not including capital transfer amounts or funding amounts provided for in the funding section on effective day identifies the average annual rate of return applied to funds placed in the investment account Model D
64. tions sheet OSR model FFO 15 yr 50 From options sheet Subsequent columns contain a 20 year Revenues projection of revenues and costs current dollars Canada gross transfer amounts Projection of Canada s gross transfer BC gross transfer amounts Projection of BC s gross transfer Gross Agreed Upon Funding Amount Sum of Canada s and BC s gross transfers Amount of OSR taken into account in the OSR offset amount funding transfer Total agreed upon P amp S funding transfer The net funding transfer Amount of OSR taken into account in the OSR offset amount funding transfer Amount of OSR set aside into a contingency Contingency OSR account Amount of OSR not taken into account in the Discretionary OSR funding transfer Total OSR all sources Amount of OSR from all sources Amount of revenue transferred in from the Transfer from Contingency Account Contingency account Other transfers including Other funding amounts including implementation implementation Sum of the net transfer total OSR and other Total Revenue funding amounts Expenditures First Nation government expenditures current dollars Health On all health programs Education On all Education Programs Social On all Social programs Capital On Capital and Housing Government On all Government programs Treaty Implementation On implementation On servicing existing and new government Debt servicing cost debt Sum of all First Nation gover
65. tments are considered the period from the agreed up data to effective day and the period post effective day Two types of adjusters are considered price and volume Adjusters are applied multiplicatively to the funding amounts in a compounding manner in order to escalate the initial funding amounts to determine the funding amount for every future year of the projection period Specific Input requirements The funding input requirements are listed in model display 14 The line references refer to the rows in the display and identified in column A of the input data sheets Rows 1 5 identifies Canada s adjuster matrix for the program and services identified in column B column C identifies the price and volume adjuster in percentage terms in effect over the per effective date period column D identifies the price and volume adjuster in percentage terms in effect over the post effective date period Row 6 identifies Canada s adjuster for the single block amount funding option column C identifies the price and volume adjuster in percentage terms in effect over the per effective date period column D identifies the price and volume adjuster in percentage terms in effect over the post effective date period Rows 10 14 Identifies BC s adjuster matrix for the program and services identified in column B column C identifies the price and volume adjuster in percentage terms in effect over the per effective date period column D id
66. turn key Fiscal Arrangements Model User Guide June 21 2003 Expenditure on housing New housing related infrastructure Maintenance on new infrastructure Additional Capital New non housing related infrastructure Maintenance on new infrastructure Total Total capital expenditures General Government current dollars General Government Local Services Protection of persons and property Recreation and Culture Land and Resource management Employment amp Development Total General Government Expenditures Treaty Implementation current dollars One time expenses One time 5 year ongoing annual amount Total Implementation Expenditures Fiscal Arrangements Model User Guide June 21 2003 Results Tax and Employment Sheet Subsequent columns contain a 20 year projection of the Employment following tax and employment parameters Total status population Total on TSL status population Total employable population On TSL Status population of employable age and availability Total labour force On TSL Status labour force Total full time employment Total on TSL full time employed status Indians Total part time employment Total on TSL part time employed status Indians Total Total on TSL employed status Indians Income from all sources Gross wage income Total Gross wage income on TSL status Indians Social Assistance tra
67. ues received by the First Nation government under the tax agreement The tax input requirements are listed in model display 8 the line references refer to the rows in the display and identified in column A of the input data sheets Row 1 title line for rows 2 and 3 Row 2 column C number of years that an exemption on transactions taxes is in place note this variable only influences GST and PST calculations Row 2 column D percentage of transactions tax capacity exempted during the exemption period Row 3 column C number of years that an exemption on personal income taxes is in place Row 3 column D percentage of income tax capacity exempted during the exemption period Row 6 identifies the year for the values in rows 2 4 Rows 6 8 annual value of taxes collected or provided to the First Nation government under a tax agreement for Tobacco Fuel and Alcohol respectively annual dollars Row 10 percentage of expenditures made on goods and services subject to the PST and GST Row 11 the provincial sales tax rate PST percent currently 7 5 Row 13 the GST rate percent currently 7 Model Display 8 Tax Data Requirements exemption years exempted Tax Exemptions Transactions Taxes Income taxes 2001 estimated value Sales Tax income Tobacco annual N OO Oil A OIN Fuel annual Fiscal Arrangements Model User Guide June 21 2003 8 Alcohol annual 9 ee ee 10 Expenditure
68. vices Tax FNGST estimates are derived using a simplified approach that identifies the consumption of individuals living on TSL and estimates an amount of tax revenues associated with their consumption There are limitations associated with this estimation methodology as it does not account for the consumption of non durable goods on TSL by non residents The input requirements for tax agreements are listed in model display 12 the line references refer to the rows in the display and identified in column A of the input data sheets In order to model an agreement between Canada BC and the First Nation government two inputs are required first the year if any in which the agreement commences and second the amount of the tax in percentage terms that gets transferred to the First Nation government This section sets out these two inputs for the various taxes that may be subject to agreement Col A amp B identifies the various taxes that may be subject to an agreement in this model Col C identifies the year in which such a tax agreement is assumed to occur if no tax agreement is contemplated this number should be set to 9999 Col D identifies the share of tax room that the First Nation receives this is the percentage of the calculated tax that would be transferred to the FN government in extent of an agreement This figure may range between 0 no funds and 100 all funds Row 2 3 identifies federal income taxes Rows 5 6 identifies prov
69. xcel 7 but will work on all higher versions Fiscal Arrangements Model User Guide June 21 2003 The user model is approximately 4 megabytes in size and the user is advised to ensure that sufficient room exists on their computer prior to making or saving versions of the model or its output The user model contains several macros users should enable macros when using this model Fiscal Arrangements Model User Guide June 21 2003 Model Structure The model is organized into two major components as follows e First Nation revenues e First Nation expenditures Representation of Revenue Side First Nation Government revenues are the sum of three main components a Own source revenue revenue the FN receives through resource extraction taxation fees charges investments commercial activities and other sources excluding transfers b Funding transfers the model assumes the existence of a funding agreement between Canada BC and the First Nation that sets out current and future funding levels for agreed upon programs and services c Other transfers transfers from other governments for activities outside of a funding agreement e g implementation training and resource rehabilitation funding Figure 1 Revenue Structure Final Agreement components Demographic and employment characteristics Funding from Funding from BC for agreed Canada agreed t upon program upon program and services a

User Guide to the Fiscal Arrangements Model

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